UNIT I

LESSON 1: INTRODUCTION TO E-COMMERCE

Internet has become an important medium for doing global · Co-operative product development
business based on the state of the art technology. Electronic · Distributed co-operative working•Use of public and private
commerce has two major aspects: economical and technological. services
The stress of this course will show you how to get started in · Business-to-administrations (e.g. customs, etc)
the complex and exciting world of Electronic Commerce. New
standards and new facilities are constantly emerging and their · Transport and logistics
proper understanding is essential for the success of an · Public procurement
operation, and especially for those who are assigned a duty to · Automatic trading of digital goods
select, establish, and maintain the necessary infrastructure. · Accounting
What is e-Commerce? · Dispute resolution
E-commerce is an emerging concept that describes the process
History of E-commerce
of buying and selling or exchanging of products, services, and
The history of e commerce is a history of how Information
information via computer networks including the internet.
Technology has transformed business processes. Some authors
Definition of E-Commerce from Different Perspective will track back the history of e commerce to the invention of
1. Communications Perspective the telephone at the end of last century. EDI (Electronic Data
Interchange) is widely viewed as the beginning of ecommerce if
· EC is the delivery of information,products/services, or
we consider ecommerce as the networking of business
payments over thetelephone lines, computer networks
communities and digitalization of business information.
orany other electronic means.
Large organizations have been investing in development of
2. Business Process Perspective EDI since sixties. It has not gained reasonable acceptance until
· EC is the application of technology towardthe automation eighties. EDI has never reached the level of popularity of the
of business transactionsand work flow. web-based ecommerce for several reasons:
3. Service Perspective · High cost of EDI prohibited small businesses and
· EC is a tool that addresses the desire offirms, consumers, medium-sized companies from participating in the
and management tocut service costs while improving electronic commerce;
thequality of goods and increasing thespeed of service · Slow development of standards hindered the growth of
delivery. EDI; and
4. Online Perspective · The complexity of developing EDI applications limited its
adaptation to a narrow user base.
· EC provides the capability of buyingand selling products
and information onthe internet and other online services. The Internet and the Web
The Internet was conceived in 1969, when the Advanced
Research Projects Agency (a Department of Defense
Benefit of e-Commerce
organization) funded research of computer networking. The
· Access new markets and extend service offerings to Internet could end up like EDI without the emergence of the
customers World Wide Web in 1990s. The Web became a popular
· Broaden current geographical parameters to operate globally mainstream medium (perceived as the fourth mainstream
· Reduce the cost of marketing and promotion medium in addition to print, radio and TV) in a speed which
· Improve customer service had never been seen before. The Web users and content were
almost doubled every a couple of months in 1995 and 1996.
· Strengthen relationships with customers and suppliers The web and telecommunication technology had fueled the
· Streamline business processes and administrative functions stock bubble in the roaring 90s and eventually pushed
Scope of E-Commerce NASDAQ over 5,000 in 2000 before it crashed down to 1,200 in
2002.
· Marketing, sales and sales promotion
XML and Web Services Besides the availability of technical
· Pre-sales, subcontracts, supply
infrastructures, the popularity of the Web is largely attributed to
· Financing and insurance the low cost of access and simplicity of HTML authoring,
· Commercial transactions: ordering, delivery, payment which are the obstacles of EDI development. The Internet and
· Product service and maintenance the Web have overcome the technical difficulty of EDI, but it

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has not solved the problem of slow development of e to visit the web store by clicking on a link or button located on
commerce standards. the web page (e.g., Buy Now, Shop Online, or an image of a
XML, as a meta markup language, provides a development tool shopping cart button are common entry points into a web
for defining format of data interchange in a wide variety of store). After choosing to visit the web store, the consumer is
business communities. Web Services offers a flexible and typically connected to an online transaction server located
effective architecture for the implementation. There is no doubt somewhere else on the internet which runs software commonly
that XML and the Web Services will shape the course of e referred to as a shopping cart application. The shopping cart
commerce in years to come application has been setup by the merchant to display all
products and services offered, as well as calculate pricing, taxes,
Concepts of Electronic Commerce shipping charges, etc.
Electronic commerce is narrowly defined as buying and selling
products/services over the Internet. The concept has been From there, the consumer decides that he wants to purchase
broadened to include all business activities of a sales cycle. The something, so he enters all pertinent credit card information
distinction between E-commerce and E-business has become and a sales order is produced. Depending on the ecommerce
blurred. Ecommerce and Electronic Commerce has been used implementation, the sales order can now take two totally
interchangeably, Electronic Business, however, has not been a different paths for confirming to the consumer that the order is
widely accepted terminology. officially placed.
David Kosiur described the Components of Electronic Scenario 1
Commerce in three dimensions (Processes, Institutions and The consumer’s credit card information goes directly through a
Networks) in his 1997 book Understanding Electronic Com- private gateway to a processing network, where the issuing and
merce. We expand Institutions as E-commerce Players, acquiring banks complete or deny the transaction. This generally
Networks as Technologies and add Markets as the fourth takes place in no more than 5-7 seconds and the consumer is
dimension of E-commerce. then informed that the order was received, the credit card was
authorized, and that the product will ultimately be shipped.
E- Commerce In Action
Scenario 2
The consumer’s entire order and credit card information is
electronically submitted back to the merchant’s server (usually
via email, FTP, or SSL connection) where the order can be
reviewed first and then approved for credit card authorization
through a processing network. The consumer then receives an
email shortly afterwards, confirming the order being received,
the credit card being authorized, and status on when the
product will exactly be shipped.
In both scenarios, the process is transparent to the consumer
and appears virtually the same. However, the first scenario is a
more simplistic method of setting up a shopping cart applica-
tion and does not take into consideration any back office issues
that may delay shipment (i.e., items out of stock, back orders,
orders submitted after office hours or during holidays, etc.).
ManageMore’s eCommerce Manager relies on the second
scenario to handle all of its ecommerce orders. This second
scenario keeps the consumer accurately informed throughout
the entire ordering process.
For the sake of this tutorial, we will assume an ecommerce
implementation that uses the second scenario mentioned
above.
There are several basic steps you will need to accomplish before
becoming Commerce Enabled.
· Getting a Merchant Bank Account
· Web Hosting
· Web Design Considerations
· Registering a Domain Name
How e-Commerce Works · Obtaining a Digital Certificate
The consumer first moves through the internet to the
Let us review each step in more detail below:
merchant’s web site. At the web site, the consumer is briefly
given an introduction to the product or services the merchant
offers. It is at this point that the consumer makes the decision

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Getting a Merchant Bank Account internet, a separate data line will not be necessary if you use
In order to be able to accept credit cards, you must apply for an the Intellicharge Interface for electronic payment.
account with a credit card merchant account provider. This can
Web Hosting
be relatively easy or somewhat difficult, depending on which Web hosting is a very important step in this process, as this is
country you live in, and the type of business you are running. how you gain a presence on the internet in the first place. There
In the past, many businesses would sign up for credit card are actually two scenarios that can be used for web hosting.
processing through their own commercial banking institutions. Scenario1 involves setting up and maintaining your own web
However, the internet has now made it simple to shop around
server, while Scenario 2 involves farming out all web hosting
for the best credit card discount rates from an endless amount
administration to an ISP. (Scenario 1 will not be discussed
of merchant account providers worldwide. A simple web
further in this article as it pertains to larger organizations which
search on “credit card processor” should be enough to get you
are not concerned with the high expense of running their own
started. Depending on how you process credit cards (especially if
web server, hiring permanent IT staff, dealing with security,
you plan on using Scenario 1 from the introduction), you may
etc.)An Internet Service Provider (ISP) is a company that
need to find a merchant account provider that specializes in
provides you with internet access and limited hard drive space
internet payment transactions.
on their web servers for hosting your web site. You will need to
When choosing a merchant account provider, the following
setup an account for internet access with the ISP of your choice.
should also be noted:
The following should be noted when searching for an Internet
1. In order for credit card authorization to be automatic from Service Provider:
within ManageMore, you must ensure that your merchant
account provider has credit card processors that connect with 1. Always try to find an ISP that can provide a local telephone
IC Verify™, PC Charge™, or AuthorizeNet™ (i.e. number for you to connect to the internet.
Intellicharge Interface) software. These products are sold 2. Choose an ISP that is known for having few interruptions of
separately from ManageMore and eliminate the need for service.
merchant terminal devices or separate time consuming steps 3. Choose an ISP that is known for good technical support and
to approve credit cards. has knowledgeable people familiar with ecommerce sites.
2. Your merchant account provider must allow you to handle 4. Choose an ISP that consistently has fast connection speeds.
non-swiped credit card transactions. This refers to 5. As with any company you do business with, make sure the
transactions where the customer is not present and only the ISP is reputable.
credit card number and expiration date are being used for Now, here is the part that gets a bit tricky to understand. The
approving the charges. online transaction providers that offer the actual web store itself
3. When choosing a merchant account provider, you should can sometimes be hosted by your same ISP or may require a
do a little research on the company’s reputation, years in completely different provider, referred to as a Commerce Service
business, and company size. Constantly changing to a new Provider (CSP). Many small businesses tend to choose CSP’s
merchant account provider when your old one goes out-of- for creating a web store because it gives them the flexibility of
business can be costly and time consuming. choosing a provider that offers competitive pricing and the best
4. Avoid merchant account providers that ask for a non- shopping cart application for their needs. Online transaction
refundable fee before you get approved. providers will usually provide one shopping cart solution they
5. Avoid merchant account providers that require 1 or 2 year feel is better than the many others that exist and differ by price,
contract terms. Since there are so many merchant account appearance, layout, functionality, and ease of use.
providers available, it doesn’t make sense to lock your The following should be noted when dealing with shopping
company into a commitment for any period of time.] cart applications:
6. Expect merchant account providers to have some form of a 1. Online transaction providers will either sell or rent you the
sign up fee after being approved only. These fees can come use of an online shopping cart application for your
in the form of an application fee, processing fee, software business. Be forewarned that purchasing an online
fee, etc. Typically expect to pay around $100 to $500 for shopping cart application is very expensive. Most
getting an account setup to accept credit cards and businesses will rent these online web store programs rather
sometimes electronic checks. than committing to such a steep investment.
7. You should be able to find a merchant account provider 2. Rental pricing for the use of shopping cart programs vary
that can offer you discount credit cards rates ranging from depending on number of transactions generated a month,
1.75% to 2.75% and no more than .25 cent per transaction. number of products listed on the shopping cart
If not, contact Intellisoft regarding our merchant account application, and the sophistication of the shopping cart
provider affiliates and the free Intellicharge Interface just for application itself.
signing up with them. 3. There are a lot of online transaction providers out there,
8. You will need a dedicated phone line or data line for and they all have varying packages. Deciding on a provider’s
processing credit cards and electronic checks. Note: If your
computer or local area network is already connected to the

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 package that fits your needs is perhaps the most important store will require you to have SSL before you can use their
aspect. services. Thankfully, for most people obtaining a digital
In the case of ManageMore, the eCommerce Manager module certificate is not a problem. For a minimal fee, one can usually use
was designed to work with specific shopping cart applications the certificate owned by the web hosting company where your
for proper retrieval and processing of web orders. If you plan page resides. If you are a larger company, however, you may
on using ManageMore’s eCommerce Manager module for the want to get your own digital certificate. A certificate costs about
back end office, it will be a requirement for your online transac- $125.00 and can be obtained from Thawte or Verisign.
tion provider to use one of the following shopping cart Conclusion
applications: Commerce can be a very rewarding venture, but it should not be
· SoftCart 4.x by Mercantec undertaken lightly. There is a lot of information to absorb. Here
· SoftCart 5.x by Mercantec are some additional tips on creating a successful Online Store:
For a list of known online transaction providers that offer the · If you know nothing about web design, it is probably a
shopping cart applications mentioned above, please contact good idea to hire a designer
Intellisoft. · Marketing your site is very important on the web. Here are
Web Design Considerations some useful tips:
With little knowledge of HTML and a lot of patience, you can i Submit your site to as many search engines as possible
probably create your own corporate web site with the help of ii Try finding web sites with similar themes and make
products like Microsoft FrontPage™ or DreamWeaver™. deals to create reciprocal links
However, when adding a web store to your web site, you may iii Put your URL in the signature file of your email and the
want to seek the help of professional web designers to make header of all business correspondence
the look and feel of your web store consistent with the rest of
iv Word of mouth is very powerful on the Net; tell all of
your corporate web site. Most shopping cart applications, like
your friends about your page
SoftCart by Mercantec, allow its templates to be modified just
for this purpose. In many cases, the same ISP or CSP you · Investigate the web sites that are possible rivals and
choose can provide web design and consultation. formulate a strategy for competing against them
· If you anticipate a lot of growth in the amount of orders
Registering a Domain Name
coming through your site, figure out how you are going to
If your business already has a corporate web site implemented,
cope with the increased load before you get swamped (In
then you probably already have a domain name and don’t need
other words, consider ManageMore eCommerce Manager
to read this section.Domain names are the names for
for your back end office control of web orders)
computers on the Internet that correspond to IP (Internet
protocol) numbers to route information to addresses on the Now that you know the basics, you should be able to make
Internet network. Domain names serve as a convenient way of some informed decisions about how to proceed. Remember that
locating information and people on the Internet. In layman you can ask for further advice from the ecommerce company
terms, will it be important to you, for customers to find your that you decide to employ.
web site by typing “123.123.456.456” or by typing something Notes
simple to remember like “www.mybiz.com?” Registering a
domain name is one of the most important decisions you can
make for your online identity. Your domain name says who you
are to your clients, your peers - the whole world.The basics for
registering a domain name are:1. Contact a domain name
registrar on the internet to register for a domain name. There
are many to choose from, just do a web search on “domain
name registrar” to get you started. 2. Select a unique domain
name you would like others to use for finding your web site.
One place to go for checking availability of a domain name is
www.whois.net3. Expect a registration fee of $10 - $100
annually for the central registrar to keep your domain name
active on the internet.There are many other questions that arise
when considering a domain name for your business that go
outside the scope of this tutorial
Obtaining a Digital Certificate
A digital certificate, also known as a SSL Server Certificate,
enables SSL (Secure Socket Layer encryption) on the web server.
SSL protects communications so you can take credit card orders
securely and ensure that hackers cannot eavesdrop on you. Any
ecommerce company that provides you with an online web

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