See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/280443467

E-commerce: an introduction

Book · January 2010

CITATIONS READS

14 55,323

1 author:

Engr. Dr. Amir Manzoor

Bahria University Karachi Campus
63 PUBLICATIONS   67 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Engr. Dr. Amir Manzoor on 25 September 2015.

The user has requested enhancement of the downloaded file.

Table of Contents

INTRODUCTION TO E-COMMERCE ...................................................................................................1

E-COMMERCE: THE DEFINITION ..................................................................................................................2
E-COMMERCE AND E-BUSINESS...................................................................................................................2
INTERNET ECONOMY, E-COMMERCE, AND E-BUSINESS ...............................................................................3
DIMENSIONS OF E-COMMERCE ....................................................................................................................4
INTERNET VS NON-INTERNET E-COMMERCE ..............................................................................................5
CATEGORIES OF E-COMMERCE ....................................................................................................................5
Business-to-Business (B2B) ..................................................................................................................5
Business-to-Consumer (B2C) ................................................................................................................5
Business-to-Business-to-Consumer (B2B2C)........................................................................................6
Business-to-Government (B2G) ............................................................................................................6
Consumer-to-Business (C2B) ................................................................................................................6
Consumer-to-Consumer (C2C) ..............................................................................................................7
Business-to-Employee (B2E) .................................................................................................................7
Government-to-Government (G2G).......................................................................................................7
Government-to-Employee (G2E) ...........................................................................................................8
Government-to-Business (G2B) ............................................................................................................8
Government-to-Citizen (G2C) ...............................................................................................................8
Other Forms of E-commerce ..................................................................................................................8
ELECTRONIC DATA INTERCHANGE (EDI)....................................................................................................9
FORMS OF E- COMMERCE ORGANIZATIONS ..............................................................................................10
Brick-and-Mortar business ...................................................................................................................10
Click-and-Mortar Business ..................................................................................................................10
Virtual Business ...................................................................................................................................11
E-marketplaces .....................................................................................................................................11
INTERMEDIATION, DISINTERMEDIATION, REINTERMEDIATION, HYPERMEDIATION, AND SYNDICATION IN
E-COMMERCE ............................................................................................................................................12
DEVELOPMENT AND GROWTH OF E-COMMERCE .......................................................................................13
GENERATIONS OF E-COMMERCE ...............................................................................................................14
E-COMMERCE: CRITICAL SUCCESS FACTORS (CSF) .................................................................................15
Internal Factors.....................................................................................................................................15
External Factors ...................................................................................................................................16
E-COMMERCE: TECHNOLOGY TRENDS......................................................................................................18
E-COMMERCE: SUITABILITY OF PRODUCTS AND SERVICES .......................................................................20
ADVANTAGES AND DISADVANTAGES OF E-COMMERCE ............................................................................21
Advantages of E-commerce .................................................................................................................22
Disadvantages of E-commerce .............................................................................................................23
IMPACTS OF DIGITAL ECONOMY AND ORGANIZATIONAL RESPONSES .......................................................24
i
 The New Business Environment ..........................................................................................................24
Business Pressures ...............................................................................................................................25
Organizational Responses ....................................................................................................................25
PROMOTING GLOBAL E-COMMERCE: INTERNATIONAL COOPERATION, COLLABORATION, AND
REGULATIONS ...........................................................................................................................................28
E-COMMERCE FUTURE OUTLOOK..............................................................................................................29
REVIEW QUESTIONS ..................................................................................................................................30
BIBLIOGRAPHY..........................................................................................................................................31
E-COMMERCE INFRASTRUCTURE ...................................................................................................35
PRINCIPAL COMPONENTS OF E-COMMERCE INFRASTRUCTURE .................................................................36
E-COMMERCE AND BUSINESS PROCESSES .................................................................................................37
MAJOR PLAYERS IN E-COMMERCE ............................................................................................................38
THE INTERNET...........................................................................................................................................40
Switching .............................................................................................................................................40
Routing .................................................................................................................................................41
TCP/IP ..................................................................................................................................................41
Working of Internet ..............................................................................................................................41
Function of Router ...............................................................................................................................42
Protocol ................................................................................................................................................43
IP Addresses .........................................................................................................................................43
Domain Name Systems (DNS) ............................................................................................................44
URL: Uniform Resource Locator.........................................................................................................45
Internet Servers and Clients .................................................................................................................47
Ports and HTTP ....................................................................................................................................47
E-mail Protocols ...................................................................................................................................47
World Wide Web (WWW) ..................................................................................................................48
Markup Languages and the Web..........................................................................................................49
INTRANETS AND EXTRANETS ....................................................................................................................51
Intranets ................................................................................................................................................52
Extranets...............................................................................................................................................52
VIRTUAL PRIVATE NETWORK (VPN) ........................................................................................................52
STORAGE AREA NETWORKS (SANS) ........................................................................................................54
INTERNET CONNECTIVITY OPTIONS ..........................................................................................................54
Dial-up..................................................................................................................................................55
Integrated Services Digital Network (ISDN) .......................................................................................56
Broadband Connections .......................................................................................................................57
Wireless Connections ...........................................................................................................................61
EVOLUTION OF INTERNET AND WORLD WIDE WEB ..................................................................................63
Internet2 ...............................................................................................................................................63
ii
 Web 2.0 ................................................................................................................................................64
Semantic Web ......................................................................................................................................64
E-COMMERCE 2.0 ......................................................................................................................................64
REVIEW QUESTIONS ..................................................................................................................................65
BIBLIOGRAPHY..........................................................................................................................................66
ELEMENTS OF E-COMMERCE ...........................................................................................................69
INTRODUCTION..........................................................................................................................................70
CLIENT-SERVER COMMUNICATION ...........................................................................................................70
WEB CONTENT ..........................................................................................................................................70
Static Content .......................................................................................................................................70
Dynamic Content .................................................................................................................................71
Dynamic Page-Generation Technologies .............................................................................................71
SOFTWARE FOR WEB SERVERS .................................................................................................................72
Open Source Software Vs Commercial Software ................................................................................72
Web Server Software ...........................................................................................................................72
Evaluating Efficiency of Your Website ...............................................................................................74
Operating Systems (OS) for Web Servers ...........................................................................................74
Web Server Market ..............................................................................................................................76
Finding Web Server Information .........................................................................................................78
Database Management Systems for Web Severs .................................................................................79
E-MAIL ......................................................................................................................................................81
SPAM.........................................................................................................................................................81
Solutions to the Spam Problem ............................................................................................................82
CONTENT FILTERING .................................................................................................................................84
E-mail Content Filtering ......................................................................................................................84
Web Content Filtering ..........................................................................................................................85
Bypassing Content Filtering.................................................................................................................85
WEBSITE AND INTERNET UTILITY PROGRAMS ..........................................................................................85
Finger and Ping Utilities ......................................................................................................................85
Traceroute and Other Route-Tracing Programs ...................................................................................86
Telnet and FTP Utilities .......................................................................................................................86
Indexing and Searching Utility Programs ............................................................................................87
Data Analysis Software ........................................................................................................................87
Link-Checking Utilities........................................................................................................................87
Remote Server Administration Software .............................................................................................88
E-COMMERCE HARDWARE ........................................................................................................................88
Web Server Hardware: Components and Requirements ......................................................................88
Web Server Performance .....................................................................................................................89
Web Server Hardware Architectures ...................................................................................................91
iii
 E-COMMERCE SOFTWARE .........................................................................................................................91
Selecting E-commerce Software ..........................................................................................................91
Basic Functions of E-commerce Software ...........................................................................................92
Advanced Functions of E-commerce Software....................................................................................97
E-commerce Software for Small and Medium Enterprise ...................................................................99
E-commerce Software for Mid-size to Large Businesses ..................................................................102
Mid-Range E-commerce Software .....................................................................................................103
E-commerce Software for Large Businesses .....................................................................................105
REVIEW QUESTIONS ................................................................................................................................107
BIBLIOGRAPHY........................................................................................................................................109
E-COMMERCE BUSINESS MODELS ................................................................................................112
TRADITIONAL VS ELECTRONIC BUSINESS MODELS ................................................................................113
E-COMMERCE BUSINESS MODELS ...........................................................................................................113
Benefits of E-commerce Business Model ..........................................................................................113
COMPETITION IN THE E-COMMERCE ........................................................................................................114
INTERNET AND ITS IMPACT ON BUSINESS ................................................................................................114
KEY ELEMENTS OF E-COMMERCE BUSINESS MODEL ..............................................................................115
PRIMARY REVENUE MODELS IN E-COMMERCE .......................................................................................116
Revenue Model Issues........................................................................................................................117
FUNDAMENTAL CATEGORIES OF E-COMMERCE BUSINESS MODELS ........................................................118
Business to Consumer (B2C) Models ................................................................................................118
Consumer to Consumer (C2C) Models ..............................................................................................122
Business to Business (B2B) Models ..................................................................................................122
Other Business Models ......................................................................................................................124
REVIEW QUESTIONS ................................................................................................................................129
BIBLIOGRAPHY........................................................................................................................................130
E-COMMERCE STRATEGY ................................................................................................................132
DEFINING E-COMMERCE STRATEGY .......................................................................................................133
STRATEGY INITIATION ............................................................................................................................134
STRATEGY FORMULATION ......................................................................................................................136
STRATEGY IMPLEMENTATION .................................................................................................................137
COMMON E-COMMERCE STARTUP MISTAKES .........................................................................................139
BUILDING E-COMMERCE WEBSITE ..........................................................................................................140
Method for Building E-commerce Site ..............................................................................................141
FEATURES OF GOOD E-COMMERCE SITE .................................................................................................142
SIX WEB PAGES OF GOOD E-COMMERCE SITES ......................................................................................143
COMPLIANCE WITH WEB STANDARDS .....................................................................................................143
MEASURING SUCCESS OF E-COMMERCE .................................................................................................144
E-COMMERCE INVESTMENTS ...................................................................................................................144
iv
 REVIEW QUESTIONS ................................................................................................................................146
BIBLIOGRAPHY........................................................................................................................................147
WEBSITE USABILITY ..........................................................................................................................150
IMPORTANCE OF EFFECTIVE WEB PRESENCE ..........................................................................................151
WEB PRESENCE GOALS ...........................................................................................................................151
Achieving Web Presence Goals .........................................................................................................152
Web Presence and Brand Image ........................................................................................................152
WEBSITE USABILITY ...............................................................................................................................152
What does usability measure? ............................................................................................................153
CUSTOMER-CENTRIC WEB SITE DESIGN .................................................................................................153
Creating a User-Centric Web Site ......................................................................................................155
USABILITY IMPROVEMENT CHECKLIST ...................................................................................................161
REVIEW QUESTIONS ................................................................................................................................178
BIBLIOGRAPHY........................................................................................................................................179
E-COMMERCE MARKETING.............................................................................................................180
INTRODUCTION........................................................................................................................................181
INTERNET MARKETING AND E-MARKETING ............................................................................................181
COMMON INTERNET MARKETING MISTAKES ..........................................................................................182
ADVANTAGES AND DISADVANTAGES OF INTERNET MARKETING ............................................................183
THE 4 P'S OF INTERNET MARKETING .......................................................................................................184
ONLINE BRANDING .................................................................................................................................184
Cost of Branding ................................................................................................................................185
Emotional Vs Rational Branding .......................................................................................................186
Online Brand Leveraging ...................................................................................................................186
Online Brand Consolidation...............................................................................................................186
Affiliate Marketing.............................................................................................................................187
APPLICATIONS OF INTERNET TOOLS IN INTERNET MARKETING ...............................................................188
INTERNET, INTRANETS, EXTRANETS, AND INTERNET MARKETING ..........................................................189
INTERNET MARKETING COMMUNICATION ..............................................................................................190
INTERNET MARKETING COMMUNICATION TOOLS ...................................................................................191
Online Advertising .............................................................................................................................191
Online Personal Selling ......................................................................................................................202
Online Sales Promotion .....................................................................................................................203
Online Public Relations .....................................................................................................................204
Online Direct Marketing ....................................................................................................................205
The Corporate Web Site .....................................................................................................................208
Web Positioning .................................................................................................................................212
Web Positioning Strategies ................................................................................................................212
SOCIAL NETWORKING SITES AND E-COMMERCE .....................................................................................217
v
 Generating Sales through Social Networking Sites ...........................................................................218
WEB 2.0 TOOLS AND E-COMMERCE ........................................................................................................219
Examples of Web 2.0 Tools Usage ....................................................................................................220
VIRTUAL WORLDS FOR E-COMMERCE .....................................................................................................221
MARKET SEGMENTATION........................................................................................................................221
THE INTERNET USERS: POPULATION AND USAGE TRENDS ......................................................................222
Internet Users Population ...................................................................................................................222
Internet Usage Trends ........................................................................................................................222
ONLINE CONSUMER BEHAVIOR...............................................................................................................223
ONLINE CONSUMER PURCHASE DECISION ..............................................................................................224
Online Consumer Purchase Decision Aids ........................................................................................225
INTERNET MARKETING IN B2B ...............................................................................................................226
Characteristics of B2B and B2C Online Buyers ................................................................................226
Marketing and Advertising in B2B E-commerce...............................................................................227
B2B Online Marketing Methods ........................................................................................................227
BUILDING TRUST IN E-COMMERCE .........................................................................................................229
Factors That Influence Trust Building in E-commerce......................................................................231
ELECTRONIC WORD OF MOUTH (EMOW) ...............................................................................................232
E-COMMERCE MARKET RESEARCH ........................................................................................................233
Advantages of Online Market Research ............................................................................................233
Disadvantages of Online Market Research ........................................................................................233
Methods of Online Market Research .................................................................................................234
PARTNER RELATIONSHIP MANAGEMENT IN E-COMMERCE......................................................................235
REVIEW QUESTIONS ................................................................................................................................236
BIBLIOGRAPHY........................................................................................................................................238
E-COMMERCE PAYMENT SYSTEMS ..............................................................................................246
PAYMENT METHODS ...............................................................................................................................247
CASH AS METHOD OF PAYMENT .............................................................................................................247
INTRODUCTION TO ELECTRONIC PAYMENTS ...........................................................................................247
Domestic and International Payments Mechanisms ..........................................................................248
Basic Problems with Electronic Payments .........................................................................................248
Electronic Payments Terminology .....................................................................................................249
Electronic Payments: Major Stakeholder and Requirements .............................................................250
Methods of Electronic Payments .......................................................................................................251
Electronic Payment Technologies ......................................................................................................252
TRANSACTION SECURITY PROTOCOLS ....................................................................................................257
SET (Secure Electronic Transactions) ...............................................................................................257
PHISHING ATTACKS ................................................................................................................................259
Phishing Attack Countermeasures .....................................................................................................260
vi
MICROPAYMENTS....................................................................................................................................261
BUSINESS-TO-BUSINESS (B2B) TRANSACTIONS......................................................................................261
B2B Electronic Payment Solutions ....................................................................................................262
E-Billing .............................................................................................................................................263
Electronic funds transfer (EFT) .........................................................................................................264
E-PAYMENT STANDARDS ........................................................................................................................265
OFX ....................................................................................................................................................265
Jalda....................................................................................................................................................266
EMV ...................................................................................................................................................266
OPEN AND CLOSED LOOP PAYMENT SYSTEMS ........................................................................................266
PAYMENT CARDS ....................................................................................................................................267
Credit Card .........................................................................................................................................267
Debit Card ..........................................................................................................................................270
Charge Card .......................................................................................................................................271
Single-Use Payment Cards.................................................................................................................271
ELECTRONIC WALLETS ...........................................................................................................................271
Electronic Wallet Characteristics .......................................................................................................272
Electronic Wallet Categories..............................................................................................................272
STORED VALUE CARDS ...........................................................................................................................274
Magnetic Strip Cards..........................................................................................................................274
Smart Cards ........................................................................................................................................274
PAYMENT GATEWAYS .............................................................................................................................276
How Payment Gateways Works ........................................................................................................276
Getting a Merchant Account ..............................................................................................................280
Selection Process for Payment Gateways ..........................................................................................280
Rate and Fee Structures and their Determination ..............................................................................282
Value-Added Services ........................................................................................................................283
Payment Gateways: Available Alternatives .......................................................................................283
PAYMENT AGGREGATORS .......................................................................................................................284
ALTERNATIVE PAYMENT SYSTEMS .........................................................................................................284
Cash on-delivery (COD) ....................................................................................................................285
Payment by Telephone using the Payment Code ...............................................................................285
INTERNET TECHNOLOGIES AND BANKING INDUSTRY ..............................................................................285
Electronic Banking .............................................................................................................................285
Electronic Checks...............................................................................................................................286
REVIEW QUESTIONS ................................................................................................................................291
BIBLIOGRAPHY........................................................................................................................................292

vii
E-CRM AND E-SCM ...............................................................................................................................294
CUSTOMER RELATIONSHIP MANAGEMENT (CRM) .................................................................................295
ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT (E-CRM) .........................................................295
Components of e-CRM ......................................................................................................................296
Benefits of e-CRM .............................................................................................................................297
Limitations of e-CRM ........................................................................................................................297
Working of e-CRM ............................................................................................................................298
Implementing e-CRM ........................................................................................................................298
Integration among CRM, ERP, SCM, and other application systems ...............................................299
E-CRM Solutions ...............................................................................................................................300
Choosing the Best CRM Application for Your Business ..................................................................300
Metrics in Customer Service and CRM .............................................................................................301
E-SCM ...................................................................................................................................................302
E-SCM: Key Processes and Infrastructure Components ...................................................................302
Critical Success Factors for E-supply Chains ....................................................................................303
Benefits of E-supply Chains ..............................................................................................................304
Functions of E-SCEM Software.........................................................................................................304
Categories of e-SCM Solutions..........................................................................................................305
Preparing for e-SCM ..........................................................................................................................306
REVIEW QUESTIONS ................................................................................................................................308
BIBLIOGRAPHY........................................................................................................................................309
E-COMMERCE SECURITY .................................................................................................................313
OVERVIEW ..............................................................................................................................................314
COMPUTER SECURITY .............................................................................................................................314
CLASSIFICATION OF INFORMATION ASSETS.............................................................................................315
Unrestricted Information ....................................................................................................................315
Protected Information.........................................................................................................................315
Confidential Information ....................................................................................................................315
Restricted Information .......................................................................................................................315
BASIC SECURITY ISSUES .........................................................................................................................316
THREAT, VULNERABILITY, AND COUNTERMEASURES .............................................................................316
GOVERNANCE OF E-COMMERCE SECURITY IN AN ORGANIZATION ..........................................................316
Key elements of an E-commerce Security Governance Structure .....................................................317
THREATS TO E-COMMERCE SYSTEMS ......................................................................................................318
Threats to E-commerce Service-side .................................................................................................319
Threats to Front-end systems .............................................................................................................320
Threats to Back-end Systems .............................................................................................................321
Threats to E-commerce Transactions .................................................................................................322
Threats to Client-Side ........................................................................................................................323
viii
 Legal and Regulatory Threats ............................................................................................................326
SOLUTIONS FOR E-COMMERCE SECURITY ...............................................................................................327
Solutions for Service Side Security ...................................................................................................327
Solutions for E-commerce Transaction Security ...............................................................................329
Solutions for Client-Side ....................................................................................................................338
Solutions for Legal and Regulatory Issues ........................................................................................340
REVIEW QUESTIONS ................................................................................................................................342
BIBLIOGRAPHY........................................................................................................................................343
MOBILE COMMERCE..........................................................................................................................345
INTRODUCTION........................................................................................................................................346
M-COMMERCE TERMINOLOGY................................................................................................................346
WHY M-COMMERCE ...............................................................................................................................348
SPECIFIC CHARACTERISTICS OF M-COMMERCE ......................................................................................349
Value-Added Attributed of M-commerce ..........................................................................................349
BUILDING BLOCKS OF M-COMMERCE .....................................................................................................350
M-Commerce Hardware.....................................................................................................................350
M-Commerce Software ......................................................................................................................351
Mobile Networks ................................................................................................................................353
PROS AND CONS OF M-COMMERCE .........................................................................................................354
For Users ............................................................................................................................................354
For Network Operators ......................................................................................................................354
For Service Providers .........................................................................................................................354
APPLICATIONS OF M-COMMERCE ...........................................................................................................355
Mobile Financial Applications ...........................................................................................................355
Mobile Marketing and Advertising ....................................................................................................356
Mobile Auction ..................................................................................................................................357
Mobile Booking and Ticketing ..........................................................................................................357
Mobile CRM ......................................................................................................................................358
Mobile Content ..................................................................................................................................358
Mobile Purchases ...............................................................................................................................358
Mobile Payments ................................................................................................................................359
Wireless Wallets.................................................................................................................................359
Wireless Telemedicine .......................................................................................................................360
M-COMMERCE SECURITY ISSUES ............................................................................................................360
Physical Security Issues .....................................................................................................................360
Transactional Security Issues .............................................................................................................360
Post-Transaction Issues ......................................................................................................................360
M-COMMERCE SECURITY TECHNIQUES ..................................................................................................361
SIM-Based Authentication .................................................................................................................361
ix
 Wireless Transport Layer Security (WTSL) ......................................................................................361
Wireless Identity Module (WIM).......................................................................................................362
VOICE TECHNOLOGIES FOR M-COMMERCE .............................................................................................362
Interactive Voice Response (IVR) .....................................................................................................362
Voice Portals ......................................................................................................................................362
M-COMMERCE: CHALLENGES AND FUTURE ............................................................................................362
COLLABORATIVE COMMERCE (C-COMMERCE) .......................................................................................363
PERVASIVE COMPUTING ..........................................................................................................................363
REVIEW QUESTIONS ................................................................................................................................364
BIBLIOGRAPHY........................................................................................................................................365
E-COMMERCE ENVIRONMENT: MAJOR ISSUES .......................................................................367
INTRODUCTION........................................................................................................................................368
ISSUES OF E-COMMERCE .........................................................................................................................368
Financial Issues ..................................................................................................................................368
Legal Issues ........................................................................................................................................369
Ethical Issues ......................................................................................................................................381
Social Issues .......................................................................................................................................382
Market Access Issues .........................................................................................................................384
E-commerce: Language Issues ...........................................................................................................386
E-commerce: Cultural Issues .............................................................................................................387
ACCOUNTABILITY IN E-COMMERCE ........................................................................................................387
DISPUTE RESOLUTION AND REDRESS ......................................................................................................388
ROLE OF GOVERNMENTS .........................................................................................................................388
INTERNATIONAL AND REGIONAL CO-OPERATION INITIATIVES TO PROMOTE E-COMMERCE ....................389
Regional Initiatives ............................................................................................................................389
International Initiatives ......................................................................................................................390
COMPUTER AND ONLINE CRIME ..............................................................................................................390
HACKER AND CRACKER ..........................................................................................................................391
GREEN E-COMMERCE AND IT ..................................................................................................................391
REVIEW QUESTIONS ................................................................................................................................393
BIBLIOGRAPHY........................................................................................................................................394
INDEX .......................................................................................................................................................399
x

View publication stats