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The Internet and e-commerce
Fundamentals of Information Technology
Session 7
The Internet
• The Internet is a global WAN – a network of
networks
• It is based on a client-server network model
Hundreds of thousands of web-servers
throughout the world provide resources and
services to millions of clients
• Communication between computers on the
Internet largely takes place using the TCP/IP
protocol, although other protocols, such as FTP,
are also used
Data transmission over
the Internet – IP and DNS
• Each computer on the Internet has its own unique IP
address (e.g. 193.61.29.155)
• Users can not possibly remember long, abstract strings
of numbers like IP addresses
• To make it easier to remember, a Domain Name
System (DNS) is used to convert IP addresses to
domain names
• The DNS has a hierarchical structure with several levels
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The root domain (Internet root domain)
Top-level domains (e.g. .edu, .com, .gov, etc.)
Second-level domains (e.g. Amazon, Birkbeck, Google)
Third level domains (sales, finance, Home Office)
Sending messages over
the Internet – IP and DNS
Internet root domain
*.*
ac.uk
edu
.ac.uk
bbk.ac.uk
amazon
dcs.bbk.ac.uk
mycomputer.dcs.bbk.ac.uk
193.61.29.155
org
birkbeck
gov
Home office
Top-level domain
Foreign
office
Second-level domain
Third-level domain
dcs
Internet services
• The Internet is the actual physical network infrastructure
• This infrastructure consists of servers, clients, network
devices and cables
• It is used to provide a range of services to users:
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Email
VoIP
Chat/Instant messaging
File Transfer Protocol (FTP)
World Wide Web (the Web)
• Note that the Internet and the Web are not synonymous
The World Wide Web
• The World Wide Web is a system of inter-linked
hypertext documents accessed via the Internet
Linear
Node
Node
link
link
Node
link
Hypertext
link
Node
Node
Node
The World Wide Web
• Navigation between pages (nodes) on the Web is
achieved by adding hyperlinks to web pages
• The Web provides a way of locating and acquiring
different kinds of media, including:
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Graphics
Video
Animation
Documents (e.g. *.doc, *.pdf, *.ppt)
Navigating the
World Wide Web – URLs
• Underlying a hyperlink is a Uniform Resource
Locator (URL)
• A URL tells a web browser (e.g. Firefox, Internet
Explorer) where to look for a specified resource
• Clicking a hyperlink sends a HTTP request to the host
web server (HTTP is the is the transfer protocol used for
the transfer of pages on the Web. It works in
conjunction with TCP/IP)
• The host web server then sends back a response using
the unique IP address of the requesting computer as the
recipient address
Navigating the
World Wide Web – URLs
http://www.amazon.com/books/345223.html
packet data
Host Server
(Amazon.com)
The
Internet
Network server
Requesting Computer
http request
including IP address
http://www.amazon.com/books/345223.html
• HTTP works with TCP/IP to send requests and responses
Navigating the
World Wide Web – URLs
• A typical URL contains:
– A reference to the transfer protocol being used
– A domain name
– A reference to any sub-directory in which a requested resource
resides on the web server
– The name of the resource being requested
Domain name
Resource being requested
http://www.amazon.com/books/classics.html
Transfer protocol
Directory on the server
Intranets
• An intranet is a private network that runs over a private
LAN belonging to a business or other organisation
• The LAN is the physical infrastructure; the intranet is
the collection of hyperlinked resources that are made
available over the LAN
• Intranets are used to make private or sensitive
organisational data available to organisational members,
but to shield it from outsiders
• Intranets require authentication to enter
• Check out and login to the SCSIS intranet at:
http://vili.dcs.bbk.ac.uk/intranet/
Intranets
Public web pages only
Public web pages only
External client
External client
The
Internet
Public web pages and
private intranet pages
Company
client
LAN
Web server
Company
client
Company
client
Company
client
Valid authentication allows access
to intranet pages from inside or
outside the company network
Company
client Public web pages and
private intranet pages
E-commerce
• E-commerce involves buying or selling goods or
services over the Internet. This can include amongst
other things:
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Concrete goods (e.g. cars, furniture, jewellery, etc)
Virtual goods (e.g. access to Web content, digital music)
Concrete services (financial, insurance, etc.)
Digital services (e.g. advertising, internet service provision, webhosting, etc., music downloads)
• There are three main categories of e-commerce:
– Business-to-customer (B2C)
– Business-to-business (B2B)
– Customer-to-customer (C2C)
Benefits of e-commerce
(for customers)
•
•
•
•
•
•
Access to a wider choice of goods and services
Better product information (price comparison sites)
Better access to customer service
No need to travel for purchases
No time restrictions on doing business
Cheaper goods due to disintermediation between self
and vendor
Benefits of e-commerce
(for customers)
• Disintermediation removes middlemen and allows
customers to aquire goods from manufacturers or
wholesalers rather than from retailers. This can
significantly reduce costs.
Cost
Manufacturer
Wholesaler
Retailer
Customer
£50
Manufacturer
Wholesaler
Partial disintermediation
Customer
£40
Customer
£30
Manufacturer
Complete disintermediation
Benefits of e-commerce
(for businesses)
• E-commerce allows vendors to reduce their overheads
and pass on savings to customers
– Savings are made by:
• reducing the need for expensive commercial real estate (e.g. high
street shops)
• Reducing the number of staff required to process a transaction
• Reducing the time needed to process a transaction
• E-commerce also expands a company’s reach. The
Internet allows a global reach beyond geographical
boundaries
• E-commerce allows business to take place outside of
normal time constraints (e.g. 24/7)
E-commerce business models
• E-commerce is conducted using several different
business models. These include:
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Virtual storefront
Online marketplace
Transaction broker
Information broker
Content provider
Online service provider
Portal
E-commerce business models
• Virtual storefront
– Sells physical or digital products to individuals or businesses
• Online marketplace
– Provides a digital environment where users can buy and sell
products from one another
• Transaction broker
– Processes sales transactions and charges a fee each time a
transaction occurs
• Information broker
– Provides product pricing, quality and availability information to
users
E-commerce business models
• Content provider
– Generates income by providing digital content such as music,
video, etc.
• Online service provider
– Provides online services for users. Gets income from
subscriptions fees, as well as advertising and/or collecting
marketing information from users
• Portal
– Provides focal point of access for users seeking a particular
category of product or service
E-commerce payment systems
• Credit or debit cards account for the vast majority of
transaction payments on the Web
• Other online payment systems include:
– Digital wallet (a system of payment that securely stores
credit/debit card details so that they do not have to be
repeatedly entered)
– Micropayment system (a system that allows for payments too
small for debit/credit cards to be made online)
– Stored value payment systems (allows users to pay from a prepaid account)
– Peer-to-peer payment systems (Allows users to credit a third
party internet service so that payments can be made between
individuals who do not have the ability to process credit/debit
card transactions)
E-commerce revenue generation
methods
• E-commerce sites generate revenue in several different
ways
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Sale of goods services or information
Advertising
Commission on transactions
Commission on referrals
Sale of customer information
Gambling
FIT Session 7 – Activities
• Now do
– Activity 7 – The internet and e-commerce