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Supply Chain Management (SCM) is one of the key applications of B2B EC.
Intranet and especially extranet networks are the platforms to implement intra-organizational and
interorganizational ECs respectively.
In company-centric B2B, one company does either all the selling (sell-side marketplace) and/or all of the
buying (buy-side marketplace).
Business Models of B2B EC
Sell-side marketplace (one-to-many)
Buy-side marketplace (many-to-one)
Distributed B2B uses many-to-many marketplaces—the exchange, auctions
When any supply chain partners use Web-based systems for activities other than buying and seling, e.g.
communication, design, planning, information sharing, and information discovery, they’re involved in
collaborative commerce, or c-commerce.
Some of the benefits of sell-side marketplaces include:
Reduced order processing costs and paperwork
Reduced errors in ordering and product configuration
Increased speed to ordering cycle
Reduces buyers’ search costs
Reduces sellers’ search costs
Reduced logistics costs
Ability to customize products
The three major sell-side B2B models are:
(1) selling from electronic catalogs,
(2) forward auctions, and
(3) one-to-one (alliance-based) selling.
Forward auctions are used by sellers to dispose of goods quickly. Bidding increases until there are no
more bids. The highest price offered wins the auction.
A reverse auction is used by buyers to collect bids from suppliers. In a reverse auction the lowest bid
usually wins.
B2B services provide support for B2B (and B2C) EC. The major EC service areas are:
e-infrastructure (networks, HW, SW)
e-process (e-payment, order fulfillment)
e-markets (providing and managing the EC marketspace)
e-content (e-market content management)
e-communities (partnership relationship management – PRM - a set of services and technologies
designed to help manage B2B relationships)
e-services (directory services and search engines)
The four steps of the EC application/service development are:
(1) EC strategy formulation,
(2) application design,
(3) building (or buying) the application, and
(4) hosting, operating, and maintaining the EC.
Many EC enterprises outsource the B2B applications and services, The major factors driving the
outsourcing are:
A desire to concentrate on core business
The need to have high quality services and running them rapidly
Lack of expertise (experience and resources) for many of the required support services
High costs for in-house options
Inability to keep up with rapidly fluctuating demands
Also, starting EC enterprises often use serfices of an infomediary - a business that collects data about
consumer behavior, analyzes and repackages it, and sells the resulting information for marketing and
profiling purposes, or Internet incubators - are companies that specialize in the development of EC
initiatives. They usually provide know how and start-up funding. Once the new company is running
smoothly the incubator moves on, usually leaving behind a small staff.
A Web host provides space on their servers for its client’s Web sites. The Web host manages the
technical infrastructure and may provide value added services such as Web site design.
Edutainment is a combination of education, entertainment, and games.
Information brokers pass information from suppliers to customers. Travel agents are a good example.
Online travel agencies provide the following major services: providing general travel information,
reserving and purchasing tickets, accommodations, and entertainment. Many also provide online specific
services such as: fare comparison tools, currency conversion, maps and directions, and chat room and
bulletin boards.
There are three main limitations to online travel services:
(1) many people do not use the Internet,
(2) use of online travel services can be difficult and time consuming, and
(3) complex trips require specialized knowledge and arrangements, which must be done by a
human travel agent.
Another example of online servicing would be electronic job market.
The major advantages to the candidate are:
Ability to find information on a large number of jobs worldwide.
Ability to communicate quickly with potential employers.
Ability to write and post resumes for large-volume distribution.
Ability to search for jobs quickly from any place at any time.
Ability to obtain several support services at no cost.
The major advantages for employers are:
Ability to advertise to a large numbers of job seekers.
Ability to save on advertisement costs.
Ability to lower the cost of processing applications (using electronic application forms).
Ability to provide greater equal opportunity for job seekers.
Ability to find highly skilled employees.
The various types of online publishing include:
online-archive approach,
new-medium approach, and
dynamic or just-in-time approach.
E-books are regular books that are offered in electronic form. A major advantage to the publisher is that
e-books can be distributed at a lower cost than traditional books (no binding or physical distribution is
needed). The advantages to the consumer are: the ability to instantly download books, the greater
availability of rare books, and the ability to carry many books on a single book reader device.
1. Intrabusiness is EC done within an organization. This type of EC utilizes Intranets and P2P architecture.
2. An intranet is a corporate internal network that is constructed with Internet protocols and tools. A
corporate portal is a personalized, single point of access through a Web browser to critical business
information located inside and outside of an organization.
3. Peer-to-peer (P2P) computer architecture is a type of network in which each workstation (or PC) has
similar capabilities. As peers, the computers share data, processing, and devices with each other. In P2P
the computers communicate directly with each other, rather than through a central server.
4. The major categories of Intrabusiness EC are:
a. business to employees (B2E) - some examples include: ordering of supplies, dissemination of
business information, and managing benefits,
b. among units within the business, and
c. among employees in the same business.
The major types of e-government are: government to citizen (G2C), electronic benefit transfer (EBT),
government to business (G2B), e-procurement, e-auctions, government to government (G2G), and
government to employees (G2E).
M-commerce refers to any e-commerce type done in a wireless environment.
The attributes of m-commerce are: mobility, broad reachability, convenience, and fast and easy
localization of products and services via wireless networks.
M-commerce drivers include:
widespread availability of devices,
no need for a PC - the handset culture,
vendors’ declining prices,
improvement in wireless bandwidth.
HW used in M-commerce are:
PDAs (personal digital assistants, also known as palm pads or handheld computers).
Notebooks equipped with wireless access device
Cell phones/Smart phones (cells with WAP microprocessor for wireless Web access, eventually
GPS services)
WAP, Wireless application protocol, is a set of communication protocols designed to enable different
kinds of wireless devices to talk to a server installed on a mobile network, so users can access the
Internet. It standardizes developments across different wireless technologies worldwide. It was designed
especially for small screens and limited bandwidth.
Bluetooth is a Wireless Personal Area Network (WPAN) standard backed by most major corporations
in the world. It is deployed by placing a radio chip and special software into the devices that you want to
communicate with each other. Bluetooth-equipped devices can automatically communicate with each
other when they come into range.
L-commerce is location-based M-commerce (when mobile operators know where a specific device is
located (through GPS or via cell information) they can provide location specific services and information.
The four parties involved are: the issuer, the customer, the merchant and the regulator.
PAIN stands for privacy, authentication, integrity, and nonrepudiation.
The factors affecting the success of an e-payment method include: independence, interoperability and
portability, security, anonymity, divisibility, ease of use, and transaction fees.
The merchant.
PKI stands for public key infrastructure.
The four basic parts of encryption are: the plaintext, the ciphertext, the encryption algorithm, and the
In a symmetric key system, the same key is used to encode and decode the message. In a public key
system there are two keys. One key, the public key, is used to encrypt messages and another key, the
private key, is used to decrypt messages.
The strength of an encryption key is determined by its length measured in bits.
A digital signature uses the following six steps (see figure 14-4): (1) create the message, (2) hash the
message, (3) encrypt the hash file using your private key, (4) send the encrypted hash file to the recipient,
(5) the recipient hashes the message, (6) the recipient uses your public key to decrypt the message.
The Electronic Signatures in Global and National Commerce Act.
Digital certificates are issued by third parties known as certificate authorities.
SSL, secure socket layer, uses certificates for authentication and encryption for privacy. It was renamed
TSL, transport layer security. IPSec secures all the traffic between two computers using TCP/IP for
communications, whereas SSL secures specific traffic such as Web communications. With IPSec
everything is secure whether you want it to be or not. With SSL you can selectively secure specific
communications. This requires less computer and network resources. IPSec can only be used to secure
servers, whereas SSL can authenticate clients and servers. Finally, the major Web browsers and Web
servers handle SSL automatically. The bottom line is that SSL is widely deployed and IPSec is not.
Credit cards provide the holder with an actual line of credit, charge and debit cards do not. With credit
and charge cards payment is made when a monthly statement is received. With debit cards the funds are
usually transferred within two days.
The key players in the electronic credit card system are cardholder, merchant, card issuer, acquirer, and
card brand.
The main security risk is that a customer’s credit card number may be stolen. This may occur while the
data is in transmission or it may be stolen from the merchant’s server.
The benefits of using a purchase card include: cost savings, productivity gains, bill consolidation,
payment reconciliation, preferred pricing, and management reports.
The basic types of smart card technologies are:
 Contact-type IC card: traditional IC chip is on a plastic card that can be read and written by slipping it
into the reader’s slot.
 Contactless-type IC card: remote sensing card without physical contact. There are two types
depending upon the distance–short range (less than a foot) and longer range (up to 100 feet).
 Hybrid card: one contact-type and one contactless-type chip on a plastic card without sharing
 Combi-card: Share memory with both contact and contactless uses.
MultOS supports C and Java. JavaCard supports a subset of Java. Microsoft Windows for smart cards
supports Visual Basic and C++.
Some of the major applications of smart cards include: loyalty card programs, financial, information
technology, health care, transportation, and identification.
Micropayment is the payment of small amounts. E-cash is a typical method of micropayment.
Some of the barriers include: having to download special software, the hassle of establishing an account,
and the need to reach critical mass.
Echarge is another alternative.
Stored-value cards allow users to “download” cash onto the card and use the card like cash at
participating merchants. Some places where stored-value cards are used include: fast food restaurants,
vending machines, gas stations, parking garages, parking meters and video stores.
A user must first establish an account and add money to it. A user makes a payment by accessing his or
her account and inputting the relevant information including the recipient’s e-mail address. The recipient
will receive an e-mail with a link to PayPal. Once the recipient creates an account the money is
transferred to it.
MICR are magnetic ink characters that appear at the bottom of checks.
When the consumer decides to pay by e-check he or she enters the routing number, account number, and
check number from the bottom of the physical check. This information is then sent to the Automated
Clearinghouse Network (ACH) and to an independent verification company (such as Equifax). The
verification company checks the data, guarantees the payment, and sends an acknowledgement to the
vendor. The order is then processed and the check is cleared through ACH within a few days.
One of the main benefits is the ability to use e-checks in situations where the amounts involved are too
large for credit cards. In addition, e-checks allow small and medium-sized businesses to leverage
electronic payment systems.
FSML is a special markup language that uses tags much like HTML. The tags are used to create
electronic payment messages that include the specifics of electronic checks, ACH payment authorizations,
ATM network transaction authorizations, and variations of a check, such as a postal money order or gift
The U.S. Treasury issues over 857 million checks per year. By using e-checks the U.S. Treasury can save
money and increase its payment and cash flow options.
There are two types of e-billing. In the first, the customer receives the bill directly from the vendor. In
the second type, a consolidator receives all of a customer’s bills and bundles them for presentation and
payment. In either case, the customer must establish an account (with the vendor or consolidator). The
customer is presented with the bill electronically. The customer can then make payment electronically via
the established account.
The goal of application development is to create applications and implement them.
The major options for EC development are: buy, lease, or build in-house.
An application server provider (ASP) is an agent or vendor who assembles the functions needed by
enterprises and packages them with outsourced development, operation, maintenance, and other services.
From the buyers perspective a storefront should have the ability to:
Discover, search for, and compare products for purchase using e-catalogs.
Select a product to be purchased and negotiate or determine its total price using search and
comparison agents.
Evaluate products and services.
Place an order for desired products using a shopping cart.
Pay for the ordered products, usually through some form of credit.
Have their order confirmed, ensuring that the desired product is available (confirmation facility).
From the sellers perspective the storefront needs to:
 Include a guest book for visitors to make comments or request to be on a mailing list.
 Verify their credit and approve their purchase through a credit verification system.
 Get answers to customer questions, or contact a Web-based call center.
 Have their orders processed (back-end services).
 Arrange for delivery with a tracking system.
 View a personalized page with a record of past purchases.
 Verify that the product has been shipped using a tracking system.
 Request post-sale support or provide feedback to the seller through a communication system.
 View all of the listed features in a secure user-friendly environment.
 Create an auction mechanism.
 Provide content update; combine content and product information.
 Create the capability for cross-sell and up-sell.
 Provide language translation if needed.
 Connect to inventory management modules.