Download Chapter 04 PowerPoints

Commercializing the
Internet
Chapter 4
Learn how to…
• Define e-commerce.
• List the technological components
required for e-commerce.
• Define the payment models.
• Differentiate e-commerce solutions.
• Manage the development of an
e-commerce solution.
• List the issues with trading internationally.
Defining E-Commerce
What Is E-Commerce
• Electronic commerce (e-commerce) is the
integration of digital communications, data
management, and security capabilities
that allow organizations to exchange
information related to the sale of goods
and services.
Elements
• Digital communication
• Data management
• Security
Scenario
• A shopper browsers an online catalog and
places items desired into a virtual
shopping cart.
– Shoppers can add or take out items at any
time from their shopping cart.
• The shopper goes to the virtual checkout.
– The shopper decides on a delivery method.
– The shopper uses digital cash or e-cash
drawn from a digital wallet, a digital check,
or a regular credit card to pay for the
purchases.
Who Uses E-Commerce
Kinds of E-Commerce
• Business-to-consumer (B2C) model is
when an end user buys something from
a company’s online storefront.
• Business-to-business (B2B) model is
when companies conduct business
electronically between themselves.
– B2B2C is used when a business buys from
a wholesaler to sell to a consumer.
B2C Model
B2B Model
Enabling E-Commerce
Technologies
Critical Elements
• Communications
– A common digital language must be
understood.
• Security
– Consumers need to feel confident in trading
online.
• Data Management
– Transactions must be stored in a way that can
be audited and recover if there are outages.
EDI
• Electronic Data Interchange (EDI) is the
computerized exchange of business
information between trading partners over
computer networks.
– Standardized format that reduces cost and
saves time.
– Reduces errors.
– Speeds up transactions.
SET
• Secure Electronic Transactions (SET) is
an open standard for conducting secure
payment card transactions over the
Internet.
– SET uses encryption and digital certificates
from financial corporations.
– Merchants never see the customer’s credit
card number.
– For more info, visit
http://whatis.techtarget.com/definition/0,28989
3,sid9_gci214194,00.html.
XML Web Services
• A Web Service is a software system that
uses an XML protocol to support
interoperable machine-to-machine
interaction over a network.
– Computers can use different programming
languages.
– For more info, visit www.w3.org.
UDDI
• Universal Description, Discovery, and
Integration (UDDI) is an online yellow
pages directory of Web Services that
business computers can use to discover
and learn how to use the B2B services
offered by various companies over the
Internet.
– For more info, visit www.uddicentral.com
UDDI
WSDL
• The Web Service Description Language
(WSDL) is an XML language for identifying
the methods in a Web Service, defining
how those methods behave, and
instructing clients how to interact with the
service.
SOAP
• The Simple Object Access Protocol
(SOAP) is an XML language for exposing
the methods and properties of a Web
Service to a consumer, which is any
Web client authorized to interact with
the Web Service.
– For more info, visit
www.w3.org/2000/xp/Group.
Processing Payments Online
Cash Model
• The cash model uses a digital wallet on
the customer’s computer that contains
digital cash or tokens that the customer
uses to pay for goods and services
purchased online – called eCash.
– Online currency is paid by credit card, check,
or money order.
– For more info, visit
www.cryptologic.com/ecash
www.ecashdirect.co.uk.
Check Model
• The check model uses a digital
checkbook on the customer’s computer
that contains digital checks that the
customer uses to pay for goods and
services online.
– For more info, visit www.checkfree.com
– For example,
www.usps.com/paymentservices
Credit Model
• Credit cards can also be used to pay for
purchases online.
• However, there are risks in giving your credit
card number.
– If a merchant is not using secure methods, a hacker
could intercept your number.
– If a merchant maintains a database with your credit
card number in it, a hacker could potentially hack into
the database.
– Single-use credit cards are available where a different
credit card number is used for each transaction.
– See www.cardcops.com for info on credit card crime.
Smart Card Model
• A smart card is a credit-card sized plastic
card with an embedded computer chip and
memory that can store digital information.
– The computer chip can handle digitally signed
and encrypted transactions.
– See www.smartcardalliance.org.
– A new Subscriber Identity Module (SIM) will
lead to a convergence of e-commerce and
mobile phones.
Person-to-Person
• Since individuals are buying and selling
from each other, there is now customerto-customer (C2C) e-commerce.
• PayPal started a person-to-person
payment model.
– You can pay money to anyone with an
e-mail account.
– The buyer must have a PayPal account from
www.paypal.com
Person-to-Person
• PayPal continued…
– Buyers pay for purchases using PayPal; they
pay PayPal by credit card, bank account
debit, or a stored balance.
– PayPal makes money by charging a small
fee for each transaction.
Choosing an E-Commerce
Solution
Instant Storefronts
• An instant storefront is a
preprogrammed e-commerce system into
which you enter your catalog of products
and begin conducting business online.
– Online allows you to develop your storefront
online.
– Offline allows you to develop your storefront
offline and then upload it.
Instant Storefronts
• Some Instant Storefront sites are:
– www.shoppingcartsplus.com
– www.storefront.com
– www.ThriftEstore.com
– www.aacard.com
– www.kagi.com
– www.digibuy.com
Auctions
• eBay is the leading online auction.
– Search for the item you want.
– Buy the item now or place a bid.
– Pay for the item if you win the bid.
• Other auction sites are:
– http://auctions.yahoo.com
– http://creativeauction.com
– http://auctionaddict.com
• For more info, see
http://internetauctionlist.com
bCentral
• Microsoft bCentral’s e-commerce product
has been phased out. Use Commerce
Manager on Microsoft’s Small Business
Center Web site.
• To get an E-commerce account, go to
Microsoft’s Small Business Center at
www.microsoft.com/smallbusiness/product
s/online/cm/detail.mspx
– Scroll to the bottom of this Web site and
choose Start Commerce Manger Demo.
Commerce Manager
•
To use Commerce Manager, you need to:
1. Set up your account with credit card information and
company information, payment options, tax rates,
credit card security settings, shipping rules, and
privacy policy.
•
Include e-mail notifications to your customers and yourself.
2. Create departments for your products.
•
Then, add products and pictures individually or from an
Excel spreadsheet or Access database or any CSV file.
Commerce Manager
3. Set up your marketplaces.
•
•
Product Gallery provides your own personal
marketplace that looks how you want it to look.
Configure a shopping cart.
4. Process orders.
•
Customers use a simple online form when they
are ready to check out using 128-bit encryption
for security.
5. View orders at any time.
•
Print a shipping and billing invoice if you wish.
6. View reports in ten different ways.
Developing an In-House ECommerce System
In-House Solution
• Developing an in-house e-commerce
solution avoids the cost of commissions
and gives you greater control.
– However, you will need a team of people:
•
•
•
•
Web designers
Database engineers
Application programmers
Security officers
ADDIE
• ADDIE represents the five stages of
software development.
– Analysis: Task analysis into goals based on
business and customer needs
– Design: Uses a storyboard that shows what
will appear on each screen of the application
– Development: Banners, logos, programming
code, database development, Web site
creation
ADDIE
– Implementation: Pilot with a small number of
users initially
– Evaluation: Has the project met its goals?
• This model must continue to be used after
the initial project is
finished
– New features & products
– New capabilities
– Enhanced security
Project Management
• Project management includes these
fundamentals:
– Scheduling using milestones for each task
– Budgeting
– Evaluating risks
– Contingency planning
– Preventing scope creep (broadening the
project goals)
Project Management
– Defining roles of each team member
– Piloting to make sure the software works
– Reporting by each project member on their
progress
Regulating Copyrights,
Licenses, Patents, and
Trademarks
Copyright
• Article I, Section 8 of the United States
Constitution grants Congress the power
“to promote the progress of science and
useful arts, by securing for limited times
to authors and inventors the exclusive
right to their respective writings and
discoveries.”
Copyright Act of 1976
• The Copyright Act of 1976 defines and
allocates rights associated with “original
works of authorship fixed in any tangible
medium of expression, now known or later
developed, or otherwise communicated,
either directly or with the aid of a machine
or device.”
Copyright Penalties
• Civil copyright infringement penalties
range up to $100,000 per software title.
• A criminal violation’s fine goes up to
$250,000 and 5 years imprisonment.
• See www.siia.org for recent actions.
Web Pages
• Web pages are copyrighted by default.
• To add to your legal strength, include the
following on your Web page:
– Copyright © 20xx by your_name.
All rights reserved
Registering a Copyright
• Go to www.copyright.gov and choose
Literary Works.
• Download Form TX, complete it, and make
a copy for your own records.
• Mail the application and a printout of the
work with a $30 registration fee to the
Library of Congress, Copyright Office, 101
Independence Avenue, S.E., Washington,
D.C. 20559-6000
Fair Use
•
Notwithstanding the provisions of section 106
[which grants authors exclusive rights], the fair
use of a copyrighted work, including such use
by reproduction in copies or phonorecords or
by any other means specified by that section,
for purposes such as criticism, comment, news
reporting, teaching (including multiple copies
for classroom use), scholarship, or research, is
not an infringement of copyright.
Fair Use
The factors to be considered shall include:
1. The purpose and character of the use, including
whether such use is of a commercial nature or is
for nonprofit educational purposes.
2. The nature of the copyrighted work.
3. The amount and substantiality of the portion used
in relation to the copyrighted work as a whole.
4. The effect of the use upon the potential market for
or value of the copyrighted work.
–
For more info, see http://fairuse.stanford.edu
WIPO & DMCA
• The World Intellectual Property
Organization (WIPO) deals with
international copyright issues.
– See www.wipo.org for more information.
• The Digital Millennium Copyright Act
(DMCA) was used to bring the United
States into conformance with the WIPO
treaties with other countries.
TEACH Act
• The Technology Education and
Copyright Harmonization (TEACH) Act
extends the concept of Fair Use to
distance learning courses.
– Allows the use of reasonable and limited
portions of audiovisual works and sound
recordings.
– Permits educators to create digital copies for
such usage.
Licensing
• A license is a permission to use goods or
services provided by a third party who
owns the goods or provides the services.
– Software is not bought; it is licensed.
Types of Licenses
• Single-user licenses gives an individual the
right to use the software.
– Often that includes the right to install the software on
multiple computers provided only that one user is
using the software.
• Site licenses allow usage throughout the
workplace on multiple computers but usually
does not allow using it at home.
• Open source licenses make the source code
freely available but often you will have to pay for
technical support if needed.
– For more info, see www.opensource.org
Patents
• A patent is the granting to an inventor of a
property right for an invention to exclude
others from making, using, offering for
sale, or selling the invention in the United
States or “importing” the invention into the
United States.
– Provides the inventor an opportunity to profit
from the invention for a reasonable period of
time (i.e. 20 years) before the patent expires.
– All patents are online at www.uspto.gov
Compton’s Patent
• One of the most blatant cases of patent
abuse occurred when Compton
announced at the 1993 Fall COMDEX
convention that they had been awarded a
patent that would require all multimedia
developers to pay them royalties.
– This resulted in the rescinding the patent and
improvements by the patent office.
Unisys GIF Patent
• Unisys owns the patent on the
compression scheme used in the GIF
file format.
– In 1994, Unisys began charging a licensing
fee for using the GIF file format but backed
down after an uproar.
– They tried again in the late 1990s.
– As a result, the PNG patent-free replacement
for GIF was developed.
Eolas ‘906 Patent
• Covers the technology used by browsers
to launch automatically the appropriate
applet or plug-in to display embedded
content, such as a Flash animation, within
a hypermedia document.
– This patent is under review.
– For more info, go to
www.w3.org/2003/09/public-faq.html
Trademarks
• A trademark is a word, phrase, symbol, or
design, or a combination of words,
phrases, symbols, or designs, that
identifies and distinguishes the source of
the goods of one party from those of
others.
– Register trademarks via the Trademark
Electronic Application System (TEAS) at
www.uspto.gov/teas
Trading Internationally
Multiple Currencies
• If a customer purchases a product in a
country that differs from that of the
merchant, the customer needs to pay in a
foreign currency.
• Most of the major turnkey systems, such
as Microsoft bCentral, handle currency
conversion for you.
• Check out the international currency
calculator at www.bankrate.com
Shipping Overseas
• When shipping overseas, you need to
be careful not to violate any customs
regulations.
• Include shipping charges upfront in your
e-commerce transaction.
• Some companies that ship overseas are:
– www.fedex.com
– www.dhl.com
Language Issues
• For international e-commerce, use the
Unicode option for character encoding.
• There are several sites where you can
enter the text of a Web page in English
and have the page automatically
translated into a variety of foreign
languages.
– Always have someone who knows the
language double-check the translation.