E-Commerce Practices

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E-Commerce Practices By the time you complete this lesson you will be able to: Compare e-commerce to traditional commerce. Define e-commerce terms and concepts. Relate the concept of supply chain to e-commerce.

Identify payment models used in e-commerce. Identify ways to protect a transaction that contains private information. Identify issues related to working in a global environment.

Identify ways to build e-commerce relationships using Web- based technology. Traditional Commerce vs. E-commerce It is important to understand the similarities and difference between traditional commerce and e-commerce.

They share the following goals: Both aim to deliver a valued product or service. Both want to serve a large population. Both strive to deliver products and services in a timely manner.

Traditional Commerce vs. E-commerce They differ in the following ways: E-commerce customers expect a shorter fulfillment time. E-commerce customers need to understand Web-based technologies.

E-commerce customers do not need to travel or pay for telephone calls. E-commerce relies encryption technology to ensure transactions remain private over public networks. E-commerce orders are often processed without human interaction.

E-Commerce Models There are two major e-commerce models: Business-to-Consumer (B2C) A Web site that targets consumers or end users and sells products and/or services. Business-to-Business (B2B) An e-commerce model ... more. less.

in which Web-based businesses sell products and or services to other businesses. Business and Internet Technologies Businesses use Web technologies in the following ways: Supply chain management , which is the ability to manage the process that generates a product and distribute it. Enterprise resource planning (ERP) , which involves the use of software to create an automated plan for a company 9s entire operation. Business and Internet Technologies B2B information sharing with XML allows information to be indexed once, then used in many different applications and companies. Internet marketing issues must be considered because they affect the content and performance of Web sites. E-Commerce Information-Formatting Technologies Business documents can be formatted in many ways. When businesses need to exchange information they need to agree on universal information-formatting methods. These methods are often called merchant systems. Information-Formatting Merchant Systems Electronic Data Interchange (EDI) A universal method for formatting information so it can be transferred among organizations. Used extensively by financial institutions. EDI A good way to exchange the following types of information: Invoices Bills Purchase Orders Inventory Lists Supply Chain Information EDI EDI Implementation: Until recently EDI use was limited to large corporations. The recent e-commerce push has helped to standardize EDI. AN EDI message contains a string of data elements that each represents a single fact such as price, product model number etc. The entire sting is called a data segment. One or more data segment framed by a header and a trailer form a transaction set, which is the EDI unit of transmission. EDI Drawbacks There are many standardized document formats, and each industry uses it 9s own cflavor d of EDI. Organizations that exchange EDI transmissions are known as trading partners 3 they must agree on a standard format when exchanging data. This format is seldom acceptable for other trading partners, resulting in multiple formats and interoperability issues. Information-Formatting Merchant Systems Open Buying on the Internet (OBI) Designed as an alternative to EDI Developed to target high-volume, low cost transactions OBI has several corporate sponsors American Express Visa Netscape Microsoft Dell OBI is based on open technologies and therefore does not have the incompatibility problems commonly associated with EDI. OBI Components Requisitioner 3 the person or software that initiates the purchase transaction. Buying Organization 3 the company that represents the requisitioner and has an OBI server. Selling Organization 3 the company that is offering the product or service for sale and has an OBI server. Payment Authority 3 the organization that acts as a neutral third party to settle the financial component of the transaction. E-Commerce Payment Technologies Several e-commerce payment technologies are in common use, either as transaction methods or as tools to secure transactions. Electronic Funds Transfer (EFT) Payment Gateways Secure Electronic Transactions (SET) Open Trading Protocol (OPT) Secure Sockets Layer (SSL)/Transport Layer Security (TLS) Electronic Funds Transfer (EFT) A generic term that describes the ability to transfer funds using computers, rather than using paper. ETF systems must ensure: Confidentiality of payment information Encrypting transactions Using certificates to authenticate users Integrity of payment information Payment information cannot have been altered Merchant authentication proof of identity Non-repudiation Interoperability Must be widely adopted and supported, even the slightest change will introduce incompatibilities in the model. Payment Gateways A hardware of software based system that mediates between the eCommerce site and the merchant 9s bank. When a merchant receives payment from a customer, the merchant uses the payment gateway to transmit credit card information to the bank. Payment Gateways The gateway is responsible for the following tasks: Forwarding information to the proper parties. Authenticating all participants in the transaction. Ensuring confidentiality. Ensuring data integrity. VeriSign is a well known gateway company. Secure Electronic Transactions (SET) An Internet protocol that uses digital certificates to secure financial transactions. Open Trading Protocol (OPT) An alternative to using SET. Supported by companies such as AT&T, HP, Oracle, SUN and Wells Fargo Bank. Uses digital certificates similar to SET. All transactions are formatted in XML, rather than a proprietary format. Secure Sockets Layer/Transport Layer Security SSL and TLS are tools used to secure transactions through encryption. Services provide include: Authentication Data confidentiality Data integrity To use SSL/TLS an organization must participate in a Public Key Infrastructure (PKI) PKI Make it possible for two parties who have never met each other to trust each other. Once a trust is established, encryption can begin. A PKI uses a Certificate Authority (CA) which is a trusted third party that verifies the identity of person or company before issuing a certificate. Working in a Global Environment When a business is placed on the Web, it 9s customer base is expanded to anyone in the world with a browser and Internet access. A business must decide how it will respond to global issues such as: currency differences Taxes and tariffs International shipping Language concerns Relationship management Lesson Review You learned about the many characteristics that e- commerce and traditional commerce share, and the ways that they are different. You learned about B2B and B2C commerce models. You studied technologies such as EDI, OBI, OTP and SSL/TLS. You also considered global commerce issues.

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