2. ISPs for E-Commerce Nizar R. Mabroukeh, M.Sc., C.S. nizar@ccse.kfupm.edu.sa http://www.geocities.com/mabroukeh E-Commerce Short Course 19 th April, 2000

3. Nizar Mabroukeh, 20002 Topics to be Covered  Planning & Requirements –Market and business study –Requirements for an ISP –Tuning your ISP setup to E-Commerce  Starting the business as an ISP –Advertise –Sell (shopping, checkout, authorization, charge back) –Start your E-Commerce Business –Promote  Surviving the competition  Future Developments

4. Planning and Requirements

5. Nizar Mabroukeh, 20004 Planning  Business Requirements  Technical Requirements  Selection / procurement

6. Nizar Mabroukeh, 20005 Know The Internet Market The Internet is:  Open 24 / 7  Connects people “not computers”  Communicate with anybody, anytime, anywhere  Everything is a “click away”  You should be selling on The Internet

7. Nizar Mabroukeh, 20006 The Internet a Threat or an Opportunity ? “Internet represents a strategic inflection point for business - grab it or lose it” Intel Co-Founder Andy Grove

8. Nizar Mabroukeh, 20007 The Connected Society

9. Nizar Mabroukeh, 20008 CEO & Executive Quotes  The Internet revolution will have a larger impact than the industrial revolution  Unless you get INTO the Internet you will be replaced  Add value and you will survive  To be successful locally you need to be available globally

10. Nizar Mabroukeh, 20009 Internet Users

11. Nizar Mabroukeh, 200010 Internet Penetration

12. Nizar Mabroukeh, 200011 Net Users in Middle East

13. Nizar Mabroukeh, 200012 Middle East Net Demographics  1 million users by 2000  27 % high school certificate  58 % University Degree  14 % Master & PhD  21 - 35 yrs old largest group - 70 %  72 % Connect from Home IAW Magazine Aug 5, 1999

14. Nizar Mabroukeh, 200013 E-Commerce Revenues

15. Nizar Mabroukeh, 200014 Revenue Estimates

16. Nizar Mabroukeh, 200015 E-Commerce in Europe

17. Nizar Mabroukeh, 200016 US vs World

18. Nizar Mabroukeh, 200017 What about Middle East E-Commerce ?  Barely exists  Purchased $ 95 million during April 98 - April 99 (IAW magazine)  9 % made purchase compared to 4 % in 97- 98

19. Nizar Mabroukeh, 200018 Middle East E-Commerce ?  33 % one purchase  18 % regular purchases  What did they buy ? Software … Books … CD’s … Clothing Traveling tickets … gifts … flowers ….

20. Nizar Mabroukeh, 200019 However 82 % of purchases from int’l vendors They are now your competitors

21. Nizar Mabroukeh, 200020 Business Model

22. Nizar Mabroukeh, 200021 Technical Requirements Infrastructure for regular ISP  A connection to a larger Internet Provider.  Hardware and Software to provide Internet Services.

23. Nizar Mabroukeh, 200022 Connecting To A Larger ISP

24. Nizar Mabroukeh, 200023 Connecting To A Larger ISP  Hardware depends on type of connection.  You are connecting your LAN to the larger provider.  Generally, you will need: –An appropriate Router. –A Gateway, if different types of networks. –A Web server, with Secure Socket Layer (SSL). –A Proxy server to cache your link. –A Firewall to protect your LAN from intruders. –May need a leased-line modem or digital modem.

25. Nizar Mabroukeh, 200024 HW & SW to Provide Internet  You will providing for 3 types of customers: –Your local users on your LAN (directly connected to the servers) –Dial-up users (using Modem) –Corporate accounts (Leased-lines, VPNs, Frame-Relay…etc.), like Internet Cafès and Intranet solutions to companies.

26. Nizar Mabroukeh, 200025 HW & SW to Provide Internet  For the 3 different types you will need: –A machine for each of the following applications: Web Server: Ex. Microsoft Internet Information Server (MIIS), Apache server (for Linux)… Proxy Server: Ex. Netscape Proxy Server E-Mail Server: Ex. Microsoft Exchange. Firewall: to protect your LAN. Ex.: SQUID, ipchains…

27. Nizar Mabroukeh, 200026 Dial-up Customers HW  For dial-up customers you will need a pool of modems (a modem for every phone line you have).  A customer dials your service using a pilot number which will connect him to the first available line from the pool.  Thus you need a Port Master and a RAS (Remote Access Server).  User Authentication follows the OS on the RAS.

28. Nizar Mabroukeh, 200027 Corporate Accounts HW  Leased-line modem, Frame-Relay switches, VPN routers…etc. depending on connection type.  Most importantly you will need to have a pool of vacant and static IP addresses to provide.

29. Nizar Mabroukeh, 200028 Your Team  Technical Team  Customer Support Team  Sales Team  Marketing and Promotion Team  Billing and Accounting Team (Customer Care)  Content and Quality of Service Team

30. Nizar Mabroukeh, 200029 Technical Team  Configures, manages and administers your connection as well as troubleshooting problems on the LAN and the Internet setup.  Supports and provides connection to corporate users.  Responsible for providing a continuous and smooth link with appropriate bandwidth to your ISP (Tune the connection).

31. Nizar Mabroukeh, 200030 Customer Support Team  On-site installation and setup of service for dial-up users.  Help-Desk service and troubleshooting.  Provides After-Sales service for dial-up users and small corporate accounts (like Internet Cafés).  Takes customer notes on service.  Works side-by-side with Technical team.

32. Nizar Mabroukeh, 200031 Billing and Accounting Team  Must be online with customer database  Always on contact and direct arrangement with Marketing team.  Aware of their limits that might depend on technical matters of the link. Ex.: If server cannot keep track of off-peak hours, we cannot sell off-peak accounts.

33. Nizar Mabroukeh, 200032 Content and Quality of Service Team  They provide content to the users.  Design your webpage and keep it up to date.  Keep users attracted and entertained: –Hold newgroups discussions. –Link people together: Chatting Services, small tutorials, free personal websites for users… –Link your users to the government or people who interest them. –Provide E-Commerce.

34. Nizar Mabroukeh, 200033 Sales Team  First Contact with customer thus first on-ground impression about company.  Must be knowledgeable about The Internet in general and about the company’s capabilities.  Promise only what the company can deliver and deliver what was promised.  Make friends with customers and keep in contact after closing the deal.  You Better have a sub-team for corporate accounts.

35. Nizar Mabroukeh, 200034 Marketing and Promotion Team  Advertise  Sell  Market  Promote.  Marketing is important for continuity of the company as well as in competition.  Hold promotional campaigns taking chances of special occasions.  Must have a clear goal (part of the general mission of the company) on each campaign.  Should be flexible and fluctuant with Competition (able to compete).

36. Nizar Mabroukeh, 200035 Marketing vs. Selling in Web Sites  In marketing sites there is often a reluctance to give complete information.  With selling, the objective is to close the sale electronically.

37. Nizar Mabroukeh, 200036 Sections of Selling Sites  Sites that sell generally have 3 sections: –Marketing and added value information. –The Catalogue: product specs and prices. –Order processing: Advanced systems may have a method for the customer to check progress and delivery of the order. Such sites may be stand-alone, or may form part of a larger site called a “Shopping Mall”

38. Nizar Mabroukeh, 200037 Tuning to E-Commerce  Online Catalogue  Shopping Cart  Secure Servers and SSL  Payment Gateways

39. Nizar Mabroukeh, 200038 Mall Services Business Owner Mall BackOfficeMall front Electronic Mall Administration Internet Secure eCommerce Services & Hosting Browse Mall Services Collect Services (shopping basket) Order $$$ Service Manager Mall Manager Business Owners Manager Mall Front Manager Reports & Statistics Advertisers Extended Services Financial Institution Extended Services Secure access Secure access (DID) Classified Ads Customer Mall Owner Secure access (DID) Remote Sales

40. Nizar Mabroukeh, 200039 Mall infrastructure: Register/transfer/point Mall DNS Database design and programming Automated provisioning and upgrading. Store ‘test drive’ Central Category directory Global shopping Global search capability Mall front: Advanced shopping cart Static store policy pages Multiple payment methods Example on Mall Deliverables

41. Nizar Mabroukeh, 200040 Example on Mall Deliverables Mall Backoffice:  Service manager  Modify, add and delete services  Modify, add and delete templates  Modify, add and delete store  Mall manager  Fulfill orders  Generate invoices  E-mail confirmation notices automatically  Track open orders  Track and manage accounts receivable  Generate past due notices  Search orders  Search unordered baskets  Payment processing

42. Nizar Mabroukeh, 200041  Customer (store owner) manager  Modify, add or delete customer information  Manage customer passwords  Track account balances  Assign service levels  Set credit limits  Set credit length  Search for customers  Mall front manager  Modify, add and delete Mall front text  Modify, add and delete Mall front advertisements  Modify, add and delete Mall demo Example on Mall Deliverables

43. Nizar Mabroukeh, 200042  Graphical Reports and Statistics  Mall front processes  Report on traffic and order analysis by day, week, or year  Report on store sales statistics by item number, rank, time period  Optional  VeriSign Server Set-up (to eliminate spoofing)  Automated Billing System Example on Mall Deliverables

44. Nizar Mabroukeh, 200043 Store Services Internet Purchase Manager Business Owner Electronic Store Customer Browse Catalog Store Manage r Collect products (shoppin g basket) Order $$$ Customer Manager Inventory Manager Supplier Shipper (UPS) Extended Services Secure eCommerce Services & Hosting Product Manage r Catalog Manager Extended Services Reports & Statistics BackOfficeStorefront Financial Institution Secure access (DID)

45. Nizar Mabroukeh, 200044 Each store is “rented” from a “Community” or “Mall” by a business Each business selects the services that best meet the online requirements of that business Each store may choose among different services like: Home page for advertisement of a business or classified with contact information About page Order information page How to shop page Catalog list pages Store ‘specials’ page Reporting and statistics Advanced reporting and statistics

46. Nizar Mabroukeh, 200045  Central directory search  Advanced shopping basket  Image uploading  Shipping matrix  Tax matrix  Automated order notification  Global ‘specials’ listing  Generic invoices  Real time payment processing capability  Drop ship supplier order notification  Customer profiling  Storefront management facilities  Backoffice administration facilities

47. You Have All The Gadgets Fully Equipped and ready….  Let’s Hit The Market

48. Nizar Mabroukeh, 200047 Start Your Business  After you have decided on your company mission, you can advertise on the grounds of this mission.  Sell: –In-door sales: For walk-in customers –Out-door sales: Target a special class or group of people or industry sector, collect contacts, call them on the phone and visit them.  Market and Promote (again, have clear goals and targets)

49. Nizar Mabroukeh, 200048 Important Points for Sales  Internet Customers are usually interested in: –Price vs. quality of service. –Customer Support (after-sales service). –On-call Tech. Service. –Trial accounts. –Your Bandwidth and your ISP.  If I am a customer, I would ask you to convince me to buy from you and not other companies. This is when your “content” comes into action.

50. Nizar Mabroukeh, 200049 Building E-Commerce Business  Negotiate links with other websites.  Traditional Marketing (include it with your marketing team).  Advertising on search engines and other high traffic sites.  Associate programs where sites that refer visitors get a commission on sales.

51. Nizar Mabroukeh, 200050 Online Catalogue  Navigation  The shopping cart  Check-out

52. Nizar Mabroukeh, 200051 Navigation  The visitor should be able to get to the product they need with very few clicks.  The Information must be comprehensive once the customer has located the product of interest.  Provide pictures and diagrams to help the customer understand what is being offered.

53. Nizar Mabroukeh, 200052 Shopping Cart  When the catalogue is small (less than 20 items) a simple order form will do.  At any point the customer should be able to review the cart, the cost and so on.  This makes it easy for the customer to browse the site selecting products as they go.

54. Nizar Mabroukeh, 200053 Check out  The customer should be presented with a list of what he purchased and their price.  The customer can then add shipping instructions.  At this stage the site should switch to Secure mode normally using SSL. This means that all communications with the server is encrypted.

55. Nizar Mabroukeh, 200054 Different Type of Payments  Offline –Bank Transfer –Cheque –Escrow –Telephone Order –Fax  Online –Micro-payments: E-Cash, CyberCash… –E-Cheques –Credit Card

56. Nizar Mabroukeh, 200055 What is involved in credit card processing? –Authorization. –Capture. –Charge back.

57. Nizar Mabroukeh, 200056 Authorization  Manual: Download sales details from Web Server and request authorization in normal method.  Automatic: Server software communicates directly with credit card processing company computer and arrange authorization online. (needs secure connection)

58. Nizar Mabroukeh, 200057 Capture  Debiting the credit card  Can happen at the same time as authorization if the merchant guarantees delivery within a certain fixed time.  Otherwise, capture should take place when the goods are shipped.

59. Nizar Mabroukeh, 200058 Charge Back  This is when the customer is dissatisfied and arranges for the transaction to be cancelled.  Note that the fact that a payment has been authorized by the bank does not provide any protection against charge back.

60. Nizar Mabroukeh, 200059 Escrow An escrow service is an intermediary between buyer and seller, collecting payment from the buyer and holding it until the buyer confirms delivery of the purchased item. www.iescrow.com www.tradesafe.com

61. Nizar Mabroukeh, 200060 Ability to accept credit card payment 1- Set up Merchant Account 2- Order Form on Web Site (HTML, CGI) 3- Form encrypted using Secure Socket Layer (SSL) 4- Digital Certificate 5- Payment processing software

62. Nizar Mabroukeh, 200061 1- Merchant Account  Accounts that accept and hold credit card transaction monies  Merchant service provider (MSPs) or Independent service Organisations (ISOs)  Process to set up a Web-enabled credit card merchant account

63. Nizar Mabroukeh, 200062 2- Order Form Set up form using HTML and CGI to –Pass credit card to the payment processing software, which sends transaction to bank –Send an email to whoever fulfills orders with order information and customer mailing address –Create confirmation page to customer and tracking information

64. Nizar Mabroukeh, 200063 On-Line Transaction Cost  Discount Rate (credit Card Company)  Per Transaction Charge  Monthly Statement Fee  Monthly Gateway Fee

65. Nizar Mabroukeh, 200064 3- Secure Server  Only page with the actual order form needs to be placed on secure server  Using a secure Web protocol such as SSL has two main goals –Credit Card Date Encryption –Certify message is coming from where it claims to be by means of digital certificate –https:// instead of http://

66. Nizar Mabroukeh, 200065 Secure Servers

67. Nizar Mabroukeh, 200066 Security Issues  SSL developed by Netscape encrypts messages passed from customer to web server  Only 40-bit encryption is available world- wide. It is weak, but it is enough to protect against automated message scanning.  Information passed to the credit card processor and the merchant must also be protected.

68. Nizar Mabroukeh, 200067 Security Issues  Information stored on the web server, and before being passed to the merchant is at the risk of someone breaching security on the server and examining the files Solution:  Encrypt the info. stored on the server  or, use a firewall, which limits access to the server to specific types, such as “web traffic only”

69. Nizar Mabroukeh, 200068 4-Digital Certificate  Obtained from digital certificate authority  Submit Certificate Signing Request

70. Surviving The Competition

71. Nizar Mabroukeh, 200070 Ensure Continuity  Try as much as possible to keep your configuration tuned for best performance. – If you need more bandwidth get more. –If you need more phone lines get more. –You might need to install new modems to keep up with technology that you’re customers are using, do it.  Provide Content and Entertainment as mentioned before.  Make a survey about your service every now and then by calling customers and asking them (keep up quality of service).

72. Nizar Mabroukeh, 200071 Ensure Continuity  Get rid of nosey customers, naggers, hackers, and hot shots ! HOW?  Make friends with your loyal customers, arrange gatherings.  You can also promote and market for your new services in these gatherings.

73. Nizar Mabroukeh, 200072 Future Development  The Internet is growing dramatically everyday. Thus the emergent need for development to keep up with technology.  It would be good if you had future plans in mind since day one of establishing your company.  Development in hardware and in content.

74. Nizar Mabroukeh, 200073 Development Team  Establish a team for Research and Development (R&D).  Give them resources they need: Money, testing devices, library, research tools…  Usually R&D is the most money and time- consuming department in any company.

75. Nizar Mabroukeh, 200074 R&D Responsibilities  Should follow up on new technologies and services.  Should be able to carry out experimentation and testing on new technologies and provide management with consultation and support in futuristic plans.  Should be able to come out with new ideas and plans to enhance the performance of employees, the network and the system as a whole.

76. Nizar Mabroukeh, 200075 Summary  We have seen the basic steps one needs to start his business as an ISP with E-Commerce added service.  To be a successful ISP keep in mind the following points: –Good planning (the internet provides a lot of services and there is a lot of technology involved, you might get lost). –Robust connection to your ISP and enough resources. –Quality of service. –A lot of customer care.  The competition is wild !

77. Nizar Mabroukeh, 200076 Conclusion E-Commerce is a new form of marketing with a predicted explosive growth over the next few years. The technology underlying the market is quite complex, and will become more so as new payment methods and web technologies come on stream. The marketing approach is also new and different. The key to success is to find innovative ways to use that technology to attract customers and build business.

78. Thank You For more information Nizar Mabroukeh King Fahd University of Petroleum and Minerals nizar@ccse.kfupm.edu.sa