1. Societal Issues in Computing (COMP466)
Chapter 6
E-Commerce Applications and Security
Prepared by: Qasem Obeidat

2. Overview of Electronic Commerce
Internet used as a worldwide distribution channel for goods, services, managerial and professional jobs
This is profoundly changing economics, markets and industry structure, products and services and their flow, consumer segmentation, consumer values, consumer behavior, jobs, and labor markets
The impact may be even greater on societies and politics, and on the way we see the world and ourselves in it

3. Electronic Commerce: Definitions and Concepts
E-commerce defined from the following perspectives:
Communications: delivery of goods, services, information, or payments over computer networks or any other electronic means
Commercial (trading): provides capability of buying and selling products, services, and information on the Internet and via other online services

4. Electronic Commerce: Definitions and Concepts (Cont…)
e-business: a broader definition of EC, which includes:
buying and selling of goods and services
servicing customers
collaborating with business partners
conducting electronic transactions within an organization

5. Electronic Commerce: Definitions and Concepts (Cont…)
Pure vs. Partial EC
depends upon the degree of digitization (the transformation from physical to digital) of:
1. the product (service) sold;
2. the process; and for
3. the delivery agent (or digital intermediary)
(e.g. Amazon.com and etoys.com)
Brick-and-Mortar organizations
are old-economy organizations (corporations) that perform most of their business off-line, selling physical products by means of physical agents

6. Electronic Commerce: Definitions and Concepts (Cont…)
Virtual (pure-play) organizations
conduct their business activities solely online, e.g. eBay
Click-and-mortar organizations
conduct some EC activities, but do their primary business in the physical world, e.g. Cisco
Electronic market (e-marketplace)
online marketplace where buyers and sellers meet to exchange goods, services, money, or information

7. Electronic Commerce: Definitions and Concepts (Cont…)
Interorganizational information systems (IOSs)
allow routine transaction processing and information flow between two or more organizations
Intraorganizational information systems
enable EC activities to go on within individual organizations

8. The Dimensions of Electronic Commerce

9. The EC Framework, Classification, and Content
Three major types (forms) of e-commerce:
Business-to-Consumer (B2C) : online transactions are made between businesses and individual consumers
Business-to-Business (B2B): businesses make online transactions with other businesses
Estimates of worldwide sales
$1.9 trillion in 2002
Projected $8.5 trillion by 2005
Consumer-to-consumer (C2C)
Takes place on online auction sites
Make buying and selling unique items easy
Your item is visible to anyone in the world with an Internet connection

10. EC Framework
EC applications are supported by infrastructure and by five support areas:
People
Public policy
Marketing and advertising
Support services
Business partnerships

11. EC Framework (Cont…)

12. Classification of EC by Transactions or Interactions
business-to-consumer (B2C) :
online transactions are made between businesses and individual consumers
business-to-business (B2B):
businesses make online transactions with other businesses
e-tailing: online retailing, usually B2C
business-to-business-to-consumer (B2B2C):
e-commerce model in which a business provides some product or service to a client business that maintains its own customers

13. Classification of EC by Transactions or Interactions (cont.)
consumer-to-business (C2B):
e-commerce model in which individuals use the Internet to sell products or services to organizations or individuals seek sellers to bid on products or services they need
consumer-to-consumer (C2C):
e-commerce model in which consumers sell directly to other consumers

14. Classification of EC by Transactions or Interactions (cont.)
peer-to-peer (P2P):
technology that enables networked peer computers to share data and processing with each other directly; can be used in C2C, B2B, and B2C e-commerce
mobile commerce (m-commerce):
e-commerce transactions and activities conducted in a wireless environment
location-based commerce (l-commerce):
m-commerce transactions targeted to individuals in specific locations, at specific times

15. Classification of EC by Transactions or Interactions (cont.)
intrabusiness EC:
e-commerce category that includes all internal organizational activities that involve the exchange of goods, services, or information among various units and individuals in an organization
business-to-employees (B2E):
e-commerce model in which an organization delivers services, information, or products to its individual employees

16. Classification of EC by Transactions or Interactions (cont.)
collaborative commerce (c-commerce):
e-commerce model in which individuals or groups communicate or collaborate online
e-learning:
the online delivery of information for purposes of training or education
exchange (electronic):
a public electronic market with many buyers and sellers (Create a marketplace to bring together many buyers and sellers)
Advantages:
Reduced costs of procurement (purchasing)
The ability to consider many suppliers

17. Classification of EC by Transactions or Interactions (cont.)
exchange-to-exchange (E2E):
e-commerce model in which electronic exchanges formally connect to one another the purpose of exchanging information
e-government:
e-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens

18. The Interdisciplinary Nature of EC
Major EC disciplines
Computer science
Marketing
Consumer behavior
Finance
Economics
Management information systems

19. The Future of EC the future is bright
2004—total online shopping and B2B transactions in the US between $3 to $7 trillion by 2008:
number of Internet users worldwide should reach 750 million
50 percent of Internet users will shop
EC growth will come from:
B2C
B2B
e-government
e-learning
B2E
c-commerce
the future is bright

20. Benefits of EC Benefits to organizations Rapid time-to-market
Lower communication costs
Efficient procurement
Improved customer relations
Up-to-date company material
No city business permits and fees
Other benefits
Global reach
Cost reduction
Supply chain improvements
Extended hours: 24/7/365
Customization
New business models
Vendors’ specialization

21. Benefits of EC (Cont…) Benefits to consumers Participation in auctions
Electronic communities
“Get it your way”
No sales tax
Ubiquity
More products and services
Cheaper products and services
Instant delivery
Information availability

22. Benefits of EC (Cont…) Benefits to society Telecommuting
Higher standard of living
Hope for the poor
Availability of public services

23. Limitations of EC

24. Barriers of EC Security Trust and risk Lack of qualified personnel
Lack of business models
Culture
User authentication and lack of public key infrastructure
Organization
Fraud
Slow navigation on the Internet
Legal issues

25. Ecommerce Security Issues
Keeping your site and customer data safe.
Customer Security: Basic Principles
Any system has to meet four requirements:
privacy: information must be kept from unauthorized parties.
integrity: message must not be altered or tampered with.
authentication: sender and recipient must prove their identities to each other.
non-repudiation: proof is needed that the message was indeed received.

26. Basic Security Issues Authentication
The process by which one entity verifies that
another entity is who he, she, or it claims to be
Authorization
The process that ensures that a person has
the right to access certain resources
Auditing
The process of collecting information about
attempts to access particular resources, use
particular privileges, or perform other security
actions

27. General Security Issues at EC Sites

28. Electronic Payment Systems
E-Payment: is An electronic payment made via a web browser for goods and services using credit or debit cards.

29. Electronic Payment Systems (Cont…)
The Payment Revolution
A number of factors impact whether a particular method of e-payment become popular:
Does the e-payment system require the payer to install specialized software components?
How safe is the transfer or payment process?
How large is the payment?
Is it easy to use?
What are the transaction fees?

30. Electronic Payment Systems (Cont…)
payment card
Electronic card that contains information that can be used for payment purposes
Three forms of payment cards:
Credit cards (Visa, MasterCard)
Charge cards (American Express, Diner’s Club)
Debit cards (Visa, MasterCard)

31. Electronic Payment Systems (Cont…)
Processing Credit Cards Online
* Three basic configurations for processing online payment:
authorization
Determines whether a buyer’s card is active and whether the customer has sufficient funds
settlement
Transferring money from the buyer’s to the merchant’s account
payment service provider (PSP)
A third-party service facilitating transfer of funds between merchants and customers via financial networks

32. E-Auctions
auction
Market mechanism by which buyers make bids and sellers place offers; characterized by the competitive and dynamic nature by which the final price is reached
electronic auctions (e-auctions)
Auctions conducted online
dynamic pricing
Prices that are determined based on supply and demand relationships at any given time

33. Fundamentals of Dynamic Pricing and E-Auctions
One Buyer, One Seller
Popular in B2B
Each party can use negotiation, bargaining, or bartering
One Seller, Many Potential Buyers
- forward auction
An auction in which a seller offers a product to many potential buyers
- sealed-bid auction
Auction in which each bidder bids only once; a silent auction, in which bidders do not know who is placing bids or what the prices are
- Vickrey auction
An auction in which the highest bidder wins but pays only the second-highest bid

34. Fundamentals of Dynamic Pricing and E-Auctions (Cont…)
One Buyer, Many Potential Sellers
- reverse auction
Auction in which the buyer places an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid on the job, with the price reducing sequentially, and the lowest bid wins; used mainly in B2B and G2B e-commerce
- “name-your-own-price” model
Auction model in which would-be buyers specify the price (and other terms) they are willing to pay to any willing seller; a C2B model, pioneered by Priceline.com
Many Sellers, Many Buyers ….

35. Benefits of E-Auctions
- Benefits to Sellers
Increased revenues
Optimal price setting
Removal of expensive intermediaries
Better customer relationships
Liquidation
Lower transaction costs
Lower administrative costs

36. Benefits of E-Auctions (Cont…)
- Benefits of E-Auctions to Buyers
Opportunities to find unique items and collectibles
Lower prices
Entertainment
Anonymity
Convenience

37. Benefits of E-Auctions (Cont…)
- Benefits to E-Auctioneers
Higher repeat purchases
A stickier Web site
Expansion of the auction business

38. Limitations of E-Auctions
Possibility of fraud
Limited participation
Security
Auction software
Long cycle time
Monitoring time
Equipment for buyers
Order fulfillment costs