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ECOMMERCE

Prabha Susy Mathew


Prabhasm@hindustanuinv.ac.in

OF TOPICS
Networks and Commercial Transactions
Internet and Other Novelties
Electronic Transactions Today
Commercial Transactions -Establishing
Establishing Trust
Internet Environment - Internet Advantage - World Wide Web

LEARNING OUTCOMES:
Define the Internet and its related technologies
Explain how the Internet has evolved
Identify the distinguishing characteristics of the Internet.
Summarize the popular Internet services/ applications.
Describe E-Commerce and its types

COMPUTER NETWORKS
A computer network is two or more computers connected
together using a telecommunication system for the purpose of
communicating and sharing resources.
Need for Network:
Overcome geographic limits
Access remote data
Separate clients and server
Goal:
Universal Communication

CLIENT-SERVER MODEL
A network with two clients and one server
Server: store data on some powerful computer
Client: access data on server and process locally on a simpler machine

CLIENT-SERVER MODEL
A network with two clients and one server
Server: store data on some powerful computer
Client: access data on server and process locally on a simpler machine
The client-server model involves requests and replies
Examples
e-mail
Video conferencing
File downloading
Instant messaging
Chatting

TYPES OF NETWORKS
PAN:A
PAN:A personal area network is a computer network (CN) used for communication
among computer devices (including telephones and personal digital assistants) close to
one person
Technologies: USB and Bluetooth (wireless)
LAN:A
LAN:A local area network is a CN covering a small geographic area, like a home, office,
or group of buildings
Technologies: Ethernet (wired) or Wi-Fi
Fi (wireless)
MAN:
MAN: Metropolitan Area Networks are large CNs usually spanning a city
Technologies :Ethernet (wired) or WiMAX (wireless)
WAN:
WAN: Wide Area Network is a CN that covers a broad area such as cross metropolitan,
regional, or national boundaries. Examples :Internet
Wireless Technologies: GPRS, GSM.

INTERNET
Internet is a network formed by the co-operative
co
interconnection of a large
number of computer networks. i.e Network of networks.
Many networks exists in the world, in order to establish a communication
between to "different" networks there are gateways
Internet uses the standard Internet Protocol TCP / IP.
Every computer in internet is
identified by a unique IP address.

EVOLUTION OF INTERNET
1950s -ARPA (Advanced Research Projects Agency)
1970 ARPANET creates precursor to Transmission Control Protocol (TCP)
1971 - Universities added to net, Telnet and FTP are available
1972 - First electronic mail message sent
1973- ARPANET connected to England and Norway
1974- TCP starts being used for communicating across a system of networks
1982- US DoD starts building defense data networks based on ARPANET technology
1983-ARPANET splits into ARPANET and MILNET
1992-Internet links more that 17,000 networks in 33 countries; 3 million hosts
1993-World Wide Web is launched
1995-Interconnected network providers start offering service , about 30 million users

ARCHITECTURE OF THE INTERNET

ARCHITECTURE OF THE INTERNET


The Internet backbone refers to the principal data routes between large, strategically
interconnected networks and core routers on the Internet. AT&T Inc., MCI, Sprint, and
CenturyLink own some of the largest Internet backbone networks. These backbone providers
sell their services to Internet service providers. For instance, MCI provides backbone services as
well as internet access to individuals and other local access providers.
Internet service Providers refers to a company that provides Internet services, including
personal and business access to the Internet.
These service providers offer a variety of technologies and services, including:
Internet access for consumers and organizations.
Network management, system integration, and backbone access services for other service
providers.
Client and server software for navigating and publishing content on the internet.
Payment systems for online purchases.

COMPONENTS OF INTERNET NETWORK ARCHITECTURE:


Satellite: Satellite plays a vital role in catching and distributing the signals over the network and the users use the
internet network to search different types of information at any time.
Network Adapters: There are different types of network adapters that are used to configure or setup the internet
technology on your operating system. Some common network adapters that are used for access of the internet are
LAN cards or modems etc.
Routers: It is defined as the device that is used to transmit data from one place to another in the form of packets
that are called as data packets is known as router. These data packets are also called data gram.
Access Points: A special type of routing device that is used to transmit the data between wired and wireless
networking device is called as AP. It is often connected with the help of wired devices such as Ethernet. It only
transmits or transfers the data between wireless internet technology and wired internet network technology by using
infra structure mode of network.
Clients: Any kind of device such as personal computers, Note books, or any kind of mobile devices which are inter
linked with wireless network area referred as a client of internet network architecture.
Bridges: A special type of connectors which is used to establish connections between wired network devices such as
Ethernet and different wireless networks such as wireless LAN. It is called as bridge. It acts as a point of control in
internet network architecture.

DOMAIN NAME SYSTEM


Domain Name System helps to resolve the host name to an address. It uses a hierarchical naming scheme and
distributed database of IP addresses and associated names
IP Address
IP address is a unique logical address assigned to a machine over the network. An IP address exhibits the
following properties:
IP address is the unique address assigned to each host present on Internet.
IP address is 32 bits (4 bytes) long.
IP address consists of two components: network component and host component.
Each of the 4 bytes is represented by a number from 0 to 255, separated with dots. For example 137.170.4.124
Uniform Resource Locator (URL) refers to a web address which uniquely identifies a document over the internet

DOMAIN NAME SYSTEM ARCHITECTURE


The Domain name system comprises of Domain Names, Domain Name
Space, Name Server that have been described below:
Domain Names
Domain Name is a symbolic string associated with an IP address. There
are several domain names available; some of them are generic such as
com, edu, gov, net etc, while some country level domain names such as
au, in, za, us etc.
Domain Name Space
The domain name space refers a hierarchy in the internet naming
structure. This hierarchy has multiple levels (from 0 to 127), with a root at
the top. The following diagram shows the domain name space hierarchy:

ADVANTAGES OF INTERNET
Global Audience
Operates 24 hours, 7 days a week
Relatively Inexpensive
Product Advertising
Distribute Product Catalogs
Online Surveys
Announcements
Provide Technical Support
Create Online Discussion Forums
Obtain Customer Feedback
Powerful Content Publishing Tools
Multimedia
Formatting Capabilities

APPLICATIONS OF INTERNET
1. Communication:
2. searches:
3. Health and medicine:
4. Entertainment:
5. Shopping: Internet is also used for online shopping.
6. Stock market updates: Several websites like ndtvprofit.com, moneypore.com, provide information regarding
investment
7. Research: a large number of people are using internet for research purposes.
8. E-Commerce
9. Video conferencing, Chatting, Mailing, etc.

INTERNET SERVICES
Internet Services allows us to access huge amount of information such as text, graphics, sound and software over the
internet. Following diagram shows the four different categories of Internet Services.

WORLD WIDE WEB


World Wide Web was created by Timothy Berners Lee in 1989 at CERN in Geneva.
World Wide Web came into existence as a proposal by him, to allow researchers to work together effectively and
efficiently at CERN. Eventually it became World Wide Web.
WWW is also known as W3. It offers a way to access documents spread over the several servers over the internet.
These documents may contain texts, graphics, audio, video, hyperlinks. The hyperlinks allow the users to navigate
between the documents.
The following diagram briefly defines evolution of World Wide Web:

WORLD WIDE WEB OPERATION


WWW works on client- server approach. Following steps explains how the web works:
User enters the URL of the web page in the address bar of web browser.
Then browser requests the Domain Name Server for the IP address corresponding to the domain name
On receiving IP address, browser sends the request for web page to the web server using HTTP protocol which
specifies the way the browser and web server communicates.
Then web server receives request using HTTP protocol and checks its search for the requested web page. If found it
returns it back to the web browser and close the HTTP connection.
Theb the web browser receives the web page, It interprets it and display the contents of web page in web browsers
window.

WORLD WIDE WEB STANDARDS


1.The www is defined by handful of protocol specifications.
specifications
2.Software developers use these specifications to implements the web browser & web server
programs.
3. browser HTTP Server.. Interaction between server and browser are made through HTTP.
www is a client server system.
Content is held by web servers and requested by clients of web browsers.
4.URL(Uniform Resource Locator) protocol specifies how individual resources( files, documents
or even a specific location of a document) are to be identified with www.
www
5.Web browsers use these URL in HTTP requests to remote servers
6.Web documents stored on the server that have been specially tagged using HTML tags.
7.Tags allows different parts of a document to behave differently.
differently Most important are the abilities
of text & graphics to behave as pointers to other parts of a document.
document

WORLD WIDE WEB STANDARDS


Web Page: A document on the web is called a webpage.
Home Page: The first page in a series of related documents or a site is called a homepage.
Browser: A browser is a software program loaded on a pc that allows the user to read or access
information stored on the Internet. The browser takes the user instructions and converts them
into a language and a format that can be sent to remote site and executed.
Web server:
A web server is the destination point on the Internet to offer web services, a computer must be
connected to the Internet, be running a web server program and have web documents available.

COMMERCIAL TRANSACTIONS
"Electronic commerce" or "e-commerce"" refers to all commercial transactions in which one or more of the following
stages are processed electronically:
Advertisement
Selection
Ordering
Payment
Delivery
Use

DRIVERS
T

1.Organizational culture attitudes to research and development (R&D); its


willingness to innovate and use technology to achieve objectives.
objectives
2. Commercial benets in terms of cost savings and improved efficiency that impact
on the nancial performance of the rm.
3. Skilled and committed workforce that understands, is willing and able to
implement new technologies and processes.
4.. Requirements of customers and suppliers in terms of product and service
demand and supply.
5. Competition ensuring the organisation stays ahead of or at least keeps up with
competitors and industry leaders.
6. Digital revolution- It provides a global platform over which people and
organizations interact, communicate, collaborate and search for information. The
digital revolution accelerates EC mainly by providing competitive advantage to
organizations

DRIVERS
7. Anytime, anyone, anywhere-The facility that internet provides that is it can be
accessed from anywhere 24 hours a day and 7 hours a week.

T 8. Changes in Organization- The changing need of organization towards Outsourcing

and demand for cross functional business process. The trend is towards partnering
owners and managers across departments to develop a chain of relationships that
adds value to the enterprise.
9. Increasing pressure of Operating cost/profit margin- Global competition and the
proliferation of products and services worldwide have added unusual pressure on
operating costs and profit margins.
10. Demand for customized products & servicesservices Todays customers are collectively
higher quality and better performance, including a customized way of producing,
delivering and paying for goods and services.
services
11. Cycle time reduction- Shortening the time it takes for a business to complete a
productive activity from its beginning to end.
end

TYPES
T

DISADVANTAGES OF
Communication: There is a wide range of opportunities to read and/or tamper
with the communication.

Component security: All the components which are connected to the internet Component
whether a user PC or a retailer's server - must be adequately protected
against possible attacks.
Establishment of identity: Establishment of the identity of the persons one is
communicating with as it is easy to falsify.
Software development industry is still evolving and keeps changing rapidly.
In many countries, network bandwidth might cause an issue as there is
insufficient telecommunication bandwidth available.

DISADVANTAGES OF
Sometimes,
Sometimes, it becomes difficult to integrate E-Commerce
E
software or website
with the existing application or databases.
Initial
Initial cost: The cost of creating / building E-Commerce
E
application in-house may
be very high. There could be delay in launching the E-Commerce
E
application due to
mistakes, lack of experience.

User resistance: User may not trust the site being unknown faceless seller. Such
mistrust makes it difficult to make user switch from physical stores to online/virtual
stores.
Security
Security / Privacy: Difficult to ensure security or privacy on online transactions.
Lack
Lack of touch or feel of products during online shopping.
E-Commerce
Commerce applications are still evolving and changing rapidly.
Internet
Internet access is still not cheaper and is inconvenient to use for many potential
customers like one living in remote villages.

ADVANTAGES OF
World
World Wide customer base at a very low cost
Ability to reach new markets

TIncreased purchasing opportunities


More efficient (electronic payments, telecommuting, etc.
etc
Buying/selling a variety of goods and services from one's home or business
Anywhere, anytime transaction
Order processing cost reduced
Electronic funds transfer faster
Supply chain management is simpler, faster, and cheaper using ecommerce Can order from several vendors and monitor supplies

NETWORKS AND ELECTRONIC TRANSACTIONS TODAY


Earlier Days
Broadcasting network, particularly television was used to market products (but
orders cannot be placed using television) one way approach.
orders

Telephone lines were used for many by consumers and merchants for business
transactions(placing orders,etc)
Payments have been made using credit cards and cheques, etc.
Highly sensitive business transactions have been processed through ATM network.
Present Days
Buying and selling of products in electronic market place will be as simple and
trusted as buying by phone or in person.

NETWORKS AND ELECTRONIC TRANSACTIONS TODAY


Retail Store
Before purchase can be made from a retail store, a customer must enter it.

TMost shops are open to public and customer can walk in.

Merchant may control access to the goods it offers in several ways


It can sell to all comers through an open store front
Selling to a certain clientele (wholesalers selling to resellers only)
Doing business only with referred customers.
Degree of restrictions a merchant make on his product will depend upon his business.

Customer choice of doing a transaction(buying a product)


Whether the establishment carries the product being sought.
Is it reliable establishment?
Payment method displayed on the stickers of the door(one criteria)

ESTABLISHING TRUST
Both
Both customer and merchant each establish a level of trust with each other.

T
After confinement from both parties a higher level of trust is required.
Issues Concerned By Both Buyer And Seller
Many products have distribution limits(to whom It can be given and whom not)e.g.
Prescription drugs may not be dispensed to anyone without a legitimate prescription.
Firearms and Ammunition are subject to a wide range of restrictions
Establishing trust between partners in a commercial transaction taking placing in
public network is very difficult.

ESTABLISHING TRUST
Merchant
Merchant can judge in person during transaction

TOOnline
nline transaction offers no opportunity for judgement.
Correlating identities on the Internet with actual individuals is difficult.
E-Merchants cannot afford to trust everyone or even anyone.
Customer
How long a webpage of a company will exist?
Constructing a counterfeit webpage representing itself as a part of large
corporation

ESTABLISHING TRUST
Trust is required between buyers and sellers.
Negotiating A Deal (Try To Reach An Agreement By Discussion)

TTrivial
Trivial matters in retail stores1.Determining the item to be purchased.2.Price to be
charged.
Common method adopted:
1.Selects the desired item.
2.Price clearly marked in the product.
3.Desired product not available (color,, size, flavor version is not instock)
4.Retailer may have to order the product or offer an alternative deal.
deal
5.Special price is also applied for products that are special but out of stock.
Ordering products over the Internet does not offer

ESTABLISHING TRUST
Ordering products over the Internet does not offer
a. An explicit method to reference the offering price

Tbb.. Nor an explicit method to reference the original order.


Payment & Settlement-Heart of any transaction is the exchange of values(Money).
Normal Procedure
1.Purchase item in person.
2.Buyers give a cash or cheques or credit card.
card
3.Receives the product in return and a receipt.
receipt
Translating these actions into electronic form takes some procedures.
procedures
There are mechanisms which allow payment information to be kept private by encrypting it
by keeping it entirely offline or by using third parties to settle transactions.

ESTABLISHING TRUST
In Internet transactions

1. Unless product available digitally, the buyer has to trust the seller until goods are
delivered.

2.Customer can avoid problems by patronizing trusted Internet vendors (a person


giving financial or other support to a person or organization)
3.To use a major credit card company that will back up the consumer in the event of
a problem with the vendor.
Vendor takes smaller risk. When selling online since credit cards are
authenticated through automated connections. Payment vehicles and currencies:
A great deal of attention is focused on the online transaction.1. Digital currencies
are developed.2.Digital signature technologies permit the authentication and
certification of digital transmitted documents.

ESTABLISHING TRUST
Products of delivery:
1.Any products, food football or even a computer can be delivered physically to the
customer.

2.Greater level of trust is required between merchant and customer.


customer
3.Customer must wait until the product is delivered.

MINUTE PAPER
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What would you still like to know more about?

Other Comments..

REFERENCES
http://nptel.ac.in/courses/106105084/1
Nptel IIT kharagpur notes
http://www.tutorialspoint.com/internet technologies
http://www.azimuth-interactive.com/essentials1e/index.html
interactive.com/essentials1e/index.html
http://www.ecommercetutorial.net/course/wordpress/
http://uwf.edu/clemley/cgs1570w/notes/Concepts-2.htm
2.htm
http://www.inf.unibz.it/~ricci/IT/slides/1-www.pdf
www.prenhall.com/Laudon
Terry Bernstein, Anish B. Bhimani,, Eugene Schultz, Carol A. Siegel, Internet Security for Business, Wiley Computer
Publishing, John Wiley & Sons Inc, 1996
Sanjaya Hettihewa, Windows NT 4, Web Development, Sams net, Indianapolis, First Edition, 1996