E Commerce 311 v1

E-Commerce
Sub Code-311
Developed by
Prof. Nitin C. Kamat
On behalf of
Prin. L.N. Welingkar Institute of Management Development & Research
!  
CONTENTS
Contents
Chapter Chapter Name Page

No. No.
1 Introduction of Information Technology 3-24
2 Creating an Integrated e-Commerce Strategy 25-53
3 Constructing an e-Business 54-97
4 Building an e-Business: Design, Development and 98-160
Management
5 Online Monetary Transaction 161-197
6 Online Security 198-226
7 e-Commerce Marketing Concepts 227-273
8 Legal, Ethical, Social and Global Issues 274-302
9 Social Networks and Portals 303-333
10 e-Business and e-Commerce Case Studies 334-382
Appendix 383-409
! !2
INTRODUCTION OF INFORMATION TECHNOLOGY
Chapter 1
INTRODUCTION OF INFORMATION
TECHNOLOGY
Learning Objectives:
After completing this chapter, you should be able to:
• understand the complexity of e-Commerce and its many facets.

• explore how e-Business and e-Commerce fit together.
• identify the impact of e-Commerce.
• recognise the benefits and limitations of e-Commerce.
• use classification frameworks for analyzing e-Commerce.
• identify the main barriers to the growth and development of e-Commerce
in organisations
Structure:
1.1 Introduction
1.2 What is e-Commerce?
1.3 What is e-Business?
1.4 e-Commerce, e-Business, who e-Cares?
1.5 e-Distinction
1.6 What are Key Drivers?
1.7 The Impact of e-Commerce
1.8 The Benefits of e-Commerce
1.8.1 Benefits of e-Commerce to Consumers
1.8.2 Benefits of e-Commerce to Society
1.9 The Limitations of e-Commerce
1.9.1 Limitations of e-Commerce to Organisations
1.9.2 Limitations of e-Commerce to Consumers
1.9.3 Limitations of e-Commerce to Society
1.10 Short Case Study
1.11 Activities
1.12 Summary
1.13 Self Assessment Questions
! !3
1.1 INTRODUCTION
Electronic commerce is a revolution in business practices. If organizations

are going to take advantage of new Internet technologies, then they must
take a strategic perspective. That is, care must be taken to make a close
link between corporate strategy and electronic commerce strategy.
Even today, some considerable time after the so-called 'dot com/Internet
revolution’, electronic commerce (e-Commerce) remains a relatively new,
emerging and constantly changing area of business management and
information technology. There has been and continues to be much publicity
and discussion about e-Commerce.
Library catalogues and shelves are filled with books and articles on the
subject. However, there remains a sense of confusion, suspicion and
misunderstanding surrounding the area, which has been exacerbated by
the different contexts in which electronic commerce is used, coupled with
the myriad of related buzzwords and acronyms.
This book aims to consolidate the major themes that have arisen from the
new area of electronic commerce and to provide an understanding of its
application and importance to management.
In order to understand electronic commerce, it is important to identify the

different terms that are used, and to assess their origin and usage.
'Electronic commerce' is sharing business information, maintaining

business relationships and conducting business transactions by means of
telecommunications networks.
In the 1960s, a cooperative effort between industry groups produced a first

attempt at common electronic data formats. The formats, however, were
only for purchasing, transportation and finance data, and were used
primarily for intra-industry transactions. Punched Cards were used for
entering data.
It was not until the late 1970s that work began for national Electronic Data
Interchange (EDI) standards, which developed well into the early 1990s.
! !4
EDI is the electronic transfer of a standardized business transaction

between a sender and receiver computer, over some kind of private
network or value added network (VAN). Both sides would have to have the
same application software and the data would be exchanged in an
extremely rigorous format. In sectors such as retail, automotive, defence
and heavy manufacturing, EDI was developed to integrate information
across larger parts of an organisation's value chain from design to
maintenance so that manufacturers could share information with
designers, maintenance and other partners and stakeholders.
Before the widespread uptake and commercial use of the Internet, the EDI
system was very expensive to run mainly because of the high cost of the
private networks. Thus, uptake was limited largely to cash-rich
multinational corporations using their financial strength to pressure and
persuade (with subsidies) smaller suppliers to implement EDI systems,
often at a very high cost.
By 1996, no more than 50,000 companies in Europe and 44,000 in the USA
were using EDI, representing less than 1% of the total number of
companies in each of the respective continents. Electronic commerce has
been re-defined by the dynamics of the Internet and traditional e-
Commerce is rapidly moving to the Internet.
With the advent of the Internet, the term e-Commerce began to include:
• Electronic trading of physical goods and of intangibles such as

information.
• All the steps involved in trade, such as online marketing, ordering

payment and support for delivery.
• The electronic provision of services such as after sales support or online

legal advice. Electronic support for collaboration between companies such
as collaborative online design and engineering or virtual business
consultancy teams.
! !5
1.2 WHAT IS e-COMMERCE?
Some of the definitions of e-Commerce often heard and found in

publications and the media are:
Electronic Commerce (EC) is where business transactions take place via

telecommunications networks, especially the Internet.
Electronic commerce describes the buying and selling of products, services,

and information via computer networks including the Internet.
Electronic commerce is about doing business electronically.
e-Commerce, or Electronic Commerce is defined as the conduct of a

financial transaction by electronic means.
The wide range of business activities related to e-Commerce brought about

a range of other new terms and phrases to describe the Internet
phenomenon in other business sectors. Some of these focus on purchasing
from online stores on the Internet. Since transactions go through the
Internet and the Web, the terms i-commerce (Internet commerce) and
even web-commerce have been suggested but are now very rarely used.
Other terms that are used for online retail selling include e-tailing, virtual-
stores or cyber stores. A collection of these virtual stores is sometimes
gathered into a 'virtual mall' or 'cybermall'.
1.3 WHAT IS e-BUSINESS?
In its simplest form, e-commerce is the buying and selling of products and
services by businesses and consumers over the Internet. People use the
term "e-commerce" to describe encrypted payments on the Internet.
Sometimes these transactions include the real time transfer of funds from
buyer to seller, and sometimes this is handled manually through a PoS
terminal once a secure order is received by the merchant.
Internet sales are increasing rapidly as consumers take advantage of lower

prices offered by wholesalers retailing their products. This trend is set to
strengthen as websites address consumer security and privacy concerns.
! !6
As with e-Commerce, e-Business (electronic business) also has a number

of different definitions and is used in a number of different contexts.
One of the first to use the term was IBM, in October 1997, when it
launched a campaign built around e-Business. Today, major corporations
are rethinking their businesses in terms of the Internet and its new culture
and capabilities and this is what some see as e-Business.
• e-Business is the conduct of business on the Internet, not only buying

and selling but also servicing customers and collaborating with business
partners.
• e-Business includes customer service (e-service) and intra-business

tasks.
• e-Business is the transformation of key business processes through the

use of Internet technologies. An e-Business is a company that can adapt
to constant and continual change. The development of intranet and
extranet is part of e-Business.
• e-Business is everything to do with back-end systems in an organisation.
In practice, e-Commerce and e-Business are often used interchangeably.
1.4 e-COMMERCE, e-BUSINESS, WHO e-CARES?
Some analysts and online business people have decided that e-Business is
infinitely superior as a moniker to e-Commerce. That's misleading and
distracts us from the business goals at hand. The effort to separate the e-
Commerce and e-Business concepts appears to have been driven by
marketing motives and is dreadfully thin in substance.
Here's the important thing: e-Commerce, e-Business or whatever else you

may want to call it is a means to an end.
The different names, definitions and words referred to in the previous

sections are merely a sample of the glossary that has originated from
marketing departments to sell a concept, the media to describe a
sensational 'new' phenomenon, consultants to justify their fees and
! !7
recommendations, and business to validate and implement the new

technology.
In fact, there is no one definitive meaning of e-Commerce or e-Business

that is universally established. The different terms are used to illustrate
different perspectives and emphases of different people in different
organisations and business sectors. Some argue that it makes little sense
to have a restrictive definition for the term e-Commerce since it is unlikely
that there will be agreement on a single unique definition.
'Attempting to define e-Commerce or e-Business is guaranteed to generate

Byzantine debates with meaningless origins.
Because of this trend, it is necessary when undertaking any electronic

commerce, electronic business or any other e-related project or
assignment, to clearly define any term in the context and environment in
which it is being used.
1.5 e-DISTINCTION
For the purpose of clarity, the distinction between e-Commerce and e-

Business in this book is based on the respective terms commerce and
business. Commerce is defined as embracing the concept of trade,
'exchange of merchandise on a large-scale between different countries’.
By association, e-Commerce can be seen to include the electronic medium

for this exchange. Thus, electronic commerce can be broadly defined as the
exchange of merchandise (whether tangible or intangible) on a large-scale
between different countries using an electronic medium – namely the
Internet. The implications of this are that e-Commerce incorporates a
whole socioeconomic, telecommunications technology and commercial
infrastructure at the micro-environmental level. All these elements interact
together to provide the fundamentals of e-Commerce.
Business, on the other hand, is defined as 'a commercial enterprise as a

going concern’. e-Business can broadly be defined as the processes or
areas involved in the running and operation of an organisation that are
electronic or digital in nature. These include direct business activities such
as marketing, sales and human resource management but also indirect
! !8
!
Figure 1.1: Electronic commerce and electronic business
activities such as business process re-engineering and change

management, which impact on the improvement in efficiency and
integration of business processes and activities.
Figure 1.1 illustrates the major differences in e-Commerce and e-Business,

where e-Commerce has a broader definition referring more to the macro-
environment; e-Business relates more to the micro-level of the firm.
Introduction to e-Commerce. Although different, both e-Commerce and e-

Business are also highly integrated and reliant upon each other.
! !9
1.6 WHAT ARE KEY DRIVERS?
It is important to identify the key drivers of e-Commerce to allow a

comparison between different countries. It is often claimed that e-
Commerce is more advanced in the USA than in Europe. These key drivers
can be measured by a number of criteria that can highlight the stages of
advancement of e-Commerce in each of the respective countries.
The criteria that can determine the level of advancement of e-Commerce

are summarised in Table 1.1 and can be categorized as:
1. Technological factors: The degree of advancement of the

telecommunications infrastructure which provides access to the new
technology for business and consumers.
2. Political factors: Including the role of government in creating

government legislation, initiatives and funding to support the use and
development of e-Commerce and information technology.
3. Social factors: Incorporating the level and advancement in IT

education and training which will enable both potential buyers and the
workforce to understand and use the new technology.
4. Economic factors: Including the general wealth and commercial health

of the nation and the elements that contribute to it.
Since a distinction has been made in this book between e-Commerce and
e-Business for consistency, the key drivers of e-Business are also
identified.
These are mainly at the level of the firm and are influenced by the macro-
environment and e-Commerce, which include:
• Organisational culture: Attitudes to research and development (R&D);

its willingness to innovate and use technology to achieve objectives.
• Commercial benefits: In terms of cost savings and improved efficiency

that impact on the financial performance of the firm.
! !10
• Skilled and committed workforce: That understands, is willing and

able to implement new technologies and processes.
• Requirements of customers and suppliers: In terms of product and

services demand and supply.
• Competition: Ensuring the organisation stays ahead of or at least

keeps up with competitors and industry leaders.
Table 1.1 Key drivers of e-Commerce

Key drivers Measurement criteria
Technological factors: • Telecommunications infrastructure

Backbone infrastructure and architecture
Industry players and competition
Pricing.
Internet service providers
Range of services available (e.g.,ADSL,
ISDN)
Ownership (private or public sector)
• Access to new technology developments
• Bandwidth
• Speed of development and implementation of new

technology by industry sector
Political factors:
• Number and type of government incentives and
programmes to support the use and development of
new technology
• Legislation-number and type of supportive or

restrictive laws and policies that govern electronic
data, contacts and financial transactions. For example,
laws that recognize and enforce the validity of
electronic documentation, contracts and transactions
in a court of law; the validation of digital signatures;
the legal usage of electronic security measures such
as encryption
! !11
• Public policies – Whether government supports the

growth of electronic transactions and processes. For
example, filing tax returns to the Inland Revenue
electronically, the national education curriculum and
training
Social factors: • Skills of workforce
• Number of users online
• Penetration rate of PCs
• Level of education; computer literacy and IT skills
• Culture of technophilla – a willingness and ability to

adopt new technology and the speed at which
technology achieves critical mass as in Japan
Economic factors: • Economic growth - GDP
• Average income
• Cost of technology (hardware and software)
• Cost of access to telecommunications infrastructure -

pricing structures and rates
• Commercial infrastructure – advancement of banking

sector; payment systems
• Innovative business models
These key drivers for the implementation of e-Business can be put into the
context of the classic economic equation of supply and demand illustrated
in Figure 1.2. Thus, e-Commerce provides the infrastructure and
environment that enables and facilitates e-Business. Within this,
! !12
!
Figure 1.2: Key Drivers of e-Business
the implementation of e-Business is solely dependent on whether there is a

demand by the organisation and whether it can be supplied within the
organisation. Demand is created largely by the need to cut costs, improve
efficiency, maintain competitive advantage and meet stakeholder
requirements.
These business objectives can be met through the supply of a technological

infrastructure to improve organisational processes, a willingness, ability
and commitment to integrate new technology and improve working
practice within the organisation, and crucial to all this is the allocation of
resources.
! !13
1.7 THE IMPACT OF e-COMMERCE
e-Commerce and e-Business are not solely the Internet, websites or dot
com companies. It is about a new business concept that incorporates all
previous business management and economic concepts. As such, e-
Business and e-Commerce impact on many areas of business and
disciplines of business management studies. For example:
Marketing: Issues of online advertising, marketing strategies and

consumer behaviour and cultures. One of the areas in which it impacts
particularly is direct marketing. In the past this was mainly door-to-door,
home parties (like the Tupperware parties) and mail order using catalogues
or leaflets. This moved to telemarketing and TV selling with the advances
in telephone and television technology and finally developed into e-
marketing spawning 'e CRM' (customer relationship management) data
mining and the like by creating new channels for direct sales and
promotion.
Computer sciences: Development of different network and computing

technologies and languages to support e-Commerce and e-Business, for
example linking front and back office legacy systems with the 'web based'
technology. Finance and accounting: Online banking; issues of transaction
costs; accounting and auditing implications where 'intangible' assets and
human capital must be tangibly valued in an increasingly knowledge based
economy.
Economics: The impact of e-Commerce on local and global economies;

understanding the concepts of a digital and knowledge-based economy and
how this fits into economic theory.
Production and operations management: The impact of online

processing has led to reduced cycle times. It takes seconds to deliver
digitized products and services electronically; similarly the time for
processing orders can be reduced by more than 90% from days to
minutes. Production systems are integrated with finance, marketing and
other functional systems as well as with business partners and customers.
Management information systems: Analysis, design and

implementation of e-Business systems within an organisation; issues of
integration of front-end and back-end systems.
! !14
Human resource management: Issues of online recruiting, home

working and 'entrepreneurs' working on a project by project basis replacing
permanent employees.
Business law and ethics: The different legal and ethical issues that have
arisen as a result of a global 'virtual' market. Issues such as copyright
laws, privacy of customer information, legality of electronic contracts, etc.
1.8 THE BENEFITS OF e-COMMERCE
International marketplace: What used to be a single physical

marketplace located in a geographical area has now become a borderless
marketplace including national and international markets. By becoming e-
Commerce enabled, businesses now have access to people all around the
world. In effect, all e-Commerce businesses have become virtual
multinational corporations.
Operational cost savings: The cost of creating, processing, distributing,

storing and retrieving paper-based information has decreased.
Mass customization: e-Commerce has revolutionized the way consumers

buy well and services. The pull-type processing allows for products and
services to be customized to the customer's requirements. In the past
when Ford first started making motor cars, customers could have any color
so long as it was black. Now customers can configure a car according to
their specifications within minutes online via the www.ford.com website.
Enables reduced inventories and overheads by facilitating 'pull'-

type supply chain management: This is based on collecting the
customer order and then delivering through JIT (just-in-time)
manufacturing. This is particularly beneficial for companies in the high
technology sector, where stocks of components held could quickly become
obsolete within months. For example, companies like Motorola (mobile
phones), and Dell (computers) gather customer orders for a product,
transmit them electronically to the manufacturing plant where they are
manufactured according to the customer's specifications (like color and
features) and then sent to the customer within a few days.
Lower telecommunications cost: The Internet is much cheaper than

value added networks (VANs) which were based on leasing telephone lines
! !15
for the sole use of the organisation and its authorised partners. It is also
cheaper to send a fax or e-mail via the Internet than direct dialing.
Digitization of products and processes: Particularly in the case of

software and music/ video products, which can be downloaded or e-mailed
directly to customers via the Internet in digital or electronic format.
No more 24-hour-time constraints: Businesses can be contacted by or

contact customers or suppliers at any time.
1.8.1 Benefits of e-Commerce to Consumers
• 24/7 access: Enables customers to shop or conduct other transactions

24 hours a day, all year round from almost any location. For example,
checking balances, making payments, obtaining travel and other
information. In one case a pop star set up web cameras in every room in
his house, so that he could check the status of his home by logging onto
the Internet when he was away from home on tour.
• More choices: Customers not only have a whole range of products that
they can choose from and customize, but also an international selection
of suppliers.
• Price comparisons: Customers can 'shop' around the world and

conduct comparisons either directly by visiting different sites, or by
visiting a single site where prices are aggregated from a number of
providers and compared (for example www.moneyextra.co.uk for
financial products and services).
• Improved delivery processes: This can range from the immediate

delivery of digitised or electronic goods such as software or audio-visual
files by downloading via the Internet, to the online tracking of the
progress of packages being delivered by mail or courier. An environment
of competition where substantial discounts can be found or value added,
as different retailers vie for customers. It also allows many individual
customers to aggregate their orders together into a single order
presented to wholesalers or manufacturers and obtain a more
competitive price (aggregate buying), for example www.letsbuyit.com.
! !16
1.8.2 Benefits of e-Commerce to Society
• Enables more flexible working practices: Which enhances the quality

of life for a whole host of people in society, enabling them to work from
home. Not only is this more convenient and provides happier and less
stressful working environments, it also potentially reduces environmental
pollution as fewer people have to travel to work regularly.
• Connects people: Enables people in developing countries and rural

areas to enjoy and access products, services, information and other
people which otherwise would not be so easily available to them.
• Facilitates delivery of public services: For example, health services

available over the Internet (online consultation with doctors or nurses),
filing taxes over the Internet through the Inland Revenue website.
1.9 THE LIMITATIONS OF e-COMMERCE
There was much hype surrounding the Internet and e-Commerce over the
last few years of the twentieth century. Much of it promoted the Internet
and e-Commerce as the panacea for all ills, which raises the question, are
there any limitations of e-Commerce and the Internet?
Isaac Newton's 3rd Law of Motion, 'For every action there is an equal and
opposite reaction’ suggests that for all the benefits there are limitations to
e-Commerce. These again will be dealt with according to the three major
stakeholders – organisations, consumers and society.
1.9.1 Limitations of e-Commerce to Organisations
Lack of sufficient system security, reliability, standards and communication

protocols. There are numerous reports of websites and databases being
hacked into, and security holes in software. For example, Microsoft has
over the years issued many security notices and ‘patches' for their
software. Several banking and other business websites, including Barclays
Bank, Powergen and even the Consumers' Association in the UK, have
experienced breaches in security where 'a technical oversight' or 'a fault in
its systems' led to confidential client information becoming available to all.
! !17
Rapidly evolving and changing technology, so there is always a feeling of

trying to 'catch up' and not be left behind.
Under pressure to innovate and develop business models to exploit the

new opportunities which sometimes leads to strategies detrimental to the
organisation. The ease with which business models can be copied and
emulated over the Internet increases that pressure and curtails longer-
term competitive advantage.
Facing increased competition from both national and international

competitors often leads to price wars and subsequent unsustainable losses
for the organisation.
Problems with compatibility of older and 'newer' technology. There are

problems where older business systems cannot communicate with web-
based and Internet infrastructures, leading to some organisations running
almost two independent systems where data cannot be shared. This often
leads to having to invest in new systems or an infrastructure, which
bridges the different systems. In both cases this is both financially costly
as well as disruptive to the efficient running of organisations.
1.9.2 Limitations of e-Commerce to Consumers
Computing equipment is needed for individuals to participate in the new

'digital' economy, which means an initial capital cost to customers.
A basic technical knowledge is required of both computing equipment and

navigation of the Internet and the World Wide Web.
Cost of access to the Internet, whether dial-up or broadband tariffs.
Cost of computing equipment. Not just the initial cost of buying equipment
but making sure that the technology is updated regularly to be compatible
with the changing requirement of the Internet, websites and applications.
Lack of security and privacy of personal data. There is no real control of
data that is collected over the Web or Internet. Data protection laws are
not universal and so websites hosted in different countries may or may not
have laws which protect privacy of personal data.
! !18
Physical contact and relationships are replaced by electronic processes.

Customers are unable to touch and feel goods being sold on-line or gauge
voices and reactions of human beings.
A lack of trust because they are interacting with faceless computers.
1.9.3 Limitations of e-Commerce to Society
• Breakdown in human interaction: As people become more used to

interacting electronically there could be an erosion of personal and social
skills. Introduction to e-Commerce might eventually be detrimental to
the world we live in where people are more comfortable interacting with
a screen than face to face.
• Social division: There is a potential danger that there will be an

increase in the social divide between technical haves and have-nots – so
people who do not have technical skills become unable to secure better-
paid jobs and could form an underclass with potentially dangerous
implications for social stability.
Reliance on telecommunications infrastructure, power and IT skills, which

in developing countries nullifies the benefits when power, advanced
telecommunications infrastructures and IT skills are unavailable or scarce
or underdeveloped.
• Wasted resource. As new technology updates quickly how do you

dispose of all the old computers, keyboards, monitors, speakers and
other hardware or software?
• Facilitates Just-In-Time manufacturing. This could potentially cripple

an economy in times of crisis as stocks are kept to a minimum and
delivery patterns are based on preset levels of stock which last for days
rather than weeks.
• Difficulty in policing the Internet. which means that numerous crimes

can be perpetrated and often go undetected. There is also an unpleasant
rise in the availability and access of obscene material and ease with
which pedophiles and others can entrap children by masquerading in chat
rooms.
! !19
1.10 SHORT CASE STUDY
Welcome to 'Online Medical Consultation' with our specialist doctors from all
around the world. Medindia has currently over 1000 doctors listed on its panel.
(View Homepages of some of our specialist doctors)
Medindia's panel of doctors will provide you with an online solution to your
problem. Please note that we do not sell prescription drugs and do not provide
you with a prescription. We can only give you advice and recommendation on
their effectiveness. Consults will be only provided if considered safe.
If you are not happy with a consultation with your own doctor or specialist or if
you wish for a clarification, we welcome you to seek 'second consults' with us.
The doctors who answer your questions are mostly either American Board
certified or hold British qualifications. Your identity and the answers will be kept
totally confidential and not displayed anywhere.
Due to the demand for medical consults it is sometimes difficult to answer your
questions instantly; hence, a simple two-tier system is devised where you
choose if the consult is urgent or non-urgent. This way you get the best value
for your money.
The urgent consults are responded within 24 to 36 working hrs and the non-
urgent are responded within 72 hrs.
! !20
1.11 ACTIVITIES
1. The Google Zeitgeist is more than a corporate event take a look at

Google trends on the Google Zeitgeist site. Select arrange of popular e-
Business terms and examine the search volume by region and over
time.
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
2. Look at the facts available about eBay on the website. Evaluate and give
examples of the ways in which the acquisition of PayPal and Skype.
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
1.12 SUMMARY
Electronic commerce is a revolution in business practices. If organizations

are going to take advantage of new Internet technologies, then they must
take a strategic perspective. That is, care must be taken to make a close
link between corporate strategy and electronic commerce strategy.
In order to understand electronic commerce it is important to identify the

different terms that are used, and to assess their origin and usage.
'Electronic commerce' is sharing business information, maintaining

business relationships and conducting business transactions by means of
telecommunications networks’.
Electronic Commerce (EC) is where business transactions take place via

telecommunications networks, especially the Internet.
Electronic commerce describes the buying and selling of products, services,

and information via computer networks including the Internet.
! !21
In its simplest form e-commerce is the buying and selling of products and
services by businesses and consumers over the Internet. People use the
term "e-Commerce" to describe encrypted payments on the Internet.
Sometimes these transactions include the real-time transfer of funds from

buyer to seller and sometimes this is handled manually through a PoS
terminal once a secure order is received by the merchant.
Some analysts and online business people have decided that e-Business is
infinitely superior as a moniker to e-Commerce. That's misleading and
distracts us from the business goals at hand. The effort to separate e-
Commerce and e-Business concepts appears to have been driven by
marketing motives and is dreadfully thin in substance.
For the purpose of clarity, the distinction between e-Commerce and e-

Business in this book is based on the respective terms commerce and
business. Commerce is defined as embracing the concept of trade,
'exchange of merchandise on a large-scale between different countries’.
By association, e-Commerce can be seen to include the electronic medium

for this exchange. Thus electronic commerce can be broadly defined as the
exchange of merchandise (whether tangible or intangible) on a large-scale
between different countries using an electronic medium – namely the
Internet.
Business, on the other hand, is defined as 'a commercial enterprise as a

going concern'. e- Business can broadly be defined as the processes or
areas involved in the running and operation of an organisation that are
electronic or digital in nature. These include direct business activities such
as marketing, sales and human resource management but also indirect
activities such as business process re-engineering and change
management, which impact on the improvement in efficiency and
integration of business processes and activities.
It is important to identify the key drivers of e-Commerce to allow a

comparison between different countries. It is often claimed that e-
Commerce is more advanced in the USA than in Europe. These key drivers
can be measured by a number of criteria that can highlight the stages of
advancement of e-Commerce in each of the respective countries.
! !22
International marketplace: What used to be a single physical

marketplace located in a geographical area has now become a borderless
marketplace including national and international markets. By becoming e-
Commerce enabled, businesses now have access to people all around the
world. In effect all e-Commerce businesses have become virtual
multinational corporations.
Operational cost savings: The cost of creating, processing, distributing,

storing and retrieving paper-based information has decreased.
Mass customization: e-Commerce has revolutionized the way consumers

buy well and services.
1.13 SELF ASSESSMENT QUESTIONS
1. What is e-Commerce?
2. What is difference between e-Commerce and e-Business?
3. What are key drivers in e-Business?
4. What are the limitations of e-Commerce? 
! !23
REFERENCE MATERIAL
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Summary
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Video Lecture - Part 1
Video Lecture - Part 2 
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CREATING AN INTEGRATED E-COMMERCE STRATEGY
Chapter 2
CREATING AN INTEGRATED e-COMMERCE
STRATEGY
Objectives
• understand the integrated e-Commerce strategy.

• identify the seven dimensions of an e-Commerce strategy
• define the bonds of an e-Commerce strategy
Structure:
2.1 Introduction
2.2 Seven Dimensions of an e-Commerce Strategy
2.3 The Bonds of an e-Commerce Strategy
2.3.1 Leadership
2.3.2 Infrastructure
2.3.3 Organizational Learning
2.4 Four Positional e-Strategic Directions

2.5 Technology Leadership
2.6 B2G and B2B Technology Leadership
2.7 Brand Leadership
2.8 The Service Pay-off
2.9 Key Issues in Implementing an e-Commerce Strategy
2.11 Activities
2.12 Summary
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2.1 INTRODUCTION
In order to understand the process of an e-Commerce strategy better, a

more systematic examination of the strategic factors involved has to be
considered. To do this we'll use a model, which with modification can
ultimately be utilized across the differing portal environments such as B2C
and B2B.
After a decade of treating the topic of e-Commerce with awe and

confusion, we can now step back and analyze the subject more objectively.
From launching an electronic storefront to managing complex supply chain
operations, most companies have ventured into e-Commerce; but even the
best-run bricks-and-mortar enterprises have run into snags in the virtual
world. Even mighty Wal-Mart, for example, took its website through several
redesigns and sales strategies, and Borders eventually outsourced its
Internet sales activities to rival, Amazon. Today, however, the key question
is not whether your firm should invest in e-Commerce, but how you can do
so most profitably. In implementing e-Commerce Strategies, Marc Epstein
goes beyond the hype to focus on the practical angles of designing,
executing, and successfully managing an e-Commerce strategy that works
for your company. Showcasing the experiences (both positive and
negative) of 32 firms in a variety of industries, he demonstrates what
works and what does not, and shows you how to integrate e-Commerce
into your company’s strategy, build support systems throughout the
organization, and measure the return on investment of your e-Commerce
initiatives.
The stock market took values from nothing to billions in the late 1990s.
Some investors made hundreds of millions of dollars. In early 2000, the
dot.com bubble burst, and many investors lost their dollars just as quickly.
Now that the hype is over, we can look back to see what worked and what
didn’t-and also apply what we know about business, about management,
about information technology (IT). What we know is that the Internet does
require some special considerations, but also that many principles that
apply to business in general have not been generally applied to e-
Commerce. For example, revenues, costs, and profits do count—not just
website hits!
What is the CEO to do today? What do senior managers need to know and
do when considering their companies’ involvement in e-Commerce?
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Specifically, what actions should senior managers take to successfully

formulate and implement an e-Commerce strategy? They must consider
alternative choices related to leadership, strategy, structure, and systems
and decide among them.
The study of e-Commerce has unfolded in much the same way that e-
Commerce thrust itself on the business world–with a great deal is an
overstatement. After a long period of treating the topic of e-Commerce
with awe and confusion, we can now discuss the subject more objectively.
Most companies have ventured into e-Commerce, and many of these

attempts have not met expectations. For example, the acknowledged
technology leader in the retail industry, Wal-Mart, has gone through several
redesigns and sales strategies in its online activities and an outright
suspension of its website. Because of the poor showing of its e-Commerce
activities, Borders eventually outsourced its Internet sales activities to
Amazon. Bank One dissolved its online banking entity, Wingspan, and
integrated its online operations into the bank.
Some companies had inept strategies and reacted slowly as other

companies in their industry succeeded at using the Internet. After Amazon
initiated its business activities, Barnes and Noble imperiled its future by
attempting to imitate Amazon, by creating a separate company that did not
take advantage of the company’s “brick-and-mortar” presence and existing
logistical systems. Compaq was eventually purchased by Hewlett-Packard
because it could not match Dell's Internet sales prowess and superior
Internet-based supply-chain operations, which provided significant cost
advantages.
We now can examine the e-Commerce records of numerous companies to

ascertain the characteristics of success and failure in e-Commerce
activities. This book offers a complete model of the choices that exist for e-
Commerce leadership, strategy, structure, and systems-and how to go
about making those choices. This includes what to do (strategy), who
needs to be involved (leadership), how to organize the company to do e-
Commerce (structure), and how to operationalize and implement e-
Commerce in corporations (systems).
An extensive framework and analysis by which to measure the

effectiveness and benefits (pay-offs) of an e-Commerce initiative includes a
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careful analysis of the causal relationships and the impact of potential

managerial actions in e-Commerce on long-term corporate profitability.
It also includes an extensive listing of potential measures of inputs,

processes, outputs, and outcomes. As companies consider beginning or
broadening e-Commerce initiatives, a clearer understanding of the benefits
and costs is critical. To obtain adequate resources, CIOs must justify the
potential pay-offs from an e-Commerce investment and calculate the
return on investment.
Many analysts have identified the tactics that led to the demise of the high-
profile e-Commerce failures filling the news pages. Methods such as
seeking revenues through online banner ads, indiscriminate customer
acquisition and partnerships, and deep discount pricing models have all
been exposed as doomed substitutes for sensible business models. Some
mistakes of the Internet boom were to be expected of experimentation in
the development of any new business model. Others were due to a lack of
attention to basic business principles. Discussions of an e-Commerce
strategy have yet to identify the elements of a successful e-Commerce
strategy and put those practices within the framework of traditional
business strategy.
Certainly appropriate strategy must reflect a company’s customer type,

product type, geographic scope, procurement and distribution channels,
and so forth. Timing and speed of entry into the e-Commerce environment
must also be considered. How to provide differentiation in the marketplace
is important, since strategy is about being different.
2.2 SEVEN DIMENSIONS OF AN e-COMMERCE STRATEGY
They represent a variety of industry sectors ranging from manufacturing to

service; whose origins range from the most established and traditional of
blue chip companies to born-on-the-net start-ups in groups we could label
e-Commerce leaders to those we could label laggards. 
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!
Three Bonding Factors
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Figure 2.1: The Seven Dimensions of an e-Commerce Strategy
It became clear that the differentiation between those companies that have
a successful e-Commerce strategy and those that do not is a function of
achieving balance among seven major factors (see Figure 2.1).
It can be argued that the model in Figure 2.1 can be applied to all forms of
organization in the traditional industrial and service sectors. This is in fact
true, and it is an intentional component of the model’s construction. The
model is based upon the understanding that all organisations need to
continuously address these seven issues, whether they are traditional
organisations addressing an investment decision regarding the deployment
of a new technology required to speed up a production line, a specialized
financial services company on Wall Street determining its ability to operate
in the electronic market, or a company born on the Internet that needs to
assess its branding.
Organizations will always be adjusting their strategies to meet the

changing environment in which they operate, and the model aims at
assisting executives in understanding the importance and weighting that
need to be applied to each factor. However, the model is especially
applicable to assisting the needs of e-Commerce strategists and is applied
to that domain throughout this book.
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The model is flexible enough that it can be used by giant traditional

organizations in their e-strategy formulation processes as they move to the
Net, just as it aims to meet the needs of start-up entrepreneurs looking at
defining their market space and e-strategy from scratch.
Furthermore, the nature of the model allows an organization to map its

strategy onto any form of vendor-client relationship, whether that
relationship is between two businesses, a business and a customer, or any
other entity.
The basic building blocks are consistent in their structure once the target
relationship is determined. For example, should an organization be in a
vertical B2G relationship, the dimensions of strategy formulation are no
different from those of a B2B relationship.
The decisions still involve branding, service levels, market space, and
technology, but the balance and focus of their interactions change. For
example, branding may be less of an issue in a B2G environment than in a
B2B environment.
However, global fulfillment and the ability to satisfy the agency's service
levels may be more of an issue. Thus, the aim is to present a flexible
framework for e-strategists that facilitates their gaining an understanding
of the interactions of the environment within which they are to operate,
and then developing a successful counterstrategy for their organizational
entity.
First let's consider the bonding factors of leadership, infrastructure, and

organisational learning. This will enable us to understand both their
importance as foundations upon which an organization's e-Commerce
strategy is based and as a springboard from which all development
emanates.
This will pave the way to consideration of the four focal points around
which a balanced strategy is created: technology, brand, market, and
service. Each of these areas presents complex and intricate issues of its
own, compounded through the need to achieve a balanced, integrated
solution overall—a complete analysis is presented in subsequent chapters.
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2.3 THE BONDS OF AN e-COMMERCE STRATEGY
The foundations of a strong e-Commerce strategy lie in the preparation of

the ground before the functional issues are addressed.
In this section we will consider three of those issues – leadership,

infrastructure, and organizational learning (see Figure 2.2). As we have
already seen, the creation of successful e-commerce strategy can reap
major rewards for an organization; failure can mean that even the most
senior managers are vulnerable and frequently are replaced following an e-
Commerce strategy failure.
Clearly there is a strong interaction between these three components. For

instance, when eBay had its outages, the leadership learned from the
experience, upgraded the systems infrastructure, and moved on. Other
organizations fail to learn from their experiences and consequently
diminish or, like Levi’s, are forced to leave the Internet space completely
while they rethink their overall strategy.
2.3.1 Leadership
Previous research has shown that the primary drivers of change and the
creators of strategic vision in an organization are the CEO and senior
executives, a finding mirrored in this research. In every successful e-
Commerce project studied for this book, a strong project champion was
present in the form of a senior executive or someone in a position to
demonstrate to a senior executive the potential added value such a project
could bring to the organization. 
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!
Figure 2.2: The Bonds of an e-Commerce Strategy
An example of such a leadership-technology meld can be found at Motorola

Corporation. Bob Clinton, Director of the Internet Business Group,
describes the discovery process:
Originally we had started back in the summer of 1994 and at that time-this
was even before we were aware of the Web-one of the things we were
looking at was trying to find a communications vehicle so we could better
communicate with our partners.
These are channel partners, folks who would sell or resell our equipment.
So we created a concept and we called it MOCA for Motorola Online

Channel Access. Fortuitously, just about this time, around August 1994,
going into September, a Motorola employee called me to say he had found
a little thing called Mosaic, and we went back to his office and saw him all
excited about it and trying to pull it up on the screen, and the thing kept
crashing and he kept swearing at his computer. But he said when you
finally get around to seeing it, it’s really cool! We did see it.
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The lessons for executives here are clear:
1. Keep an open mind with regard to all new technologies.
2. Don’t get isolated from new and experimental technologies that are
coming over the technology horizon.
3. Encourage a “skunks works” (a quickly thrown together, in-house)

research team thinking and philosophy.
4. Be ready to make the necessary amount of change in corporate strategy

as indicated by the “seismic shock wave” of the technology.
2.3.2 Infrastructure
Once the need to develop e-Commerce in some form had been identified,
the single most important issue facing the executives and technologists
charged with developing Internet-based projects is infrastructure. This
spans the technology spectrum from a single Internet file server connected
to a commercial.
Internet service provider (ISP) all the way to the information-intense online
transaction processing of a company like UPS, the giant global parcel
delivery company. UPS’s site assisted customers in tracking 12.92 million
packages a day during 1999, hitting a peak of 18.7 million packages in a
single day during the busy holiday peak shipping season as customers
increasingly embraced the Internet and retail e-Commerce and tracked
their parcels online.
Online tracking activity at UPS’s website established a new all-time record

of 3.3 million requests in a single day.
To handle the volume, UPS employed 90,000 additional workers, adding

more than 3,000 additional trucks to a fleet of 149,000 tractor-trailers,
vans, and delivery vehicles, as well as coordinating the activities of the
world's tenth-largest airline composed of 229 aircraft.
UPS’s infrastructure also includes a growing set of online partners and tools
utilized by over 15,000 of its customers to improve its efficiency at both
the B2C and B2B levels.
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The infrastructure needs to be considered at several levels:
• Strategic
• Organizational
• Physical
At the strategic level, the focus is on determining the impact future

technologies will have on the market and the organization.
The aim is to align future business planning initiatives with the new
technology challenges.
The first level at which the implications of technology and strategic change
become apparent is the organizational. At this level, the challenge is to
align the work practices, process flow, and structure of the organization to
execute the strategic goals effectively and efficiently.
The execution occurs through the physical layer: the hardware and
software of the computing environment, in conjunction with the
telecommunications infrastructure.
However, not all organizations have the ability to be nimble in responding

to these challenges. Frequently, in mature organizations the infrastructure
has grown old and lethargic, unable to adequately cope with change when
asked to, at least within the allowable cost and time parameters.
Successful organizations and their CIO’s have recognized this and worked
toward a fluid and flexible architecture that allows for change, whether that
change be of organic growth through corporate acquisition, or of
streamlining through divestiture, or of a complete strategic turnaround due
to the pressures of new technology. It is clear that it is easier to create a
brand-new value chain that is based upon a Web pipeline philosophy than it
is to change an established value chain which has inertia built into its
practices and processes.
Butler of Office Depot indicates that an organization needs a solid

infrastructure to succeed in deploying an Internet channel: “All of our
delivery centers currently operate under a common order processing
system, common warehouse management system, and common inventory
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system” —an eclectic approach to infrastructure may not have worked so

well.
Again, several lessons for executives can be distilled:
1. Create a flexible infrastructure that can act as the “shock absorber” of

change.
2. The factors that influence the infrastructure come from strategic,

organizational, and physical levels.
3. Infrastructure creation requires open levels of communication at and

across all levels of the organization.
4. Create a technology solution that is scalable, secure and robust.
5. Maintain awareness of all standards as they evolve and attempt to

influence the development of standards where possible. Plan for their
integration as soon as is feasible, so that actual integration will not
occur in a pressurized environment.
6. E x e c u t i v e s c a n n o t d i v o r c e t h e m s e l v e s f r o m t e c h n o l o g i c a l
understanding: the Techno- CEO is the leadership model of the future.
2.3.3 Organizational Learning
The ability of established organizations to react, understand, and deploy an

e-Commerce solution is very dependent upon the ability of an organization
to effectively leverage its organizational learning.
Roy Stata, Chairman of Analogue Devices, Inc., has stated that

“organizational learning occurs through shared insights, knowledge, and
mental models… [and] builds on past knowledge and experience—that is,
on memory.”
Organizational learning, however, is not an isolated process; it is clearly

linked to our earlier discussion on leadership. The learning that occurs in
formulating and creating brand, technology, market, and service leadership
positions as well as the interconnection between these focuses are just as
important as if not more important than the individual elements
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themselves. Leadership with vision facilitates, encourages, and allows an

environment to develop within the organisation where institutional learning
and memory thrive.
A few factors drive this: Senior executives place trust in their colleagues at
all levels; they stimulate an environment of intellectual curiosity; they
facilitate new concepts and technologies even when a traditional return-on-
investment metric may not be applicable.
Successful organizations have always been able to internalize the learning

brought about by developing an understanding of their processes and
functions.
Henry Ford, for example, internalized process control, while American

Airlines internalised passenger yield management. In doing this, these
enterprises gained a dominant position in their respective fields. Therefore,
it would not be unexpected, within the emerging e-Commerce arena, to
find organizations exhibiting similar leadership characteristics developed
through superior organizational learning skills.
The front-runners such as Priceline.com, Officedepot.com, and BMW.com

all demonstrate great creative and visionary leadership, but they also
differentiate themselves through their ability to execute that vision.
Two of the keys behind the success of the leaders in e-Commerce are their
ability to understand the metrics that drive their e-Commerce market
space, and their ability to understand their own relationship with their
customers.
From these two issues, the leading organizations have determined how to
respond to those metrics and then improve the processes, structure, and
communication accordingly.
Many organizations start this process through the use of easily accessible
metrics; for example, Alamo Car-Rental measures the yield ratio between
metrics such as click-throughs and reservations, building upon its strong
organizational understanding of yield management.
Leading organizations clearly understand the importance of metrics. BMW's

Carol M. Burrows constantly assesses the customer and retail feedback
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through BMW's site, which attracts over 1 million hits a day. BMW then
builds this into retail connectivity. Burrows states, “We communicate with
retailers all the time. They are very, very complimentary of our site and
very pleased with the amount of individuals that come to our site and who
then use our link to their local retailer, to whom we refer someone for a
test drive and to get a close-up look of a car. We provide a kit for all of our
retailers to help them get online and to do it in a way that we think is
complimentary to the brand.”
Not only is BMW measuring its hit rate; it has also created a mechanism to
involve all dimensions of the organization in the creation of its site,
including customer service, dealer network, and financial services, to
provide reinforcement of the BMW brand. In doing so, BMW has aligned the
e-Commerce strategy with the organizational strategy as a whole.
Several key drivers with regard to organizational learning can be gleaned:
1. Create an environment that stimulates and fosters organisational

learning. This is vital not only for the successful introduction of
technology but for long-term organizational survival.
2. Organizational learning has to have a focus and that focus has to be

driven from the strategic objectives of the organization as a whole,
taken one at a time in the areas of brand, technology, service, and
market and then combined to provide holistic learning.
3. Organizational learning creates an environment of positive change and

continuous process refinement. Should this not be present,
organizational inertia will cause the organization to “stall in flight.”
2.4 FOUR POSITIONAL e-STRATEGIC DIRECTIONS
In creating an e-Commerce strategy, it is clearly necessary to align and

integrate the four main areas of positional strategic focus: technology,
brand, service, and market (see Figure 2.3). This is a challenging task that
must be deeply considered at the outset of strategy formulation since both
the dollar and opportunity costs of dramatic strategic change after
execution can be high.
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This is not to say that change is not occurring; change in this arena is
inevitable and continuous, with victory coming to those who can adapt
fastest and be nimble in the face of change. The remainder of this chapter
will introduce the basic strategic issues in each of these leadership
propositions and consider some of the key interactions between them.
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Figure 2.3: Integration of Four e-Commerce Leadership Propositions
2.5 TECHNOLOGY LEADERSHIP
We can find e-Commerce strategies that are focused on leadership through

technology in all industry sectors. Technology leadership involves the early
adoption of an emerging technology to achieve a preemptive position.
Many of the companies studied for this book followed this strategy or
viewed technology leadership as an integral part of their overall leadership
strategy, including UPS, Nortel, SUN Microsystems, Motorola, and Dow
Jones.
At the World Economic Forum in Davos, Switzerland, Nortel Networks

issued a statement illustrating the technical and strategic challenges facing
the company in an evolving Internet and communications driven
marketplace.
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2.6 B2G AND B2B TECHNOLOGY LEADERSHIP
An example of B2G-mandated technology change is that originating from

the regulatory conditions decreed by the U.S. Department of Energy,
which, under the auspice of the Federal Energy Regulatory Commission and
the Open Access Same Time Information System (OASIS), mandated that
the Internet can be used to buy and sell natural gas, as well as to make
nominations for gas and pipeline capacity.
The utilities, which through other deregulation have been forced to

relinquish monopoly power and become competitive, have been quick to
recognize the potential that a technology leadership position offers in the
B2B and B2C markets. With their ability to rapidly pass through the
learning and experience curves, internalize their learning, and create new
infrastructures, utilities such as Florida Power & Light (FPL) have rapidly
moved to the front of the technology leadership arena. Utilities such as FPL
aim through the use of technology to increase the strength of their
customer relationship by offering more informational services and
decreasing power costs, thus locking in market share for both residential
(B2C) and corporate (B2B) consumers.
While their mandate is to reduce their customers’ power consumption, they

balance this with a strategy of increasing their market share.
Through the deployment of Internet technologies they can achieve this at a

lower cost, than would have been possible even 5 years ago. The
technology leverages the ability of the power utilities to monitor their
customers’ usage and offer them suggestions on how to be more power
efficient.
This is a win-win strategy for both the utility and the customer, but it
simultaneously changes the nature of competition within the industry. No
longer is it based on the lowest-cost solution per kW-hour; it is based on a
technology added value strategy that allows the utilities to get closer to the
customer and create wider market coverage.
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2.7 BRAND LEADERSHIP
The emergence of the Internet as a dynamic branding mechanism has

done much to fuel the debate over how to most effectively utilize this
benefit within the development of the organization’s overall brand strategy.
Potentially the most important of these debates focuses on the Internet's
ability to influence, change or reinforce corporate branding.
The Internet is unique in modern times as it is truly new conduit to the

customer, and as such it has extensive ability to create a new corporate
branding position, to reinforce the existing brand, or to enable the existing
brand to be repositioned.
The development of an e-Commerce branding strategy will clearly mean

something different to a new entity than it will to an established
organization. The born-on-the-net category is epitomised by Amazon.com,
a company that only just commenced selling books on the Web in July
1995 but that had by 2000 sales of $1.64 billion (net sales for fiscal year
1999, as reported in its SEC filing)—a staggering growth rate of 169% over
the net sales of $610 million for 1998. Amazon is not only the Internet's
dominant bookseller; it is potentially Internet's most dominant brand. To
most North American Internet users, Amazon is a reflection of the
Internet's e-Commerce potential; to most executives, it is the spectre on
the horizon, and they do not want to be caught cold like the “café latte”
high street booksellers.
To the book-buying public, the added value is financially clear—everyday

low-cost pricing. However, cost alone is not the only added value factor;
convenience and service is the key.
The customer feels connected to the company rather than disconnected by

the technology. The secret of the branding at Amazon.com is also more
than its efficient, quality customer service. It is based on the added value
of mass customization.
The customer is dealt with the way customers wish to be dealt with—as a
valued and familiar client with whom a store worker has built up a long-
term relationship.
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Thus, value comes from recognizing the customer’s patterns of purchasing

and through making subtle suggestions to the customer, rather than using
overt direct marketing techniques. The key to mass customization is
getting close to the customer and providing the product on demand at a
low cost while maintaining sufficient margins for the supplier.
Brand reinforcement comes through reflecting the values of the physical

product through the medium of the Internet. A brand reinforcement
strategy does not necessarily imply the Internet is used to transact, merely
to interact.
The goal of being a leader and developer of Internet sales may not be the
goal of every organization. Many established organizations do not actually
wish to develop a new sales channel at the current time and hence have
determined that a brand reinforcement strategy is a suitable complement
to their existing corporate strategy. The goal of this channel is to reinforce
the organization in the eyes of the customer. In order to do this the
organization has to utilize the added value of “information provision” to its
viewers, providing information and building a quality relationship with the
customer on a continuing basis through that information content. This is
not a static information interchange relationship but a dynamic one in
which the customer will expect change and continual value from the
relationship or the linkage will be severed, potentially for a significant
amount of time. An example of a leading brand reinforcement strategy can
be found in the automotive area where BMW is continually stimulating its
customers through subtle incremental changes to its site. BMW utilizes the
technology to increase the involvement level of potential, current, and past
customers. In the past, the site has allowed customers to build their own
dream car or, at the launch of the M series Z3 roadster, to listen to its
engine.
However, unlike Amazon, BMW would prefer the potential new owner to
visit a traditional dealer subsequent to visiting the site. This is not because
BMW is not capable of creating the technology to sell a vehicle via the
Internet, but because the company feels that the interrelationship between
customer and organization is best served by human reinforcement and
bonding.
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Even though this channel is not directly generating revenue, the brand
equity is developing tangible benefits to those that understand and execute
effectively in this market space.
An automobile manufacturer confirmed during the research for this book

that there is a tangible return through retail feedback and retail
connectivity, and that the insights gained through the online channel are
superior to those of traditional marketing channels.
2.8 THE SERVICE PAY-OFF
An obsessive focus on all information surrounding the customer at all

contact points is the most effective way to establish service leadership via
the Internet.
Service should not always be expected to translate immediately into

purchases by customers because its value often consists simply of building
relationships with, and gathering information about, potential customers
and maintaining relationships with existing ones.
The value adding effects of building virtual communities have been well
documented by management consultants John Hagel and Arthur Armstrong
in their 1997 book Net Gain.8. Their communities are developing in parallel
to the e-consortia relationship within the B2C and B2B environments. Over
time, e-consortia will attract more and more customers (and potential new
sellers to add to the consortia) through their service strength.
This derives from the specialized nature of the individual organization's

information being available under the umbrella of the consortia to service
the needs of the customer from a data and information provision
perspective.
2.9 KEY ISSUES IN IMPLEMENTING AN e-COMMERCE

STRATEGY
1. Make sure you have a market. Who is going to buy your products
online? The best place to start is your current customer base. Will going
online make life easier for them? Are you going to save them time and
money by allowing them to purchase online? You probably have a basic
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website already; are you getting requests for online buying from
potential customers? It is never truly possible to judge in advance
whether a market exists, but there should be at least some indication of
a demand for an online presence.
2. Use a clicks-and-mortar strategy if possible. The clicks-and-mortar

approach is the most effective and economic. This combines offline
resources, such as store brands, channels with an online e-Commerce
presence. The other option – a pure play dot-com is now rare.
Consumers are looking for brands that they know and trust. They also
like the fact that a business has a physical presence, a place where they
can go if something goes wrong. Pure play doctors found that they had
to spend a lot of money on marketing just to maintain awareness.
3. Integrate the shopping experience. Consumers look to the web

primarily for information; they may use the website initially to find out
about the product, and then buy by phone or in person. However, repeat
purchasers more familiar with the web are more likely to buy online.
They will be able to do this more easily if their personal details and
purchase history can be stored for subsequent purchases.
4. Plan how you will deal with content, pricing, stock management,
fulfillment, support, payment, returns, support and security.
These are the basics of any business, but there can be added
complications online. You need to address the following:
• Content: This must be updated frequently.
• Pricing: If you are selling direct for the first time, you may have
problems with your distributors and retailers, who will not want you
to underprice them. If you are selling brands by other manufacturers,
there may be problems involved in selling in foreign marketplaces.
Are you going to offer prices in a range of currencies? If so, which?
• Stock Management: Are you going to use the same stock base to
sell online and through your physical distribution channels? If so, you
need an integrated stock management system.
• Fulfillment: Precise information on order status is essential. Each

order should have a tracking number so that the customer can get
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information on the status of the order right up to the point of

delivery. If you haven't sold by mail order before, you will have to
plan for packaging and fulfillment. This can be a major cost, and
needs careful management. If, for cost or other reasons, you decide
not to fulfill to certain countries, you must make that very clear on
the website.
• Payment: How will people pay? What credit cards will you accept?
How will you manage fraud?
• Returns: What is your return policy? Studies indicate that returns

can be a major cost for e-Commerce.
• Support: How will you support the products you sell online? You
must plan for a support section on your website to answer basic
questions from customers. Will you also offer telephone and e-mail
support?
• Security: Security will be a central issue in an e-Commerce strategy.

Fraud and hacking of computer systems are ever-growing problems.
5. Develop an easy-to-use purchase process. An alarming number of

consumers abandon their attempts to buy online. One of the reasons
given is a badly designed purchase process. Your purchase process must
be reliable and very easy to use. It is a good idea to tell the customer
upfront how many steps there are in the purchase process, and to keep
that information prominently displayed at the top of the web page. An
example of the purchase steps is as follows: “Shopping cart - Account -
Shipping - Payment - Verify - Confirm.”
6. Consider localization issues. If you want to sell seriously to foreign

marketplaces, you will have to localize the web site. Studies indicate
that, without localization, sales will be minimal. More worryingly, returns
are very high because of misunderstanding by people who are
purchasing in a foreign language.
7. Consider customer relationship management and personalization

. The Internet offers many opportunities for a better understanding of
customer’s behavior and for developing a closer relationship with them.
Customer relationship management and personalization systems allow
! !45
for the collection and application of comprehensive information to create

a more customised environment for the consumer. While the potential
for such systems is substantial, they are complex and difficult to
implement, and, if not professionally managed, can lead to the abuse of
consumer privacy..
8. Make sure that you buy the right software. There is no need to do
all the work internally, as there is now a wide range of quality software
for e-Commerce.
9. Make sure you have a team in place. An e-Commerce website needs

day-to-day maintenance. Technical problems must be fixed, new content
must be published and old content removed, and the website must be
constantly marketed.
10.If you don’t market, they won’t come. Opening up an e-Commerce

website is rather like setting up shop at the North Pole: nobody knows
you are there. It is not enough just to register with search engines; you
will need an aggressive marketing campaign to make your target
market aware of what you have to offer. The ideal situation is a
seamless integration with marketing strategy of the offline business.
! !46
You wouldn’t build a house without an architect and a blueprint, and you
shouldn’t build a website without a digital equivalent. If you want your
digital ‘house’ to crumble, the surest way to ensure failure online and
waste untold time and money is to skip proper planning and jump blindly
into implementation.
Start with the 5 Ps: Proper Preparation Prevents Poor Performance
Avoid
1. Weak or inconsistent branding
2. Cart abandonment
3. Bad user experience and usability
4. Poor navigation
5. Slow performance
6. Slow or limited site search
7. Inability to make changes quickly
8. Poor Performance with search engines
Achieve Real Economic Benefits for Your Business
What will you gain through proper strategy and planning? A successful e-
commerce business that delivers real economic value, including:
1. Attracting New Customers: By planning and implementing a search

engine friendly architecture from the start, your e-commerce site gains
relevant and targeted traffic.
2. Increasing Sales: By streamlining the sales process and improving the

shopping experience we increase the conversion rate and the average
ticket price.
! !47
3. Increasing Customer Loyalty and Retention: An enhanced, usable,

and pleasing e-commerce experience generates greater user satisfaction
and trust which translates into returning customers.
4. Providing Superior Customer Service and Communications: Help

your customers to communicate, engage and ultimately identify
themselves with your business through e-commerce tools, user
communi ti es, onl i ne support, and by provi di ng them with
comprehensive and timely product information.
5. Reducing Operating Costs and Increasing Efficiency: Reduce your

customer acquisition, customer service and fulfillment costs by
leveraging the website for client communications and process
automation.
6. Promoting Your Brand and Enhancing Your Brand Image: We

ensure you display a consistent corporate identity online with a
professional style guide. Moreover, our e-commerce Marketing solutions
promote your products to the right audience, resulting in enhanced
Brand Recognition and demand.
7. Preparing for Future Needs: With proper planning and a scalable

architecture, your e-Commerce site can accommodate additional
requirements, features and functionality in the future.
Measure Your Success
How will you know if your e-Commerce site is successful at meeting your
business needs? The key success metrics for e-Commerce sites include:
1. Traffic: The number of visitors that are coming to your site
2. Stickiness: The amount of time users spend on the site and the
number of pages they view
3. Conversion: The per cent of visitors who become customers and the
size of the average sales ticket
4. Customer Retention: The number of customers who return to your

site and the frequency of their purchases
! !48
Implement our Holistic Methodology
e-Commerce Partners’ motto is to “Come in prepared and do it once, right”.

A thorough understanding of your business goals alone is not enough to
ensure a flawless execution that delivers results. While it takes only one
mediocre designer or developer to ruin a website, it takes a highly skilled
and professionally managed team to produce a successful e-Commerce
site, including:
• A Project Manager
• An e-Commerce Business Analyst (to conduct the research, plan

strategy, find out what your competitors are doing that may be worth
mimicking, and find the “opportunities” that those competitors are not
taking advantage of)
• A Search Engine Optimization Specialist (to ensure search engine

friendliness is incorporated into the site architecture)
• An Information Architect
• A User Experience Specialist
• An Art Director (to create the design style guide and give directions to
the designers)
• A Developer (for site development and technical specifications)
• A Quality Assurance Specialist
2.11 ACTIVITIES
1. Browse Moneysupermarket.com and study strategies used for saving

money and time by this site.
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
! !49
2. Browse eBay site and distinguish strategies used for different products.
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
……………………………………………………………………………………………………………….
2.12 SUMMARY
The foundations of a strong e-Commerce strategy lie in the preparation of

the ground before the functional issues are addressed.
Clearly there is a strong interaction between these three components. For

instance, when eBay had its outages, the leadership learned from the
experience, upgraded the systems infrastructure and moved on. Other
organizations fail to learn from their experiences and consequently
diminish or, like Levi’s, are forced to leave the Internet space completely
while they rethink their overall strategy.
The ability of established organizations to react, understands, and deploys

an e-Commerce solution is very dependent upon the ability of an
organization to effectively leverage its organizational learning.
Four Positional e-strategic Directions
In creating an e-Commerce strategy, it is clearly necessary to align and

integrate the four main areas of positional strategic focus: technology,
brand, service, and market (see Figure 2.3).
This is a challenging task that must be deeply considered at the outset of
strategy formulation since both the dollar and opportunity costs of
dramatic strategic change after execution can be high.
This is not to say that change is not occurring; change in this arena is
inevitable and continuous, with victory coming to those who can adapt
fastest and be nimble in the face of change. The remainder of this chapter
will introduce the basic strategic issues in each of these leadership
propositions and consider some of the key interactions between them.
! !50
Technology Leadership
We can find e-Commerce strategies that are focused on leadership through

technology in all industry sectors. Technology leadership involves the early
adoption of an emerging technology to achieve a preemptive position.
Many of the companies studied for this book followed this strategy or
viewed technology leadership as an integral part of their overall leadership
strategy, including UPS, Nortel, SUN Microsystems, Motorola and Dow
Jones.
B2G and B2B Technology Leadership
An example of B2G-mandated technology change is that originating from

the regulatory conditions decreed by the U.S. Department of Energy,
which, under the auspice of the Federal Energy Regulatory Commission and
the Open Access Same Time Information System (OASIS), mandated that
the Internet be used to buy and sell natural gas, as well as to make
nominations for gas and pipeline capacity.
Brand Leadership
The emergence of the Internet as a dynamic branding mechanism has

done much to fuel the debate over how to most effectively utilize this
benefit within the development of the organization’s overall brand strategy.
Potentially the most important of these debates focuses on the Internet's
ability to influence, change or reinforce corporate branding.
The Service Pay-off
An obsessive focus on all information surrounding the customer at all

contact points is the most effective way to establish service leadership via
the Internet.
Service should not always be expected to translate immediately into

purchases by customers because its value often consists simply of building
relationships with, and gathering information about, potential customers
and maintaining relationships with existing ones.
! !51
Key Issues in Implementing e-Commerce
1. Make sure you have a market
2. Use a click-and-mortar strategy if possible
3. Integrate the shopping experience
4. Plan how you will deal with content, pricing, stock management,
fulfillment, support, payment, returns, support and security
5. Develop an easy-to-use purchase process
6. Consider localization issues
7. Consider customer relationship management and personalization
8. Make sure that you buy the right software
9. Make sure you have a team in place
10.If you don't market, they won't come
1. Explain the Seven Dimensions of an e-Commerce Strategy.
2. What are the Bonds of an e-Commerce Strategy?
3. Explain the Four Positional e-Strategic Directions with examples.
4. What do you understand by Brand Leadership with cases studies?
5. What are the Key Issues in Implementing an e-Commerce strategy?
! !52
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !53
Chapter 3
CONSTRUCTING AN e-BUSINESS
Objectives:

• understand different business models implemented on internet
• explore the transition from brick and mortal business to e-Business
• review B2C and B2B models used in business application
Structure:
3.1 Introduction
3.2 Types of e-Commerce Models
3.3 Major Business-to-Consumer (B2C) Models
3.3.1 Portal Model
3.3.2 Content Provider
3.3.3 Transaction Broker
3.3.4 Market Creator
3.3.5 Service Provider
3.4 Major Business-to-Business (B2B) Models
3.4.1 e-Distributor
3.4.2 e-Procurement
3.4.3 Exchanges
3.4.4 Industry Consortia
3.4.5 Private Industrial Networks
3.5 Different Types of e-Business Models
3.5.1 Brokerage
3.5.2 Infomediary
3.5.3 Advertising
3.5.4 Affiliate
3.5.5 m-Commerce
3.6 Dynamic Pricing Models for Electronic Business
3.7 Click Modeling for e-Commerce
3.8 Examples of e-Commerce Design Logical Flow Chart
3.9 Short Case Study: Priceline.com
3.10 Activities
3.11 Summary
! !54
3.1 INTRODUCTION
e-Commerce is the process of buying and selling of various products and

services by businesses through the Internet. It deals with various kinds of
business concerns, from retail site of the consumer, which includes auction
but the main focus is to concentrate on business substitutes involving
goods and services between various corporations.
e-Commerce is the purpose of Internet and the Web to conduct business

but when we concentrate on commercial deals among organizations and
individuals demanding selective information systems under the guarantee
of the firm it accepts the form of e-Business. Nowadays, the word ‘e’ is
hitting momentum.
A business model is a set of planned activities (sometimes referred to as

business process) designed to result in a profit in the market place. A
business model is not always the same as a business strategy, although in
some cases they are very close insofar as the business model explicitly
takes into account the competitive environment.
The business model is the center of the business plan. A business plan is a
document that describes a firms business model, it takes into account the
competitive environment.
Eight Key Elements of a Business Model
For developing a successful business in any area, you need to make sure
that the model to effectively address the eight elements addressed in Table
3.1.
• Value proposition defines how a company’s product or service fulfills the

need of customers
• Revenue models describes how firms earn revenue, produce profits, and
produce superior return on investment capital
• Market opportunity refers to the companies intended market space and

the overall potential financial opportunities available to the firm in that
market place
! !55
• Competitive environment refers to the other companies operating in the

same market space selling similar products
• Competitive advantage achieved by a firm when it can produce a

superior product and/ or bring the product to market at a lower price
than most, or all of the competitors
• Market strategy is the plan you put together that exactly how you intend
to enter into new market and attract new customers
• Organizational development is a plan that describes how the company

will organize the work that needs to be accomplished
• Management team refers to employees of the company responsible for

making the business model work. 
Table 3.1 Key Ingredients of a Business Model

Components Key Questions
Value proposition Why should the customer buy from you?

Revenue model How will you earn money?
Market opportunity What marketspace do you intend to serve, and

what is its size?
Competitive Who else occupies your intended marketspace?
environment
Competitive What special advantages does your firm bring

advantage to the marketspace?
Market strategy How do you plan to promote your products or

services to attract your target audience?
Organizational What types of organizational structures within

development the firmare necessary to carry out the business
plan?
Management team What kinds of experiences and background are

important for the company's leaders to have?
! !56
Table 3.2 Five Primary Revenue Models

Revenue Examples Revenue Source
Model
Advertising yahoo.com Fees from advertisers in

exchange for advertisements
Subscription WSJ.com Fees from subscribers in

consumerreports.org exchange for access to content
or services
Sportsline.com
Transaction fee eBay.com,E-Trade.com Fees (commissions) for enabling

or executing a transaction
Sales Amazon.com, LLBeancom, Sales of goods, information or

Gap.com, Searscom, services
JCPenny.com
Affiliate mypoints.com Fees for business referrals
 
3.2 TYPES OF e-COMMERCE MODELS
Creating an e-Commerce solution mainly involves creating and deploying

an e-Commerce site. The first step in the development of an e-Commerce
site is to identify the e-Commerce model.
Depending on the parties involved in the transaction, e-Commerce can be

classified into 4 models.
These are:
• Business-to-Business (B2B) model
• Business-to-Consumer (B2C) model
• Consumer-to-Consumer (C2C) model
• Consumer-to-Business (C2B) model
Let us look at each of them in detail.
Business-to-Business (B2B) Model
The B2B model involves electronic transactions for ordering, purchasing, as

well as other administrative tasks between houses. It includes trading
goods, such as business subscriptions, professional services,
! !57
manufacturing, and wholesale dealings. Sometimes in the B2B model,

business may exist between virtual companies, neither of which may have
any physical existence.
In such cases, business is conducted only through the Internet.
Let us look at the same example of www.amazon.com. As you know,

www.amazon.com is an online bookstore that sells books from various
publishers including Wrox, O’Reilly, Premier Press, and so on. In this case,
the publishers have the option of either developing their own site or
displaying their books on the Amazon site (www.amazon.com), or both.
The publishers mainly choose to display their books on www.amazon.com
as it gives them a larger audience. Now, to do this, the publishers need to
transact with Amazon, involving business houses on both the
ends, is the B2B model.
Consider a hypothetical example. ABC company sells automobile parts and

XYZ company assembles this part and then sells the automobile to
customers. XYZ company comes across the web-site of ABC and finds it
suitable. XYZ therefore, requests for more information about ABC and
finally, decides to purchase automobile parts from ABC. To do this, XYZ
places an order on the website of ABC. After ABC receives the order
details, it validates the information.
As soon as the order is confirmed, the payment procedures are settled.

Finally, ABC sends an acknowledgement of payment to XYZ and delivers
the goods as per the shipment details decided between the two
organizations.
The advantages of the B2B model are:
• It can efficiently maintain the movement of the supply chain and the
manufacturing and procuring processes.
• It can automate corporate processes to deliver the right products and

services quickly and cost-effectively.
The B2B model is predicted to become the largest value sector of the
industry within a few years.
! !58
This is said to be the fastest growing sector of e-Commerce.
B2B Business Model
!
Figure 3.1: Business-to-Business (B2B) Model
The B2C model involves transactions between business organizations and

consumers. It applies to any business organization that sells its products or
services to consumers over the Internet. These sites display product
information in an online catalog and store it in a database.The B2C model
also includes services online banking, travel services, and health
information.
B2C Business Model
!
Figure 3.2: Business-to-Consumer (B2C) Model
Consider a hypothetical example in which a transaction is conducted

between a business organization and a consumer. A business house, LMN
Department Store, displays and sells a range of products on their website,
www.lmn.com. The details information of all their products is contained in
the huge catalogs maintained by LMN Department Stores. Now, a
consumer, Mr. Deshpande, wants to buy a gift for his wife. He therefore,
logs on to the site of LMN Department Stores and selects a gift from the
catalog. He also gets the detailed information about the gift such as, the
! !59
price, availability, discounts, and so on from their catalog. Finally, when he

decides to buy the gift, he places an order for the gift on their website. To
place an order, he needs to specify his personal and credit card information
on www.lmn.com. This information is then validated by LMN Department
Store and stored in their database. On verification of the information the
order is processed. Therefore, as you can see, the B2C model involves
transactions between a consumer and one or more business organizations.
The example of the www.amazon.com site also involves the B2C model in
which the consumer searches for a book on their site and places an order,
if required. This implies that a complete business solution might be an
integration solution of more than one business model.
For example, www.amazon.com includes the B2B model in which the

publishers transact with Amazon and the B2C model in which an individual
consumer transacts with the business organization.
The B2C model of e-Commerce is more prone to security threats because

individual consumers provide their credit card and personal information on
the site of a business organization.
In addition, the consumer might doubt that his information is secured and
used effectively by the business organization. This is the main reason why
the B2C model is not very widely accepted. Therefore, it becomes very
essential for the business organizations to provide robust security
mechanisms that can guarantee a consumer for securing his information.
Consumer-to-Consumer (C2C) Model – The C2C model involves transaction

between consumers. Here, a consumer sells directly to another consumer.
eBay and www.bazee.com are common examples of online auction
websites that provides a consumer to advertise and sell their products
online to another consumer.
However, it is essential that both the seller and the buyer must register
with the auction site. While the seller needs to pay a fixed fee to the online
auction house to sell their products, the buyer can bid without paying any
fee. The site brings the buyer and seller together to conduct deals.
! !60
C2C Business Model
!
Figure 3.3: Consumer-to-Consumer (C2C) Model
Let us now look at the previous figure with respect to eBay. When a
customer plans to sell his products to other customers on the website of
eBay, he first needs to interact with an eBay site, which in this case acts as
a facilitator of the overall transaction. Then, the seller can host his product
on www.ebay.com, which in turn charges him for this. Any buyer can now
browse the site of eBay to search for the product he interested in.
If the buyer comes across such a product, he places an order for the same
on the website of eBay. eBay now purchase the product from the seller and
then, sells it to the buyer. In this way, though the transaction is between
two customers, an organization acts as an interface between the two
organizations.
Consumer-to-Business (C2B) Model
The C2B model involves a transaction that is conducted between a

consumer and a business organization. It is similar to the B2C model,
however, the difference is that in this case the consumer is the seller and
the business organization is the buyer. In this kind of a transaction, the
consumers decide the price of a particular product rather than the supplier.
This category includes individuals who sell products and services to

organizations. For example, www.monster.com is a website on which a
consumer can post his biodata for the services he can offer. Any business
organization that is interested in deploying the services of the consumer
can contact him and then employ him, if suitable.
Let us look at another example of the C2B model.
! !61
Deshpande needs to buy an airline ticket for his journey from Mumbai to
New Jersey. Deshpande needs to travel immediately. Therefore, he
searches a website for a ticket. The website offers bidding facility to people
who want to buy tickets immediately. On the website, Deshpande quotes
the highest price and gets the ticket.
C2B Business Model
!
Figure 3.4: Consumer-to-Business (C2B) Model
In addition to the models discussed so far, five new models are being
worked on that involves transactions between the government and other
entities, such as consumer, business organizations, and other
governments.
All these transactions that involve government as one entity are called e-
governance. The various models in the e-governance scenario are:
• Government-to-Government (G2G) model: This model involves

transactions between 2 governments. For example, if the American
government wants to buy oil from the Arabian government, the
transaction involved is categorized in the G2G model.
• Government-to-Consumer (G2C) model: In this model, the government

transacts with an individual consumer. For example, a government can
enforce laws pertaining to tax payments on individual consumers over
the Internet by using the G2C model.
• Consumer-to-Government (C2G) model: In this model, an individual

consumer interacts with the government. For example, a consumer can
pay his income tax or house tax online. The transactions involved in this
case are C2G transactions.
! !62
• Government-to-Business (G2B) model: This model involves transactions

between a government and business organizations. For example, the
government plans to build a flyover. For this, the government requests
for tenders from various contractors. Government can do this over the
Internet by using the G2B model.
• Business-to-Government (B2G) model: In this model, the business

houses transact with the government over the Internet. For example,
similar to an individual consumer, business houses can also pay their
taxes on the Internet.
3.3 MAJOR BUSINESS-TO-CONSUMER (B2C) MODEL
Business-to-Consumer (B2C) e-Commerce in which online business seek to

reach individual consumers, is the most well known and familiar type of e-
Commerce business model.
Table 3.3 illustrates the major business models used in the B2C arena
Table 3.3 B2C Business models

Business Variations Examples Description Revenue
Models Model
Portal Horizontal yahoo.com Offers an integrated Advertising

AOL.com package of content Subscription
MSN.com services and content - Fees,Transac
search, news, e-mail, tion fees
chat music
downloads,video
streaming,
calendars,etc. Seeks to
be user's home base.
Vertical/ Sailnet. Offers service and Same

Speci-alized com products to specialized
(Vortal) marketspace
! !63
E-Tailer Virtual amazon.co Online version of retail Sales of

Merchant m store, where customers goods
can shop at
any hour of the day or
night
without leaving their
home or
office.
Clicks and Wal- Online distribution Same

Bricks Mart.com channel for a company
that also had physical
stores
Catalog LandsEnd.c Online version of direct Same

Merchant om mail catlog
LLBean.co
m
Manufactur deil.com Sales of

er direct compaq.co goods
m
Content WSJ.com, Information and Advertising

providers sportsline.c entertainment Providers Subscription
om like newspapers, sports Fees,
CNN.com sites, an other online Affiliate
rhapsody.co sources that offer referral fees
m customers up-todate
ESPN.com news and special
interest how-to guidance
and tips and/or
information sales.
Transaction E- Processors of online Transaction

Trade.com, sales, transactions, such Fees
expedia.co as stock brokers and
m, travel agents, that
monster.co increase customers
m, productivity by helping
travelocity.c them get things done
om, faster and more cheaply.
hotels.com,
orbitz.com
! !64
Market Auctions ebay.com, Web-based businesses Transaction

priceline.co that use internet Fees
m, technology to
amazon.co create markets that
m bring buyers and sellers
together
Service Mybcons- Companies that make Sales of

Provider ulting. money by selling users a services
Lawinfo. service, rather than a
com xDrive product.
myCFO.com
Community about.com Sites where individuals Advertising

with
particular
3.3.1 Portal Model
Electronic Marketplaces and Portals: As the Web emerged in the

mid-1990s, many business researchers and consultants believed that it
would provide an opportunity for companies to establish information hubs
for each major industry. These industry hubs would offer news, research
reports, analyses of trends, and in-depth reports on companies in the
industry. In addition to information, these hubs would offer marketplaces
and auctions.
These hubs would offer a doorway to the Internet for industry members
and would be vertically integrated; these planned enterprises were called
vertical portals or vortal. As with many electronic commerce predictions,
the prediction that vertical portals would change business forever did not
turn out to be exactly correct.
Private Stores and Customer Portals: As established companies in various

industries watched new businesses open marketplaces; they became
concerned that these independent operators would take control of
transactions away from them in supply chains. Large companies that sell to
many relatively small customers can exert great power in negotiating price,
quality, and delivery terms with those customers. These sellers feared that
industry marketplaces would dilute that power.
! !65
Private Stores and Customer Portals: Many of these large companies had
already invested heavily in Web sites that they believed would better meet
the needs of their major customers than any industry marketplace. For
example, Cisco and Dell offer private stores for each of their major
customers within their selling websites. Other companies, such as Grainger
and Milacron, provide additional services for customers on their sites.
Large companies that purchase from vendors that are relatively small can
exert great power over those vendors in purchasing negotiations. These
companies can invest in procurement software. Companies that implement
e-procurement software usually require their suppliers to bid for their
business.
When industry marketplaces opened for business, these large companies

were reluctant to abandon their investments in e-procurement software.
These companies use their power in the supply chain to force suppliers to
deal with them on their own terms rather than negotiate with suppliers in
an industry marketplace. As marketplace software became more reliable,
many of these companies developed private company marketplaces.
• Portal sites give visitors access to a variety of information in one place

• News, sport, weather, online shopping, searching
• Revenue through charging advertisers and charging for premium services
• Charging strategies for portals
• Charge merchants for a link
• Per customer “click-through”
Reserve best areas for paying customers, a broad range of topics, e.g.
search engines
• Yahoo!, Altavista.com, about.com

• Vertical portals (community sites) – large amount of information in one
subject area
• www.webmd.com, Bolt.com, IVillage.com
3.3.2 Content Provider

Content providers distribute digital content (news, music, video, artwork)
over the Web
• WSJ.com, Rhapsody.com, CNN.com
! !66
• Second largest source of B2C e-Commerce revenue in 2002

• Revenue generates through subscription fees, pay for download or
advertising
• Syndication a variation of standard content provider model
3.3.3 Transaction Broker

• Sites that process transactions for consumers
• E-Trade.com, Ameritrade.com, monster.com
• Primary value proposition – saving of time and money for customers
• Typical revenue model – transaction fee based on flat rate or sliding scale
• Industries using this model
• Financial services
• Travel services
• Job placement services
3.3.4 Market Creator

• Uses Internet technology to create markets that bring buyers and sellers
together
• Where they can display products, search for products and establish prices
priceline.com (reverse auction), eBay.com
• Typically uses a transaction fee revenue model
• Usually a commission on sales is collected and sometimes a submission
fee
• A middleman – no inventory and production costs, not involved in
payment and delivery
3.3.5 Service Provider

• Offers services online
• xDrive.com – information storage
• Mybconsulting.com – consulting for small businesses
• Value proposition – valuable, convenient, timesaving, low-cost
alternatives to traditional service providers
• Revenue models – subscription fees or one-time payment
• Mixing services with products – powerful strategy
3.4 MAJOR BUSINESS-TO-BUSINESS (B2B) MODELS

• e-Distributor
• e-Procurement
! !67
• Exchanges (B2B hubs)

• Industry Consortia
• Private Industrial Networks
3.4.1 e-Distributor
• Company that supplies products and services directly to individual
businesses
• Granger.com
• GE Electric Aircraft Engines (geae.com)
• Owned by one company seeking to serve many customers
• Revenue through sale of goods
3.4.2 e-Procurement
• Create and sell access to digital electronic markets
• Aruba
• CommerceOne
• B2B service provider is one type — offer purchasing firms sophisticated
set of sourcing and supply chain management tools
• Application service providers a subset of B2B service providers
• Revenue through fees (for market making services, supply chain
management)
3.4.3 Exchanges
• An electronic digital marketplace where suppliers and commercial
purchasers can conduct transactions
• Exchange.eSteel.com, GEPolymerland.com
• Usually owned by independent firms whose business is making a market
• Generate revenue by charging transaction fees
• Usually serve a single vertical industry
3.4.4 Industry Consortia
• Industry-owned vertical marketplaces that serve specific industries

• Horizontal marketplaces, in contrast, sell specific products and services
to a wide range of industries
• Leading example: Covisint
! !68
3.4.5 Private Industrial Networks

• Digital networks (usually, but not always Internet-based) designed to
coordinate the flow of communications among firms engaged in business
together
• Single firm network: the most common form (example – Wal-Mart)
• Industry-wide networks: often evolve out of industry associations
(example – WWRE)
B2B Business Models Summary
Table 3.4 B2B Business Models

Business Examples Description Revenue Model
Model
(1) NET MARKET PLACES
e - G r a i n g e r. Single-firm online versions of retail Sales of goods.

Distributor com and wholesale stores; supply
FindMRO.c maintenance, repair, operation
om goods; indirect inputs.
staples.co
m
e - A r u b a - Single firms creating digital markets Fees for market-

Procureme C o m where thousands of sellers and making services;
nt commerce buyers transact. Sellers and buyer supply chain
one.com transact for indirect inputs management,
Siemens and fulfil
services.
Exchanges Exchange. Independently owned digital market F e e s and

e S t e e l . place for direct inputs. Vertical commissions on
c o m industry orientation transactions.
IMX.com
I n u s t r y covisint.co Industry-owned vertical digital F e e s and

Consortia m markets open to select suppliers. commissions on
sciquest.c transactions.
om
(2) PRIVATE INDUSTRIAL NETWORKS
! !69
S i n g l e - W a l m a r t Company-owned networks to Cost absorbed

F i r m Proctor & coordinate supply chains with a by
Networks G a m b l e Gamblelimited set of partners. network owner
Daimeler and recovered
Chrysler t h r o u g h
Ford production and
Motor Co. distribution
efficiencies.
I n d u s t r y - N i s t e v o Industry-owned networks to set Contributions

wide Inc. standards, coordinate supply and from
networks Globalnetx logistics for the industry. industry member
change. firms and
UCC recovered
net.org t h r o u g h
worldwide production
retail- and distribution
exchange. efficiencies; for
org transactions
and services.
3.5 DIFFERENT TYPES OF e-BUSINESS MODELS
An e-Business model describes how an organization operates and provides

products or services. It also demonstrates how the company makes money.
Many business models explain the organizations approach to creating and
penetrating new markets or technologies.
Most e-Business models consist of various components – concept, value

proposition and sources of revenue. In addition, models include business
activities, resources and core capabilities.
! !70
!
Figure 3.5
3.5.1 Brokerage
The brokerage e-Business model entails bringing buyers and sellers

together to make possible business transactions. Brokers can facilitate
consumer-to-consumer, consumer-to- business or business-to-business
markets. This business model earns money by charging afee or
commission for each transaction. Various types of brokerage models exist,
such as auction broker, search agent, buy/sell fulfillment or transaction
broker. Auction brokers coordinate auctions for sellers for a listing fee and
commission. The eBay website epitomizes the clearest example of the
model. Search agents involve a robot or search agent that uncovers prices
and the availability of specific goods and services or difficult-to-find items.
Buy/sell fulfillment brokers takes customers directives to buy or sell
services or products. A transaction broker offers buyers and sellers a third-
party payment venue where the parties can settle business transactions.
3.5.2 Infomediary
This particular e-Business model entails capturing and sharing information.

Some organizations may have website users to register to gain access to
the information on the website, even free information. This is a common
technique for getting white papers or e-Books. Many companies have white
papers written by experts or consultants. Some other infomediary entities
like specializing in supplying banner ads to a group of member site,
collecting consumer data to evaluate marketing campaigns. Another model
provides consumers incentives, such as coupons or points to patronize
certain businesses and collects data to sell for target advertising
campaigns.
! !71
3.5.3 Advertising
The advertising e-Business model works in the same way as the convention
media broadcast version. The business may offer free or paid services,
such as e-mail, blogs or instant messaging. Many sites list ads, products or
services for sale. This model usually has banner or text ads, which may
constitute the primary source of revenue. Generally, this sort of model
requires a high volume of traffic. The model also works for highly
specialized traffic.
3.5.4 Affiliate
The affiliate e-Business model offers products or services whenever people

may surf on the Web. An Internet merchant offers financial incentives,
usually as a commission, for a web site owner to place an advertisement
with links on the affiliate's website. When a surfer clicks on the link and
buy, the affiliate receives a commission. Companies benefit from this
approach because it reduces customer acquisition costs and allows
merchants to target specific markets.
3.5.5 m-Commerce
It deals with conducting the transactions with the help of mobile. With the
mobile device consumers can interact with each other and can lead the
business. Mobile Commerce involves the change of ownership or rights to
utilize goods and related services.
!
Figure 3.6
! !72
3.5.6 Electronic Data Exchange Technology
These emerging networks of firms are more flexible and can respond to
changes in the economic environment much more quickly than
hierarchically structured businesses ever could.
• Electronic Data Interchange (EDI). EDI is a computer-to-computer
transfer of business information between two businesses that uses a
standard format. The two businesses that are exchanging information are
called trading partners. Firms that exchange data in specific standard
formats are said to be EDI-compatible.
• Electronic Data Interchange (EDI). The business information

exchanged is usually transaction data; however, it can include other
information related to transactions, such as price quotes and order-status
inquiries. Transaction data in B2B transactions includes the information
usually on paper invoices, purchase orders, requests for quotations, bills
of lending, and receiving reports.
• Early Business Information Interchange. Efforts In the 1950s,

information flows between businesses continued to be printed on paper.
By the 1960s, businesses had begun exchanging transaction information
on punched cards or magnetic tape. In 1968, a number of freight and
shipping companies formed the Transportation Data Coordinating
Committee (TDCC) to create the TDCC standard format. Value Added
Networks EDI reduces paper flow and streamlines the interchange of
information among departments within a company and between
companies. Trading partners can implement the EDI network and EDI
translation processes in several ways using either direct connection or
indirect connection.
• Direct Connection between Trading Partners. Direct connection EDI

requires each business in the network to operate its own onsite EDI
translator computer. These EDI translator computers are then connected
directly to each other using modems and dialup phone lines or dedicated
leased lines.
• Indirect Connection between Trading Partners. Instead of

connecting directly to each of its trading partners, a company might
decide to use the services of a value added network. A value added
! !73
network (VAN) is a company that provides the communications

equipment, software, and skills needed to receive, store, and forward
electronic messages that contain EDI transaction sets.
• EDI on the Internet. Trading partners who had been using EDI began
to view the Internet as a potential replacement for the expensive leased
lines. The major roadblock to conducting EDI over the Internet was
security. As the TCP/IP was enhanced and SHTTP protocol was
developed, businesses worried less about security issues.
• Open Architecture of the Internet. A number of new firms, such as

Commerce One and IPNet, have begun providing EDI services on the
Internet. EDI on the Internet is also called “open EDI” because the
Internet is an open architecture network. New tools, such as XML, are
helping trading partners be even more flexible in exchanging detailed
information.
• Financial EDI. The EDI transaction sets that provide instructions to a
trading partner’s bank are called Financial EDI (FEDI). All banks have the
ability to perform electronic funds transfers (EFTs). Most EFTs are
handled through the Automated Clearing House (ACH). Security and
reliability are issues of FEDI.
• Hybrid EDI Solutions. Some firms are offering hybrid EDI solutions
that use the Internet for part of the transaction. Bottom-line
Technologies’ payBase package is an example of hybrid EDI. Other hybrid
solutions include EDI-HTML translation services.
! !74
!
Figure 3.7: Product Delivery Information Flow without EDI
Tangible Benefits of EDI
• EDI can be a cost and time saving system because:

— automatic transfer of information from computer to computer reduce
errors
— EDI produce acknowledgement of receipt of data – invoice is not
necessary, and thus save efforts and reduce cost
• For companies dealing with thousands of suppliers and tens of thousands

of purchase order a year, the saving from EDI are significant, e.g., RJR
Nabisco cut the processing of purchase order from about 100 to 93 cents
• Saving accrue from the following improvements:

— reduced paper-based systems
— improved problem resolution and customer service
— expanded customer/supplier base
! !75
!
Figure 3.8: Product Delivery Information Flow with EDI
3.6 DYNAMIC PRICING MODELS FOR ELECTRONIC BUSINESS
Dynamic pricing is the dynamic adjustment of prices to consumers

depending upon the value these customers attribute to a product or
service. In the literature, several alternative terms have been used to
describe dynamic pricing. These include flexible pricing and customized
pricing. Dynamic pricing includes two aspects:
(1) Price dispersion and (2) Price discrimination.
Price dispersion can be spatial or temporal. In spatial price dispersion,

several sellers offer a given item at different prices. In temporal price
dispersion, a given store varies its price for a given good over time, based
on the time of sale and supply-demand situation.
The other aspect of dynamic pricing is differential pricing or price

discrimination, where
different prices are charged to different consumers for the same product.
! !76
e-Business companies are currently grappling with the complex task of

determining the right prices to charge a customer for a product or a
service. This task requires that a company know not only its own operating
costs and availability of supply, but also how much the customer
values the product and what the future demand would be.
A company therefore needs a wealth of information about its customers

and also be able to adjust its prices at a minimal cost. Advances in Internet
technologies and e-Commerce have dramatically increased the quantum of
information the sellers can gather about customers and
have provided universal connectivity to customers making it easy to
change the prices. This has led to increased adoption of dynamic pricing
and to increased interest in dynamic pricing research.
There is a trend in pricing that promises to significantly change the way

goods are marketed and sold. Sellers now offer special deals, tailored for
individual customers, and are beginning to compute the right price to the
right customer at the right time.
This change has been largely due to the wiring of the economy through the
Internet, corporate networks and wireless networks. Buyers are now able
to quickly and easily compare products and prices, putting them in a better
bargaining position.
At the same time, the technology is allowing sellers to collect detailed data
about customers'
buying habits, preferences, even spending limits, so they can customize
their products and prices. In the past, there was a significant cost
associated with changing prices, known as the menu cost. For a company
with a large product line, it could take months for price adjustments to
filter down to distributors, retailers and salespeople.
Emergence of network technology has reduced menu cost and time to near
zero. As buyers and sellers interact in the electronic world, the resulting
dynamic prices more closely reflect the true market value of the products
and services being traded.
There are two developments in electronic business which have resulted in a

paradigm shift from fixed pricing to dynamic pricing.
! !77
1. Transaction costs for implementing dynamic pricing have been reduced

by eliminating the need for people to be physically present in time and
space
2. Reducing the search costs and reducing the menu costs of informing the
changed prices.
Increased uncertainty and demand volatility has led to an increased

number of customers
and competitors and an increased amount of information. Dynamic pricing
itself leads to increased price uncertainty and companies are finding that
using a single fixed price in these volatile Internet markets is ineffective
and inefficient.
Examples of Dynamic Pricing
The airline industry is a common example of deployment of dynamic

pricing strategies.
The kind of pricing strategy followed here is popularly known as yield

management or revenue management.
Essentially, the method here is to dynamically modulate prices over time

by adjusting the number of seats available in each pre-defined fare class.
Advantage is taken of a natural segmentation in the consumers: business
travelers for whom the flight dates and timings are primary and fares are
secondary; casual travelers for whom prices are important and the dates/
timings are flexible; and hybrids for whom both factors are at an equal
level of importance. Yield management systems essentially forecast
demand, closely monitor bookings, and dynamically adjust seats available
in each segment, so as to maximize profits.
Priceline.com allows travelers to name their price for an airline ticket

booked at the last minute and get for example a ticket from Boston to San
Francisco at USD 275 instead of the full fare of USD 750. Priceline.com
uses complex software that enables major airlines to fill unsold
seats at marginal revenues.
The business model of Priceline.com is attractive for airlines since it can

generate additional revenues on seats that would have otherwise gone
! !78
unsold. Transactions through priceline.com do not influence buyers with

high willingness to pay since a number of serious restrictions apply
to the cheaper tickets.
Auction sites such as Ebay.com and Onsale.com have been successfully

running auctions where people participate outbidding one another to
purchase computers, electronics, sports equipment, etc., at dynamic prices
that are governed by supply-demand characteristics.
Computer manufacturers such as Sun Microsystems and IBM have been

selling increasing numbers of servers via auctions. Dell sells custom PC
configurations at prices which are different for different configurations.
The Dell model is the ultimate in price differentiation in the sense of being
implemented in terms of product differentiation. Dell quotes different prices
to different market segments for the same product, enabling the company
to increase the profitability. Dell and Cisco generate almost
50% of their sales through the Internet.
In September 2000, Amazon.com experimented with prices on their most

popular DVDs.
Depending on the supply and demand, the prices on a particular DVD

varied over a wide range. Customers found out about this and reacted in
anger at what they saw as random prices on a commodity which is plenty
in supply. Thus price fluctuations can often lead to reduced loyalty
from customers if fairness is not perceived.
Buy.com uses software agents to search websites of competitors for

competitive prices and in response, Buy.com lowers its price to match
these prices. The pricing strategy here is based on the assumption that
their customers are extremely price sensitive and will choose to
purchase from the seller offering the lowest price.
This has resulted in Buy.com register high volumes of trade, however due
to the low prices, the profits are low, often at times even negative. This
example illustrates that overly simplistic or incorrect model of buyer
behaviour can produce undesirable results.
! !79
Models Used in Dynamic Pricing
A variety of mathematical models have been used in computing dynamic

prices. Most of these models formulate the dynamic pricing problem as an
optimization problem. Depending on the specific mathematical tool used
and emphasized, we provide a list of five categories of models.
• Inventory-based models: These are models where pricing decisions

are primarily based on inventory levels and customer service levels.
• Data-driven models: These models use statistical or similar techniques

for utilising data available about customer preferences and buying
patterns to compute optimal dynamic prices.
• Game theory models: In a multi-seller scenario, the sellers may

compete for the same pool of customers and this induces a dynamic
pricing game among the sellers. Game theoretic models lead to
interesting ways of computing optimal dynamic prices in such situations.
• Machine learning models: An e-Business market provides a rich

playground for online learning by buyers and sellers. Sellers can
potentially learn buyer preferences and buying patterns and use
algorithms to dynamically price their offerings so as to maximize
revenues or profits.
• Simulation models: It is well known that simulation can always be used

in any decision making problem. A simulation model for dynamic pricing
may use any of the above four models stated above or use a prototype
system or any other way of mimicking the dynamics of the system.
3.7 CLICK MODELING FOR e-COMMERCE
Historical user click patterns on search result pages are considered a great
resource for algorithms that attempt to learn to rank search results. This
ranking method is a well-studied problem in the field of Information
Retrieval (IR).
! !80
What are Click Models?
Click models are mathematical models that attempt to do just that:

Describe a typical user's decision process as he or she interacts with the
search results page, so that we may infer said users judgments on the
relevance and irrelevance of specific search results.
Take, for example, the following scenario:
The user searched for “Meaning of life”. A search result page (SRP) with 50
results was served back. The user then clicked on result #2, and we never
heard from him again.
Consider the following two explanations:
1. The user looked at the SRP, read the snippet returned for result #1, and
then ignored it as irrelevant. The user then moved to result #2, read
the snippet, found it attractive, clicked through to the page, found the
meaning of life in there, and then stopped the search, satisfied with
what he found.
2. The user glanced at the SRP, chose result #2 randomly, read the
snippet, found it somewhat relevant, clicked-through to the page, and
found it completely irrelevant. Then his phone rang and he abandoned
the search.
According to the first explanation, result #2 was relevant to the users

search. According to the second explanation, it wasn’t. Both explanations
(and many others) are possible. But are they equally likely?
A click model helps us assign mathematical probabilities to every such

explanation, enabling us to use millions of scenarios to infer the likelihood
of relevance for every search result against every search.
Commonly Used Click Models
The simplest class of click models is called position models. Position models
assume that search results have a probability of being examined by the
user that decays with the position of the result within the page. A click
depends on a result being examined and deemed relevant, so that P (click)
! !81
= P (examined) * P (relevant), and P (examined) is a decaying function of

rank.
Cascade models are another class of click models, where the user is
assumed to examine the results sequentially: starting from the top,
clicking on the first relevant result examined, and stopping the search
immediately. Here the probability of a click depends on the relevance of a
result, as well as the irrelevance of all previous results. This model doesn't
account for abandoned searches, or searches with multiple clicks.
The DBN model assumes that users examine items in an SRP starting at
position 1 and working downwards: skipping items that appear irrelevant
and clicking on items that appear relevant, until either abandoning the
search or landing on a satisfactory page following a click from the SRP.
Bricks and clicks (aka clicks and bricks, click and mortar, or bricks, clicks
and flips) is a business model by which a company integrates both offline
(bricks) and online (clicks) presences, sometimes with the third extra flips
(physical catalogs). Additionally, many will also offer telephone
ordering as well, or at least provide telephone sales support.
A popular example of the bricks and clicks model is when a chain of stores
allows the customer to order products either online or physically in one of
their stores, also allowing them to either pick-up their order directly at a
local branch of the store or get it delivered to their home. There are many
alternative combinations of this model.
The bricks and clicks model has typically been used by traditional retailers
who have extensive logistics and supply chains, but are well known and
often respected for their traditional physical presence.
Part of the reason for its success is that it is far easier for a traditional
retailer to establish an online presence, than it is for a start-up company to
employ a successful purely online one, or for an online only retailer to
establish a traditional presence, including a strong and well recognized
brand, without having a large marketing budget.
Although the major factor in the success or failure of this business model is
in the control of costs, as usually maintaining a physical presence — paying
for many physical store premises and their staffing — requires larger
! !82
capital expenditure which online only businesses do not usually have.

Some business sectors may lend themselves better to a bricks and clicks
model than others.
For example, supermarkets often have different customer's types requiring

alternative shopping options; one group may wish to see the goods directly
before purchase and like the convenience of quickly shopping on-the-fly,
while another group may require a different convenience of shopping online
and getting the order delivered when it suits them. Conversely, a business
selling more luxurious, often expensive, or only occasionally purchased
products — like cars — may find sales are more common with a physical
presence, due to the more considered nature of the purchasing decision,
though they may still offer online product information.
The success of the model in many sectors has lessened the credibility of
some analysts who argued that the Internet would render traditional
retailers obsolete through disintermediation. On the other hand, an online-
only service can remain a best-in-class operation because its
executives focus on just the online business. It has been argued that a
bricks and clicks business model is more difficult to implement than an
online only model. In the future, the bricks and clicks model may be more
successful, but in 2010 some online only businesses grew at a staggering
30%, while some bricks and clicks businesses grew at a paltry 3%. The key
factor for a bricks and clicks business model to be successful “will, to a
large extent, be determined by a company’s ability to manage the trade-
offs between separation and integration” of their retail and online
businesses.
3.8 EXAMPLES OF e-COMMERCE DESIGN LOGICAL FLOW

CHART
Example 1
A book distributor who stocks a large number of books, which he

distributes via a large network of booksellers. Assume that the distributor
has stocks of books of a large number of publishers and bookseller’s order
books as and when their stock is low. Distributors give one month's time to
booksellers for payment.
! !83
Example 2
B2C e-Commerce of a customer reserving airline tickets from his home or

place of work.
B2C e-Commerce involves the business between an individual and an

organization.
For the case given in question, the customer has to visit the site of the
travel agency or a broker and get the status of the availability of tickets. If
ticket is available he/she will book the ticket and input the credit card
details. He/She will be given the details of delivery of ticket.
The block diagram below depicts the total process B2C.
! !84
!
Example 3
C2C e-Commerce with an appropriate example
Here the selling and purchasing is carried out between two individuals. One
is a seller and the other is a buyer. The items are usually used items, /
coins or antiques. The seller posts the description of the item and the
expected price of the item on a website maintained by a company which
acts as a middleman or broker.
For example: Consider a company Y which acts as a broker. Suppose an

individual A has to sell some items, so it will post the description of the
items in Y's site. A person B is interested to purchase some items, then he/
she will visit Y's site.
Here we can have three cases.
! !85
Case I:
The broker Y can just act as an advertising agency and make the two
persons meet each other and carry out further transaction. For this it gets
some commission from both the parties.
This is described in the block diagram below:
! !86
Case II:
The broker Y can act as an advertising agency, make the two persons
negotiate the price. Then Y takes all responsibilities until the item is
delivered. For this it gets some commission from both the parties.
! !87
Case III:
The broker Y can act as an advertising agency and displays items posted
by the seller with prices. Both the buyer and seller will not have to
acknowledge each other. Y takes all responsibilities until the item is
delivered. For this he gets some commission from both the parties.
! !88
3.9 SHORT CASE STUDY: PRICELINE.COM
Priceline.com an American company and a commercial website that helps

users obtain discount rates for travel-related purchases such as airline
tickets and hotel stays. The company is not a direct supplier of these
services; instead it facilitates the provision of travel services by its
suppliers to its customers.
Priceline was the brainchild of digital entrepreneur Jay S. Walker. The

company's origins were closely tied with Walker's company Walker Digital.
Hong Kong company Cheung Kong Holdings later purchased a significant
portion of Priceline's stock.
Priceline first gained prominence for its Name Your Own Price system,
where travellers would name their price for airline tickets, hotel rooms, car
rentals and vacation packages. While the purchaser can select a general
location, service level and price, the hotel, rental car company or airline (as
well as the exact location of the hotel and the exact flight itinerary) is
disclosed only after the purchase had gone through, with no rights to
cancel.
Priceline's cut of the proceeds was the difference between the price an
individual named and the price charged by the service establishment. More
recently, it has added a more traditional model where travelers are
presented prices and are also told the name of the establishment. Travelers
can still choose to name their price for airline tickets, hotel rooms and
rental cars. The number of airlines, hotels and car rental company
participants in the name your own price program has increased as these
suppliers utilize this opaque market Priceline created to sell their perishable
inventory without lowering prices through other traditional sales channels.
Priceline now also sells discounted cruises, as well as tours and attractions.
Priceline.com also experimented with selling gasoline and groceries under

the Name Your Own Price model in 2000, at the height of the dot-com
bubble, through a partially owned affiliate, Web House Club. Priceline also
got into the online auction business with Priceline Yard Sales, where
individuals would use the Priceline system to haggle for various second-
hand items and trade them in person. Priceline also sold long distance
telephone service and automobiles under the Name Your Own Price model.
All of these experiments were terminated in 2002. Another experiment, the
! !89
Name Your Own Rate system for home loans, continues under a license
with EverBank. In 2002 Priceline licensed its “Name Your Own Price” travel
system to eBay.
Priceline returned to its original focus on travel products, such airfares and
rental cars, with the addition of cruise sales and a special emphasis on
hotel bookings in its commercials. During November 2007, Priceline
“permanently” eliminated all booking fees on published airfares.
Priceline is the parent company of the European organization Booking.com.

established in 1996, Booking.com is the world's leading online hotel
reservations agency by room nights sold, attracting over 30 million unique
visitors each month via the Internet from both leisure and business
markets worldwide. [Booking.com offers many types of property, ranging
from small independent hotels to a five star luxury through Booking.com.
The Booking.com website is available in 41 languages and offers over
240,000 hotels in 167 countries.]
Booking.com is based in Amsterdam (Netherlands) and is supported

internationally from offices in various countries.
Booking.com have customer services HQ in Amsterdam, Berlin, Orlando,

Grand Rapids, Singapore and Lille.
! !90
! !91
TravelJigsaw
Priceline purchased TravelJigsaw as part of its international expansion

strategy. Under the new financing deal TravelJigsaw will be provided with
sufficient capital to enable working growth in order that ISIS may release
some of its substantial investment in the travel specialist.
TravelJigsaw has reported an “extremely successful” sixth year of trading

with turnover increasing by 32%. TravelJigsaw posted a turnover of
£157.1m in the 12 months to 31 December 2010, up from £119m a year
earlier. Gross profit increased from £27.3m to £38m for the same reporting
periods. The company currently employs in excess of 600 staff and latest
accounts show an annual turnover reaching £500 million.
Gregory Wills, TravelJigsaw's managing director, says the company will

work closely with Booking.com and Agoda to build distribution. Key
questions looming will be the interplay between TravelJigsaw, Booking.com,
Agoda and Priceline.com, as well as what kind of response, if any, Expedia
has to Priceline’s car-rental acquisition. So, one can imagine a lot of cross-
promotion between Booking.com, Agoda and TravelJigsaw in various
markets, if not some integration in the future.
Active Hotels
In November 2006, Active Hotels Limited merged some operations with
Booking.com. The company’s physical locations and personnel are not
affected by the name change. ActiveHotels.com became part of
Booking.com and forwards to Booking.com website.
Kayak
In November 2012, Priceline announced that it had agreed to acquire
Kayak in a stock and cash transaction, paying approximately $500 million
in cash and $1.3 billion in equity and assumed stock options. Kayak will
continue to operate independently as a Priceline Group company.
Priceline Branding
Priceline, Booking.com, Active Hotels and Agoda are separately branded for
dissimilar demographics. However each company is regulated and
integrated into the Priceline business model. Priceline is also the most
talked about travel booking site online in the Brand Passion Index.
! !92
3.10 ACTIVITIES
(1) Rebates can help attract customers to your site. Many customers offer
“everyday low price” and specials to keep customers come back.
ebates.com is a shopping site where customers receive Debates on every
purchase Visit the above site and learn about how loyalty is built with
customers and develop trust over a period of time.
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(2) Visit eCentives.com and compare how different from ebates.com site.
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3.11 SUMMARY
e-Commerce is the process of buying and selling of various products and

services by businesses through the Internet. It deals various kind of
business concern, from retail site of the consumer, which includes auction.
The main focus is to concentrate on business substitutes involving goods
and services between various corporations.
Type of e-Commerce Models
These are:
• Business-to-Business (B2B) model
• Business-to-Consumer (B2C) model
• Consumer-to-Consumer (C2C) model
• Consumer-to-Business (C2B) model
! !93
Major Business-to-Consumer (B2C) Business Models
Portal Models
Electronic Marketplaces and Portals: As the Web emerged in the

mid-1990s, many business researchers and consultants believed that it
would provide an opportunity for companies to establish information hubs
for each major industry. These industry hubs would offer news, research
reports, analyses of trends, and in-depth reports on companies in the
industry. In addition to information, these hubs would offer marketplaces
and auctions.
Content Provider
• Content providers distribute digital content (news, music, video, artwork)

over the Web
• WSJ.com, Rhapsody.com, CNN.com
• Second largest source of B2C e-Commerce revenue in 2002
• Revenue generates through subscription fees, pay for download or
advertising
Transaction Broker
• Sites that process transactions for consumers

• E-Trade.com, Ameritrade.com monster.com
• Primary value proposition – saving of time and money for customers
Market Creator
• Uses Internet technology to create markets that bring buyers and sellers
together
• where they can display products, search for products and establish prices
• Priceline.com (reverse auction), eBay.com
Service Provider
• Offers services online

• xDrive.com – information storage
• Mybconsulting.com – consulting for small businesses
! !94
Major Business to Business (B2B) Models
• e-Distributor
• e-Procurement
• Exchanges (B2B hubs)
• Industry Consortia
• Private Industrial Networks
Different Types of e-Business Models
Brokerage: The brokerage e-Business model entails bringing buyers and

sellers together to make possible business transactions. Brokers can
facilitate consumer-to-consumer, consumer-to-business or business-to-
business markets. This business model earns money by charging a fee or
commission for each transaction.
Infomediary: This particular e-Business model entails capturing and

sharing information. Some organizations may have website users to
register to gain access to the information on the
website, even free information.
Advertising: The advertising e-Business model works in the same way as

the convention media broadcast version. The business may offer free or
paid services, such as e-mail, blogs or
instant messaging
Affiliate: The affiliate e-Business model offers products or services

whenever people may surf on the Web. An Internet merchant offers
financial incentives, usually as a commission, for a
website owner to place advertisement with links on the affiliate's website
m-Commerce It deals with conducting the transactions with the help of

mobile. The mobile
device consumers can interact with each other and can lead to the
business. Mobile Commerce involves the change of ownership or rights to
utilize goods and related services
! !95
Electronic Data Exchange Technology
These emerging networks of firms are more flexible and can respond to
changes in the economic environment much more quickly than
hierarchically structured businesses ever could.
Electronic Data Interchange (EDI). EDI is a computer-to-computer

transfer of business information between two businesses that uses a
standard format.
Dynamic Pricing Models for Electronic Business
Dynamic pricing is the dynamic adjustment of prices to consumers

depending upon the value these customers attribute to a product or
service. In the literature, several alternative terms have been used to
describe dynamic pricing. These include flexible pricing and customized
pricing.
Click Modeling for e-Commerce
Historical user click patterns on search result pages are considered a great
resource for algorithms that attempt to learn to rank search results. This
ranking method is a well-studied problem in the field of Information
Retrieval (IR).
State whether true or false if answer is false explain why?

1. A shopping cart allows customer to continue to browse after selecting
each item they wish to purchase. (True)
2. In a reverse auction, the seller sets a price and customer makes

individual bids to buy an item. (False)
3. A reserve price is the highest bid a customer is willing to make. (False)
4. The name your price model is an auction based model. (False)
! !96
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !97
BUILDING AN E-BUSINESS: DESIGN, DEVELOPMENT AND MANAGEMENT
Chapter 4
BUILDING AN e-BUSINESS: DESIGN,
DEVELOPMENT AND MANAGEMENT

• discuss the decision to convert existing business and build an e-Business
• review the importance of good website for success of e-Business
• to introduce website features that enhances visitors experience
• understand various types of e-Business solutions
• explore e-Business consulting services
Structure:
4.1 Introduction
4.2 Generating Business Ideas
4.2.1 Business Processes, Knowledge Processes, and e-Business
Processes
4.2.2 Factors Considered for Successful Development of e-Business
Sites
4.3 Putting Your Plan into Action
4.3.1 Choosing a Domain Name
4.3.2 Selection of eBusiness Products and Services
4.4 e-Business/e-Commerce Websites and Portals
4.4.1 Difference between Website and Portal
4.4.2 Websites4.4.3 Web Portals
4.5 Website Hosting
4.6 Web Design
4.7 Enhancing the User Experience
4.7.1 Creating Excellence in User Experience
4.7.2 Key Elements in Increasing Effectiveness and Popularity
4.7.3 Protecting Your e-Business
4.7.4 End to End e-Business Solutions
4.7.5 Use of Streaming Media in Web page
4.7.6 Preparing for New Technologies
4.8 e-Business Consulting
4.10 Activities
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4.11 Summary
4.1 INTRODUCTION
There are numerous ways to approach designing and maintaining an e-

Business. IT applications are purposeful. They support and partially
automate human participation in business processes.
The larger corporations or businesses with substantial funding, can

outsource the project to an organization offering e-Business solutions or
choose to build the e-Business in-house through the application platform.
Especially in trading communities, and in communities of practice in

medicine, pharmacology, architecture, engineering, science more generally,
and in other areas where the distinction between true and false information
is central.
In this chapter, we explore the various options available to help you

construct your own e-Business, choose an effective design by adding
features to enhance your visitors experience
and select a domain name to attract visitors. We discuss both front-end
system (the portion of your e-Business that is visible to the customer) and
back-end systems (usually your database management, SQL programs,
HTML, XML scripts and logistics etc.)
All the deterrent factors are closely related to company size, which
influences not only financial resources, but also the availability of skills to
manage complex e-Business systems. The specific characteristics of SMEs
demand that e-Business systems are precisely tailored to their actual
operational requirements.
Suppliers of e-Business solutions and services have the possibility to use

the online tool as a marketing instrument for their products and services.
The instrument uses a common set of product details which simplifies the
comparison between different products.
! !99
4.2 GENERATING BUSINESS IDEAS
Before beginning to build an e-Business, you must have a solid idea of the
product and services you want to offer via the Web. Surf the web to
discover what exists. Are the websites you find providing exceptional
services or could they offer more.
4.2.1 Business Processes, Knowledge Processes, and e-Business

Processes
IT applications are purposeful. They support and partially automate human

participation in business processes. Portals are no different. So let's talk
about business processes, e-Business processes and knowledge processes
before we talk about knowledge portals.
Figure 4.1 illustrates the idea that any business process (including
knowledge and knowledge management processes) may be viewed as a
network of linked activities governed by validated rule sets, or knowledge.
A linked sequence of activities performed by one or more agents sharing at
least one objective is a Task. A linked, but not necessarily sequential set of
tasks governed by validated rule sets, producing results of measurable
value to the agent or agents performing the tasks, is a Task Pattern.
A cluster of task patterns, not necessarily performed sequentially, often

performed iteratively and incrementally, is a Task Cluster. Finally, a
hierarchical network of interrelated, purposive, activities of intelligent
agents that transforms inputs into valued outcomes, a cluster of task
clusters, is a Business Process.
Any business process, task cluster, task pattern, or task must involve
decision cycles through which agents execute their part in a business
process or component. The phases of any decision/execution cycle are:
Planning, Acting, Monitoring, and Evaluating.
Planning means setting goals, objectives, and priorities, making forecasts

as part of prospective analysis, performing cost/benefit assessments as
part of prospective analysis, and revising or re-engineering a business
process.
! !100
Acting means performing the business process (cluster, pattern, or task)

or any of its components.
Monitoring means retrospectively tracking and describing the business

process (cluster, pattern, or task).
Evaluating means retrospectively assessing the performance of the

business process as a value network. There is a natural order to the
activities of planning, acting, monitoring, and evaluating, the four phases
of any decision/execution cycle in a value network.
!
Figure 4.1: The Activity to Business Process Hierarchy
Three of these four phases require knowledge production to solve problems

that occur in each of the phases, and the fourth, the acting phase, uses the
knowledge produced in the other three phases. So every business process
involves both knowledge production and knowledge use.
And planning and acting require integration of knowledge within

organizational agents if acting is to be effective in moving processes
toward their objectives.
! !101
4.2.2 Factors Considered for Successful Development of e-Business

Sites
• Create Unique Descriptions for Best Results
“Search engines want to provide the most relevant results possible when
people search. The original content rule applies to storefronts if they want
to succeed. Best practices for natural search engine ranking is to create
your own unique product descriptions and avoid copying
descriptions from manufacturers.”
• Cut Down on Clutter
“Shoppers don’t want clutter! Ideally there should be only 10 to15 products
on a page, no pop-ups or advertising, and a comparison feature to view
more product details.”
• Consolidate Your Community
“Publish exclusive offers and discounts in the social networks (like Twitter,
Facebook or Google Orkut). It will consolidate your community and will
keep it active.”
• Increase Foot Traffic
“If you welcome customers to collect purchases in person, or if you have a

bricks-andmortar store, make sure you are listed on Google Places. It will
help you get found by potential customers looking for your products in and
around your local area.”
• Develop Pure Content
“Content is still king. Dedicate a portion of your web team’s time and
budget to developing pure content that is compelling and relevant for your
users. Finding the right idea is key — it can be informational and help your
users make a more educated choice, or it can be simply for entertainment.
Compelling content will generate free traffic and links that your product
pages never will.”
! !102
• Global e-Commerce
“Know your global audience. Americans may want a quick and easy
checkout process, but consumers in Japan and Europe prefer to see more
details and options when shopping online. Eighty-five per cent of the local
German market uses bank transfers as the primary means of payment, not
credit cards. And, discounted products are often perceived in Japan as
being faulty instead of simply a good deal.”
• Consider Payment Provider Added Services
“Consider the cost of added services when choosing your payment

provider. For instance, you may use PayPal to checkout customers from
your store or on a selling channel like Etsy or eBay, but did you know
PayPal can also get your accounting done? Various added services offered
by payment providers can make it less costly and simpler to run your
business.”
• Make a Better Category Tree
“Don’t make product lists too long. Everything that goes ‘beyond the fold’
is too long. Spend more time to make a better category tree. If it’s
impossible in your case, make page navigation very obvious and easy for a
visitor.”
• Display In-store Promotions on Your Website
“Since the research cycle is typically much longer for consumers

considering a big ticket purchase online, the impact of relevant and
compelling promotions can often be the driving factor in getting them into
the store or online to make their final purchase. To make this process
seamless for the customer, use e-Commerce tools to align your site with
your promotional calendars, and display on your website you’re in-store
events, promotions, sales, coupons and finance offers. When optimized,
these tools will create a better customer experience online, extending the
value of materials created for in-store customers.”
• Try Incentives to Reduce Cart Abandonment
! !103
“Online merchants typically concentrate on attracting new customers, but

research shows that the industry has a very high rate of shopping cart
abandonment, and this has not improved over the past years. Try offering
incentives for consumers to complete their purchases, and reward them for
doing so. Rewarding customers creates loyalty and drives more sales and
revenue.”
4.3 PUTTING YOUR PLAN INTO ACTION
Focusing on what makes your e-Business plan unique is important
e-Business Plan
Primary Purpose
!
Strategy
Support
!
Business Model
Process
• Planning involves capturing and using data, information, and knowledge

to produce a plan, an instance of planning knowledge.
• Acting involves using the planning knowledge, along with other

knowledge outside of the plan to make and implement decisions.
• Monitoring involves gathering data and information and using previous

knowledge to produce new descriptive, impact-related, and predictive
knowledge about the results of acting.
• Evaluating means using the results of monitoring, along with previous

knowledge to assess the results of acting and to produce knowledge
about the descriptive gaps between business outcomes and tactical
! !104
objectives and about the normative (benefits and costs) impact of

business outcomes.
4.3.1 Choosing a Domain Name
There are many important issues that must be addressed when creating an
e-Business plan. These issues are considered in separate chapters which
include accepting on line payments, setting up communication, hardware
and software technology used, Marketing your website, and managing your
consumer.
A domain name is the name used in the URL for your website. Choose a
concise name that people will be able to recognize and type easily.
Tips for Choosing Domain Names:
1. Brainstorm Five Top Keywords: When you first begin your domain
name search, it helps to have five terms or phrases in mind that best
describe the domain you're seeking. Once you have this list, you can
start to pair them or add prefixes and suffixes to create good domain
ideas. For example, if you're launching a mortgage related domain, you
! !105
might start with words like “mortgage, finance, home equity, interest
rate, house payment” then play around until you can find a good match.
2. Make the Domain Unique: Having your website confused with a

popular site already owned by someone else is a recipe for disaster.
Thus, I never choose domains that are simply the plural, hyphenated or
misspelled version of an already established domain. I still believe that
Flicker desperately needs to buy Flicker.com — I hear kids in their 20s
tell parents in their 40s and 50s to see photos on Flicker and always
envision that traffic going straight to the wrong domain.
3. Only Choose Dot-Com Available Domains: If you’re not concerned

with type-in traffic, branding or name recognition, you don’t need to
worry about this one. However, if you’re at all serious about building a
successful website over the long-term, you should be worried about all
of these elements, and while directing traffic to a .net or .org (as
SEOmoz does) is fine, owning and 301’ing the .com is critical. With the
exception of the very tech-savvy, most people who use the web still
make the automatic assumption that .com is all that's out there — don't
make the mistake of locking out or losing traffic to these folks.
4. Make it Easy to Type: If a domain name requires considerable

attention to type correctly, due to spelling, length or the use of un-
memorable words or sounds, you’ve lost a good portion of your
branding and marketing value. I’ve even heard usability folks touted the
value of having the letters include easy-to-type letters (which I interpret
as avoiding “q,” “z,” “x,” “c,” and “p”).
5. Make it Easy to Remember: Remember that word-of-mouth and

SERPs dominance marketing (where your domain consistently comes up
for industry-related searches) both rely on the ease with which the
domain can be called to mind. You don't want to be the company with
the terrific website that no one can ever remember to tell their friends
about because they can’t remember the domain name.
6. Keep the Name as Short as Possible: Short names are easy to type
and easy to remember (the previous two rules). They also allow for
more characters in the URL in the SERPs and a better fit on business
cards and other offline media.
! !106
7. Create and Fulfill Expectations: When someone hears about your

domain name for the first time, they should be able to instantly and
accurately guess at the type of content that might be found there.
That's why I love domain names like Hotmail.com, CareerBuilder.com,
AutoTrader.com and WebMD.com. Domains like Monster.com,
Amazon.com and Zillow.com (whom I usually praise) required far more
branding because of their un-intuitive names.
8. Avoid Copyright Infringement: This is a mistake that isn't made too

often, but can kill a great domain and a great company when it does. To
be sure you're not infringing on anyone’s copyright with your site's
name, visit copyright.gov and search before you buy.
9. Set Yourself Apart with a Brand: Using a unique moniker is a great

way to build additional value with your domain name. A “brand” is more
than just a combination of words, which is why names like
mortgageforyourhome.com or shoesandboots.com aren’t as compelling
as branded names like bankrate.com or lendingtree.com. SEOmoz itself
is a good example — “SEO” does a good job of explaining the industry
we’re in and creating expectations, while “moz” gives a web association,
and an association with being free, open, and community-driven.
10.Reject Hyphens and Numbers: Both hyphens and numbers make it

hard to give your domain name verbally and falls down on being easy to
remember or type. I’d suggest not using spelled-out or roman numerals
in domains, as both can be confusing and mistaken for the other.
11.Don’t Follow the Latest Trends: Website names that rely on odd mis-
spellings (like many Web 2.0 style sites), multiple hyphens (like the
SEO-optimized domains of the early 2000s), or uninspiring short
adjectives (like “top...x,” “best...x,” “hot...x”) aren’t always the best
choice. This isn’t a hard and fast rule, but in the world of naming
conventions in general, if everyone else is doing it, that doesn’t mean
it’s a surefire strategy. Just look at all the people who named their
businesses “AAA... x” over the last 50 years to be first in the phone
book; how many Fortune 2000s are named “AAA company?”
12.Use an Ajax Domain Selection Tool: Websites like AJAXWhois and

Domjax make it exceptionally easy to determine availability of a domain
name — just remember that you don’t have to buy through these
! !107
services. You can find a name you like that’s available, then go to your
registrar of choice.
4.3.2 Selection of e-Business Products and Services
Companies striving to improve their business processes, introduce IT-based

process innovations, or integrate with their business partners and
customers will benefit from appropriate IT solutions developed specifically
for their functional areas and business processes. How should a company
or an advisor to a company proceed in selecting the right product and
service provider?
Companies can choose between an individual software solution developed

by a software firm based on individual company requirements and selecting
an appropriate standard software product. More often than not, a company
will prefer to buy a standard software product. This is due to the fact that,
in most cases, the standard product will turn out to be significantly more
economical — considering the life cycle cost, which includes the
maintenance of the software, the required knowledge, the availability of
standard interfaces, etc.
The individual needs of a company on one hand, and the large number of
standard software solutions available on the other, will mean that the
selection process for the appropriate solution will involve matching the
individual company needs with the product features of the individual
software solutions. In most cases, there will not be 100% match and the
selection will have to be based on the “best” match. Furthermore, a
standard product may have to be configured to the company needs and
may have to be integrated. Often small and medium-sized companies will
not have the knowledge or resources available to carry out the
configuration, adaptation, or integration work by themselves. Not only a
product but also a service provider may need to be selected – and this
selection may become as important as the selection of a standard software
product itself.
It should be mentioned that some products can be bought as a service —

e.g. as an SAAS model (software as a service) or an ASP model
(application service providing). This may be an attractive solution, because
a company would not have to maintain the software itself and would not
need to provide IT hardware or operation support.
! !108
Due to the fact that there is no “best” product (or service provider) in
general but only a “most appropriate” product based on individual company
requirements, a global benchmarking of e-Business products and services
is not possible. Instead, a company needs to define its individual
requirements and evaluate each product and service provider based on
these requirements. The ever-increasing importance and cost of the
product to be introduced and the project to be implemented, combined
with the comparative limited knowledge within the company itself, will lead
to increased involvement of external consultants.
We therefore introduce a six-step standard product selection process,

depicted in Table 4.1. The six steps consist of:
1. developing e-Business strategy and focus
2. documenting and prioritizing product, supplier and process requirements
3. identifying and pre-selecting products and suppliers
4. analyzing detailed information and quotations
5. arranging supplier presentations and evaluating selected products
6. negotiating the final contract with existing IT solutions
! !109
Definition Specification Identification Analysis of Presentatio Negotiation &

of of & detailed n construction
e-business requirement pre-selection information & with selected
strategy & priorities of products and evaluation supplier(s)
and and suppliers quotation of selected
focus products
Result • e- •Requiremen • Market Analysis

• • Detailed • For
Business t overview of analysis of negotiation
Strategy specification quotations small with
(with • List of • Reduce number supplier(s)
• Most priorities) preselected list of of • Contract
important products and products products/ with
e-busines suppliers and suppliers supplier
(e.g., 10 supplier • Decision
supplier) (e.g., 3-5 regarding
suppliers) final
negotiation
s
(with 1.2
suppliers)
Stakehol • company •Project • Project • Project • Project • Project

ders executives team team team team team
• head of • External • External • External • Buying • Suppliers(s
e-Business consultant consultant consultant centre )
• external • Suppliers (employees • Responsibl
consultant relevant e
for the executive
decision (e.g.,
making CED/CIO)
process) • Project
external team
consultant
• Suppliers
Activities • Identify • Designs • Identify • Contact • Invite • Conduct

market characteristic relevant the favourite bilateral
technology s products and pre- suppliers negotiations
and of future suppliers selected for with the
customer process suppliers product and favourite
trends scenario supplier(s)
presentatio
n
! !110
Activities • Analyse • Identify • Screen Send

• • Conduct • Finalise
current product and suppliers are questionnai product quotation
e-Business supplier product re presentatio
action requirements or request n • Fix
based • Pre-select for negotiation
on • Identity interesting quotation • Evaluate result
company process suppliers and (RFQ) and
strategy requirements products including rank Aspects in
and based on OWN products contract
rank • Identify major requiremen and
possible financial requirements ts supplier, • Make
projects requirements e.g., final
• Create • Receive based on decision
• Set-up • Prioritise product and information a score
one requirements and supplier and card • Inform and
project questionnair quotations or utility contract
with • Define e (deadline) analysis supplier(s)
goals and example (if
project scenarios for applicable) • Analyse • Decide on • Finalise
team evaluation and desired project
evaluate product and
• Document information and team for
results and supplier introduction
quotations phases
• Select
products/
for
next step
Tools • Benchma • Market • Market • Question • Spreadsh • Model

and rking studies studies naire eets, contracts
supporti decision
ng • Industry • Supplier's • Supplier's • Spreadsh matrix • Service
informati best. website website eets, level
ons practice decision • Presentati agreements
• Market Spreadshe
• matrix ons
• State-of- studies ets,
theart decision
reports • Documentat matrix
ion
• Spreadsh software
eets,
cost/ • Standard
benefit requirement
analysis listings
• Project
manageme
nt
! !111
eBSN • Company • Baisc • Basic • Supplier

e- benchmarki information information and
Business ng on product in on product in product
Solution with categories categories characterist
Guide e-Business and product and product ics
support Competenc features features
e • Communi
Index • List of • Suppliers' ty
(EBCI) consultants information opinion and
and link to experience
• Overview supplier and
of product
possible websites
solutions
based on • Community
business opinion and
processes experience
• List of
consultants
The table includes the individual activities for each step together with
stakeholders, appropriate tools and information sources. The table also
shows how the eBSN e-Business Solutions Guide supports the selection
process and individual activities.
The eBSN e-Business Solutions Guide also includes a community feedback

feature, which provides additional (subjective) information on individual
products based on individual opinions of technical experts or other
companies.
Phases two to four can be supported by standard requirement listings and

spreadsheets, which implement the utility analysis method (based on
decision matrices). The following paragraph includes an example for a
utility analysis.
The sixth step is the last step of the selection process but not of the end of
the product introduction.
The “selection phase” is followed by an “introduction phase”, which will
cover the following
additional tasks:
• Verify and detail technical specification

• Verify and detail process design
• Adapt, configure and integrate product (or service)
! !112
• Train employees
• Carry out organisational and process changes (or introduce new
processes)
• Carry out pilot test
• Start live operation and improvement
• Verify cost/benefit calculations or estimates
It is important to note that the whole process is not only about selecting
the right product or service provider. It is — at least — equally important to
design the appropriate future business processes and activities and
evaluate the product based on these process requirements.Moreover, one
of the most common mistakes within the whole selection process is that
products are selected based only on technical requirements and nice (but
unnecessary) product features, but not based on process and company
requirements. In this case, the future processes may have to be adapted to
the product, which may result in additional, unnecessary use of personal
resources and inefficient processes.
4.4 e-BUSINESS/e-COMMERCE WEBSITES AND PORTALS
The internet is an excellent channel for promoting your business to

potential clients anywhere and anytime. All they need is your website
address, whether from a business card, an advertisement, letterhead, e-
mail or search engines.
It offers a cost effective and convenient means of keeping in touch with

your existing client base and keeping them informed of developments
within your business. You can achieve this without visiting the printers, or
mailing hundreds of letters. A website will maximize your marketing
investment, by leveraging this versatile and dynamic marketing channel
which is the Internet.
Today's business environment demands a new approach—one where

customers can ask questions or voice concerns and employees can answer
in real time, improving service delivery and product innovation. We have
covered Websites and Web Portals in complete detail in this chapter.
Online prospect enhancement techniques which include: Lead generation

systems, Business networking and creating remarkable content on the net
! !113
are covered in detail as well. Knowledge of the elements of a great lead

generation system is crucial to any online marketer.
Business networking is critical if you want to create a presence online.
LinkedIn, a prominent business networking site is discussed in detail to
give you a practical overview of this important aspect. The content of any
website is crucial to attracting and retaining visitors to your website.
Marketing your business on search engines is the key to success on the

Internet hence, we must understand all the essential aspects of this
approach. How your website pages are ranked determines their position in
the search engine results pages that returned from a customer’s search.
Search engine optimization involves specialized writing and site design
techniques that not only increase the volume of traffic to your website, but
also increase the quality of the traffic looking at your website.
Leveraging your business through web portals: Portal solutions have

changed the way business is done today. A web portal is a highly beneficial
access point to web for individual as well as business users. The
information contained in web content portal is categorized into
topics such as new, business, finance, travel, sports and more.
Online Customer conversion consists of converting visitors and prospects

into leads. Once you have a visitor's e-mail, it is necessary for you to begin
and develop a relationship with them over time. Regular e-mail
communications will establish credibility and develop the relationships
and trust you need to help them make a buying decision.
4.4.1 Difference between Website and Portal
!
Picture 4.1 Website and Web Portal
Source: besttoolbars.net
! !114
A good understanding of the difference between Websites and Portals is

necessary before we proceed. A web portal offers multiple services like
mail, news, calendars, search or multiple brands (in the case of content
portals) under one umbrella. A website is a smaller subset offering
only a limited or just one service or brand.
Thus, a portal is a larger entity than just a website. Of course the

boundaries on where a website ends and where a portal begins are
subjective. A web portal is usually a website that contains or provides
access to multiple sub-websites. An analogy might be a shopping mall –
where the mall provides access to multiple stores with specific purposes. A
web portal is like the mall and the sub-websites would be like the stores.
The very term “Portal” indicates an entry point for further access to
informations and content. This also implies that a Website will tend to be
static and a Portal will require a Content Management System (CMS) in
order to manage the myriad of information contained within the system.
Another differentiator is that a Portal will almost always authenticate/
authorize the user in order to provide customized content and released
access to content. Perhaps an oversimplified analogy is that Portals tend to
be applications whereas Websites are more like brochures.
4.4.2 Websites
A website is a collection of related web pages containing images, videos or

other digital assets. A website is hosted on at least one web server,
accessible via a network such as the Internet or a private local area
network through an Internet address also called URL.
A web page is a document, typically written in plain text interspersed with

formatting instructions of Hypertext Markup Language (HTML, XHTML). A
web page may incorporate elements from other websites with suitable
markup anchors. Web pages are accessed and transported with the
Hypertext Transfer Protocol (HTTP), which may optionally employ
encryption (HTTP Secure, HTTPS) to provide security and privacy for the
user of the web page content. The user’s application, often a web browser,
renders the page content according to its HTML markup instructions onto a
display terminal. All publicly accessible websites collectively constitute the
World Wide Web. The pages of a website can usually be accessed from a
simple Uniform Resource Locator (URL) called the homepage. The URLs of
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the pages organize them into a hierarchy, although hyper-linking between

them conveys the reader’s perceived site structure and guides the reader’s
navigation of the site.
!
Picture 4.2
Some websites require a subscription to access some or all of their

content. Examples of subscription websites include many business sites,
parts of news websites, academic journal websites, gaming websites,
message boards, web-based e-mail, social networking websites, websites
providing real time stock market data, and websites providing various
other services (e.g., websites offering storing and/or sharing of images,
files and so forth).
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!
Picture 4.3
Source: webmarketing.biz
The World Wide Web (WWW) was created in 1989 by CERN physicist Tim
Berners-Lee. On 30 April 1993, CERN announced that the World Wide Web
would be free to use for anyone. Before the introduction of HTML and HTTP,
other protocols such as file transfer protocol and the gopher protocol were
used to retrieve individual files from a server. These protocols offer a
simple directory structure which the user navigates and chooses files to
download. Documents were most often presented as plain text files without
formatting, or were encoded in word processor formats.
Organized by function, a website may be:
!
Figure 4.2
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It could be the work of an individual, a business or other organization, and

is typically dedicated to some particular topic or purpose. Any website can
contain a hyperlink to any other website, so the distinction between
individual sites, as perceived by the user, may sometimes be
blurred. Websites are written in, or dynamically converted to, HTML (Hyper
Text Markup Language) and are accessed using a software interface
classified as a user agent. Web pages can be viewed or otherwise accessed
from a range of computer-based and Internet-enabled devices of
various sizes, including desktop computers, laptops, PDAs and cell phones.
A website is hosted on a computer system known as a web server, also

called an HTTP server, and these terms can also refer to the software that
runs on these systems and that retrieves and delivers the web pages in
response to requests from the website users. Apache is the most
commonly used web server software and Microsoft's Internet Information
Server (IIS) is also commonly used.
Static website: A static website is one that has web pages stored on the
server in the format that is sent to a client web browser. It is primarily
coded in Hypertext Markup Language, HTML. Simple forms or marketing
examples of websites, such as classic website, a five-page website or a
brochure website are often static websites, because they present pre-
defined, static information to the user. This may include information about
a company and its products and services via text, photos, animations,
audio/video and interactive menus and navigation. This type of website
usually displays the same information to all visitors. Similar to handing out
a printed brochure to customers or clients, a static website will generally
provide consistent, standard information for an extended period of time.
Although the website owner may make updates periodically, it is a manual
process to edit the text, photos and other content and may require basic
website design skills and software.
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!
Picture 4.4
In summary, visitors are not able to control what information they receive
via a static website, and must instead settle for whatever content the
website owner has decided to offer at that time. They are edited using four
broad categories of software:
• Text editors, such as Notepad or TextEdit, where content and HTML

markup are manipulated directly within the editor program
• WYSIWYG offline editors, such as Microsoft FrontPage and Adobe

Dreamweaver (previously Macromedia Dreamweaver), with which the
site is edited using a GUI interface and the final HTML markup is
generated automatically by the editor software
• WYSIWYG online editors which create media rich online presentation like
web pages, widgets, intro, blogs, and other documents.
• Template-based editors, such as Rapidweaver and iWeb, which allow

users to quickly create and upload web pages to a web server without
detailed HTML knowledge, as they pick a suitable template from a palette
and add pictures and text to it in a desktop publishing fashion without
direct manipulation of the HTML code.
Dynamic website: A dynamic website is one that changes or customizes

itself frequently and automatically, based on certain criteria. Dynamic
websites can have two types of dynamic activity: Code and Content.
Dynamic code is invisible or behind the scenes and dynamic content is
visible or fully displayed.
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!
Picture 4.5
Source: sitedynamics.ca
Dynamic code: The first type is a web page with a dynamic code. The
code is constructed dynamically on the fly using active programming
language instead of plain, static HTML.
A website with dynamic code refers to its construction or how it is built,

and more specifically refers to the code used to create a single web page.
A dynamic web page is generated on the fly by piecing together certain
blocks of code, procedures or routines. A dynamically-generated web page
would recall various bits of information from a database and put them
together in a predefined format to present the reader with a coherent
page. It interacts with users in a variety of ways including by reading
cookies recognizing users' previous history, session variables, server
side variables etc., or by using direct interaction (form elements, mouse
over's, etc.). A site can display the current state of a dialogue between
users, monitor a changing situation, or provide information in some way
personalized to the requirements of the individual user.
Dynamic content: The second type is a website with dynamic content

displayed in plain view. Variable content is displayed dynamically on the fly
based on certain criteria, usually by retrieving content stored in a
database. A website with dynamic content refers to how its messages,
text, images and other information are displayed on the web page and
more specifically how its content changes at any given moment. The web
page content varies based on certain criteria, either pre-defined rules or
variable user input. For example, a website with a database of news
articles can use a pre-defined rule which tells it to display all news articles
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for today's date. This type of dynamic website will automatically show the
most current news articles on any given date. Another example of dynamic
content is when a retail website with a database of media products allows a
user to input a search request for the keyword Beatles. In response, the
content of the web page will spontaneously change the way it looked
before, and will then display a list of Beatles products like CDs, DVDs and
books.
Purpose of dynamic websites: The main purpose of a dynamic website

is automation. A dynamic website can operate more effectively, be built
more efficiently and is easier to maintain, update and expand. It is much
simpler to build a template and a database than to build hundreds or
thousands of individual, static HTML web pages.
Product- or service-based sites: Some websites derive revenue by

offering products or services for sale. In the case of e-Commerce websites,
the products or services may be purchased at the website itself, by
entering credit card or other payment information into a payment form on
the site. While most business websites serve as a shop window for existing
brick and mortar businesses, it is increasingly the case that some websites
are businesses in their own right; that is, the products they offer are only
available for purchase on the web.
Websites occasionally derive income from a combination of these two

practices. For example, a website such as an online auctions website may
charge the users of its auction service to list an auction, but also display
third-party advertisements on the site, from which it derives further
income.
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Picture 4.6
Source: blog.mydealbag.com
Types of websites:
Affiliate: A site, typically few in pages, whose purpose is to sell a third

party's product. The seller receives a commission for facilitating the sale.
Archive: Used to preserve valuable electronic content threatened with

extinction. Two examples are: Internet Archive, which since 1996, has
preserved billions of old (and new) web pages; and Google Groups, which
in early 2005, was archiving over 845,000,000 messages posted to Usenet
news/discussion groups.
Blogs: Sites generally used to post online diaries which may include
discussion forums (e.g., blogger, Xanga). Many bloggers use blogs like an
editorial section of a newspaper to express their ideas on anything ranging
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from politics to religion to video games to parenting, along with anything in

between. Some bloggers are professional bloggers and they are paid to
blog about a certain subject, and they are usually found on news sites.
!
Picture 4.7
Brand Building: A site with the purpose of creating an experience of a

brand online. These sites usually do not sell anything, but focus on building
the brand. Brand building sites are most common for low-value, high-
volume fast moving consumer goods (FMCG).
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!
Picture 4.8
Celebrity website: A website whose information revolves around a

celebrity. This sites can be official (endorsed by the celebrity) or fan made
(run by his/her fan, fans, without implicit endorsement).
!
Picture 4.9
Source: www.amitabh-bachchan.co.in
Community sites: A site where persons with similar interests

communicate with each other, usually by chat or message boards.
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Content sites: Sites whose business is the creation and distribution of

original content.
Corporate sites: Used to provide background information about a

business, organization, or service.
!
Picture 4.10
Source: tatamotors.com
Dating sites: These are site where users can find other single people
looking for long-range relationships, dating, or just friends.
e-Commerce sites: A site offering goods and services for online sale and
enabling online transactions for such sales.
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!
Picture 4.11
Source: amwzon.com
Government sites: A website made by the local, state, department or

national government of a country. Usually these sites also operate websites
that are intended to inform tourists or support tourism.
!
Picture 4.12
Information sites: Most websites could fit in this type of website to some
extent many of them are not necessarily for commercial purposes.
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Media sharing sites: A site that enables users to upload and view media
such as pictures, music, and videos.
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Picture 4.13
Source: www.youtube.com
Mirror sites: A website that is the replication of another website. These

types of websites are used as a response to spikes in user visitors. Mirror
sites are most commonly used to provide multiple sources of the same
information, and are of particular value as a way of providing reliable
access to large downloads.
News sites: Similar to an information site, but dedicated to dispensing

news, politics, and commentary.
Personal sites: Websites about an individual or a small group (such as a

family) that contains information or any content that the individual wishes
to include. Many personal homepages are rare, thanks to the modern era
of social networking sites such as MySpace, but some are still used for at
home businesses. This website is different from a Celebrity website, which
can be very expensive and run by a publicist or agency.
Phishing sites: A website created to fraudulently acquire sensitive

information, such as passwords and credit card details, by masquerading
as a trustworthy person or business (such as Social Security
Administration, PayPal) in an electronic communication (see Phishing).
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Torrent sites: Websites that index torrent files. This type of website is
different from a bit torrent client which is usually stand-alone software.
Political sites: A site on which people may voice political views, show
political humor, campaigning for elections, or show information about a
certain political party or ideology.
Porn sites: A site that shows sexually explicit content for enjoyment and
relaxation. They can be similar to a personal website when it's a website of
a porn actor/actress or a media sharing website where a user can upload
from their own sexually explicit material to movies made by adult studios.
Review sites: A site on which people can post reviews for products or
services.
!
Picture 4.14
Source: expedia.com
Search engine sites: A website that indexes material on the internet or

an intranet (and lately on traditional media such as books and newspapers)
and provides links to information as a response to a query.
Social bookmarking sites: A site where users share other content from
the Internet and rate and comment on the content.
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Social networking sites: A site where users could communicate with one
another and share media, such as pictures, videos, music, blogs, etc., with
other users. These may include games and web applications.
!
Picture 4.15
Webmail sites: A site that provides a webmail service.
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Picture 4.16
Source: http://webmail.vsnl.com/
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Web Portal Sites:
A site that provides a starting point or a gateway to other resources on the

Internet or any intranet.
Some websites may be included in one or more of these categories. For

example, a business website may promote the business's products, but
may also host informative documents, such as white papers. There are also
numerous subcategories to the ones listed above. For example, a porn site
is a specific type of e-Commerce site or business site (that is, it is trying to
sell memberships for access to its site) or have social networking
capabilities. A fan site may be a dedication from the owner to a particular
celebrity.
!
Picture 4.17
Websites are constrained by architectural limits (e.g., the computing power

dedicated to the website). Very large websites, such as Facebook, Yahoo!,
Microsoft, and Google employ many servers and load balancing equipment
such as Cisco Content Services Switches to distribute visitor loads over
multiple computers at multiple locations. As of early 2011, Facebook
utilized 9 data centers with approximately 63,000 servers.
In February 2009, Netcraft, an Internet monitoring company that has

tracked Web growth since 1995, reported that there were 215,675,903
websites with domain names and content on them in 2009, compared to
just 18,000 websites in August 1995.
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4.4.3 Web Portals
A web portal or links page is a web site that functions as a point of access
to information on the World Wide Web. A portal presents information from
diverse sources in a unified way. Apart from the standard search engine
feature, web portals offer other services such as e-mail, news, stock prices,
information, databases and entertainment. Portals provide a way for
enterprises to provide a consistent look and feel with access control and
procedures for multiple applications and databases, which otherwise would
have been different entities altogether. Examples of public web portals are
AOL, Excite, iGoogle, MSN and Yahoo!.
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Picture 4.18
Source: voaburmese.wordpress.com
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In the late 1990s, the web portal was a hot commodity. After the
proliferation of web browsers in the late-1990s many companies tried to
build or acquire a portal to have a piece of the Internet market. The web
portal gained special attention because it was, for many users, the starting
point of their web browser. Netscape became a part of America Online, the
Walt Disney Company launched Go.com, IBM and others launched Prodigy,
and Excite and @Home became a part of AT&T during the late 1990s.
Some portal sites such as Yahoo! and those others first listed in this article
remain successful.
Types of Portals
Horizontal and Vertical Portals: Two broad categorizations of portals are

horizontal portals, which cover many areas, and vertical portals, which are
focused on one functional area. Another definition for a horizontal portal is
that it is used as a platform to several companies in the same economic
sector or to the same type of manufacturers or distributors. A vertical
portal consequently is a specialized entry point to a specific market or
industry niche, subject area, or interest, also called vortal.
Personal portals: A personal portal is a site on the World Wide Web that
typically provides personalized capabilities to its visitors, providing a
pathway to other content. It is designed to use distributed applications,
different numbers and types of middleware and hardware to provide
services from a number of different sources. In addition, business portals
are designed to share collaboration in workplaces. Personal portals can be
related to any specific topic such as providing friend information on a social
network or providing links to outside content that may help others beyond
your reach of services. Portals are not limited to simply providing links.
Information or content that you are putting on the internet creates a
portal, or a path to new knowledge and/or capabilities.
News portals: The traditional media rooms all around the world are fast
adapting to the new age technologies. This marks the beginning of news
portals by media houses across the globe. This new media channels give
them the opportunity to reach the viewers in a shorter span of time than
their print media counterparts.
Government web portals: At the end of the dot-com boom in the 1990s,
many governments had already committed to creating portal sites for their
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citizens. These included primary portals to the Governments as well as

portals developed for specific audiences. Examples of Government web
portals include;
• Australia.gov.au for Australia.

• USA.gov for the United States (in English) and GobiernoUSA.gov (in
Spanish).
• Disability.gov for citizens with disabilities in the United States.
• Directgov for citizens and businesslink.gov.uk for businesses in the
United Kingdom.
• India.gov.in for India.
• Europa (web portal) links to all EU agencies and institutions in addition to
press releases and audiovisual content from press conferences.
• Health-EU portal gathers all relevant health topics from across Europe.
• National Resource Directory links to resources for United States Service
Members, Veterans and their families (NRD.gov).
Corporate web portals: Corporate intranets became common during the

1990s. As intranets grew in size and complexity, webmasters were faced
with increasing content and user management challenges. A consolidated
view of company information was judged insufficient; users wanted
personalization and customization. Webmasters, if skilled enough, were
able to offer some capabilities, but for the most part ended up driving
users away from using the intranet.
!
Picture 4.19
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Many companies began to offer tools to help webmasters manage their

data, applications and information more easily, and through personalized
views. Portal solutions can also include workflow management,
collaboration between work groups, and policy managed content
publication.
The concept of content aggregation seems to still gain momentum and

portal solution will likely continue to evolve significantly over the next few
years. The increase in user generated content, disparate data silos, and file
formats, information architects and taxonomist will be required to allow
users the ability to tag (classify) the data. This will ultimately cause a
ripple effect where users will also be generating ad hoc navigation and
information flows. Corporate Portals also offer customers and employees
self-service opportunities.
Stock portals: Also known as stock-share portals, stock market portals or

stock exchange portals are Web-based applications that facilitates the
process of informing the share-holders with substantial online data such as
the latest price, ask/bids, the latest News, reports and announcements.
Some stock portals use online gateways through a central depository
system (CDS) for the visitors to buy or sell their shares or manage their
portfolio.
Search portals: Search portals aggregate results from several search

engines into one page.
Tender's portals: Tender's portals stands for a gateway to search/modify/

submit/archive data on tenders and professional processing of continuous
online tenders. With a tender portal the complete tendering process-
submitting of proposals, assessment, administration are done on the web.
Electronic or online tendering is just carrying out the same traditional
tendering process in an electronic form, using the Internet. Using online
tendering, bidders can do any of
the following:
• Receive notification of the tenders.

• Receive tender documents online.
• Fill out the forms online.
• Submit proposals and documents.
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Domain-specific portals: A number of portals have come about that are

specific to the particular domain, offering access to related companies and
services, a prime example of this trend would be the growth in property
portals that give access to services such as estate agents, removal firm,
and solicitors that offer conveyancing. Along the same lines, industry-
specific news and information portals have appeared, such as the clinical
trials specific portal: IFPMA Clinical Trials Portal.
4.5 WEBSITE HOSTING
A web hosting service is a type of Internet hosting service that allows

individuals and organizations to make their website accessible via the
World Wide Web. Web hosts are companies that provide space on a server
owned or leased for use by clients, as well as providing Internet
connectivity, typically in a data center. Web hosts can also provide data
center space and connectivity to the Internet for other servers located in
their data center, called collocation, also known as Housing in Latin
America or France.
The scope of web hosting services varies greatly. The most basic is web
page and small scale file hosting, where files can be uploaded via File
Transfer Protocol (FTP) or a Web interface. The files are usually delivered to
the Web “as is” or with minimal processing.
Many Internet service providers (ISPs) offer this service free to

subscribers. Individuals and organizations may also obtain Web page
hosting from alternative service providers. Personal website hosting is
typically free, advertisement-sponsored or inexpensive. Business website
hosting often has a higher expense.
Single page hosting is generally sufficient for personal web pages. A

complex site calls for a more comprehensive package that provides
database support and application development platforms (e.g., PHP, Java,
or ASP.NET). These facilities allow customers to write or install scripts for
applications like forums and content management. Also, Secure Sockets
Layer (SSL) is typically used for e-Commerce.
The host may also provide an interface or control panel for managing the
Web server and installing scripts, as well as other modules and service
applications like e-mail. Some hosts specialize in certain software or
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services (e.g., e-Commerce), which are commonly used by larger

companies that outsource network infrastructure.
4.6 WEB DESIGN
A well designed, easy to navigate website is a crucial element of a

successful e-Business. While elaborate design and graphics might attract
customers initially, content should be the foundation.
Features of Good Web Design
One of the elements of good web design is a lack of the elements that
make bad web design. If you stay away from everything listed on the page
about dorky web pages, you've probably got a pretty nice website. In
addition, keep these concepts in mind:
Text
• Background does not interrupt the text

• Text is big enough to read, but not too big
• The hierarchy of information is perfectly clear
• Columns of text are narrower than in a book to make reading easier on
the screen
Navigation
• Navigation buttons and bars are easy to understand and use

• Navigation is consistent throughout the website
• Navigation buttons and bars provide the visitor with a clue as to where
they are, what page of the site they are currently on
• Frames, if used, are not obtrusive
• A large site has an index or site map
Links
• Link colors coordinate with page colours

• Links are underlined so they are instantly clear to the visitor
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Graphics
• Buttons are not big and dorky

• Every graphic has an alt label
• Every graphic link has a matching text link
• Graphics and backgrounds use browser-safe colours
• Animated graphics turn off by themselves
General Design
• Pages download quickly

• First page and home page fit into 800 x 600 pixel space
• All of the other pages have the immediate visual impact within 800 x 600
pixels
• Good use of graphic elements (photos, subheads, pull quotes) to break
up large areas of text
• Every web page in the site looks like it belongs to the same site; there
are repetitive elements that carry throughout the pages
Below are features that can make a web design look dorky.
Backgrounds
• Default gray color

• Color combinations of text and background that make the text hard to
read
• Busy, distracting backgrounds that make the text hard to read
Text
• Text that is too small to read

• Text crowding against the left edge
• Text that stretches all the way across the page
• Centered type over flush left body copy
• Paragraphs of type in all caps
• Paragraphs of type in bold
• Paragraphs of type in italic
• Paragraphs of type in all caps, bold, and italic all at once
• Underlined text that is not a link
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Links
• Default blue links

• Blue link borders around graphics
• Links that are not clear about where they will take you
• Links in body copy that distract readers and lead them off to remote,
useless pages
• Text links that are not underlined so you don't know they are links
..(If you're not going to underline your links, please make darned sure
..that each link is perfectly clearly a link! Don't make me wander around
..with my mouse checking to see if randomly colored text is a link!)
Dead links (links that don't work anymore)
Graphics
• Large graphic files that take forever to load

• Meaningless or useless graphics
• Thumbnail images that are nearly as large as the full-sized images they
link to
• Graphics with no alt labels
• Missing graphics, especially missing graphics with no alt labels
• Graphics that don't fit on the screen (assuming a screen of 800 x 600
pixels)
Tables
• Borders turned on in tables

• Tables used as design elements, especially with extra large (dorky)
borders, blinking and animations
• Anything that blinks, especially text
• Multiple things that blink
• Rainbow rules (lines)
• Rainbow rules that blink or animate
• “Under construction” signs, especially of little men working
• Animated “under construction” signs
• Animated pictures for e-mail
• Animations that never stop
• Multiple animations that never stop
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Junk
• Counters on pages – who cares

• Junky advertising
• Having to scroll sideways (800 Å~ 600 pixels)
• Too many little pictures of meaningless awards on the first page
• Frame scroll bars in the middle of a page
• Multiple frame scroll bars in the middle of a page
Navigation
• Unclear navigation; over complex navigation

• Complicated frames, too many frames, unnecessary scroll bars in frames
• Orphan pages (no links back to where they came from, no identification)
• Useless page titles that don’t explain what the page is about
General Design
• Entry page or home page that does not fit within the standard browser
window (800 x 600 pixels)
• Frames that make you scroll sideways
• No focal point on the page
• Too many focal points on the page
• Navigation buttons as the only visual interest, especially when they're
large (and dorky)
• Cluttered, not enough alignment of elements
• Lack of contrast (in color, text, to create hierarchy of information, etc.)
• Pages that look okay in one browser but not in another
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!
Figure 4.3
Source: homested.com
! !140
!
Figure 4.4
Source: healthlife.com
4.7 ENHANCING THE USER EXPERIENCE
In addition to designing your site to meet your customers preferences,

there are a number of other features you can implement to enhance their
experience. We review searching capabilities, intelligent agents, community
building features and product viewing technology.
Some of the problems associated with site layout can be solved by adding
a search engine. Searching features to make it easy to find items on your
site can be added for free through www.freefind.com.
FreeFind has provided Web site owners with a quick and easy way to add a
powerful search engine to their own pages.
FreeFind is one of those rare free Web services that is so reliable and
efficient that it’s hard to believe that this is a free service. While there are
a number of other “set-up-a-search-engine” type free services out there,
FreeFind’s ease of use, speed and configurability places it in the top
division of the Web's free services.
! !141
You submit your e-mail address and URL, site then sends you the HTML
code via e-mail for implementing the search feature on your site.
FreeFind generates reports to get a better idea of what their visitors are
truly looking for and whether their expectations are being met.
Obviously, visitors to a FreeFind-enabled site benefit as well, since they get

to easily search the site to find what they're looking for.
4.7.1 Creating Excellence in User Experience
“Life’s like a play; it’s not the length but the excellence of the acting that
matters” said Seneca, a Roman philosopher in mid-1st century AD.
The Design Experience
Is design really important?
If psychologists are to be believed then definitely yes. Design directly

affects our behaviour towards objects, people and things. In a website the
design experience becomes even more important because the website per
se has to seduce the customer and make a sale (or sell information).
Emotional Design analyzes the profound influence of this deceptively

simple idea, from our willingness to spend thousands of dollars on Gucci
bags and Rolex watches to the impact of emotion on the everyday objects
of tomorrow. In the future, will inanimate objects respond to human
emotions? Is it possible to create emotional robots?
It's a recommendation for any student of design.
The Content Experience
Content is king. It makes or breaks a website. I have said that at least a

hundred times before and am saying it again. Any, yes I do mean ANY,
successful website owes its success to a copy. Whether its Amazon, or the
successful begging Savekayrn kind of sites, they ALL owe their success to
good copywriting. In fact any person with the slightest knowledge of the
web lays the maximum emphasis on copy writing. Yet some of the
webpreneurs seem to think otherwise.
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The visitor on the website cannot see your physical company or its
employees. It is the content experience that determines the values of your
company. The content on the website either makes or breaks the website.
The Navigation Experience
Optimize the user's experience and see how it benefits. It has been proven
an optimised Information Architecture (designing the organization and
navigation systems that help users find information. Adapted from
concepts of traditional architecture, user interface design and usability
studies) directly affects the ROI.
How to enhance the user experience?
In one of my earlier columns titled “Don’t Make Me Think” I had written

profoundly on website usability.
Website Usability Tests
It is generally advised to have usability tests in the design stage. It saves

precious capital and time. Yet all is not lost and there are ways of
improving usability.
Website usability can be quantitatively measured. In the academic

environment usability lies within the remit of researchers working in the
discipline of human-computer interaction (HCI), an area that has seen
considerable growth within the last decade. Usability is all about making
websites intuitive to use, easy to learn and satisfying to use.
Through research in the HCI Unit at the University of Luton, and

collaboration with a number of web design agencies, three approaches
have been found particularly suitable for website usability evaluation:
• Usability comparison tests
Assuming that competitor (or at least similar) sites are available, usability
comparisons tests should be undertaken. The analysis can benefit from
access to real end-users and therefore a quantitative approach to usability
perceptions can be adopted, and comparisons between sites undertaken.
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Usability metric for both performance and satisfaction can be selected for
specific sites.
• Expert/heuristic evaluation
The user-based work should be supported by ‘blind’ HCI-expert evaluation

of the three sites against supplied heuristics. A range of heuristics are
available from key HCI gurus.
• User Enquiry sessions
On its own a metric-based approach can only highlight strengths and

weaknesses in usability outcomes, rather than the causes that are inherent
within the design. Many of these can be obtained through expert/heuristic
evaluation, but studies show that often only the minority of the problems
that users encounter are detected by such an approach. It is possible to
undertake a technique developed jointly at the University of Luton and the
Open University, known as Developer-User Contextual Enquiry (DUCE)
sessions to elicit the major design modifications for the site. Within the
approach developed, two distinct activities are provided:
• Developer — user contextual enquiry (DUCE) sessions — in which, by

interacting with the site and verbalizing their experience, users are given
the opportunity to provide evidence relating to the overall usability of the
system.
• Team evidence analysis (TEA) session — in which the evidence captured

in the DUCE sessions is refined by a team of developers into a number of
design improvements
A simpler technique
If the above sounds tough maybe you could try out this simpler technique
You will need around 15-20 people of your target profile.
A spreadsheet to note down the reactions.
An independent panel of judges.
1. Determine Objectives
Make short and express objectives.
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E.g. Evaluate the no. of clicks to purchase product XYZ
2. Prepare and test
Before the session, set testers’ expectations and make them feel
comfortable. Explain that you want them to think out loud, telling you what
they are trying to accomplish and what they do and don't understand. Ask
them to read each task out loud before attempting it. Make clear that they
are not being tested, they are testing the Web site so you can learn how to
make it better. Tell testers you will be taking notes and will try not to talk
with them during the sessions.
3. Evaluate
Evaluate and respect the responses. Even better let a person not
associated with the site design evaluate the responses.
User experience on a website is a combination of various elements such as

sensory, conceptual, and reactive aspects. Success is about creating
excellence and enhancing the user experience. With the kind of tools and
techniques available today it's just a matter of initiative. Get the user
experience right and see the revenues soar.
4.7.2 Key Elements in Increasing Effectiveness and Popularity
A well designed website can do wonders for your corporate image and
sales.
• Web Design and Development

• Web Usability and Accessibility
• Banner Advertisement and Website Advertisement
• E-mail Newsletters
• Electronic Presentations
• Keeping track record of creating high traffic, interactive websites
• Our creative people create a great user experience
• At SSW, our designers work everyday with our technical team
• Good Process: We are experienced at walking you through all the stages
of design.
• Technical knowledge: We know what will work and what your platform
can offer
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Metro is Microsoft's latest offering to the user interface world. With

Windows 8 on the horizon, Metro will become the new internet standard.
Examples of indicating how the above factors are considered for redesign
of some old websites at SSW using the Metro Interface is shown below:
!
Figure 4.5: TimePro.Net before our 2012 revision
Source: SSWweb2casestudy)
!
Figure 4.6: TimePro.Net 2012 Metro
Source: SSWweb2casestudy
! !146
4.7.3 Protecting Your e-Business
In addition to providing your consumers with a well organised Website,

timely shipping and effective personalization, you must take steps to
protect the consumer and your e-Business from misunderstanding,
misinterpretation and hacking threats.
Your website should include private policy, detailing the intended use of
consumer’s private information. Additional legal and ethical issues are
discussed in detail in later subsequent chapter.
There are many websites that help you to build private policy. They provide
you with their seal.
!
Figure 4.7
! !147
4.7.4 End to End e-Business Solutions
!
Figure 4.8
4.7.5 Use of Streaming Media in Web Page
It is important to recognize that while multimedia such as streaming video

and audio can enhance content, not all users have the capability to
download this kind of information effectively, or even at all.
Your Web pages should be able to provide such consumers simple, but
never the less effective Web pages.
4.7.6 Preparing for New Technologies
Building a website is only a beginning. By keeping new technologies in

mind when designing your website, you can reduce the cost of
incorporating these technologies later. It is important to begin thinking of
new technologies to make your e-Business accessible to mobile devices.
Wireless Application Protocol, WAP is used in e-Business.
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4.8 e-BUSINESS CONSULTING
Consulting firms guide developing e-Business. Some operate as advisor,

while others provide building and maintenance services similar to those by
end to end providers.
Anderson Consulting devotes one section of its website to the discussion of

e-Commerce.
SAP is a software solution provider. MySap.com allows individual and

corporates to create an online forum in which e-Business solutions can be
used for all types of business applications.
!
Figure 4.9
Source: SSW consulting.com
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SSW Consulting
Metro is Microsoft’s latest offering to the user interface world. With

Windows 8 on the horizon, Metro will become the new internet standard. At
SSW, we've eagerly dived into Metro’s new design guidelines with strong
typography, bold colors and plenty of whitespace.
WorleyParsons
SharePoint Website
WorleyParsons is one of the world’s top engineering and project delivery

companies. SharePoint was implemented extensively across their
organization, but they were looking to extend the development to include
their new public website. After a lengthy tendering process, WorleyParsons
chose SSW to develop their new public website and it is now powered by
SharePoint.
!
Figure 4.10
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Microsoft
SharePoint and Office Forum 2008, Website
Microsoft Australia approached SSW to develop a website in preparation for

the upcoming 2008, Forum event for SharePoint and Office. The original
website design used for previous events required a complete overhaul with
clear layout and navigation, and to demonstrate a SharePoint site
integrating with various other technologies.
!
Figure 4.11
CBP Lawyers
SharePoint Intranet Redesign
CBP Lawyers came to SSW to restructure their intranet. The portal had no
branding and was especially hard to navigate, so people simply didn't use
it. We had about a week to redesign and build it. So we did.
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eMove
Website
eMove is a free online service for finding removals quotes, utility

connections/disconnections, address changes, cleaners, storage, packing,
and much more. SSW was brought into the project to provide new
functionality for the removals quotes and utility connections
disconnections. SSW created 2 new DotNetNuke modules for the site and
integrated into their solution and bug-fixed existing errors on their site.
SSW was also commissioned to take a new design from eMove and create
and implement a DotNetNuke skin for this design.
FastAs
Website
FastAs came to SSW to create an online

application that provides a global directory of
contact information and integrated messaging
services for individuals and businesses. It
processes both payments and receipting, and
offers convenient (and, if necessary, confidential)
contact services via e-mail, SMS, Fax, surface
mail and telegram.
Carmody Group
Website
Carmody Group specializes in Hotel Interior Design

and Refurbishment services throughout Asia
Pacific. SSW was given the task to redesign their
public website http://www.carmodygroup.com.au/
applying unique design concept to showcase
current and past projects.
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Bahai
Website
SSW was asked to assist in creating a DNN skin and

c u s t o m m o d u l e s f o r t h e A u s t ra l i a n B a h a ' i
Community public website that meets the needs of a
range of audiences. The design aims to portray the
community as welcoming, vibrant, authentic and
optimistic.
Australia BedBank
Website
Australia BedBank got to SSW to develop a hub where real time room
inventory for hundreds of hotels, resorts and cruises is stored, and
instantly confirmed and transmitted to inbound travel operators and travel
wholesalers globally.
The Guide
Website
The Guide got SSW to create http://www.theguide.com.au/as a

comprehensive social guide for most of Australia including restaurants,
nightlife spots, accommodation, and other entertainment venues. The
design was architected to best direct people to their areas of interest while
looking contemporary and relevant to a modern user base.
Central Coast Grammar School
DNN Skin
Central Coast Grammar School (CCGS) developed their portal on

DotNetNuke and were seeking to implement a custom skin and container
design that matched with the organisation’s identity and culture. SSW
worked with several key people in the organization and produced a set of
visual framework guidelines as reference for content editors.
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BCS Direction
Website
A chartered accountants practice specializing in superannuation audit, BCS

Direction, has more than 10 years of experience in providing expert
services. SSW was approached to build their corporate website focusing on
search engine optimization to maximize online discoverability. The result is
a clean, lightweight and professional looking site that is easily discovered
in various search engines.
SSW
Web 2.0 makeover
SSW website received a makeover. The new layout is designed for easier
navigation and provides first-time visitors with quick access to the most
sought-after content. The challenge was to create a home page that could
be understood and operated by a wider range of clients, not just the
technically minded.
LUKA TV
Concept Design
Luka TV is an upcoming online video site providing high quality broadcast

to sport fans around the world. SSW was asked to create a concept design
that focused on enhancing user experience for this highly visual site by
incorporating Silver light as one of the core technologies.
4.10 ACTIVITIES
(1)SQL Deploy is a fast and easy to use application that should be part of
every developer’s software deployment strategy, as it automatically
applies any pending SQL scripts and Database updates. SQL Deploy is
developed by SSW, so it’s nice looking, SEO friendly and an informative
website. Visit SSW website and collect more details
.........................................................................................................
.........................................................................................................
.........................................................................................................
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(2) DispatchKing approached SSW to realize the idea that job delivery
shouldn’t be tracked on paper or spread sheets – it should be done in a
simple to use computer system. The result is a beautiful, state of the art
run-board tracking system combining ASP.NET MVC 2, Silverlight and Bing
Maps API. Visit DispatchKing to learn more about tracking system.
…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………….
4.11 SUMMARY
There are numerous ways to approach designing and maintaining an e-

Business. IT applications are purposeful. They support and partially
automate human participation in business processes.
The larger corporations or business with substantial funding, can outsource

the project to an organization offering e-Business solutions or choose to
build the e-Business in-house through
the application platform.
Generating business ideas
Before beginning to build an e-Business, you must have a solid idea of the
product and services you want to offer via the Web. Surf the web to
discover what exists. Are the websites you find providing exceptional
services or could they offer more.
IT applications are purposeful. They support and partially automate human

participation in business processes. Portals are no different. So let's talk
about business processes, e-Business processes and knowledge processes
before we talk about knowledge portals.
Factors considered for successful development of e-Business sites
• Create Unique Descriptions for Best Results

• Cut Down on Clutter
• Consolidate Your Community
• Increase Foot Traffic
• Develop Pure Content
• Global e-Commerce
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• Consider Payment Provider Added Services

• Display In-store Promotions on Your Website
• Try Incentives to Reduce Cart Abandonment
Putting your plan into action
Choosing a Domain Name
Tips for choosing Domain Names
• Brainstorm Five Top Keywords

• Make the Domain Unique
• Only Choose Dot-Com Available Domains
• Make it Easy to Type
• Make it Easy to Remember
Companies striving to improve their business processes, introduce IT-based

process innovations, or integrate with their business partners and
customers will benefit from appropriate IT solutions developed specifically
for their functional areas and business processes
Difference between Website and Portal
A good understanding of the difference between Websites and Portals is

necessary before we proceed. A web portal offers multiple services like
mail, news, calendars, search or multiple brands (in the case of content
portals) under one umbrella. A website is a smaller subset offering only a
limited or just one service or brand.
Websites
A website is a collection of related web pages containing images, videos

or other digital assets. A website is hosted on at least one web server,
accessible via a network such as the Internet or a private local area
network through an Internet address also called URL.
Static website: A static website is one that has web pages stored on the
server in the format that is sent to a client web browser. It is primarily
coded in Hypertext Markup Language, HTML.
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Dynamic website: A dynamic website is one that changes or customizes

itself frequently and automatically, based on certain criteria. Dynamic
websites can have two types of dynamic activity: Code and Content.
Dynamic code is invisible or behind the scenes and dynamic content is
visible or fully displayed.
Types of websites:
• Affiliate Archive
• Blogs Celebrity
• Community Content Corporate
• Dating e-Commerce
• Government Media Sharing Mirror
• Personal Phishing Torrent
Web Portals
diverse sources in a unified way. Apart from the standard search engine
feature, web portals offer other services such as e-mail, news, stock prices,
information, databases and entertainment.
Types of portals:
• Horizontal and Vertical portals

• Personal portals
• News portals
• Government web portals
• Corporate web portals
• Stock portals
Website Hosting
A web hosting service is a type of Internet hosting service that allows

individuals and organizations to make their website accessible via the
World Wide Web. Web hosts are companies that provide space on a server
owned or leased for use by clients, as well as providing Internet
connectivity, typically in a data center. Web hosts can also provide data
center space and connectivity to the Internet for other servers located in
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their data center, called collocation, also known as Housing in Latin

America or France.
Web Design
A well designed, easy to navigate website is a crucial element of in a

successful e-Business. While elaborate design and graphics might attract
customers initially, content should be foundation.
Enhancing the User Experience
In addition to designing your site to meet your customers’ preferences,

there are number of other features you can implement to enhance their
experience. We review searching capabilities, intelligent agents, community
building features and product viewing technology
Some of the problems associated with site layout can be solved by adding
a search engine. Searching features to make it easy to find items on your
site can be added for free through www.freefind.com.
Creating Excellence in User Experience
Design directly affects our behavior towards objects, people and things. In
a website the design experience becomes even more important because
the website per se has to seduce the customer and make a sale (or sell
information).
Key elements in increasing effectiveness and popularity
A well designed website can do wonders for your corporate image and
sales.
• Web Design and Development

• Web Usability and Accessibility
• Banner Advertisement and Website Advertisement
• e-Mail Newsletters
• Electronic Presentations
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Protecting Your e-Business
• In addition to providing your consumers with a well organised website,

timely shipping and effective personalization, you must take steps to
protect the consumer and your e-Business from misunderstanding
misinterpretation and hacking threat.
• Your website should include private policy, detailing the intended use of
consumer’s private information.
e-Business Consulting
Consulting firms guide developing e-Business. Some operate as advisor,

while others provide building and maintenance services similar to those by
end to end providers.
Anderson Consulting devotes one section of its website to the discussion of

e-Commerce.
SAP is a software solution provider. MySap.com allows individual and

corporate to create an online forum in which e-Business solutions can be
used for all types of business applications.
1. What are the factors considered for successful development of e

Business sites?
2. What factors are considered for choosing Domain Names?
3. Explain the difference between Website and Portal.
4. What do you understand by Blogs? Illustrate with examples. 
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REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !160
ONLINE MONETARY TRANSACTION
Chapter 5
• Understand the credit card transactions used in e-Commerce

• Identify the fraud and security issues
• Explore digital currency and e-Wallets concepts
• Understand e-Commerce payment systems
• Recognise the benefits of business-to-business (B2B) transactions
Structure:
5.1 Introduction
5.2 Credit Card Transactions
5.3 Online Credit Card Fraud and Security Issues
5.4 Digital Currency
5.4.1 Alignment with the Current Postal Service Mission and Role
5.5 Digital Wallets/e-Wallets
5.6 e-Billing/Invoicing
5.7 Online Stored Value Payment System
5.7.1 Smart Cards
5.8 Alternate Consumer Payment Options
5.8.1 Digital Accumulating Balance Payment System
5.8.2 Digital Checking Payment System
5.8.3 Wireless Payment System
5.9 Business-to-Business (B2B) Transactions
5.11 Activities
5.12 Summary
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5.1 INTRODUCTION
Secure electronic funds transfer is crucial to e-Commerce. Examination of

how individuals and organizations conduct monetary transactions on the
Internet. Credit-card transactions, digital cash and e-wallets, smart cards,
micropayments and electronic bill presentment and payment and
Electronic-payment enablers.
5.2. CREDIT CARD TRANSACTIONS
Credit card represents an account that extends credit to consumers,

permits to consumers to purchase items while deferring payments, and
allow consumers to make payments to multiple vendors at one time. A
credit card is a payment card issued to users as a system of payment. It
allows the cardholder to pay for goods and services based on the holder's
promise to pay for them. The issuer of the card creates a revolving account
and grants a line of credit to the consumer (or the user) from which the
user can borrow money for payment to a merchant or as a cash advance to
the user.
A credit card is different from a charge card: a charge card requires the
balance to be paid in full each month. In contrast, credit cards allow the
consumers a continuing balance of debt, subject to interest being charged.
A credit card also differs from a cash card, which can be used like currency
by the owner of the card.
Collectible Credit Cards
A growing field of numismatics (study of money), or more specifically

exonumia (study of money-like objects), credit card collectors seek to
collect various embodiments of credit from the now familiar plastic cards to
older paper merchant cards, and even metal tokens that were accepted as
merchant credit cards. Early credit cards were made of celluloid plastic,
then metal and fiber, then paper, and are now mostly polyvinyl chloride
(PVC) plastic.
How Credit Cards Work
Credit cards are issued by a credit card issuer, such as a bank or credit
union, after an account has been approved by the credit provider, after
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which cardholders can use it to make purchases at merchants accepting

that card. Merchants often advertise which cards they accept by displaying
acceptance marks - generally derived from logos – or may communicate
this orally, as in “We take (brands X, Y, and Z)” or “We don’t take credit
cards”.
When a purchase is made, the credit card user agrees to pay the card
issuer. The cardholder indicates consent to pay by signing a receipt with a
record of the card details and indicating the amount to be paid or by
entering a personal identification number (PIN). Also, many merchants now
accept verbal authorizations via telephone and electronic authorization
using the Internet, known as a card not present transaction (CNP).
Electronic verification systems allow merchants to verify in a few seconds

that the card is valid and the credit card customer has sufficient credit to
cover the purchase, allowing the verification to happen at time of purchase.
The verification is performed using a credit card payment terminal or point-
of-sale (PoS) system with a communications link to the merchant’s
acquiring bank. Data from the card is obtained from a magnetic strip or
chip on the card; the latter system is called Chip and PIN in the United
Kingdom and Ireland, and is implemented as an EMV card.
Many banks now also offer the option of electronic statements, either in
lieu of or in addition to physical statements, which can be viewed at any
time by the cardholder via the issuer’s online website. Notification of the
availability of a new statement is generally sent to the cardholder’s e-mail
address. If the card issuer has chosen to allow it, the cardholder may have
other options for payment besides a physical check, such as an electronic
transfer of funds from a checking account. Depending on the issuer, the
cardholder may also be able to make multiple payments during a single
statement period, possibly enabling him or her to utilize the credit limit on
the card several times over.
Interest Charges
Credit card issuers usually waive interest charges if the balance is paid in
full each month, but typically will charge full interest on the entire
outstanding balance from the date of each purchase if the total balance is
not paid.
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The credit card may simply serve as a form of revolving credit, or it may
become a complicated financial instrument with multiple balance segments
each at a different interest rate, possibly with a single umbrella credit limit,
or with separate credit limits applicable to the various balance segments.
Usually this compartmentalization is the result of special incentive offers
from the issuing bank, to encourage balance transfers from cards of other
issuers.
Grace Period
A credit card's grace period is the time the customer has to pay the
balance before interest is assessed on the outstanding balance. Grace
periods may vary, but usually range from 20 to 55 days depending on the
type of credit card and the issuing bank. Some policies allow for
reinstatement after certain conditions are met.
Benefits to Merchants
For merchants, a credit card transaction is often more secure than other
forms of payment, such as cheques, because the issuing bank commits to
pay the merchant the moment the transaction is authorized, regardless of
whether the consumer defaults on the credit card payment (except for
legitimate disputes, which are discussed below, and can result in charges
back to the merchant). In most cases, cards are even more secure than
cash, because they discourage theft by the merchant’s employees and
reduce the amount of cash on the premises. Finally, credit cards reduce the
back office expense of processing checks/cash and transporting them to
the bank.
Parties involved
• Cardholder: The holder of the card used to make a purchase; the

consumer.
• Card-issuing bank: The financial institution or other organization that

issued the credit card to the cardholder. This bank bills the consumer for
repayment and bears the risk that the card is used fraudulently.
American Express and Discover were previously the only card-issuing
banks for their respective brands, but as of 2007, this is no longer the
! !164
case. Cards issued by banks to cardholders in a different country are

known as offshore credit cards.
• Merchant: The individual or business accepting credit card payments for

products or services sold to the cardholder.
The financial institution accepting payment for the products or services on

behalf of the merchant.
• Independent sales organization: Resellers (to merchants) of the

services of the acquiring bank.
• Merchant account: This could refer to the acquiring bank or the

independent sales organization, but in general is the organization that
the merchant deals with.
• Credit Card association: An association of card-issuing banks such as

Discover, Visa, MasterCard, American Express, etc., that set transaction
terms for merchants, card issuing banks, and acquiring banks.
• Transaction network: The system that implements the mechanics of

the electronic transactions. May be operated by an independent
company, and one company may operate multiple networks.
• Affinity partner: Some institutions lend their names to an issuer to

attract customers that have a strong relationship with that institution,
and get paid a fee or a percentage of the balance for each card issued
using their name. Examples of typical affinity partners are sports teams,
universities, charities, professional organizations, and major retailers.
• Insurance providers: Insurers underwriting various insurance

protections offered as credit card perks, for example, Car Rental
Insurance, Purchase Security, Hotel Burglary Insurance, Travel Medical
Protection etc.
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5.3 ONLINE CREDIT CARD FRAUD AND SECURITY ISSUES
Credit card security relies on the physical security of the plastic card as
well as the privacy of the credit card number. Therefore, whenever a
person other than the card owner has access to the card or its number,
security is potentially compromised. Once, merchants would often accept
credit card numbers without additional verification for mail order
purchases. It’s now common practice to only ship to confirmed addresses
as a security measure to minimise fraudulent purchases. Some merchants
will accept a credit card number for in-store purchases, whereupon access
to the number allows easy fraud, but many require the card itself to be
present, and require a signature. A lost or stolen card can be cancelled,
and if this is done quickly, will greatly limit the fraud that can take place in
this way. European banks can require a cardholder's security PIN be
entered for in-person purchases with the card.
The PCI DSS is the security standard issued by The PCI SSC (Payment
Card Industry Security Standards Council).
Internet fraud may be by claiming a chargeback which is not justified

(“friendly fraud”), or carried out by the use of credit card information which
can be stolen in many ways, the simplest being copying information from
retailers, either online or offline. Despite efforts to improve security for
remote purchases using credit cards, security breaches are usually the
result of poor practice by merchants. For example, a website that safely
uses SSL to encrypt card data from a client may then e-mail the data,
unencrypted, from the webserver to the merchant; or the merchant may
store unencrypted details in a way that allows them to be accessed over
the Internet or by a rogue employee; unencrypted card details are always
a security risk. Even encryption data may be cracked.
Credit card fraud is a wide-ranging term for theft and fraud committed
using a credit card or any similar payment mechanism as a fraudulent
source of funds in a transaction. The purpose may be to obtain goods
without paying, or to obtain unauthorized funds from an account. Credit
card fraud is also an adjunct to identity theft. According to the Federal
Trade Commission, while identity theft had been holding steady for the last
few years, it saw a 21% increase in 2008. However, credit card fraud, that
crime which most people associate with ID theft, decreased as a
percentage of all ID theft complaints for the sixth year in a row.
! !166
!
Figure 5.1: How an Online Credit Transaction Works
5.4 DIGITAL CURRENCY
Digital technologies and e-Commerce have completely revolutionized the

way individuals, businesses, and institutions conduct their financial
transactions. Cash is losing its primacy as the most widely used payment
method, now increasingly displaced by “digital currency” – a set of
innovative tools to store and transfer money electronically, including
electronic fund transfers, Internet payments, payment cards (credit, debit,
and prepaid), and mobile payments.
The increased efficiency and lower costs characterizing digital currency

have made it an attractive option for both providers and customers. As a
result, the electronic payment market is rapidly expanding. New non-bank
intermediaries have entered the market, attracted by its high growth
potential and relatively low barriers to entry. Businesses and governments
are looking to move their transactions to the digital channel to save on
processing costs. Consumers see digital currency as more practical,
! !167
potentially safer, and less expensive than cash or checks, while providing
an indisputable proof of transaction.
People without access to mainstream banking services are likely to be

excluded from the benefits of digital currency. Digital currency refers to
any exchange of money that takes place electronically through a secured
network. There are four primary types of electronic money instruments:
Electronic Payments Internet Mobile

Fund Cards Payments Payments
Transfers
These instruments are innovative in that they provide new ways to access
money, including through the Internet and mobile devices. However, their
users still need a bank account or a payment card, enabling traditional
bank and credit card networks to settle the payments.
1. Electronic Fund Transfers
Electronic fund transfers include any transfers of money between two bank
accounts initiated through an electronic terminal such as a computer; a
credit, debit, or prepaid card; an automated teller machine (ATM); a point-
of-sale (PoS) device; or a smart phone. In these cases, the intermediaries
are banks or other financial institutions where the sender and the receiver
hold an account. People who do not have a bank account generally send
and receive money through a variety of alternative providers,such as
Western Union®, Money Gram®, or the Postal Service, whose products
allow customers to conduct transfers in cash.
2. Payment Cards
The Payment cards are classified as credit, debit, or prepaid, depending on

the level of restrictions and benefits granted to the holder by the card
issuer. When a payment is made using a payment card, the transfer of
money takes place through a payment network such as Visa, MasterCard,
American Express, Diners Club, or Discover.
All three card types allow holders to make purchases in stores or online
and to withdraw cash at an ATM. Credit and debit cards are tied to a bank
! !168
account and provide more flexibility in terms of spendable amounts,

though many require a positive credit history.
Prepaid cards, in contrast, do not require a bank account or a positive

credit record, but must be preloaded with funds before use. Figure 5.2
highlights the primary differences between credit, debit, and prepaid cards.
PREPAID CARD DEBIT CARD Credit CARD

(Pay BEFORE) (Pay NOW) (Pay LATER)
Credit history No Credit history Yes Credit history

Bank account No Bank account Yes Yes
Credit Granting No Credit granting No Bank account Yes
Credit granting Yes
Figure 5.2: Primary Differences between Prepaid, Debit and Credit Cards
Source: OIG Analysis
3. Internet Payments
Internet payments encompass a group of new online payment solutions

aimed at increasing the simplicity and security of e-Commerce. Consumers
must still conduct these transactions with a payment card (typically, credit
or debit) tied to a bank account, but the payer's financial information
(owner's name, card number, type of card, and expiration date) is
communicated to the vendor in an encrypted form to protect the payer
from identity theft.
The typical example of Internet payment is the e-wallet. This is an

encrypted data storage system where users save their payment card or
bank account and shipping information. When they buy from an e-retailer
offering this payment option, their saved information is automatically
retrieved from the e-wallet and used to complete the transaction without
being disclosed to the merchant. Providers of e-wallet solutions include
PayPal®, Google Checkout®, Click2Pay®, and
many others.
! !169
4. Mobile Payments
Mobile payments are transfers of money made through an application

downloaded on a mobile device, via text messaging, or through a chip for
contactless payments installed in the phone. Similar to Internet payments,
mobile transactions are typically performed via payment card or bank
account. Also like Internet payments, mobile payments use electronic
wallet technologies that store payment card or bank details in the database
of the provider, which releases them in an encrypted mode at the time of
the payment.
5.4.1 Alignment with the Current Postal Service Mission and Role
Promoting the financial inclusion of the unbanked and under banked

population could be an important part of the Postal Service’s mission of
“binding the nation together.” To date, the Postal Service has fulfilled this
mission through its physical infrastructure, by
• transporting money across the country, and by providing universal access

to cash through its retail network.
In an environment that is increasingly dominated by the use of electronic

money, embracing new payment technologies and adapting its offerings to
the changing needs of these customers would be a natural evolution of the
Postal Service’s role. The Postal Service could position itself as a “provider
of last resort,” helping bridge the gaps that cannot be easily filled by the
private sector and ensuring that unbanked people are not left behind in an
increasingly digital economy. (see Figure 5.3)
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The Evolution of the Postal Service’s Role in Serving the

Underbanked Market
Cash-based Economy Digital Economy
Provide access to digital

currency
Provide access to cash
Electronic Money Transfers
Physical transportation of money
Card, mobile and Internet-based
Cash-to-Cash payments
payments
Physical access (retail network)
Multi-channel integrated access
(physical + web)
Figure 5.3: The Evolution of the Postal Service’s Role in Serving the
Underbanked Market
Source: OIG Analysis
5.5 DIGITAL WALLET
A Digital Wallet emulates the functionality of a regular wallet by

authenticating the consumer, storing and transferring value, and securing
the payment process from consumer to merchant. Digital Wallet (also
known as an e-Wallet) allows users to make electronic commerce
transactions quickly and securely.
A digital wallet functions is much like a physical wallet. The digital wallet
was first conceived as a method of storing various forms of electronic
money (e-cash), but with little popularity of such e-cash services, the
digital wallet has evolved into a service that provides internet users with a
convenient way to store and use online shopping information.
The term “digital wallet” is also increasingly being used to describe mobile
phones, especially smart phones, that store an individual's credentials and
utilize wireless technologies such as near field communication (NFC) to
carry out financial transactions.
! !171
An individual’s bank account is usually linked to the digital wallet. They

might also have their driver’s license, health card, loyalty card(s) and other
ID documents stored on the phone. The credentials can be passed to a
merchant’s terminal wirelessly via NFC. Certain sources are speculating
that these smart phone “digital wallets” will eventually replace physical
wallets. The system has already gained popularity in Japan, where digital
wallets are known as Osaifu-Keitai or “wallet mobiles”.
Technology
A digital wallet has both a software and information component. The

software provides security and encryption for the personal information and
for the actual transaction. Typically, digital wallets are stored on the client
side and are easily self-maintained and fully compatible with most e-
Commerce websites. A server-side digital wallet, also known as a thin
wallet, is one that an organization creates for and about you and maintains
on its servers. Server-side digital wallets are gaining popularity among
major retailers due to the security, efficiency, and added utility it provides
to the end-user, which increases their enjoyment of their overall purchase.
The information component is basically a database of user-inputted

information. This information consists of your shipping address, billing
address, payment methods (including credit card numbers, expiry dates,
and security numbers), and other information.
Set Up and Use
A client side digital wallet requires minimal set up and is relatively easy to
use. Once the software is installed, the user begins by entering all the
pertinent information. The digital wallet is now set up. At the purchase/
check-out page of an e-Commerce site, the digital wallet software has the
ability to automatically enter the user information in the online form. By
default, most digital wallets prompt when the software recognizes a form in
which it can fill out, if you chose to fill out the form automatically, you will
be prompted for a password. This keeps unauthorised users from viewing
personal information stored on a particular computer.
ECML
Digital wallets are designed to be accurate when transferring data to retail

checkout forms; however, if a particular e-Commerce site has a peculiar
! !172
checkout system, the digital wallet may fail to properly recognize the forms
fields. This problem has been eliminated by sites and wallet software that
use ECML technology. Electronic Commerce Modeling Language is a
protocol that dictates how online retailers structure and set up their
checkout forms. Participating e-Commerce vendors who incorporate both
digital wallet technology and ECML include: Microsoft, Discover, IBM,
Omaha Steaks and Dell Computers.
!
Electronic Wallet
Technology has made massive improvements in recent times, and there is

a need for new technology to meet the growing demands of consumers.
This demand has resulted in the development and manufacturing of more

advanced and detailed devices and technologies. A great example of this is
the electronic wallet, which is also referred to as an e-Wallet. An electronic
wallet is one of the developments that is part of Near Field Communication
(NFC). It helps to hold or store financial or credit card information in order
to complete a transaction without re-entering the same information over
and over again. It has been seen as a good method of storing electronic
cash and it is also an easy, safe and secure way of storing important
information such as all of the passwords for different accounts that
someone has. It is also a file that you can save in your hard drive. This file
would securely contain all of your personal information such as credit card
numbers, expiration dates and billing addresses.
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!
Figure 5.4
So what is NFC exactly? It is a short-range wireless connectivity that uses

magnetic fields to enable electronic devices that are at a close range to be
able to communicate just by touching or coming near each other.
How Near Field Communication Can Be Used?
It works almost like a Bluetooth where NFC enabled devices that are within
close proximity can choose to share and transfer files or information. Some
examples include:
• For example, when you take a picture from your phone, you can just
touch another phone and send the picture without any wired connection.
• You can send large document to another device just by touching them
together.
• You can download games and other kinds of application just by touching
the two gadgets together.
• It can also be used to send files that contain music from one computer to
another.
• You can make payments with an electronic wallet. Just as the name
suggest, it seems like a wallet because it is able to carry and store
! !174
information to enable payments without carrying different cards to do the

same work for you.
The main purpose why the e-Wallet was developed was to make payments
faster, easier and more secure. As the payments are limited to your device,
and can only be processed in very close proximity to the second device, it
helps increase security that has been lacking in some other forms of
payment. Some key points of the electronic wallet are:
• It can store personal and important information in just one wallet such as
personal passwords and credit card information.
• It can also be used for online purchasing of items.
• It is very easy to use as it doesn't contain a large number of different
steps.
• It ensures that all your information is stored securely.
• It can be used very quickly to acquire the information you require.
• It works wirelessly, so no connections are necessary
Advantages of the Electronic Wallet
• It helps in carrying a range of information which means that you don't

need to carry a lot different cards as the e-Wallet will do it for you.
• It is very light to carry – unlike other gadget or the use of cash, it can
carry all the money you need without weighing you down.
• Most of the information is built in, so you don’t need to run a program in
order to use the electronic wallet at all.
• It is very easy to connect – you just need to tap it on the other device.
• It makes the check – out process simpler when shopping online.
• It is portable – you will always have the information you need with you to
make a payment.
• It is very secure – you can be sure that your information is secure.
• The electronic wallet can store all your information such addresses,
photos and credit card information in a secure, organized and protected
area.
• It can also protect people from viruses because it allows for encrypted
web surfing.
• It can also be used for online gambling instead of needing to make
multiple account payments.
• It helps in completing an online form, which can be very lengthy, by
automating the completion process. There are times when people are
! !175
tempted to abandon a purchase or account set up because the form is

too lengthy or confusing.
• The e-Wallet is also universal so it can be used while travelling
throughout the world.
Disadvantages of the Electronic Wallet
• NFC is still a relatively new technology, so it is still not available on the

majority of mobile devices. However, this will change as new models are
released.
• It may not be possible to use it on some sites to check out and fill out
forms because they are not compatible with the technology.
• It will be necessary to keep more traditional payment methods with you
until there is greater acceptance of the technology.
So why should we be using an e-Wallet instead of the more traditional

payment methods that we are used to? Let us first look at the advantages
and disadvantages of it:
Advantages of Traditional Cards
• They are easy to use and very easy to understand how they work.
• They are mobile.
• They are widely accepted around the world, both online and in stores.
Disadvantages of Using Traditional Cards
• They are very easy to duplicate

• They are easily stolen and used for fraudulent purchases
• They hold no memory of the current balances, so a manual check needs
to be done either online, at the bank or via an ATM
• When using them internationally, large fees can be incurred
Having looked at the development of the e-Wallet and the advantages and
disadvantages of it, as well as for traditional debit/credit cards, it is
recommended that with the development of this new technology, people
start to look at incorporating an electronic wallet into their payment
options. However, the full benefits of this technology will not be realised
until it is more widely accepted by both seller and mobile manufacturers.
! !176
5.6 E-BILLING/INVOICING
Electronic Bill Presentment and Payment (EBPP)
Offers ability to present a company’s bill on multiple platforms online and

actual payment processes. Payments are generally electronic transfers
from consumer checking accounts, conducted through the ACH (Automated
Clearing House).
Current method for processing electronic monetary transfers:
Paytrust
• Users send bills directly to Paytrust which scans them and places them
online
• e-Mails customers about newly arrived bills and payment due dates
• Makes automatic payments on any bill up to a threshold amount
• Services to enable EBPP on a company's site
Derivion
• Provides billers with electronic capabilities in conjunction with Paytrust's

serviceOffers billing companies the technology and expertise needed to
transfer from paper to electronic billing through iNetBillerSM
Encirq
• Partners with banks that issue credit cards, presenting the consumer with
an illuminated statement (interactive statement, placing special offers
from retail merchants to correspond with the itemized charges on a
credit-card statement)
• Builds highly specific consumer profiles each time charges is received
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!
Figure 5.5: Process and Optimisation Areas for Invoice/Bill Issuers
! !178
! !179
!
Figure 5.6: Process and Optimisation Areas for Invoice Recipients
!
Figure 5.7: Optimisation Scope for Organisations
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Inbound
Organisations in a strong buying position may decide to replace inbound

invoices first, as are in a strong position to push their suppliers to deliver
invoices in electronic format.
Figure 5.8: Priorities of Invoice Streams
Source: Billentis
!
Figure 5.9: Supplier Direct Model
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Source: Billentis
!
Figure 5.10: Buyer Direct Model
Source: Billentis
!
Figure 5.11: Consolidator Model
Source: Billentis
! !182
!
Figure 5.12: Total Invoice Management
Source: Billentis
!
Figure 5.13
! !183
5.7 ONLINE STORED VALUE PAYMENT SYSTEM
Online stored value payment systems permits consumers to make online

payments to merchants and other individuals based on the value stored in
an online account.
In the early 1970s, advances in digital magnetic recording technology led

to the development of mag-strip card-based electronic payment systems.
The most familiar of these are the ubiquitous automatic teller machines
(“ATM”) and credit authorization and transaction capture terminals found in
many retail stores at the point of sale (“PoS”). As a parallel development,
albeit on a much smaller scale, entrepreneurial companies which
represented themselves neither as being banks nor as being involved in
banking activities-developed electronic stored value systems for various
applications.
There are two broad divisions in the taxonomy of these systems: offline
and online. Offline systems encode information electronically on a magnetic
strip or a computer chip and can be used to purchase goods or services.’
The balance recorded on the card is debited at a merchant’s PoS terminal

when a customer makes a purchase or is credited when additional value is
placed on the card.’ Generally, stored value cards (“SVC”) contain all the
information necessary to identify the card and its value.
This has enabled PoS terminals in most systems to be “offline.” In other

words, it is unnecessary to contact a depository institution or database for
transaction authorization. Examples of offline stored value systems include
photo copier payment cards and prepaid rapid transit system fare cards.
These cards are disposable and contain a small amount of value — usually
less than twenty dollars.
This type of card is treated as a bearer instrument because there is no

registration of the card's value with a corresponding owner. In this respect,
offline SVCs are like cash. If a card is lost, the value on the card is
irretrievably lost to its purchaser and may or may not be available to
its finder. If the lost card has an assigned personal identification number
(“PIN”), only the card’s rightful bearer can use its value, provided, of
course, that the card's finder is unable somehow to determine, or guess,
the correct PIN.
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Online systems, on the other hand, use the encoding on the card to
identify the unique location of the cardholder’s “value store” in a
centralized data processing resource. This value store is maintained in an
electronic memory register. The card accepting terminal and the centralized
data processing resource are connected, either permanently or as required
at the time of the transaction, by means of a data communications channel
— hence the “online” designation.
As value is used to make purchases or when additional value is added to

the store, the memory register in the unique location is adjusted
accordingly. Such cards are similar to debit cards except that the
cardholder specifically designates the amount of money that may be
accessed through the card, and once so designated, such funds may be
accessed only through the card. The identity of a particular cardholder is
generally, but not necessarily, known.’ The knowledge of a cardholder’s
identity is a policy issue to be determined by the system’s administration
authority; it is not a capability limitation of the system. If the person’s
identity is known, it is possible to deactivate the linkage between the card
and its value store in the event that a card holder reports its loss in a
timely manner.’
Online stored value systems, where the cardholder is known to the system,
have found their primary application in campus card systems.
The crucial difference between online and offline systems is that copying a
card in an online system yields only an additional access device to a single
store of funds, while in an offline system, additional funds are created
fraudulently by duplication.
5.7.1 Smart Cards
Card with computer chip embedded on its face, holds more information
than ordinary credit card with a magnetic strip.
Contact smart cards
• To read information on smart cards and update information, contact

smart cards need to be placed in a smart card reader
! !185
Contactless smart cards
• Have both a coiled antenna and a computer chip inside, enabling the
cards to transmit information
• Can require the user to have a password, giving the smart card a
security advantage over credit cards
• Information can be designated as “read only” or as “no access”
• Possibility of personal identity theft
5.8 ALTERNATE CONSUMER PAYMENT OPTIONS
5.8.1 Digital Accumulating Balance Payment System
Digital Accumulating Balance Payment system allows user to make

micropayments and purchases on the web, accumulating a debit balance
for which they are billed at the end of the month. Like a telephone bill,
consumers are expected to pay the entire balance at the end of the month
using checking or credit card account. Digital Accumulating Balance
Payment system are ideal for purchasing intellectual property on the web
such as single musical tracks, chapters
from a book, articles, etc.
5.8.2 Digital Checking Payment System
Digital Checking Payment System seeks to extend the functionality of

existing checking accounts for use as an online shopping payment tool. Pay
By Check’s system is based on the consumers’ existing checking account.
When a consumer wishes to pay by check at a merchant site that offers
this service, an online authorization form appears that mimics the
appearances of paper cheque. Along with a security number, bio
identification in the form of fingerprint scanner attached to a PC also can
be used. Digital checking has not been successful so far because of
difficulties of the customer verifying online.
5.8.3 Wireless Payment System
Use of mobile handsets as payment devices is established as the most

advanced in terms of providing non-voice services to customers, that is
real mobile commerce.
! !186
5.9 BUSINESS-TO-BUSINESS (B2B) TRANSACTIONS
• Business-to-Business (B2B) transactions
— Fastest growing sector of e-Commerce payments

— Payments are often larger than B2C transactions and involve complex
business accounting systems
• PaymentechTM
— Payment solution provider for Internet point-of-sale transactions

— Brick-and-mortar and electronic merchants choose from transaction-
processing options including debit cards, credit cards, checks and EBT
authorization and settlement
• EBT (Electronic Benefits Transfer)
— Defined by the USDA as the electronic transfer of government funds to

retailers for the benefit of the needy
• e-Credit provides real-time, credit-transaction capabilities of B2B size
• Clareon facilitates B2B transactions by providing digital payment and

settlement services
— Payment is digitally signed, secured and authenticated via digital

payment authentication (DPA)
— Compatible with all enterprise resource planning (ERP) systems and can
adapt electronic records for companies, banks and each member of a
given transaction
• Electronic consolidation and reconciliation of the business transaction

process
— Companies can keep track of a transaction from order-to-cash

settlement while reducing administrative costs, errors, waste and
complexity in the supply chain
— e-Time Capital
! !187
• Order-fulfillment providers
— Companies attempting to bring supply chain expertise and logistical

services to Internet businesses
• Internet-based electronic B2B transactions will augment, but not replace,

traditional Electronic Data Interchange (EDI) systems.
!
Figure 5.14
TradeCard Feature
• Provides a global B2B e-Commerce infrastructure
— Cross-border data management and payment
! !188
• Buyer creates pre-formatted electronic purchase order and presents

document to seller
• Purchase order data stored electronically in TradeCard database, and

electronic invoices and packing slips are produced from data
• Uses a patented “data compliance engine” to check documents against

original purchase order
— If discrepancies are found, concerned parties are notified immediately

and can negotiate to resolve the conflict
• TradeCard awaits delivery confirmation from a third-party logistics

services provider (3PL)
— Industry terminology for a shipping company
• When confirmation is received and compliance met, TradeCard completes

the financial transaction by sending request for payment to the buyer's
financial institution
• TradeCard enables large-scale and large-dollar commerce without credit-

card payment through direct interaction with existing financial
institutions.
! !189
!
Figure 5.15
PayPal is a secure payments system that lets people buy online without
sharing their personal financial information. A PayPal user can purchase
goods or services online through their PayPal account with a credit card,
debit card, bank account or PayPal balance. PayPal enables businesses to
get paid electronically, in a number of different currencies. PayPal’s
advanced security techniques enable safe online transactions, offering both
businesses and consumers a convenient and safe way to pay and be paid
online. PayPal is an online payment processor now owned by eBay was the
first truly successful internet based e-Commerce payment system. The
PayPal Payments Standard Integration Guide (previously called Website
Payments Standard) describes how to integrate your website with PayPal
by using HTML buttons and forms. PayPal Payments Standard lets you
accept payments for:
! !190
• Single-item purchases with Buy Now buttons – Sell from websites that
offer single or mutually exclusive products.
• Contribution payments with Donate buttons – Raise financial support for

any cause.
• Recurring payments with Subscribe, Automatic Billing, and Installment

Plan buttons
— Collect membership dues and offer other subscription services, get
authorization to bill customers automatically, and set up installment plans.
• Multiple-item purchases with Add to Cart and View Cart buttons – Sell
from online stores with catalogs and shopping carts.
!
Figure 5.16
! !191
Buy Now Buttons: Getting Started With Buy Now Buttons
! !192
!
Figure 5.17
•One of e-Commerce’s major success stories:

— Went public in 2002; acquired by eBay October 2002 for $1.5 billion
• An example of a “peer-to-peer” payment system
! !193
• Fills a niche that credit card companies avoided – individuals and small
merchants
• Piggybacks on existing credit card and checking payment systems
• Weakness: Suffers from relatively high levels of fraud
— Competitors include Western Union (MoneyZap), AOL (AOLQuickcash)

and Citibank (C2it)
5.11 ACTIVITIES
1. Visit the Bill Point demonstration at www.billpoint.comand and answer

the following questions:
(a) According to tutorial which two links are necessary to use online Bill
Point online payment?
(b) What is the action taken by the seller at the close of the auction?
(c) Name three of the items required in the Bill Point Invoice?
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2. Visit Check Free demo at www.checkfree.com and answer the following

questions:
(a) What must be four fields that must be filled out in the check payment
process?
(b) What features allows you to make several payments at once?
(c) What features allows you to make repeated payments?
! !194
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5.12 SUMMARY
Secure electronic funds transfer is crucial to e-Commerce. Examination of

how individuals and organizations conduct monetary transactions on the
Internet. Credit-card transactions, digital cash and e-wallets, smart cards,
micropayments and electronic bill presentment and payment and
Electronic-payment enablers.
Credit card represents an account that extends credit to consumers,

permits to consumers to purchase items while deferring payments, and
allow consumers to make payments to multiple vendors at one time.
Credit card security relies on the physical security of the plastic card as
well as the privacy of the credit card number. Therefore, whenever a
person other than the card owner has access to the Security problems and
solutions.
Digital technologies and e-Commerce have completely revolutionized the

way individuals, businesses, and institutions conduct their financial
transactions. Cash is losing its primacy as the most widely used payment
method, now increasingly displaced by “digital currency” – a set of
innovative tools to store and transfer money electronically, including
electronic fund transfers,Internet payments, payment cards (credit, debit,
and prepaid), and mobile payments.
A Digital Wallet emulates the functionality of a regular wallet by

authenticating the consumer, storing and transferring value, and securing
the payment process from consumer to merchant. Digital Wallet (also
known as an e-Wallet) allows users to make electronic commerce
transactions quickly and securely.
! !195
A digital wallet functions much like a physical wallet. The digital wallet was
first conceived as a method of storing various forms of electronic money
(e-cash), but with little popularity of such e-cash services, the digital wallet
has evolved into a service that provides internet users with a convenient
way to store and use online shopping information.
Online stored value payment systems permits consumers to make online

payments to merchants and other individual based on the value stored in
an online account. Digital Accumulating Balance Payment system allows
user to make micropayments and purchases on web, accumulating a debit
balance for which they are billed at the end of month.
Like a telephone bill, consumers are expected to pay the entire balance at
the end of month using checking or credit card account. Digital checking
payment system seeks to extend the functionality of existing checking
accounts for use as online shopping payment tool.
1. How do credit cards work?
2. Explain with examples online credit card fraud and security issues.
3. What do you understand by Digital Currency?
4. What are advantages of the Electronic Wallet?
5. What are disadvantages of the Electronic Wallet? 
! !196
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !197
ONLINE SECURITY
Chapter 6
ONLINE SECURITY
• Identify the security attacks and threats to e-Commerce business

• Understand online payment of e-Commerce
• Explore the use of key cryptography
• Understand digital signature used in e-Commerce
Structure:
6.1 Introduction
6.2 Security Attacks and Threats
6.3 Information Security
6.4 Key Cryptography
6.5 Digital Signatures: Integrity in Public-key Systems
6.7 Activities
6.8 Summary
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ONLINE SECURITY
6.1 INTRODUCTION
Internet security is a branch of computer security specifically related to the

Internet, often involving browser security but also network security on a
more general level as it applies to other applications or operating systems
on the whole. Its objective is to establish rules and measures to use
against attacks over the Internet.
The Internet represents an insecure channel for exchanging information

leading to a high risk of intrusion or fraud, such as phishing. Different
methods have been used to protect the transfer of data, including
encryption.
6.2 SECURITY ATTACKS AND THREATS
A big problem with the Internet is that data is transmitted using telephone
technology, which means unauthorised users can intercept the data
relatively easily. Which is a bit of a pain, really?
1. Online shopping or e-Commerce has got much more popular recently.
2. The basic idea is that the retailer puts details of their products on a
website. Customers can put the stuff they want into an electronic basket
(by clicking on a button). They then pay using a credit card, and the
goods are delivered soon after.
3. Some people don’t like online shopping because they’re worried that
their credit card details might be intercepted and used to make
unauthorised purchases. Encryption software can reduce this risk.
4. Sensitive information – like credit card details – is encrypted by the

website into a code which can only be decoded with the right software
and a special password called a key. In theory, only the retailer’s
website can access the information, so even if someone intercepts the
transmission, they won’t be able to use the data.
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ONLINE SECURITY
Passwords Give Restricted Access to Some Websites
Some websites restrict access to authorised users only. Schools allowing

pupils and parents to access material on their intranet might do this to
prevent other people accessing the information. Online magazines also do
this, so they can charge people for access. The usual way to restrict access
is to issue user names and passwords.
Get Protection from Hackers and Viruses
• Hacking means accessing a computer system and its files without

permission. It’s totally illegal, and once inside a system, the hacker
might be able to view, edit copy or delete important files or plant a virus.
Organisations can protect themselves by using passwords, encrypting
files and using hacking-detection software.
• A virus is a program deliberately written to infect a computer, and make

copies of it. They often corrupt other files – and even operating systems.
They move between computer systems by attaching themselves to
harmless computer files and e-mails.
• The main way to reduce the risk of viruses is to use anti-virus software –
but it's important to use an up-to-date version because new viruses are
detected practically everyday.
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ONLINE SECURITY
DNS Poisoning
Pharming is a derivate from phishing. Phishing mean fishing (the act of

catching fish). In computer slang, fish means user name and password.
Both word use “ph” instead of an “f” in this slang.
Pharming’s purpose is to obtain personal information through domain

spoofing as is illustrated above. In phishing (stealing passwords) you are
spammed with malicious e-mail requests for you to visit a malicious
computer – spoof Websites – which appear as “nice and friendly sites”.
Pharming on the other hand, attacks a DNS server and introduces false
information into the DNS server. So if you ask the server what IP matches
the nicebank domain, it will send you to n1cebank.com (introduce your
personal bank details and you are lost).
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ONLINE SECURITY
What is Phishing?
Phishing occurs when criminals (phishers) pretend to be legitimate

organisations, like banks and credit card companies in order to trick you
into giving them personal details such as bank account numbers or PIN
numbers.
Phishers usually send you an e-mail in which they may ask you to ‘verify’
or ‘re-submit’ personal information by return.They could ask you to
complete an online form and may offer you something attractive like
money or a holiday if you do so.
Be alert for anyone requesting your bank account details, credit card
numbers, passwords, PIN numbers, Personal Public Service number (PPS)
or National Insurance number.
Phishers can use this information to impersonate you and make

unauthorised withdrawals from your bank account or use it to pay for
online purchases. They can even sell on this valuable information to third
parties.
How will I know if I’ve been ‘phished’? Trust your instincts. If an e-mail
looks suspicious, delete it immediately or if it offers something that looks
too good to be true, it probably is. If it appears to come from your bank or
credit card company, inform their customer services department
immediately.
Here are some phrases that may be used in a phishing e-mail:
• ‘Verify your account’.

• ‘Respond within 48 hours or your account will be closed’.
• ‘Dear valued customer’.
• ‘Click the link below to gain access to your account’.
How Can I Avoid Phishing Fraud?
Trust your instincts. Remember, no reputable company will ever ask you to
give out personal details by e-mail. Never give out personal details by e-
mail, fax or in response to a pop up advertisement or unexpected website
address. Always check your credit card and bank statements for any
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ONLINE SECURITY
irregularities. Use up to date anti-virus and anti-spyware software to keep

unwanted or malicious software at bay. A phishing filter can help protect
you from web fraud by warning or blocking you from reported phishing
websites.
6.3 INFORMATION SECURITY
Information security is the process of protecting data from unauthorized

access, use, disclosure, destruction, modification or disruption. The terms
information security, computer security and information assurance are
frequently used interchangeably. These fields are interrelated and share
the common goals of protecting the confidentiality, integrity and availability
of information, however there are some subtle differences between them.
These differences lie primarily in the approach to the subject, the
methodologies used, and the areas of concentration. Information security
is concerned with the confidentiality, integrity and availability of data
regardless of the form the data may take: electronic, print or other forms.
Heads of state and military commanders have long understood the

importance and necessity of protecting information about their military
capabilities, number of troops and troop movements. Such information
falling into the hands of the enemy could be disastrous. Governments,
military, financial institutions, hospitals, and private businesses amass a
great deal of confidential information about their employees, customers,
products, research, and financial status.
Most of this information is now collected, processed and stored on

electronic computers and transmitted across networks to other computers.
Should confidential information about a business’s customers or finances or
new product line fall into the hands of a competitor, such a breach of
security could lead to lost business, law suits or even bankruptcy of the
business. Protecting confidential information is a business requirement,
and in many cases, it is also a legal requirement, and some would say that
it is the right thing to do. For the individual, information security has a
significant effect on Privacy, which is viewed very differently in different
cultures.
The field of information security has grown and evolved much in recent
years. As a career choice there are many ways of gaining entry into the
field. The field offers many areas for specialization including Information
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Systems Auditing, Business Continuity Planning and Digital Forensics

Science to name a few.
Basic Principles of Information Security
Any introduction to the subject of information security must include a

discussion of confidentiality, integrity and availability. These three are also
known as the CIA Triad.
Confidentiality: It is virtually impossible to get a driver’s license, rent an

apartment, obtain medical care, or take out a loan without disclosing a
great deal of very personal information about ourselves, such as our name,
address, telephone number, date of birth, Social Security Number, marital
status, number of children, mother’s maiden name, income, place of
employment, medical history, etc. This is all very personal and private
information, yet we are often required to provide such information in order
to transact business. We generally take it on faith that the person, business
or institution to whom we disclose such personal information have taken
measures to insure that our information will be protected from
unauthorized discloser, either accidental or intentional, and that our
information will only be shared with other people, businesses or institutions
who are authorized to have access to the information and who have a
genuine need to know.
Information that is considered to be confidential in nature must only be

accessed, used, copied, or disclosed by persons who have been authorized
to access, use, copy, or disclose the information, and then only when there
is a genuine need to access, use, copy or disclose the information. A
breach of confidentiality occurs when information that is considered to be
confidential in nature has been, or may have been, accessed, used, copied,
or disclosed to, or by, someone who was not authorized to have access to
the information.
For example: permitting someone to look over your shoulder at your

computer screen while you have confidential data displayed on it would be
a breach of confidentiality if they were not authorized to have the
information. If a laptop computer, which contains employment and benefit
information about 100,000 employees, is stolen from a car (or is sold on
eBay) is a breach of confidentiality because the information is now in the
hands of someone who is not authorized to have it. Giving out confidential
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information over the telephone is a breach of confidentiality if the caller is

not authorized to have the information.
Confidentiality is a requisite for maintaining the privacy of the people

whose personal information the organization holds.
Integrity: In information security, integrity means that data cannot be

created, changed, or deleted without authorization. It also means that data
stored in one part of a database system is in agreement with other related
data stored in another part of the database system (or another system).
For example: a loss of integrity can occur when a database system is not
properly shut down before maintenance is performed or the database
server suddenly loses electrical power. A loss of integrity occurs when an
employee accidentally, or with malicious intent, deletes important data
files. A loss of integrity can occur if a computer virus is released onto the
computer. A loss of integrity occurs when an online shopper is able to
change the price of the product they are purchasing.
Availability: The concept of availability means that the information, the

computing systems used to process the information, and the security
controls used to protect the information are all available and functioning
correctly when the information is needed. The opposite of availability is
denial of service (DoS).
Risk Management
A comprehensive treatment of the topic of risk management is beyond the

scope of this article. We will however, provide a useful definition of risk
management, outline a commonly used process for risk management, and
define some basic terminology.
The CISA Review Manual 2006, provides the following definition of risk
management:
“Risk management is the process of identifying vulnerabilities and threats

to the information resources used by an organization in achieving business
objectives, and deciding what countermeasures, if any, to take in reducing
risk to an acceptable level, based on the value of the information resource
to the organization.”
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There are two things in this definition that may need some clarification.
First, the process of risk management is an ongoing iterative process. It
must be repeated indefinitely. The business environment is constantly
changing and new threats and vulnerabilities emerge everyday. Second,
the choice of countermeasures (controls) used to manage risks must strike
a balance between productivity, cost, effectiveness of the countermeasure,
and the value of the informational asset being protected.
Risk is the likelihood that something bad will happen that causes harm to
an informational asset (or the loss of the asset). Vulnerability is a
weakness that could be used to endanger or cause harm to an
informational asset. A threat is anything (man-made or act of nature) that
has the potential to cause harm.
The likelihood that a threat will use a vulnerability to cause harm creates a
risk. When a threat does use a vulnerability to inflict harm, it has an
impact. In the context of information security, the impact is a loss of
availability, integrity, and confidentiality, and possibly other losses (lost
income, loss of life, loss of real property). It should be pointed out that it is
not possible to identify all risks, nor is it possible to eliminate all risk. The
remaining risk is called residual risk.
A risk assessment is carried out by a team of people who have knowledge

of specific areas of the business. Membership of the team may vary over
time as different parts of the business are assessed. The assessment may
use a subjective qualitative analysis based on informed opinion, or where
reliable dollar figures and historical information is available, the analysis
may use quantitative analysis.
The ISO-17799:2005 Code of practice for information security

management recommends the following be examined during a risk
assessment: security policy, organization of information security, asset
management, human resources security, physical and environmental
security, communications and operations management, access control,
information systems acquisition, development and maintenance,
information security incident management, business continuity
management and regulatory compliance. In broad terms, the risk
management process consists of:
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1. Identification of assets and estimating their value. Include: People,

buildings, hardware, software, data (electronic, print, others), supplies.
2. Conduct a threat assessment. Include: Acts of nature, acts of war,

accidents, and malicious acts originating from inside or outside the
organization.
3. Conduct a vulnerability assessment, and for each vulnerability, calculate

the probability that it will be exploited. Evaluate policies, procedures,
standards, training, physical security, quality control, technical security.
4. Calculate the impact that each threat would have on each asset. Use
qualitative analysis or quantitative analysis.
5. Identify, select and implement appropriate controls. Provide a

proportional response. Consider productivity, cost effectiveness and
value of the asset.
6. Evaluate the effectiveness of the control measures. Insure the controls

provide the required cost effective protection without discernible loss of
productivity.
For any given risk, Executive Management can choose to accept the risk
based upon the relative low value of the asset, the relative low frequency
of occurrence, and the relative low impact on the business. Or, leadership
may choose to mitigate the risk by selecting and implementing appropriate
control measures to reduce the risk. In some cases, the risk can be
transferred to another business by buying insurance or outsourcing to
another business. The reality of some risks may be disputed. In such cases
leadership may choose to deny the risk. This is itself a potential risk.
Three Types of Controls
When Management chooses to mitigate a risk, they will do so by

implementing one or more of three different types of controls.
Administrative controls are comprised of approved written policies,

procedures, standards and guidelines. Administrative controls form the
framework for running the business and managing people. They inform
people on how the business is to be run and how day to day operations are
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to be conducted. Laws and regulations created by government bodies are

also a type of administrative control because they inform the business.
Some industry sectors have policies,procedures, standards and guidelines
that must be followed – the Payment Card Industry (PCI) Data Security
Standard required by Visa and Master Card is such an example. Other
examples of administrative controls include the corporate security policy,
password policy, hiring policies and disciplinary policies.
Administrative controls form the basis for the selection and implementation
of logical and physical controls. Logical and physical controls are
manifestations of administrative controls. Administrative controls are of
paramount importance.
Logical controls (also called technical controls) use software and data to
monitor and control access to information and computing systems. For
example: passwords, network and host-based firewalls, network intrusion
detection systems, access control lists, and data encryption are logical
controls.
An important logical control that is frequently overlooked is the principle of

least privilege. The principle of least privilege requires that an individual,
program or system process is not granted any more access privileges than
are necessary to perform the task. A blatant example of the failure to
adhere to the principle of least privilege is logging into Windows as user
Administrator to read e-mail and surf the Web. Violations of this principle
can also occur when an individual collects additional access privileges over
time. This happens when an employees' job duties change, or they are
promoted to a new position, or transferred to another department. The
access privileges required by their new duties are frequently added onto to
their already existing access privileges which may no longer be necessary
or appropriate.
Physical controls monitor and control the environment of the work place
and computing facilities. They also monitor and control access to and from
such facilities. For example, doors, locks, heating and air conditioning,
smoke and fire alarms, fire suppression systems, cameras, barricades,
fencing, security guards, cable locks, etc. Separating the network and work
place into functional areas are also physical controls.
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An important physical control that is frequently overlooked is the

separation of duties. Separation of duties insures that a single individual
can not complete a critical task by themselves. For example, a employee
who submits a request for reimbursement should not be able to authorize
payment or print the check. An applications programmer should not also be
the server administrator or the database administrator – these roles and
responsibilities must be separated from one another.
6.4 KEY CRYPTOGRAPHY
Information security uses cryptography to transform usable information

into a form that renders it unusable by anyone other than an authorized
user; this process is called encryption. Information that has been
encrypted (rendered unusable) can be transformed back into its original
usable form by an authorized user, who possesses the cryptographic key,
through the process of decryption. Cryptography is used in information
security to protect information from unauthorized or accidental disclosure
while the information is in transit (either electronically or physically) and
while information is in storage.
Cryptography provides information security with other useful applications

as well including improved authentication methods, message digests,
digital signatures, and encrypted network communications. Older less
secure applications such as telnet and ftp are slowly being replaced with
more secure applications such as SSH that use encrypted network
communications. Wireless communications can be encrypted using the
WPA protocol. Software applications such as GNUPG or PGP can be used to
encrypt data files and e-mail.
Cryptography can introduce security problems when it is not implemented

correctly. Cryptographic solutions need to be implemented using industry
accepted solutions that have undergone rigorous peer review by
independent experts in cryptography. The length and strength of the
encryption key is also an important consideration. A key that is weak or too
short will produce weak encryption. The keys used for encryption and
decryption must be protected with the same degree of rigor as any other
confidential information. They must be protected from unauthorized
disclosure and destruction and they must be available when needed. PKI
solutions address many of the problems that surround key management.
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!
Figure 6.1
Public-key Cryptography
Public-key algorithms are asymmetric algorithms and, therefore, are based

on the use of two different keys, instead of just one. In public-key
cryptography, the two keys are called the private key and the public-key.
• Private key: This key must be know only by its owner.
• Public-key: This key is known to everyone (it is public)
• Relation between both keys: What one key encrypts, the other one
decrypts, and vice versa. That means that if you encrypt something with
my public-key (which you would know, because it's public:), I would
need my private key to decrypt the message.
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A secure conversation using public-key cryptography
In a basic secure conversation using public-key cryptography, the sender

encrypts the message using the receiver’s public-key. Remember that this
key is known to everyone. The encrypted message is sent to the receiving
end, who will decrypt the message with his private key. Only the receiver
can decrypt the message because no one else has the private key. Also,
notice how the encryption algorithm is the same at both ends: what is
encrypted with one key is decrypted with the other key using the same
algorithm.
!
Figure 6.2: Key-based Asymmetric Algorithms
Pros and Cons of Public-key Systems
Public-key systems have a clear advantage over symmetric algorithms:

there is no need to agree on a common key for both the sender and the
receiver. As seen in the previous example, if someone wants to receive an
encrypted message, the sender only needs to know the receiver’s public-
key (which the receiver will provide; publishing the public-key in no way
compromises the secure transmission). As long as the receiver keeps the
private key secret, no one but the receiver will be able to decrypt the
messages encrypted with the corresponding public-key. This is due to the
fact that, in public-key systems, it is relatively easy to compute the public-
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key from theprivate key, but very hard to compute the private key from the
public-key (which is the one everyone knows). In fact, some algorithms
need several months (and even years) of constant computation to obtain
the private key from the public-key.
!
Figure 6.3: Public-key Generation
Another important advantage is that, unlike symmetric algorithms, public-

key systems can guarantee integrity and authentication, not only privacy.
The basic communication seen above only guarantees privacy. We will
shortly see how integrity and authentication fit into public-key systems.
The main disadvantage of using public-key systems is that they are not as
fast as symmetric algorithms.
6.5 DIGITAL SIGNATURES: INTEGRITY IN PUBLIC-KEY

SYSTEMS
Integrity is guaranteed in public-key systems by using digital signatures. A
digital signature is a piece of data which is attached to a message and
which can be used to find out if the message was tampered with during the
conversation (e.g., through the intervention of a malicious user).
The digital signature for a message is generated in two steps:
1. A message digest is generated. A message digest is a ‘summary’ of the

message we are going to transmit, and has two important properties: (1)
It is always smaller than the message itself and (2) Even the slightest
change in the message produces a different digest. The message digest is
generated using a set of hashing algorithms.
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2. The message digest is encrypted using the sender’s private key. The
resulting encrypted message digest is the digital signature.
The digital signature is attached to the message, and sent to the receiver.
The receiver then does the following:
!
Figure 6.4: Digital signatures
1. Using the sender’s public-key, decrypts the digital signature to obtain

the message digest generated by the sender.
2. Uses the same message digest algorithm used by the sender to

generate a message digest of the received message.
3. Compares both message digests (the one sent by the sender as a digital
signature, and the one generated by the receiver). If they are not
exactly the same, the message has been tampered with by a third
party. We can be sure that the digital signature was sent by the sender
(and not by a malicious user) because only the sender's public-key can
decrypt the digital signature (which was encrypted by the sender's
private key; remember that what one key encrypts, the other one
decrypts, and vice versa). If decrypting using the public-key renders a
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faulty message digest, this means that either the message or the
message digest are not exactly what the sender sent.
Using public-key cryptography in this manner ensures integrity, because

we have a way of knowing if the message we received is exactly what was
sent by the sender. However, notice how the above example guarantees
only integrity. The message itself is sent unencrypted. This is not
necessarily a bad thing: in some cases we might not be interested in
keeping the data private, we simply want to make sure it isn't tampered
with. To add privacy to this conversation, we would simply need to encrypt
the message as explained in the first diagram.
Authentication in Public-key Systems
The above example does guarantee, to a certain extent, the authenticity of

the sender. Since only the sender’s public-key can decrypt the digital
signature (encrypted with the sender’s private key). However, the only
thing this guarantees is that whoever sent the message has the private key
corresponding to the public-key we used to decrypt the digital signature.
Although this publickey might have been advertised as belonging to the
sender, how can we be absolutely certain? Maybe the sender isn’t really
who he claims to be, but just someone impersonating the sender.
Some security scenarios might consider that the ‘weak authentication’

shown in the previous example is sufficient. However, other scenarios
might require that there is absolutely no doubt about a user's identity. This
is achieved with digital certificates, which are explained in the diagram
below (see Figure 6.5) and short case study ahead.
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!
Figure 6.5
The Cohn Family Internet Encryption
All of the protected parts of our website now use 128 bit encryption. This is
the same level of encryption used by online shopping site’s and even
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banks! We’ve achieved this, with no cost, by establishing our own “Root
Certification Authority”. That is basically a computer that issues digital
certificates for encrypting data. Unfortunately this "Root CA" is not trusted
by your computer yet, so that means you get that annoying security
warning every time you enter our website. To avoid the security warning
you will need to tell your computer to trust our “Root CA” (see the last
section on this page).
There are many types of encryption. Normal encryption uses a simple

encryption key. The problem with that is that the encryption key needs to
be transmitted secretly so only the two people communicating can read a
message. The type of encryption explained below is called RSA encryption,
named for the three men who worked it out, Rivest, Shamir and Adleman.
This type of encryption allows the secret transmission of data without
having to first transmit a secret key. However, it is quite heavy for your
computer to calculate it so it is usually only used to transmit a normal
encryption key that is then used for the actual transmission of data.
How RSA Encryption Works?
You have a “public-key” that is known to everyone and a “private key” that
is known only to you. Everything that is encrypted using this “public-key”
can ONLY be decrypted by using your “private key”. This means that if I
encrypt some data using your “public-key”, you will be the only person able
to decrypt it, because only you have the equivalent “private key”.
It also works the other way around. Anything that you encrypt using your
“private key” can ONLY be decrypted using your “public-key” – therefore
proving that the data (normally an e-mail in this case) came from you and
not from someone posing as you.
It is important to note that once data is encrypted with one of these keys it
CANNOT be decrypted using the same key, but ONLY the other key in that
“public/private key pair”.
When your computer makes a connection to our website everything that
you send to our server is encrypted using our public-key. This is exactly
what happens when you send us you user name and password. In this way
everything you type in and click on can only be decrypted by our server.
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BUT, I hear you say, what about the other way around? I don’t have a
public/private key pair, do I?
Well, yes and no. You don’t have a digital certificate, but for encrypted
connections your computer has created it's own public/private key pair.
This key does not prove who you are, like a digital certificate, so it is only
used to establish encrypted connections to other computers. Your
computer then sends that public-key to our server and everything our
server sends to your computer is encrypted using your computer’s public-
key, so that only your computer can decrypt it.
Just in case you are interested, the public-key of our server is below. You
can see this for yourself if you click on the “View Certificate” button on the
security warning you receive when entering our site. Of course, we're not
going to show you our private key!
To avoid the security warning you will need to tell your computer to trust
our "Root CA”.
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Encrypting Your Message:
Because a mathematical function is used for encryption, all the characters

need to be turned into numbers. On computers this is usually achieved by
substituting the character for its ASCII equivalent (e.g. X = 88).
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In order to use these keys to encrypt data a special one way mathematical
function is used. This function uses circular arithmetic such as we use on a
clock. If you start at 0 and count around the clock 50 hours you’ll end up at
2, but if you only know the answer it is impossible to get back to the
original number. This is called a modular function, where the “mod” is the
number of hours on the clock face. For example, the above calculation
would be shown:
50 (mod 12) = 2
To encrypt a message to you your friend would use the formula:
C = Me (mod N)
where:
C is the resulting encrypted number,
M is the number you want to encrypt,
e is one part of your public-key, and
N is the multiple of the two prime numbers that make your private key
Your friend is then ready to transmit the encrypted number to you….
Decrypting the Message:
In order to decrypt the number you need calculate your private key “d”
according to the following formula:
e x d = 1 (mod (p – 1) x (q – 1))
Once that is done you can decrypt the message using this formula:
M = Cd (mod N)
where: M is the decrypted number,
C is the encrypted number, d is your private key, and
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N is the multiple of the two prime numbers that make your private key
And there you have it.... Your friend has transmitted a number to you
without having to transmit a secret key.
How to Trust the Cohn Family "Root CA”:
You need to install the digital certificate of the Cohn Family Root
Certification Authority into your computer. Follow these steps*:
*These instructions were taken from a computer running Windows 2000

Professional with Internet Explorer 6. The exact steps may vary with other
versions of Windows and Internet Explorer.
1. Download the certificate by clicking this link.
2. Click on “Open”.
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3. Click on “Install Certificate…”.
4. The “Certificate Import Wizard” begins. Click on “Next”.
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5. Select “Automatically select the certificate store based on the type of

certificate” and click on “Next”.
6. Click on “Finish”.
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7. Click on “Yes”.
8. Click on “OK”. Click on “OK” again (to close the certificate).
9. Finished. Your computer will now automatically trust any certificate

issued by our “Root CA”.
6.7 ACTIVITIES
(1) Visit www.entrust.com and understand how Entrust produces effective

security software products using Public-key Infrastructure.
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(2) Visit www.cse.dnd.ca The Communication Security Establishment has a

short tutorial on Public-key Infrastructure. Learn about public-key
cryptography.
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6.8 SUMMARY
Internet security is a branch of computer security specifically related to the

Internet, often involving browser security but also network security on a
more general level as it applies to other applications or operating systems
on a whole. Its objective is to establish rules and measures to use against
attacks over the Internet.
A big problem with the Internet is that data is transmitted using telephone
technology, which means unauthorised users can intercept the data
relatively easily. Which is a bit of a pain, really. Pharming is a derivate from
phishing. Phishing mean fishing ( the act of catching fish). In computer
slang, fish means user name and password. Both word use “ph” instead of
an “f” in this slang.
Phishing occurs when criminals (phishers) pretend to be legitimate

organisations, like banks and credit card companies in order to trick you
into giving them personal details such as bank account numbers or PIN
numbers. Along with the information technology, the Internet high speed
development, electronic commerce has caused the current distribution
realm significant transformation gradually. In the electronic commerce
practice, the online electronic payment is the electronic commerce
essential link, also is the foundation condition which electronic commerce
can smoothly develop.
Any introduction to the subject of information security must include a

discussion of confidentiality, integrity and availability. These three are also
known as the CIA Triad. Information security uses cryptography to
transform usable information into a form that renders it unusable by
anyone other than an authorized user; this process is call encryption.
Information that has been encrypted (rendered unusable) can be
transformed back into its original usable form by an authorized user, who
possesses the cryptographic key, through the process of decryption.
Cryptography is used in information security to protect information from
unauthorized or accidental discloser while the information is in transit
(either electronically or physically) and while information is in storage
Public-key algorithms are asymmetric algorithms and, therefore, are based
on the use of two different keys, instead of just one. In public-key
cryptography, the two keys are called the private key and the public-key.
Integrity is guaranteed in public-key systems by using digital signatures. A
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digital signature is a piece of data which is attached to a message and

which can be used to find out if the message was tampered with during the
conversation (e.g., through the intervention of a malicious user).
1. Explain Security Attacks and Threats to e-Commerce sites.
2. Explain Online Payment with examples in Retailing.
3. What do you understand by Cryptography? Explain with examples.
4. Explain pros and cons of public-key systems.
5. “Digital signatures: Integrity in public-key systems.” Discuss. 
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REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
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E-COMMERCE MARKETING CONCEPTS
Chapter 7
e-COMMERCE MARKETING CONCEPTS

• Understand the concept of internet marketing basics
• Discuss the role of world wide web and various types, advantages and
disadvantages of world wide web marketing
• Understand online consumers and their persuasion tools
• Explore internet market technologies — B2C market and B2C market
• Understand the benefits, value and how to use creative mail marketing
• Explore the concepts of database, data warehouse and data mining
• Identify the B2C and B2B strategies
• Understand the concept, components and importance of integrated
marketing communication
Structure:
7.1 Introduction
7.2 Defining Internet Marketing Basics
7.2.1 Marketing Basics Covered
7.2.2 Internet Marketing Defined
7.3 Role of the World Wide Web
7.3.1 Concept of World Wide Web Marketing
7.3.2 Consumers Online
7.3.3 Understanding the Online Customers
7.3.4 Online Marketer's Persuasion Tools
7.4 Internet Marketing Technologies
7.4.1 B2B Market
7.4.2 B2C Market
7.5 Creative e-Mail Marketing
7.5.1 e-Mail Marketing Benefits
7.5.2 Value of e-Mail
7.5.3 How to Use e-Mail Marketing
7.6 Data Base, Data Warehouse and Data Mining Concepts
7.6.1 What is a Data Warehouse?
7.6.2 What is Data Mining?
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7.6.3 Why Use Data Mining?

7.7 B2C and B2B Branding Strategies
7.7.1 Building an Outline Brand
7.7.2 Online Branding
7.7.3 Brand as Search Keys
7.8 e-Commerce Marketing Communications
7.8.1 Integrated Marketing Communication
7.8.2 IMC Components
7.8.3 Marketing Mix Component
7.8.4 Importance of IMC
7.10 Activities
7.11 Summary
7.1 INTRODUCTION
A wide range of industries are leveraging the power of the Internet and
World Wide Web to globalize their brick and mortar businesses. Every
industry be it Information Technology, Finance, Infrastructure or even
Transportation is affected by the Internet. For large software companies
such as Microsoft, Oracle, IBM and Dell the answer is ‘very significant’ –
Dell now gains over 90% of its multi-billion dollar global revenue online. It
also conducts many of its other business processes such as new product
development and technical customer service online.
The significance of the Internet is relatively low in the Manufacturing

sector, which still follow the tradition channels of sale. Even for these
sectors the Internet is breaching boundaries as the Internet is becoming
increasingly important in influencing purchase decisions – many new car
purchasers will research their purchase online, so manufacturers need to
invest in Internet marketing to persuade customers of the features and
benefits of their brands.
7.2. DEFINING INTERNET MARKETING BASICS
7.2.1 Marketing Basics Covered
The important concept of Marketing is covered in this introductory section.

For us to develop a good understanding of Internet Marketing, we must
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first understand the underlying concept of marketing. The Chartered

Institute of Marketing defines marketing as ‘The management process
responsible for identifying, anticipating and satisfying customer
requirements profitably.’
If we look at this definition in more detail, marketing is a management

responsibility and should not be solely left to junior members of staff.
Marketing requires coordination, planning, implementation of campaigns
and a competent manager(s) with the appropriate skills to ensure success.
Internet Marketing is the newest development in this field.
Marketing objectives, goals and targets have to be monitored and met,

competitor strategies have to be analyzed, anticipated and exceeded.
Through effective use of market and marketing research an organization
should be able to identify the needs and wants of the customer. Marketing
research should try to deliver benefits that will enhance or add to the
customers’ lifestyle, while at the same time ensuring that the satisfaction
of these needs results in a healthy turnover for the organization. Philip
Kotler defines marketing as 'satisfying needs and wants through an
exchange process’. Within this exchange, transaction customers will only
exchange what they value (money) if they feel that their needs are being
fully satisfied; clearly the greater the benefit provided the higher
transactional value an organization can charge. The marketing concept
should lie at the heart of the organization, and the actions of directors,
managers and employees should be guided by its philosophy. Modern
marketing requires organizations to be committed to a market/ customer
orientation (Jaworski and Kohli, 1993). All parts of the organization should
coordinate activities to ensure that customer needs are met efficiently,
effectively and profitably. Marketing encompasses activities traditionally
seen as the sole domain of accountants, production, human resources
management (HRM) and information technology (IT). Many of these
functions had little regard for customer considerations.
7.2.2 Internet Marketing Defined
Internet Marketing is a broad term for marketing products and/or services

online - Internet marketing means different things to different people.
Essentially, though, Internet marketing refers to the strategies that are
used to market a product or service online. The marketing strategies
include search engine optimization and search engine submission,
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copywriting that encourages site visitors to take action, website design

strategies, online promotions, reciprocal linking, and e-Mail marketing.
Online marketers are constantly devising new Internet marketing
strategies in the hopes of driving more traffic to their websites and making
more sales.
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Figure 7.1
A wide range of organizational functions and processes that deliver

products and services to customers and other key stakeholders are
supported by the Internet. It facilitates information management, which is
now increasingly recognized as a critical marketing support tool to strategy
formulation and implementation. The future role of the Internet should
form part of the vision of a company since its future impact will be
significant to most businesses. Without adequateinformation, organizations
are at a disadvantage with respect to competitors and the external
environment. Up-to-date, timely and accessible information about the
industry, markets, new technology, competitors and customers is a critical
factor in an organization’s ability to plan and compete in an increasingly
competitive marketplace.
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Internet as a Tactical Management Tool: Widening Our Horizons
We need to move our focus towards understanding broader applications of

the internet within the total marketing process rather than just using it as
a communication and selling tool, if Internet marketing is to become
integrated and fully established as a tactical marketing management tool.
One of the elements of developing an Internet marketing strategy is
deciding which marketing functions can be assisted by the Internet. There
is a tendency amongst companies first using the Internet to restrict
applications to promotion and selling rather than a relationship building
and service delivery tool.
Theodore Levitt, writing in the Harvard Business Review (Levitt, 1960),

outlined the factors that underlie the demise of many organizations and at
best seriously weaken their longer-term competitiveness. These factors still
provide a timely reminder of traps that should be avoided when embarking
on Internet marketing.
1. Wrongly-defining which business they are in.
2. Unwillingness to innovate and ‘creatively destruct’ existing product/

service lines.
3. Short sightedness in terms of strategic thinking.
4. Giving marketing only ‘stepchild status’, behind finance, production and

technology.
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7.3 ROLE OF THE WORLD WIDE WEB
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Figure 7.2
The World Wide Web Marketing concept has gained rapid popularity, firstly
due to the lowcost and the global nature of the Internet. In these days of
vast World Wide Web use, people generally have the intention to attach
everything of their regular life to the Internet. So the concept of promotion
and marketing get co-related through the web. The second cause of the
popularity of this concept is the interactive nature of the Internet. World
Wide Web marketing is a procedure of establishing and promoting a group
using the online medium. The scope of this marketing is beyond the
website building or operating through the website.
7.3.1 Concept of World Wide Web Marketing
World Wide Web marketing strategies include aspects of online advertising

services, products, and the websites that include the e-Mail marketing,
market research and the direct income strategies.
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Figure 7.3: WWW Marketing Types
World Wide Web Marketing Types:
Search Engine Marketing: SEM or search engine marketing is a special

type of World Wide Web Marketing, which looks to endorse the websites by
mounting their appearance in the pages of Search Engine Results. This
type of World Wide Web Marketing could be divided into several categories
such as paid placement, search engine optimization, and paid inclusion.
e-Mail Marketing: e-mail marketing is a special form of direct World Wide

Web marketing that uses the electronic mails as the component of
interacting commercial or fund-lifting messages to a target audience.
Blog Marketing: When the World Wide Web Marketing is done through the
uses of the webblogs, then that type of online marketing is called the Blog
Marketing.
Viral Marketing: Viral marketing is the marketing technique, which uses

the already existing social networks to create the brand awareness,
through spreading of personal viruses. We shall have a detailed look into
the above types in the latter part of this book.
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Advantages of World Wide Web Marketing:
The main advantage of the World Wide Web Marketing is the one-on-one
interaction between the manufacturer and the customer. The mails or the
messages are sent to the customers in bulk but when the customers open
the mailboxes, they receive mail addressed directly to them. Among the
other advantages of World Wide Web Marketing we can include the
demographics targeting by the online marketers, measurability, customer
response and the immediate results.
Disadvantages of World Wide Web Marketing:
A majority of people in India are not aware of the World Wide Web hence,
the Internet marketing strategy could go in vain. Another disadvantage is
that customers can demand seeing and feeling the product physically
rather than on the Internet.
7.3.2 Consumers Online
Online shopping behavior (also called online buying behavior and Internet
shopping/buying behavior) refers to the process of purchasing products or
services via the Internet. The process consists of five steps similar to those
associated with traditional shopping behavior. In the typical online
shopping process, when potential consumers recognize a need for some
merchandise or service, they go to the Internet and search for need-
related information. However, rather than searching actively, at times
potential consumers are attracted by information about products or
services associated with the felt need. They then evaluate alternatives and
choose the one thatbest fits their criteria for meeting the felt need. Finally,
a transaction is conducted and post-sales services provided. Online
shopping attitude refers to consumers' psychological state in terms of
making purchases on the Internet.
7.3.3 Understanding the Online Customers
Companies in online advertising, marketing, publishing or other web-

related service providers may have a greater challenge in terms of data
volume as well as the need to provide fast insight to their customers as
part of their service. Off-the-shelf web analytics products don’t provide the
detailed data or enable the flexible reporting, what-if analysis or predictive
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analytics that online businesses require, particularly when the website data
needs to be enriched with other enterprise data sources for a more
comprehensive story. This means building analytic applications that meet
your unique requirements.
Online consumers are time conscious and are often willing to gamble with
their money rather than time as it is impossible to recover lost time, where
a moderate financial loss can be compensated. Consumers will appreciate
businesses, which value for customer’s time by employing technology,
tools, information and customer service.
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Figure 7.4
Source: mouthshut.com
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7.3.4 Online Marketer’s Persuasion Tools
Figure 7.5: Forces influencing the online consumer’s behaviour
Sources: Based on the P.Kotler’s framework (2003)
Exposure of customers to the company’s marketing can affect the decision

making by providing inputs for the consumer’s black box where information
is processed before the final consumer’s decision is made. Online
marketers can influence the decision making process of the virtual
customers by engaging traditional, physical marketing tools but mainly by
creating and delivering the proper online experience, the Web experience:
a combination of online functionality, information, emotions, cues, stimuli
and products/services, in other words a complex mix of elements going
beyond the 4Ps of the traditional marketing mix. The prime medium of
delivering the Web experience is the corporate Web site, the interfacing
platform between the firm and its online clients.
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7.4 INTERNET MARKETING TECHNOLOGIES
What is B2B and B2C Marketing?
These terms were coined to differentiate Internet commerce businesses

that sold primarily to consumers versus those whose market are other
businesses. These terms have expanded their definitions to refer to any
business who sells primarily to the end customer (B2C) or to other
businesses (B2B), both online and offline. Although the marketing
programs are the same for each type of business (events, direct
marketing, internet marketing, advertising, public relations, word of mouth
and alliances), how they are executed, what they say, and the outcome of
the marketing activities differ.
The first step in developing your marketing strategy for B2B is similar to
the first step in a B2C strategy: identify who the customer is and why they
need to hear your message. From there, the marketing activities diverge.
Business-to-business (B2B) is a term commonly used to describe electronic

commerce transactions between businesses, as opposed to those between
businesses and other groups, such as business and individual consumers
(B2C) or business and government (B2G).
B2B is also commonly used as an adjective to describe any activity, be it

B2B marketing, sales, or e-Commerce, that occurs between businesses and
other businesses rather than between businesses and consumers. Similar
to B2B, B2G is often meant to refer to B2G Marketing.
There exist several types of online transactions:
Automated Ecommerce Transactions
It is a term also used in electronic commerce and to describe automated

processes between trading partners.
The volume of B2B transactions is much higher than the volume of B2C
transactions. One reason for this is that businesses have adopted electronic
commerce technologies in greater numbers than consumers. Also, in a
typical supply chain there will be many B2B transactions but only one B2C
transaction, as the completed product is retailed to the end customer.
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An example of a B2B transaction is a chicken feed company selling its

product to a chicken farm, which is another company. An example of a B2C
transaction is a grocery store selling grainfed chickens to a consumer. B2B
can also describe marketing activities between businesses, not just the
final transactions that result from marketing, though the term can be used
to identify sales transactions between businesses (also referred to as
“institutional sales”). For example, a company selling photocopiers would
more likely be a B2B sales organization than a B2C sales organization.
“Business-to-business” can also refer to all transactions made in an

industry value chain before the finished product is sold to the end
consumer.
B2B Standards
UN/EDIFACT is one of the most well-known and established B2B standards.

ANSI ASC X12 is a popular standard in North America. RosettaNet is an
XML-based, emerging B2B standard in the high tech industry. An approach
like UN/CEFACT's Modeling Methodology (UMM) might be used to capture
the collaborative space of B2B business processes.
e-Marketplace
“e-” or “electronic" marketplace in a business-to-business context is

primarily a large online platform (B2B portal) or website that facilitates
interaction and/or transactions between buyers and suppliers at
organizational or institutional rather than individual levels. Since the
builders of such marketplaces primarily aim at facilitating buyer-seller
interaction (in most cases without being a buyer or seller themselves),
these are also referred to as “third-party” B2B marketplaces.
These marketplaces can do one or more of the following:
• Help buyers find new suppliers and vice versa

• Help reduce the time and cost of interaction for B2B transactions
• Help increase trade between distant geographies
• Help manage payments and track orders for B2B transactions
• Help the environment by using appropriate technology that is
environmentally friendly
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Vertical e-Marketplace
A vertical e-Marketplace or Vortal spans up and down every segment of

one specific industry. Each level of the industry has access to every other
level, which greatly increases collaboration. Buyers and sellers in the
industry are connected to increase operating efficiency and decrease
supply chain costs, inventories and cycle times.
This is possible because buying/selling items in a single industry

standardizes needs, thereby reducing the need for outsourcing many
products.
Horizontal e-Marketplace
A horizontal e-Marketplace connects buyers and sellers across many

industries. The most common type of materials traded horizontally are
MRO (maintenance, repair and operations) materials. Mainly business and
consumer articles, these items are in demand because they are crucial to
the daily running of a business, regardless of industry and level within that
industry. Many corporations have MRO materials bought directly online by
the maintenance team in order to relieve the purchasing department.
No-frills e-Marketplace
Developed in response to customers wanting to purchase products without

service (or with very limited service), the no-frills e-Marketplace parallels
the B2C offering of no-frills budget airlines. The subject of several Harvard
and IMD articles/case-studies, no-frills B2B e-Marketplaces enable the
effective de-bundling of service from product via clear “business rules.”
This provides the basis of differentiation from conventional B2B sales/
purchasing channels.
Electronic Business, commonly referred to as “eBusiness” or “e-Business”,

may be defined broadly as any business process that relies on an
automated information system. Today, this is mostly done with web-based
technologies. Louis Gerstner, the former CEO of IBM, in his book, 'Who
says Elephants can’t dance’ attributes the term “e-Business” to IBM's
marketing and Internet teams in 1996. Electronic business methods enable
companies to link their internal and external data processing systems more
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efficiently and flexibly, to work more closely with suppliers and partners,
and to better satisfy the needs and expectations of their customers.
In practice, e-Business is more than just e-Commerce. While e-Business

refers to more strategic focus with an emphasis on the functions that
occurs using electronic capabilities, e-Commerce is a subset of an overall
e-Business strategy. e-Commerce seeks to add revenue streams using the
World Wide Web or the Internet to build and enhance relationships with
clients and partners and to improve efficiency using the Empty Vessel
strategy. Often, e-Commerce involves the application of knowledge
management systems.
e-Business involves business processes spanning the entire value chain:

electronic purchasing and supply chain management, processing orders
electronically, handling customer service, and cooperating with business
partners. Special technical standards for e-Business facilitate the exchange
of data between companies. e-Business software solutions allow the
integration of intra and inter firm business processes. e-Business can be
conducted using the Web, the Internet, intranets, extranets, or some
combination of these.
Subsets
Applications can be divided into three categories:
A. Internal business systems:
1. customer relationship management

2. enterprise resource planning
3. document management systems
4. human resources management
B. Enterprise communication and collaboration:
5. VoIP
6. content management system
7. e-Mail
8. voice mail
9. Web conferencing
10. Digital work flows (or business process management)
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C. Electronic commerce – business-to-business electronic commerce (B2B)

Or businessto- consumer electronic commerce (B2C):
11. Internet shop

12. supply chain management
13. online marketing
Models
When organizations go online, they have to decide which e-Business

models best suit their goals. A business model is defined as the
organization of product, service and information flows, and the source of
revenues and benefits for suppliers and customers. The concept of e-
Business model is the same but used in the online presence. The following
is a list of the currently most adopted e-Business models:
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Classification by Provider and Consumer
Roughly dividing the world into providers/producers and consumers/clients,

one can classify e-Businesses into the following categories:
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7.4.1 B2B Market
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Figure 7.6
Source: saleswork.com
Businesses that Sell to Businesses: B2B
• Relationship driven
• Maximize the value of the relationship
• Small, focused target market
• Multi-step buying process, longer sales cycle
• Brand identity created on personal relationship
• Educational and awareness building activities
• Rational buying decision based on business value
The B2B market has two primary components: e-frastructure and e-

markets. e-frastructure is the architecture of B2B, primarily consisting of
the following:
• Logistics – transportation, warehousing and distribution (e.g., Procter

and gamble);
• Application service providers – deployment, hosting and management of
packaged software from a central facility (e.g., Oracle and Linkshare);
• Outsourcing of functions in the process of e-Commerce, such as web-
hosting, security and customer care solutions (e.g., outsourcing providers
such as eShare, NetSales, iXL enterprises and Universal access);
• Auction solutions software for the operation and maintenance of real-
time auctions in the internet (e.g., Moai technologies and OpenSite
technologies);
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• Content management software for the facilitation of website content

management and delivery (e.g., Interwoven and ProcureNet); and
• Web-based commerce enablers (e.g., commerce one, a browser-based,
xml enabled purchasing automation software).
e-markets are simply defined as websites where buyers and sellers interact
with each other and conduct transactions. The more common B2B
examples and best practice models are IBM, Hewlett Packard (HP), Cisco
and Dell. Cisco, for instance, receives over 90% of its product orders over
the Internet. Most B2B applications are in the areas of supplier
management (especially purchase order processing), inventory
management (i.e., managing order-ship-bill cycles), distribution
management (especially in the transmission of shipping documents),
channel management (i.e., information dissemination on changes in
operational conditions), and payment management (e.g., electronic
payment systems or EPS).
Although the goal of B2B marketing is to convert prospects into customers,

the process is longer and more involved. A B2B company needs to focus on
relationship building and communication using marketing activities that
generate leads that can be nurtured during the sales cycle. B2B companies
use marketing to educate various players in the target audience because
the decision to purchase is usually a multi-step process involving more
than one person. For example, the goal of an e-Mail campaign for B2B is to
drive prospects to the web to learn about your products and services. The
e-mail to a business must contain contact information for offline
communications and the landing page should contain information on
features, benefits, and possibly pricing. This marketing activity is usually
the first step in a longer, integrated touch campaign that may include direct
mail, telemarketing, Web casts, and newsletters and follow up by sales
representatives who will discuss the businesses requirements in more
detail and move the prospect through the sales cycle. Content is king for
B2B marketing and white papers, newsletters, and coverage of your
products and services by the media helps companies educate their
prospects.
Example of B2B - Intel selling micro processors to Dell - Heinz selling

ketchup to McDonald’s
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7.4.2 B2C Market
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Figure 7.7
Source: buzzle.com
Businesses that Sell to Consumers (B2C)
• Product driven
• Maximize the value of the transaction
• Large target market
• Single step buying process, shorter sales cycle
• Brand identity created through repetition and imagery
• Merchandising and point of purchase activities
• Emotional buying decision based on status, desire, or price
The ultimate goal of B2C marketing is to convert shoppers into buyers as

aggressively and consistently as possible. B2C companies employ more
merchandising activities like coupons, displays, store fronts (both real and
Internet) and offers to entice the target market to buy. B2C marketing
campaigns are concerned with the transaction, are shorter in duration and
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need to capture the customer’s interest immediately. These campaigns

often offer special deals, discounts, or vouchers that can be used both
online and in the store.
For example, the goal of an e-Mail campaign for a B2C company is to get
consumers to buy the product immediately. The e-Mail will take the
consumer to a landing page on the website that is designed to sell the
product and make purchasing very easy by integrating the shopping cart
and checkout page into the flow of the transaction. Any more than a couple
of clicks and the customer are likely to abandon the shopping cart.
One interesting aspect of B2C marketing, however, is that many companies

have realized the importance of loyalty. Amazon, Best Buy, and Staples
combine merchandising and education to keep customers coming back.
Add great customer service, and you get a winning combination.
Example of B2C:
• Dell selling me a laptop

• McDonald's selling me a Big Mac
The B2B Buyer vs. the B2C Buyer
The business buyer is sophisticated, understands your product or service

better than you do, and wants or needs to buy products or services to help
their company stay profitable, competitive, and successful. Marketing copy
must talk to a sophisticated audience. Your typical reader has a high
interest in – and understanding of – your product (or at least of the
problem it solves). Therefore, writing marketing copy is more complex and
requires research to ensure you deliver the necessary information to the
buyer.
The B2C buyer is usually looking for the best price and will research the
competition prior to shopping. Another factor that does come into play,
however, is whether the buyer trusts the retail outlet, either the store front
or on the Internet. Although you can find the products on the Internet at
many different price points, many consumers will still buy from a trusted
source. In that respect, B2C marketing needs to convince the person to
buy and build trust and loyalty with their customers.
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Both buyers are interested in quality customer service. B2B customer

service comes into play prior to ever making that first sale and begins with
a customer’s very first contact with your company, whether you call them
or they call you. B2C customer service helps build customer loyalty where
customers will be willing to pay a slightly higher price to know that they
can return the product easily and can trust the source they are dealing
with. In other words, customer service is critical and although may not be
considered “marketing”, bad customer service can render all of your
marketing efforts useless.
7.5 CREATIVE e-MAIL MARKETING
e-Mail remains the most important communication techniques for building

customer relationship. e-Mail is a word of mouse tool when consumers
communicate about products with each other. At its core, e-Mail marketing
is a tool for customer relationship management (CRM). Used effectively,
this extension of permission-based marketing can deliver one of the
highest returns on investment (ROI) of any e-Marketing activity.
Many companies have turned to cost-effective online communication

methods such as e-Mail marketing to reach and engage their customers.
Looking ahead, companies will continue to invest in e-Mail marketing.
According to well-established research companies such as Forrester and
Jupiter Research, e-Mail marketing spending runs into the billions both in
the United States and in Europe.
Implementing an effective e-Mail marketing communication platform

involves multiple tasks, such as building a permission-based list of
recipients, managing the list, defining relevant content in the right format,
delivering the message and evaluating the results. With best e-Mail
marketing practices, companies will experience the return on investment
required to justify expenditures. Marketers rate e-Mail to in-house lists as
among the most effective forms of online advertising. According to the
early-adopter online marketers, e-Mail marketing to in-house lists is among
the top three best performing online advertising tactics.
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7.5.1 e-Mail Marketing Benefits
e-Mail is inexpensive: e-Mail is far less expensive on a cost-per-contact

basis than other advertising options, including banner ads, print
advertising, and telemarketing.
e-Mail creates quick response cycles: e-Mail cuts response times down
from as much as six to eight weeks for direct mail to as little as 48 hours in
most cases.
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Figure 7.8
Source: akshatinfotech.com
e-Mail marketing campaign results are measurable: Campaign

success can be measured using software designed to record responses or
sales that are attributable to e-Mail marketing efforts. Reports can be
generated on the number of e-Mails opened by your recipients (openups)
and the number of times your embedded links were clicked (click-through).
By being able toquantify the success of campaigns while in progress,
marketers can quickly adjust strategies to strengthen response rates.
e-Mail has wide reach: e-Mail is the most widely used facet of the
Internet and is part of many people’s daily routine. It is a communication
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medium with an exceptionally large audience that allows recipients to

immediately act on messages.
e-Mail drives web site traffic and registration: e-Mail is an effective

way of driving people to your website. Links may be embedded within
messages, quickly directing customers to your site. With any luck, this
increased website traffic will then lead to increased website registration.
You may then follow up by providing your customers with personalized and
targeted content.
e-Mail strengthens brand awareness and builds customer

relationships: Regularly delivered e-Mail messages that contain properly
titled subject lines and logos reinforce company and product awareness. e-
Mail creates an interactive connection with customers and nurtures long-
lasting, quality relationships.
e-Mail can be highly customized: When e-Mail lists work together with
customer databases, even large-volume campaigns can be customized so
that messages include specific customer data. Database integration also
allows select customer groups to receive messages appropriate for only a
portion of database entries (for example, ZIP Code, gender, or income-
based mailings can be easily selected and targeted for delivery).
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Figure 7.9
Source: keywordpictures.com
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e-Mail saves time: Compared to traditional direct marketing, e-Mail

marketing campaign administration is efficient and saves time and money.
e-Mail is easy to implement and requires limited resources: e-Mail

campaigns can be quickly implemented and executed with only minimal
software, hardware and personnel investments.
7.5.2 Value of e-Mail
Let's take into consideration this situation: Your company is planning to

distribute a newsletter to customers, prospects, and other interested
parties, and it is your job to decide how to accomplish this task. The
monthly newsletter will contain many regular features, including articles,
advice, and industry news. You have two options to distribute the
newsletter: You can print the newsletter and snail-mail it to recipients –
after all, this is how company newsletters have been distributed for many
years. This is still an effective option, but have you considered the many
benefits of sending your newsletter via e-Mail? In addition to saving costs
(including paper, printing, and postage), e-Mail allows you to do things that
you would not otherwise have been able to do if you chose print format.
If you choose to e-Mail the newsletter and select an advanced software

program to manage the mailing, you will be able to measure what sections
of the newsletter are most popular with readers. When you send an e-Mail
newsletter, recipients click on embedded links to retrieve articles they wish
to read. These clicks are measurable and provide you with valuable
information that can, in turn, be used to tailor future newsletters to best
suit readers' interests.
However, if you choose print format to deliver the newsletter, there is very
little you can do to quantify what portions of the newsletter are popular
and are being read. e-Mail makes a difference. This is why more and more
organizations and companies are turning to e-Mail to conduct marketing
initiatives.
7.5.3 How to Use e-Mail Marketing?
As e-Mail has evolved, marketers have discovered clever ways to take

advantage of its usefulness. Some common ways companies have
integrated e-Mail into their communication efforts include:
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• Sending newsletters and building an online community: Pearson

Education (NYSE: PSO), which provides an online resource for technology
information, uses LISTSERV® to manage more than 20 newsletters to
subscribers about topics ranging from programming to networking. These
newsletters have enabled Pearson Education to build a strong IT
community that subscribers can depend on for uptodate technology
news.
• Sending conference announcements, guides and tickets:

Stockholm International Fairs is the leading exhibition and congress
center in Scandinavia and the Baltic Sea region. In 2002, the company
started using LISTSERV® Maestro to provide conference announcements,
tickets, and pre-registration opportunities to exhibitors and attendees
using e-Mail. Stockholm International Fairs has achieved campaign cost
savings and improved information distribution to exhibitors and visitors.
The number of conference registrations has also increased thanks to the
mailings.
• Database Integration: A unique advantage of e-Mail marketing is the

ability to customize messages. This is achieved through integration with
your customer database. By incorporating customer demographic
information stored in your database, you are able to study customers’
histories and buying habits in order to more effectively target and
customize your messages. For instance, if you sellout door gear, you may
configure your e-Mail marketing software to send offers for discounts on
overstocked raingear to customers with zip codes in the Pacific
Northwest, or likewise send those who reside in the deserts of Arizona
similar offers on sunglasses.
From : Yahoo Search Marketing

Subject : Account Alert Notification
Date : June 17, 2008 1:31;59 AM EDT
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Account Notification!
Dear Adviser,
Account Notification: Account ‘Yahoo! Inc’ (20674413322) has stopped

displaying ads at this time because the account balance reached zero.
For more Information regarding this altert, please log into your account at:
https://marketingsolutions.login.yahoo.com/adju/displaySignin.do and click the
“View All” link in
the Alterts panel, for additional help, please visit our Help Center.
Sincerely,
Your Partners at Yahoo! Search Marketing

Failure to login and update your information may lead in deactivating
you account.
Please do not directly to this email, as we are unable to receive replies at this
address. To contact Yahoo!
https://marketingsolutions.login.yahoo.com/adju/displaySignin.do and click the
Customer Support
link in the upper rights of the page.
Figure 7.10
Source: pagetrafficbuzz.com
! !252
7.6 DATA BASE, DATA WAREHOUSE AND DATA MINING

CONCEPTS
7.6.1 What is a Data Warehouse?
A single, complete and consistent store of data obtained from a variety of

different sources made available to end-users in a what they can
understand and use in a business context. [Barry Devlin]
!
Figure 7.11
• Used to manage and control business

• Data is historical or point-in-time
• Optimized for inquiry rather than update
• Use of the system is loosely defined and can be ad hoc
• Used by managers and end-users to understand the business and make
judgments
• Data Warehousing – It is a process
! !253
• Technique for assembling and managing data from various sources for
the purpose of answering business questions. Thus making decisions that
were not previously possible
• A decision support database maintained separately from the
organization’s operational database.
OLTP vs. Data Warehouse

OLTP Warehouse (DSS)
• Subjectoriented • Applicationoriented
• Used to analyze business • Used to run business
• Manager/Analyst • Clerical User
• Summarized and refined • Detailed data
• Snapshot data • Current up to date
• Integrated Data • Isolated Data
• Ad hoc access using large • Repetitive access by small
queries transactions
• Mostly read access (batch • Read/Update access
update)
! !254
!
Figure 7.12
7.6.2 What is Data Mining?
Data Mining is the process of extracting knowledge hidden from large

volumes of raw data.
The importance of collecting data that reflect your business or scientific

activities to achieve competitive advantage is widely recognized now.
Powerful systems for collecting data andmanaging it in large databases are
in place in all large and mid-range companies. However, the bottleneck of
turning this data into your success is the difficulty of extracting knowledge
about the system you study from the collected data.
Human analysts with no special tools can no longer make sense of

enormous volumes of data that require processing in order to make
informed business decisions. Data mining automates the process of finding
relationships and patterns in raw data and delivers results that can be
either utilized in an automated decision support system or assessed by a
human analyst.
• What goods should be promoted to this customer?
! !255
• What is the probability that a certain customer will respond to a planned

promotion?
• Can one predict the most profitable securities to buy/sell during the next
trading session?
• Will this customer default on a loan or pay back on schedule?
• What medical diagnosis should be assigned to this patient?
• How large are the peak loads of a telephone or energy network going to
be?
• Why does the facility suddenly start to produce defective goods?
These are all the questions that can probably be answered if information
hidden among megabytes of data in your database can be found explicitly
and utilized. Modeling the investigated system, discovering relations that
connect variables in a database are the subject of data mining.
Modern computer data mining systems self learn from the previous history
of the investigated system, formulating and testing hypotheses about the
rules which this system obeys. When concise and valuable knowledge
about the system of interest had been discovered, it can and should be
incorporated into some decision support system which helps the manager
to make wise and informed business decisions.
7.6.3 Why Use Data Mining?
Data might be one of the most valuable assets of your corporation – but
only if you know how to reveal valuable knowledge hidden in raw data.
Data mining allows you to extract diamonds of knowledge from your
historical data and predict outcomes of future situations. It will help you
optimize your business decisions, increase the value of each customer and
communication, and improve satisfaction of customer with your services.
Data that require analysis differ for companies in different industries.

Examples include:
• Sales and contact histories

• Call support data
• Demographic data on your customers and prospects
• Patient diagnoses and prescribed drugs data
• Clickstream and transactional data from your website
! !256
In all these cases data mining can help you reveal knowledge hidden in
data and turn this knowledge into a crucial competitive advantage. Today
increasingly more companies acknowledge the value of this new
opportunity and turn to Megaputer for leading edge data mining tools and
solutions that help optimizing their operations and increase your bottom
line.
7.7 B2C AND B2B BRANDING STRATEGIES
7.7.1 Building an Online Brand
!
Figure 7.13
Source: electronicbranding.blogspot.com
Managers need to take a systematic approach to the development of

brands in the online marketplace. A model for an online brand development
process is proposed, and its stages are discussed below. It is however
important to remember that this model focuses on what the business can
do to build the brand. Ultimately, a brand is only as good as the brand
image that it generates in the minds of consumers.
Brand marks can be seen as representative of the accumulated experience

of the brand; a brand mark evokes memories of previous brand
experiences. The task for the brand builder is to tease out and
communicate brand values that take the organization where it wants to go,
whilst acknowledging and building on any existing values, attributes or
personality traits that existing users associate with the organization. In the
sense that all brands are dynamic they must provide leadership, and not
just echo how they are currently perceived. On the other hand their
message must be initially credible and ultimately deliverable.
! !257
7.7.2 Online Branding
An online brand development strategy includes the following stages:
• Setting the context for the brand

• Deciding on brand objectives and message
• Developing a brand specification
• Developing a brand design
• Creating the website and other communications using the brand
• Launching and promoting the brand, building the brand experience
• Reviewing, evolving and protecting the brand
A brand is not a name. A brand is not a positioning statement. It is not a

marketing message. It is a promise made by a company to its customers
and supported by that company. Some argue that in a world of information
overload, brands become ever more important, because they save the
customer time, by reducing their search costs. This position can be further
developed by arguing that brand building will be increasingly important in
providing continuity and customer commitment in a fast moving
marketplace.
In an electronic shopping environment where physical interaction is

reduced and product qualities and benefits must be distilled and captured
in a way that can be communicated over the wires, online branding may be
increasingly important. Others argue that with the wealth of information on
the Web at their fingertips, coupled with intelligent agents and search
engines to help them locate the information, products and services that
they need users will no longer need to rely on the shorthand of brand.
Instead they will gather detailed information on products and services and
make their own judgments on the suitability of a product making brands
superfluous.
Library and information services and a range of other intermediaries or

cybermediaries in the information industry face specific challenges.
Information-based industries have been the most affected by the digital
revolution, with the products and services that they offer being capable of
digitization at many stages in the customer relationship. Marketing
communication, selling and transactions, and delivery can all be executed
digitally.
! !258
The Web page is not just another channel designed to increase visibility
and access; it is rapidly becoming the shop window for many players in the
information industry. The first impact that a digital information provider
makes on a potential user or customer, and the greeting that they provide
to returning customers is embedded in the home page, and the other parts
of the website those users frequently visit. A well designed digital
experience will also embed opportunities for e-Mail, telephone or personal
contact with service agents (i.e., people) and components of service
delivery (as embedded in functional elements of the website such as a
search engine, transactions to deliver print or electronic copies, or the
delivery of other items Online Information Review ordered through the
website). Service agents and service delivery can reinforce the initial
message or detract from it, but the initial message is communicated
through the relatively impersonal means of the Web page.
This means that it is particularly important for information providers to be

at the leading edge of online branding.
In addition, the new economy characterized by digitalization, customer

relationships and globalization is leading to rapid change in industry and
marketplace structures that affect both private and public sector
enterprises.
7.7.3 Brand as Search Keys
In a crowded Internet marketplace, the role of the brand symbol has

reasserted itself. A unique brand name has an important role to play as a
keyword in the search process. Unique brands that are well known and are
not generic terms can be very effective as key words used with search
engines. Even more important is the link between domain name and brand.
Consistency between domain name and brand name can reinforce
familiarity with the brand, and strengthen the message links between
channels. Notable examples are naukri.com and shaadi.com.
! !259
!
Figure 7.14
Source: newscrash.blogspot.com
Not all organizations have been successful in achieving priority on the

domain brand that aligns most closely with their brand. For example,
General Motors does not own the domain name www.generalmotors.com,
although it does own and use www.gm.com. Ward and Lee (2000), found
that consumers used brand names as substitutes for product information
when they made online purchase decisions.
In commercial environments, there is evidence to suggest that it is difficult

to communicate an online brand in the absence of preconceptions already
established through other channels. Many of the early dotcoms failed
because they needed to establish presence and reputation quickly and the
huge marketing budgets that this required undermined their financial
stability.
Some organizations chose to migrate, established brands online, e.g.,

tesco.com and CNN.com; others took the opportunity to create a unique
! !260
and fresh identity online, e.g. smile.co.uk. There are also a limited number
of successful online brands, such as Amazon.com, yahoo.com, and
Google.com. A key agenda has been to balance the need to protect and not
corrupt established brands as established organizations enter risky “new
marketplaces” whilst leveraging the brand equity of existing brands. In
other words the issue has been to create a sense of “the same credibility,
but a different presentation”. For example, at the symbolic level, Barnes &
Noble achieved this by retaining the offline parent brand Barnes & Noble,
but launched using the same name, but in a different presentation,
barnesandnoble.com.
The earlier click vs. brick debate has now been replaced by a recognition
that businesses need to take a new look at their channels strategies, and
to understand both the service and the marketing communication that
customers want delivered through each channel, and to develop a robust
multi-channel strategy.
One perspective is to argue that it is necessary to integrate messages, but

differentiate experience. One approach to differentiation is being trialed by
Sony with their demonstration stores in which customers can experience
products, but not purchase; purchase is online. In this type of
differentiation demonstration stores focus on offering the whole body
experience that engages consumers’ senses, including feeling, smelling and
tasting, and leads to an emotional (rather than a rational) commitment. In
this scenario, an online channel is designed to offer factual arguments,
transactions, basic support and ready 24 hour point of contact through and
beyond the purchase process.
! !261
7.8 e-COMMERCE MARKETING COMMUNICATIONS
!
Figure 7.15
Source: intechventure.com.
7.8.1 Integrated Marketing Communication
A management concept that is designed to make all aspects of marketing

communication such as advertising, sales promotion, public relations, and
direct marketing work together as a unified force, rather than permitting
each to work in isolation.
Integrated marketing communications (IMC) is a process for managing

customer relationships that drive brand value primarily through
communication efforts. Such efforts often include cross-functional
processes that create and nourish profitable relationships with customers
and other stakeholders by strategically controlling or influencing all
messages sent to these groups and encouraging data-driven, purposeful
dialog with them. IMC includes the coordination and integration of all
! !262
marketing communication tools, avenues, and sources within a company

into a seamless program in order to maximize the impact on end users at a
minimal cost. This integration affects all firms’ business-to-business,
marketing channel, customer-focused, and internally directed
communications.
This is enhanced when integration goes beyond just the basic

communications tools. There are other levels of integration such as
Horizontal, Vertical, Internal, External and Data Integration. Here is how
they help to strengthen Integrated Communications.
Horizontal Integration occurs across the marketing mix and across business
functions – for example, production, finance, distribution and
communications should work together and be conscious that their decisions
and actions send messages to customers.
While different departments such as sales, direct mail and advertising can
help each other through Data Integration. This requires a marketing
information system which collects and shares relevant data across different
departments.
Vertical Integration means marketing and communications objectives must

support the higher level corporate objectives and corporate missions.
Check out the Hall of Fame later for more about missions.
Meanwhile Internal Integration requires internal marketing – keeping all

staff informed and motivated about any new developments from new
advertisements, to new corporate identities, new service standards, new
strategic partners and so on.
External Integration, on the other hand, requires external partners such as

advertising and PR agencies to work closely together to deliver a single
seamless solution – a cohesive message
– an integrated message.
! !263
!
Figure 7.16: Model for communication migration
7.8.2 IMC Components
• The Foundation: Corporate image and brand management; buyer

behavior; promotions opportunity analysis.
• Advertising Tools: Advertising management, advertising design:

theoretical frameworks and types of appeals; advertising design:
message strategies and executional frameworks; advertising media
selection. Advertising also reinforces brand and firm image.
• Promotional Tools: Trade promotions; consumer promotions; personal

selling, database marketing, and customer relations management; public
relations and sponsorship programs.
7.8.3 Marketing Mix Component
The Internet has changed the way business is done in the current world.
The variables of segmentation, targeting and positioning are addressed
differently. The way new products and services are marketed have changed
even though the aim of business in bringing economic and social values
remain unchanged. Indeed, the bottom line of increasing revenue and
profit are still the same. Marketing has evolved to more of connectedness,
due to the new characteristics brought in by the Internet. Marketing was
! !264
once seen as a one way, with firms broadcasting their offerings and value
proposition. Now it is seen more and more as a conversation between
marketers and customers. Marketing efforts incorporate the “marketing
mix”. Promotion is one element of the marketing mix. Promotional
activities include advertising (by using different media), sales promotion
(sales and trades promotion), and personal selling activities. It also
includes Internet marketing, sponsorship marketing, direct marketing,
database marketing and public relations. Integration of all these
promotional tools, along with other components of the marketing mix, is a
way to gain an edge over a competitor.
The starting point of the IMC process is the marketing mix that includes
different types of marketing, advertising, and sales efforts. Without a
complete IMC plan there is no integration or harmony between client and
customers. The goal of an organization is to create and maintain
communication throughout its own employees and throughout its
customers.
Integrated marketing is based on a master marketing plan. This plan

should coordinate efforts in all components of the marketing mix. A
marketing plan consists of the following steps:
1. Situation analysis
2. Marketing objectives
3. Marketing budget
Integrated marketing communications aims to ensure consistency of

message and the complementary use of media. The concept includes online
and offline marketing channels. Online marketing channels include any e-
marketing campaigns or programs, from search engine optimization (SEO),
pay-per-click, and affiliate, and e-Mail, banner to latest web related
channels for webinar, blog, micro-blogging, RSS, podcast, Internet Radio,
and Internet TV. Offline marketing channels are traditional print
(newspaper, magazine), mail order, public relations, industry relations,
billboard, traditional radio, and television.
A company develops its integrated marketing communication programmer

using all the elements of the marketing mix (product, price, place, and
promotion). Integrated marketing communications plans are vital to
achieving success. The reasons for their importance begin with the
! !265
explosion of information technologies. Channel power has shifted from

manufacturers to retailers to consumers.
Using outside-in thinking, Integrated Marketing Communications is a data-

driven approach that focuses on identifying consumer insights and
developing a strategy with the right (online and offline combination)
channels to forge a stronger brand-consumer relationship. This involves
knowing the right touch points to use to reach consumers and
understanding how and where they consume different types of media.
Regression analysis and customer lifetime value are key data elements in
this approach.
7.8.4 Importance of IMC
Several shifts in the advertising and media industry have caused IMC to
develop into a primary strategy for marketers:
1. From media advertising to multiple forms of communication.
2. From mass media to more specialized (niche) media, which are centered
on specific target audiences?
3. From a manufacturer-dominated market to a retailer-dominated,

consumer-controlled market.
4. From general-focus advertising and marketing to data-based marketing.
5. From low agency accountability to greater agency accountability,

particularly in advertising.
6. From traditional compensation to performance-based compensation

(increased sales or benefits to the company).
7. From limited Internet access to 24/7 Internet availability and access to

goods and services.
— Business to Business e-CRM

— Online Advertising
! !266
Air Consolidators deals for customers, looking for international and

domestic flights
!
Figure 7.17
Source: moontravel.co.cc
Search Engine Marketing puts you in front of the people who are searching
for what you are selling. We place advertisements on the world’s leading
search engines that are triggered to display when people search for certain
“keywords” or phrases. This allows you to drive traffic to your website and
show them why their search should end with your company. Just as each
company has unique needs, Renewal Marketing offers various online
marketing services designed for our client'’ specific goals.
Air Consolidators Experiences a 50% Increase in Traffic Overnight
Objectives:
Air Consolidators (www.airconsolidators.com) finds deals for customers

looking for international and domestic flights.
It does most of its business online, and just like any online retailer it was
interested in driving more traffic to its site. It came to Renewal Marketing
looking for help with its internet marketing campaigns.
An important concept to understand is that all traffic is not created equally.

Because Air Consolidators specializes in airline tickets and vacation
! !267
packages, it only truly benefits from increased traffic when that traffic is
comprised of people planning a vacation.
Solutions and Results:
Renewal Marketing designed pay per click campaigns with these specific
needs of Air Consolidators, in mind.
As soon as the campaigns designed by Renewal Marketing were

implemented, Air Consolidators saw its website traffic increase by 50%.
These additional visitors were more likely to be planning vacations than
other visitors, because they had found the site by typing in keywords of
phrases like “travel to India,” “cheap domestic flight,” or “vacation
packages to Hawaii.” Furthermore, the average cost per click of the
campaigns designed by Renewal Marketing cost three times less than air
consolidators' previous PPC campaigns.
This is the type of renewed effectiveness our marketing specialists can

provide. With our expertise in online marketing we were able to
simultaneously increase traffic by 50% and decrease the average cost of
that traffic more than three times. Add to this that these results were
achieved in the first day of the campaign, and you can see the results our
team is capable of delivering..
Source: www.airconsolidators.com.
7.10 ACTIVITIES
(1) www sane.com Sane Solutions offers Net Tracker, a log file analysis
tools. Visit the site for on line demo.
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(2) www.sss.com has many solutions for customer relationship

management. Its balanced scorecard uses data warehousing and data
management to analyze collected data. Visit this website to learn more
about data warehousing.
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7.11 SUMMARY
A wide range of industries are leveraging the power of the Internet and
World Wide Web to globalize their brick and mortar businesses. Every
industry be it Information Technology, Finance, Infrastructure or even
Transportation is affected by the Internet.
The important concept of marketing is covered in this introductory section.

For us to develop a good understanding of Internet Marketing, we must
first understand the underlying concept of marketing. The Chartered
Institute of Marketing defines marketing as 'The management process
responsible for identifying, anticipating and satisfying customer
requirements profitably.
Internet Marketing is a broad term for marketing products and/or services

online – Internet marketing means different things to different people.
Essentially, though, Internet marketing refers to the strategies that are
used to market a product or service online.
The World Wide Web marketing concept has gained rapid popularity, firstly
due to the lowcost and the global nature of the Internet. In these days of
vast World Wide Web use, people generally have the intention to attach
everything of their regular life to the Internet. So the concept of promotion
and marketing get co-related through the web. The second cause of the
popularity of this concept is the interactive nature of the Internet.
! !269
World Wide Web marketing strategies include aspects of online advertising

services, products, and the websites that include the e-mail marketing,
market research and the direct income strategies.
Online shopping behavior (also called online buying behavior and Internet
shopping/buying behavior) refers to the process of purchasing products or
services via the Internet. The process consists of five steps similar to those
associated with traditional shopping behavior. In the typical online
shopping process, when potential consumers recognize a need for some
merchandise or service, they go to the Internet and search for need-
related information. However, rather than searching actively, at times
potential consumers are attracted by information about products or
services associated with the felt need.
Online consumers are time conscious and are often willing to gamble with
their money rather than time as it is impossible to recover lost time, where
a moderate financial loss can be compensated. Consumers will appreciate
businesses, which value for customer's time by employing technology,
tools, information and customer service.
Business-to-business (B2B) is a term commonly used to describe electronic

commerce transactions between businesses, as opposed to those between
businesses and other groups, such as business and individual consumers
(B2C) or business and government (B2G).
Data Warehousing – It is a process, technique for assembling and

managing data from various sources for the purpose of answering business
questions. Thus making decisions that were not previous possible. A
decision support database maintained separately from the organization’s
operational database.
Data Mining is the process of extracting knowledge hidden from large

volumes of raw data.
The importance of collecting data that reflect your business or scientific

activities to achieve competitive advantage is widely recognized now.
Powerful systems for collecting data and managing it in large databases are
in place in all large and mid-range companies. However, the bottleneck of
turning this data into your success is the difficulty of extracting knowledge
! !270
about the system you study from the collected data. Managers need to
take a systematic approach to the development of brands in the online
marketplace. A model for an online brand development process is
proposed, and its stages are discussed below. It is however important to
remember that this model focuses on what the business can do to build the
brand. Ultimately, a brand is only as good as the brand image that it
generates in the minds of consumers.
In a crowded Internet marketplace, the role of the brand symbol has

reasserted itself. A unique brand name has an important role to play as a
keyword in the search process. Unique brands that are well known and are
not generic terms can be very effective as key words used with search
engines. Even more important is the link between domain name and brand.
Consistency between domain name and brand name can reinforce
familiarity with the brand, and strengthen the message links between
channels. Notable examples are naukari.com and shaadi.com.
Integrated Marketing Communications (IMC) is the coordination and

integration of all marketing communication tools, avenues, functions and
sources within a company into a seamless program that maximizes the
impact on consumers and other end-users at a minimal cost.
Horizontal Integration occurs across the marketing mix and across business
functions – for example, production, finance, distribution and
communications should work together and be conscious that their decisions
and actions send messages to customers.
Vertical Integration means marketing and communications objectives must

support the higher level corporate objectives and corporate missions.
Check out the Hall of Fame later for more about missions.
The Internet has changed the way business is done in the current world.
The variables of segmentation, targeting and positioning are addressed
differently. The way new products and services are marketed have changed
even though the aim of business in bringing economic and social values
remain unchanged. Indeed, the bottom line of increasing revenue and
profit are still the same. Marketing has evolved to more of connectedness,
due to the new characteristics brought in by the Internet.
! !271
1. Define Internet Marketing.
2. Role of the World Wide Web.
3. Explain World Wide Web Marketing Types.
4. What do you understand by Blog Marketing.
5. Explain with examples “Online marketer’s persuasion tools.”
6. What is B2B and B2C Marketing?
7. Explain examples of B2C market.
8. What are e-Mail Marketing Benefits?
9. What is a Data Warehouse?
10. What is data mining?
! !272
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !273
LEGAL, ETHICAL, SOCIAL AND GLOBAL ISSUES
Chapter 8
LEGAL, ETHICAL, SOCIAL AND GLOBAL
ISSUES
• Identify the legal, ethical and global issues in e-Commerce business

• Understand privacy and information rights of e-Commerce
• Explore the cybercrime
• Understand social and political issues in e-Commerce
Structure:
8.1 Introduction
8.2 Understanding Various Legal, Ethical and Social Issues
8.3 Legal Issues Specific to e-Commerce
8.4 Privacy and Information Rights
8.5 Intellectual Property Rights
8.6 Cybercrime
8.7 Social and Political Issues
8.9 Activities
8.10 Summary
! !274
8.1 INTRODUCTION
In business the role of ethics cannot be ignored. As we talk about ethics,

the legal issues also cannot be ignored in business. This unit covers the
legal and ethical issues with respect to business perspective especially an
online business.
Confidentiality is the term refer as the ethical and professional duty which
is performed on not to disclose any inappropriate information to a third
party. Certain professionals who hold Certified Confidentiality Officer (CCO)
certification apply for the confidentiality clause because of their legal or
ethical requirements.
In business, it is used to protect the privacy of a business entity and it’s

critical or sensitive business information. Policies and procedures are a
must for protection against spying and for intentional or unintentional
disclosure of sensitive or owner’s information.
These policies and procedures are being mandated by laws or regulations

or by the professional ethical obligations of employees. These policies and
procedures are also being implemented as a best practice to avoid insider
or outsider access to critical business information.
Inefficient preplanning of the flow of confidential and private information

within the business organization may result in false safeguarding of critical
business secrets and thefts of intellectual property which includes property
protected by copyrights, trademarks and patents. A confidentiality audit is
a crucial step to business’s minimum requirements of being protected
against danger or loss.
This is a fact finding, non-fault-finding audit that involves:
• A search for vulnerabilities through information collection and analysis

and
• A way to identify leaks, sources and indicators potentially exploitable by
an adversary
! !275
Ethics in e-Business
Behaving ethically is often practical because most of the time we are

honest, we keep our promises, we do not steal, and we do our jobs.
Therefore, behaving ethically, in personal or professional sphere, is usually
not a burden.
In a business context, doing well ethically corresponds closely with good

business in the sense that ethically developed products are more likely to
please consumers.
A professional can cause great harm through dishonesty, carelessness, or

incompetence. Sometimes, it is difficult to do the right thing. It takes
courage in situations where we could suffer negative consequences.
Courage in professional setting could mean admitting to a customer that
your program is faulty, declining a job for which you are not qualified, or
speaking out when you see someone else is doing something wrong.
It is hard to gain trust on the web because customers do not know you.
Thus, ethics is important in e-Business if an organization wants people to
trust it and do business with it.
e-Businesses must honor their business policies and their customer’s

privacy and security. Unethical conducts of online businesses include the
use of:
• Adware – to collect information about the consumers or to advertise on

their Web browser.
• Key logging – to obtain the users’ authentication.
• Bait and switch – to lure customers to do business by falsely advertise

a product to appeal to the customers. For example, an ad claiming that
they are selling a PS3 for 40 dollars to “reel” customers to its website.
• e-mail spoofing – to forge an email address to make the consumer into

thinking that the sender is from a reliable source than from its actual
source.
! !276
• URL hijacking – to fabricate the website into something that looks

similar to an authentic one to illegitimately phish for usernames and
passwords.
8.2 UNDERSTANDING VARIOUS ETHICAL, LEGAL AND

SOCIAL ISSUES
The vastness of Internet advertising offers a solid platform for Electronic

Commerce (or e-Commerce) to explode. e-Commerce has the ability to
provide secure shopping transactions coupled with instant verification and
validation of credit card transactions. e-Commerce is not about the
technology itself, it is about doing business leveraging the technology.
A technological innovation is followed by frequent incorporation of ethical

standards into law. New forms of e-Commerce that enables new business
practices have many advantages but also bring numerous risks. Let’s
discuss about the ethical and legal issues related to e-Business.
Ethical Issues
Ethics is the study of principles that individuals and organizations can use
to determine right and wrong course of action. Basic ethical concepts are
responsibility, accountability and liability.
Responsibility is a free moral agents, individuals, organizations, and

societies are responsible for any action they take. Accountability of
individuals, organizations, and societies are held accountable to others for
the consequence of their actions. Liability is the feature of a political
system in which the body of law is in place that permits individual to
recover the damages done to them by other actions, systems or
organization.
In general, many ethical and global issues of Information Technology apply

to e-Business. So, what are the issues particularly related to e-Commerce?
Let’s list some of the ethical issues spawned with the growing field of e-
Commerce.
! !277
Web Tracking
e-Businesses draw information on how visitors use a site through log files.
Analysis of log file means turning log data into application service or
installing software that can pluck relevant information from files in-house.
Companies track individual’s movement through tracking software and
cookie analysis. Programs such as cookies raise a batch of privacy
concerns. The tracking history is stored on your PC’s hard disk, and any
time you revisit a website, the computer knows it. Many smart end-users
install programs such as Cookie cutters, Spam Butcher, etc., which can
provide users some control over the cookies.
The battle between computer end users and web trackers is always going
on with a range of application programs. For example, software such as
Privacy Guardian, My Privacy, etc., can protect user’s online privacy by
erasing browser’s cache, surfing history and cookies. To detect and remove
spyware specially designed programs like Ad-Aware are present. A data
miner application, SahAgent collects and combines Internet browsing
history of users and sends it to servers. The battle goes on!
Privacy
Most Electronic Payment Systems knows the identity of the buyer. So it is

necessary to protect the identity of a buyer who uses Electronic Payment
System.
A privacy issue related to the employees of a company is tracking.

Monitoring systems are installed in many companies to monitor e-mail and
other web activities in order to identify employees who extensively use
business hours for non-business activities. The e-Commerce activities
performed by a buyer can be tracked by organizations. For example,
reserving railway tickets for their personal journey purpose can be tracked.
Many employees don’t want to be under the monitoring system even while
at work.
As far as brokers and some of the company employees are concerned, e-

Commerce puts them in danger zone and results in elimination from their
jobs. The manner in which employees are treated may raise ethical issues,
such as how to handle displacement and whether to offer retraining
programs.
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Disintermediation and Reinter Mediation
Intermediation is one of the most important and interesting e-Commerce

issue related to loss of jobs. The services provided by intermediaries are:
(i) Matching and providing information.
(ii) Value added services such as consulting.
The first type of service (matching and providing information) can be fully
automated, and this service is likely to be in e-marketplaces and portals
that provide free services. The value added service requires expertise and
this can only be partially automated. The phenomenon by which
Intermediaries, who provide mainly matching and providing information
services, are eliminated is called Disintermediation.
The brokers who provide value added services or who manage electronic
intermediation (also known as info mediation), are not only surviving but
may actually prosper; this phenomenon is called Reinter mediation.
T h e t ra d i t i o n a l s a l e s c h a n n e l w i l l b e n e g a t i ve l y a f f e c t e d by
disintermediation. The services required to support or complement e-
Commerce are provided by the web as new opportunities for reinter
mediation. The factors that should be considered here are the enormous
number of participants, extensive information processing, delicate
negotiations, etc. They need a computer mediator to be more predictable.
Legal Issues
Where are the headlines about consumers defrauding merchants? What

about fraud e-Commerce websites? Internet fraud and its sophistication
have grown even faster than the Internet itself. There is a chance of a
crime over the internet when buyers and sellers do not know each other
and cannot even see each other. During the first few years of e-Commerce,
the public witnessed many frauds committed over the internet. Let’s
discuss the legal issues specific to e-Commerce.
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Fraud on the Internet
e-Commerce fraud popped out with the rapid increase in popularity of

websites. It is a hot issue for both cyber and click-and-mortar merchants.
The swindlers are active mainly in the area of stocks. The small investors
are lured by the promise of false profits by the stock promoters. Auctions
are also conductive to fraud, by both sellers and buyers. The availability of
e-mails and pop up ads has paved the way for financial criminals to have
access to many people. Other areas of potential fraud include phantom
business opportunities and bogus investments.
Copyright
The copyright laws protect Intellectual property in its various forms, and
cannot be used freely. It is very difficult to protect Intellectual property in
e-Commerce. For example, if you buy software you have the right to use it
and not the right to distribute it. The distribution rights are with the
copyright holder. Also, copying contents from the website also violates copy
right laws.
Domain Names
The competition over domain names is another legal issue. Internet

addresses are known as domain names and they appear in levels. A top
level name is qburst.com or microsoft.com. A second level name will be
qburst.com/blog. Top level domain names are assigned by a central non-
profit organization which also checks for conflicts or possible infringement
of trademarks. Problems arise when several companies having similar
names competing over the same domain name. The problem of domain
names was alleviated somewhat in 2001, after several upper level names
were added to com.
Another issue to look out for is Cyber squatting, which refers to the
practice of registering domain names with the desire of selling it at higher
prices.
Security features such as authentication, non-repudiation and escrow

services can protect the sellers in e-Commerce.
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One needs to be careful while doing e-Commerce activities. The need to

educate the public about the ethical and legal issues related to e-
commerce is highly important from a buyer as well as seller perspective.
The Internet has reduced the geographic boundaries which help the
organizations to conduct extensive research and planning to enter the e-
Commerce arena. Internet technology has a great effect on the global
trade which includes multitude of products and services.
e-Marketing tools used by the online travel industry helps the consumers to
purchase travel services in a convenient manner. However, many
businesses and consumers are still wary of conducting their business over
the Internet because of the shortfall of the predictable legal environment
governing transactions.
Security, Confidentiality and International Issues
The global market is vast having no unified regulatory guidelines or

standards. Due to which e-Commerce businesses must implement varied
contingencies to ensure compliance with both domestic and foreign tax
requirements regarding the sale of products ad services. In the United
States, firms are required to disclose any potential tax liabilities under the
Sarbanes- Oxley Act of 2002, however there is no clear legislation of how
state tax sales will be structured through e-Commerce venues.
In a polar opposite to the United States the European Union, issued a

directive requiring “companies outside of the European Union to start
paying value added tax on sales of electronically delivered goods and
services to European customers” (Meller, 2002). Different national
perspective regarding taxes requires individual e-Commerce businesses to
understand the global market and to develop internal controls to comply
with the governing tax structure applicable to the areas in which they
operate. In addition to tax concerns, U.S. firms must satisfy compliance
with consumer protection and privacy legislation aimed at protecting
individual consumers.
For example, the Gramm-Leach-Bliley Financial Modernization Act requires

companies to provide an option for consumers to determine if they want
their information shared with third parties; the Children’s Online Privacy
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Protection Act (COPPA) Rule which applies to commercial websites

operators and an online services directed to children under age 13.
The law makes parents to control the information that is being collected by
their children online and how such types of information are used by them.
(FTC, 2006) Industry practices of web developers in the United States,
Canada and Europe were studied by the Federal Trade Commission (FTC).
In a FTC report to Congress “four widely accepted fair information practices
regarding the collection of personal identifying information from or about
consumers online are Notice, Choice, Access and Security.” (FTC, 1998)
FTC guidelines help the consumer-oriented commercial websites to adopt
four widely accepted information practices:
(1)Notice – Websites would provide clear and conspicuous notice of their

information practices to the customers, including what information they
collect, how they collect it (e.g., directly or through non-obvious means
such as cookies), how they use it, how they provide Choice, Access and
Security to consumers, whether they disclose the information collected
to other entities or whether other entities are collecting information
through the site.
(2)Choice – Websites would offer choices to consumers to analyze them

that how their personal information is being used beyond the use for
which the information was provided (e.g., to consummate a
transaction). Such choice would include both internal secondary uses
(such as marketing back to consumers) and external secondary uses
(such as disclosing data to other entities).
(3)Access – Websites would offer consumers reasonable access to the

information which has been collected about them, including a
reasonable opportunity to review information and to correct inaccuracies
or delete information.
(4)Security – Websites would take reasonable steps to protect the security

of the information they collect from the customers (FTC, 1998). The
global marketplace has provided webbased firms with a larger customer
community.
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However, charting the diverse domestic and international regulatory

requirements will remain a challenge as independent nations develop
legislation to regulate this medium.
8.3 LEGAL ISSUES SPECIFIC TO e-COMMERCE
Domain name. Internet addresses are known as domain names. Domain

names appear in levels. A top-level name is wiley.com, or stanford.edu. A
second-level name will be wiley.com/ turban or ibm.com.hk (for IBM in
Hong Kong). Top-level domain names are assigned by central non-profit
organizations that check for conflicts and possible infringement of
trademarks. Obviously, companies who sell goods and services over the
Internet want customers to be able to find them easily, so the URL must
match the company’s name. Problems arise when several companies that
have similar names compete over a domain name.
For example, if you want to book reservations at a Holiday Inn hotel and
you go to holidayinn.com, you get the website for a hotel at Niagara Falls,
New York; to get to the hotel chain’s website, you have to go to holiday-
inn.com. Several cases of disputed names are already in court. An
international arbitration organization is available as an alternative to the
courts. The problem of domain names was alleviated somewhat in 2001,
after several upper-level names were added to “com” (such as “info” and
“coop”).
Taxes and other fees, federal, state, and local authorities are scrambling to
figure out how to get a piece of the revenue created electronically. The
problem is particularly complex for interstate and international commerce.
For example, some claim that even the state in which a server is located
deserves to receive some sales tax from an e-Commerce transaction.
Others say that the state in which the seller is located deserves the entire
sales tax (or value-added tax, VAT, in some countries).
In addition to sales tax, there is a question about where (and in some

case, whether) electronic sellers should pay business license tax, franchise
fees, gross receipts tax, excise tax, privilege tax and utility tax.
Furthermore, how should tax collection be controlled? Legislative efforts to
impose taxes on e-Commerce are opposed by an organization called the
Internet Freedom Fighters. Their efforts have been successful so far: At the
time this edition was written, there was a ban on taxing business done on
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the Internet in the United States and many other countries (sales tax
only),which could remain valid until fall 2006.
Copyright. Intellectual property, in its various forms, is protected by

copyright laws and cannot be used freely.
8.4 PRIVACY AND INFORMATION RIGHTS
Reasons why business confidentiality can be important:
• To keep trade secrets and intellectual property away from business

competitors.
• The improper dissemination of information about current business
objectives or future projects may harm the business.
• For employee security and for the security of their families.
• For job security.
• It encourages employees to make use of services which are being
created to help them, such as counseling or other employee assistance
programmes.
• It makes easier for the people to get help without any fear or damage to
reputation or other relationships.
Confidentiality is based on four basic principles:
1. Respect for a business’s right to privacy.

2. Respect for human relationships in which business information is
shared.
3. Appreciation of the importance of confidentiality to both the business
and its employees.
4. Expectations that those who pledge to safeguard confidential
information will actually do so.
Confidentiality is must for the great interests of the organization because

disclosure of the information will cause great damage to the business or to
other organizations.
The confidentiality exists when information is designated as

“confidential” (e.g., stamped or announced). It also applies where the need
is obvious or evident (depending on the nature of the material or context
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of the situation) or when needed by applicable law–even when the

information is not so important.
It is the duty of the business officials and employees to keep certain

business and personal information confidential. However this legal
obligation exists even if officials and employees have not signed contracts
or other documents related specifically to confidentiality.
Board members are being trusted and it is their fiduciary duty to honor the
business’s need to keep certain information confidential.
A Board member or employee who discloses confidential information can

create significant legal liability for the organization if he/she is legally
required to maintain confidentiality and may face personal liability in
disclosing confidential information.
10 Postulates about Confidentiality in the Business World
The first postulate says that a dynamic security mechanism is required to

prevent losses (loss = cost) that will help to achieve objectives, i.e., the
continued smooth operation of the business while ensuring:
• The security of both tangible and intangible elements of business.

• The security of employees and materials.
• The security of information, communications and information systems
that are used to manage risk (risk = intention + ability + opportunity),
whether the risk is personal, human, physical, technological or other has
a great impact on the well being of the organization.
The second postulate says that these security mechanisms must involve:
• Prevention
• Tracking
• Corrective actions.
The third postulate says that the security mechanism need real time
exposure and the tactical assessments that have been taken into account
are:
• The risk or threat to the whole business;
• The acceptable level of risk or threat;
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• The processes of reacting to a threat;

• The need to reduce the overall vulnerability.
The fourth postulate says that the security mechanism must specially
address the following policies and procedures to produce effective and
tangible results.
• Policies for how to implement the security mechanism;

• Procedures detailing the implementation process.
The fifth postulate is to integrate the above issues in a coherent

programme, call the “Security Programme” or “Security Master Plan”.
The sixth postulate says that the current business risks linked to each
other create a complex co-dependency. Therefore the management of
initial frontline responses (e.g., guard actions and responsibilities at a
building entrance) has passed into the arena of comprehensive security
management.
The seventh postulate says that the security strategy must determine the
nature of Legal and Ethical Issues risk in detail, in addition to specifying
the response plan.
The eighth postulate says that the security mechanism must collect and
spread information about security-related business processes so as to
manage the flow of information and the reputation of the business.
The ninth postulate says that if the security mechanism becomes effective
it has to analyze recruiting information from different sources and use this
information to protect the business.
The tenth postulate says that the security mechanism must be planned-in
advance to analyze what happens on the next business day after a serious
adverse event.
Crisis do not get anticipated or managed by vast majority of organizations

and institutions once they have occurred.
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8.5 INTELLECTUAL PROPERTY RIGHTS
Intellectual property rights are the rights given to persons over the
creations of their minds. They usually give the creator an exclusive right
over the use of his/her creation for a certain period of time.
The importance of intellectual property in India is well established at all

levels – statutory administrative and judicial. India ratified the agreement
establishing the World Trade Organisation (WTO). This Agreement, inter
alia, contains an Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS) which came into force from 1st January 1995. It
lays down minimum standards for protection and enforcement of
intellectual property rights in member countries which are required to
promote effective and adequate protection of intellectual property rights
with a view to reducing distortions and impediments to international trade.
The obligations under the TRIPS Agreement relate to provision of minimum
standard of protection within the member countries legal systems and
practices.
The Agreement provides for norms and standards in respect of following

areas of intellectual property:
• Patents
• Trademarks
• Copyrights
• Geographical Indications
• Industrial Designs
The basic obligation in the area of patents is that, invention in all branches
of technology whether products or processes shall be patentable if they
meet the three tests of being new, involving an inventive step and being
capable of industrial application. In addition to the general security
exemption which applied to the entire TRIPS Agreement, specific
exclusions are permissible from the scope of patentability of inventions, the
prevention of whose commercial exploitation is necessary to protect public
order or morality, human, animal, plant life or health or to avoid serious
prejudice to the environment. Further, members may also exclude from
patentability of diagnostic, therapeutic and surgical methods of the
treatment of human and animals and plants and animal other than
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microorganisms and essentially biological processes for the production of

plants and animals.
The TRIPS Agreement provides for a minimum term of protection of 20

years counted from the date of filing.
India had already implemented its obligations under Articles 70.8 and 70.9
of TRIP Agreement.
Trademarks
Trademarks have been defined as any sign, or any combination of signs

capable of distinguishing the goods or services of one undertaking from
those of other undertakings. Such distinguishing marks constitute
protectable subject matter under the provisions of the TRIPS Agreement.
The Agreement provides that initial registration and each renewal of
registration shall be for a term of not less than seven years and the
registration shall be renewable indefinitely. Compulsory licensing of
trademarks is not permitted.
Keeping in view the changes in trade and commercial practices,

globalization of trade, need for simplification and harmonization of
trademarks registration systems, etc., a comprehensive review of the Trade
and Merchandise Marks Act, 1958, was made and a Bill to repeal and
replace the 1958 Act has since been passed by the Parliament and notified
in the Gazette on 30.12.1999. This Act not only makes Trademarks Law,
TRIPS compatibility but also harmonizes it with international systems and
practices. Work is underway to bring the law into force.
Intellectual property rights are customarily divided into two main areas:
(i)Copyright and rights related to copyright
The rights of authors of literary and artistic works (such as books and other
writings, musical compositions, paintings, sculpture, computer programs
and films) are protected by copyright, for a minimum period of 50 years
after the death of the author.
Also protected through copyright and related (sometimes referred to as

“neighboring”) rights are the rights of performers (e.g., actors, singers and
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musicians), producers of phonograms (sound recordings) and broadcasting

organizations. The main social purpose of protection of copyright and
related rights is to encourage and reward creative work.
(ii) Industrial property
Industrial property can usefully be divided into two main areas. One area
can be characterized as the protection of distinctive signs, in particular
trademarks (which distinguish the goods or services of one undertaking
from those of other undertakings) and geographical indications (which
identify a good as originating in a place where a given characteristic of the
good is essentially attributable to its geographical origin).
The protection of such distinctive signs aims to stimulate and ensure fair
competition and to protect consumers, by enabling them to make informed
choices between various goods and services. The protection may last
indefinitely, provided the sign in question continues to be distinctive.
Other types of industrial property are protected primarily to stimulate

innovation, design and the creation of technology. In this category, fall
inventions (protected by patents), industrial designs and trade secrets.
The social purpose is to provide protection for the results of investment in

the development of new technology, thus giving the incentive and means
to finance research and development activities.
A functioning intellectual property regime should also facilitate the transfer

of technology in the form of foreign direct investment, joint ventures and
licensing. The protection is usually given for a finite term (typically 20
years in the case of patents). While the basic social objectives of
intellectual property protection are as outlined above, it should also be
noted that the exclusive rights given are generally subject to a number of
limitations and exceptions, aimed at fine-tuning the balance that has to be
found between the legitimate interests of right holders and of users.
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8.6 CYBERCRIME
The growing danger from crimes committed against computers, or against

information on computers, is beginning to claim attention in national
capitals. In most countries around the world, however, existing laws are
likely to be unenforceable against such crimes. This lack of legal protection
means that businesses and governments must rely solely on technical
measures to protect themselves from those who would steal, deny access
to or destroy valuable information.
Self-protection, while essential, is not sufficient to make cyberspace a safe

place to conduct business. The rule of law must also be enforced. Countries
where legal protections are inadequate will become increasingly less able
to compete in the new economy. As cyber crime increasingly breaches
national borders, nations perceived as havens run the risk of having their
electronic messages blocked by the network. National governments should
examine their current statutes to determine whether they are sufficient to
combat the kinds of crimes discussed in this report.Where gaps exist,
governments should draw on best practices from other countries and work
closely with the industry to enact enforceable legal protections against
these new crimes.
To provide this self-protection, organizations should focus on implementing

cyber security plans addressing people, process, and technology issues.
Organizations need to commit the resources to educate employees on
security practices, develop thorough plans for the handling of sensitive
data, records and transactions, and incorporate robust security technology
such as firewalls, anti-virus software, intrusion detection tools, and
authentication services throughout the organizations’ computer systems.
Examples of Cybercrime
Data Crimes
• Data Interception: Interception of data in transmission.

• Data Modification: Alteration, destruction or erasing of data.
• Data Theft: Taking or copying data, regardless of whether it is protected
by other laws, e.g., copyright, privacy, etc.
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Network Crimes
• Network Interference: Impeding or preventing access for others. The

most common example of this action is instigating a distributed denial of
service (DDOS) attack, flooding websites or Internet Service Providers.
DDOS attacks are often launched from numerous computers that have
been hacked to obey commands of the perpetrator.
• Network Sabotage: Modification or destruction of a network or system.
Access Crimes
• Unauthorized Access: Hacking or cracking to gain access to a system or

data.
• Virus Dissemination: Introduction of software damaging to systems or
data.
Related Crimes
• Aiding and Abetting: Enabling the commission of a cyber crime.

• Computer-related Forgery: Alteration of data with intent to represent as
authentic.
• Computer-related Fraud: Alteration of data with intent to derive
economic benefit from its misrepresentation.
To conclude, following issues are taken care of:
1. Reliance on terrestrial laws is an untested approach. Despite the

progress being made in many countries, most countries still rely on
standard terrestrial law to prosecute cyber crimes. The majority of
countries are relying on archaic statutes that predate the birth of
cyberspace and have not yet been tested in court.
2. Weak penalties limit deterrence. The weak penalties in most updated
criminal statutes provide limited deterrence for crimes that can have
large-scale economic and social effects.
3. Self-protection remains the first line of defense. The general weakness
of statutes increases the importance of private sector efforts to develop
and adopt strong and efficient technical solutions and management
practices for information security.
4. A global patchwork of laws creates little certainty. Little consensus exists
among countries regarding exactly which crimes need to be legislated
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against. In the networked world, no island is an island. Unless crimes

are defined in a similar manner across jurisdictions, coordinated efforts
by law enforcement officials to combat cyber crime will be complicated.
5. A model approach is needed. Most countries, particularly those in the
developing world, are seeking a model to follow. These countries
recognize the importance of outlawing malicious computer-related acts
in a timely manner in order to promote a secure environment for e-
Commerce.
But few have the legal and technical resources necessary to address the
complexities of adapting terrestrial criminal statutes to cyberspace. A
coordinated, public-private partnership to produce a model approach can
help eliminate the potential danger from the inadvertent creation of cyber
crime havens.
The weak state of global legal protections against cyber crime suggests
three kinds of action.
1. Firms should secure their networked information. Laws to enforce

property rights work only when property owners take reasonable steps
to protect their property in the first place. As one observer has noted, if
homeowners failed to buy locks for their front doors, should towns solve
the problem by passing more laws or hiring more police? Even where
laws are adequate, firms dependent on the network must make their
own information and systems secure. And where enforceable laws are
months or years away, as in most countries, this responsibility is even
more significant.
2. Governments should assure that their laws apply to cybercrimes.

National governments remain the dominant authority for regulating
criminal behavior inmost places in the world. One nation already has
struggled from, and ultimately improved, its legal authority after a
confrontation with the unique challenges presented by cyber crime. It is
crucial that other nations profit from this lesson, and examine their
current laws to discern whether they are composed in a technologically
neutral manner that would not exclude the prosecution of cyber
criminals. In many cases, nations will find that current laws ought to be
updated. Enactment of enforceable computer crime laws that also
respect the rights of individuals are an essential next step in the battle
against this emerging threat.
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3. Firms, governments, and civil society should work cooperatively

to strengthen legal frameworks for cyber security. To be
prosecuted across a border, an act must be a crime in each jurisdiction.
Thus, while local legal traditions must be respected, nations must define
cyber crimes in a similar manner. An important effort to craft a model
approach is underway in the Council of Europe, comprising 41 countries.
The Council is crafting an international Convention on Cyber Crime. The
Convention addresses illegal access, illegal interception, data
interference, system interference, computer-related forgery, computer-
related fraud, and the aiding and abetting of these crimes. It also
addresses investigational matters related to jurisdiction, extradition, the
interception of communications, and the production and preservation of
data.
Finally, it promotes cooperation among law enforcement officials across

national borders.
8.7 SOCIAL AND POLITICAL ISSUES
!
Figure 8.1: The moral dimension of an internet society
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e-Commerce and the Internet have raised so many ethical, social and
political issues that it is difficult to classify them all and hence complicated
to see their relationship to one another. Clearly ethical, social, and political
issues are interrelated. One way to organize the ethical, social, and political
dimensions surrounding e-Commerce is shown in Fig 8.1
At the individual level, what appears as an ethical issue “What should I

do?.” reflected at the social and political levels – “What should we as a
society and government do?.”
The ethical dilemmas you face as a manager of business using the web
reverberate and are reflected in social and political debates. The major
ethical, social, and political issues that have developed around e-
Commerce over last ten years can be categorized into four major
dimensions as follows.
Information rights
What rights to their own personal information do individuals have in a

public market place or in a private home, when internet technologies make
information collection so pervasive and efficient?
Property rights
How can traditional intellectual property rights be enforced in an internet

world where perfect copies of protected works can be made and easily
distributed worldwide in seconds?
Governance
Should the Internet and e-Commerce be subject to public laws and if so

what law making bodies have jurisdiction — states, federal and/or
international?
Public Safety and welfare
What efforts should be undertaken to ensure equitable access to the

internet and e-commerce channels? Should government be responsible for
ensuring that school and colleges have access to the internet? Are certain
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online contents such as pornography and gambling a threat to public safety

and welfare? Should mobile commerce be allowed from moving vehicles?
Governance has to do with social control. Who will control the internet?
Who will control the process of e-Commerce, the content, and the
activities? Because internet and e-Commerce are so closely interconnected,
controlling e-Commerce also involves regulating Internet protocols.
Expedia Legal and Ethical Issues
Expedia is very much concerned with security and privacy of its customers.
According to Expedia’s privacy policy, the company states “We understand

that making purchases online involves a great deal of trust on your part;
we take this trust very seriously and make it our highest priority to ensure
the security and confidentiality of the personally identifiable information
you provide us” (Expedia, 2006). In September of 2000, Expedia
announced the successful completion of a privacy audit that was conducted
by PriceWaterhouseCoopers.
This audit took Expedia’s to an extensive inspection of its business

practices and how it relates to the organization’s privacy policy (Expedia,
2000). Expedia’s privacy policy explains how the organization handles
customer data, the confidentiality in which customer information is handled
and how the company secures this information. Expedia.com has also set
up regional offices that work with specific geographic locations across the
world. Each local site reflects the laws and issues of that specific area.
Every regional site has its own version of Expedia’s privacy policy and lists
specific laws that apply to that country or area in which Expedia does
business.
Travelocity
Security is Travelocity’s top priority which protects consumer personal

information through security protocols within the company’s system
infrastructure. Throughout the booking process, Travelocity ensures
multiple security precautions after you completed your transactions.
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Firewall that act as shields to our computer networks makes the Travelocity
systems very much protected.
Travelocity ensure the protection of consumer’s credit card transactions

and encrypts the consumer financial and personal data residing in these
systems. Travelocity also shows concern about privacy and confidentiality.
Only third party travel service providers get the personal information when
consumers reserve or purchase travels services through Travelocity
Business. Customer private profile information is not sold to third parties.
Occasionally, Travelocity Business will provide consumer information to a
third party acting on their behalf for specialized projects such as market
research surveys and contest entry processing.
International issues and global barriers help the Travelocity to improve its
infrastructure to provide support to global pricing and taxation by its
leveraging parent company Sabre’s back-end system, which already
ensures proper handling of international pricing. These improvements
make Travelocity offer services to customers in 94 countries. (Goodridge
E., 2000).
Orbitz
Physical, administrative and technical safeguards are employed by Orbitz

to protect the confidentiality and integrity of consumer information in its
databases and reduce the risk of loss, misuse, unauthorized access,
disclosures or modification of personal information. Any information
transmitted electronically via the World Wide Web might not be secure.
Orbitz makes the company to assume no liability for the loss of any
information transmitted via the World Wide Web. However, personal
financial data on credit cards used when making a booking, reservation or
purchase on the site is encrypted for the transaction Orbitz’s privacy policy
tells that consumer privacy is of great importance.
Their privacy policy explains the principles and practices that apply to the
Information collected from users which are personal in nature for services
on the company site, in telephone or e-mail communications or in
interviews, surveys, sweepstakes, contests or raffles. Simply put, without
the consumer’s knowledge and permission, Orbitz will not collect their
personal information; nor disclose their personal information to third
parties.
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Personal Information
The international issues associated with Orbitz are managed by Travelport.

Travelport solutions are a subsidiary of Cendant Corp. provides a global full
service of strategic services and tools for mid and large corporations,
providing access to online booking tools and global distribution services.
Travelport’s International Rate Desk specializes in faring complex,
multisegment international itineraries.
Using their experience and knowledge of customer contracts, specialized

agents find the best options for international travelers-and average savings
of $550 per ticket (CendantCorporate Travel, 2004).
Research and planning must occur when an organization decides to enter

into e-Commerce, because the Internet has changed the way organizations
do business; these organizations must understand the legal, regulatory
and ethical considerations of e-Commerce before commencing an online
website.
A company could risk its success and livelihood by not abiding by the law
or allowing private information or data to become compromised. Expedia,
Travelocity and Orbitz, e-Commerce sites do business in international
markets and have addressed these issues by working with local countries
and regions on how to best address the regulations of their respective
geographic areas to ensure that each is compliant and are acting within the
local laws.
8.9 ACTIVITIES
(1)Visit eGroups.com.
This site allows joining e-mail with people having interests similar to one.
When the e-mail is sent. It is distributed to whole group. Users can select
their own group by selecting members. Form your own group on any hobby
or subject of your interest.
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(2) Visit firetalk.com
This website allows Fire talk members to conduct online communication,

gather in discussion group, and tour the web together.
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8.10 SUMMARY
In business the role of ethics cannot be ignored. As we talk about ethics,

the legal issues also cannot be ignored in business. This unit covers the
legal and ethical issues with respect to business perspective especially an
online business. Reader will be able to learn about the important facts to a
business successfully and honestly.
Confidentiality is the term refer as the ethical and professional duty which
is performed on not to disclose any inappropriate information to a third
party. Certain professionals who hold Certified Confidentiality Officer (CCO)
certification apply for the confidentiality because of their legal or ethical
requirements.
The vastness of Internet advertising offers a solid platform for Electronic

Commerce (or e-Commerce) to explode. E-Commerce has the ability to
provide secure shopping transactions coupled with instant verification and
validation of credit card transactions. e-Commerce is not about the
technology itself, it is about doing business leveraging the technology.
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e-Businesses draw information on how visitors use a site through log files.
Analysis of log file means turning log data into application service or
installing software that can pluck relevant information from files in-house.
Companies track individual’s movement through tracking software and
cookie analysis. Programs such as cookies raise a batch of privacy
concerns. The tracking history is stored on your PC’s hard disk, and any
time you revisit a website, the computer knows it. Many smart end-users
install programs such as Cookie cutters, Spam Butcher, etc which can
provide users some control over the cookies.
Most Electronic Payment Systems knows the identity of the buyer. So it is

necessary to protect the identity of a buyer who uses Electronic Payment
System.
A privacy issue related to the employees of company is tracking.

Monitoring systems are installed in many companies to monitor e-mail and
other web activities in order to identify employees who extensively use
business hours for non-business activities
Where are the headlines about consumers defrauding merchants? What

about fraud e-Commerce websites? Internet fraud and its sophistication
have grown even faster than the Internet itself
e-Commerce fraud popped out with the rapid increase in popularity of

websites. It is a hot issue for both cyber and click-and-mortar merchants.
The swindlers are active mainly in the area of stocks
The copyright laws protect Intellectual property in its various forms, and
cannot be used freely. It is very difficult to protect Intellectual property in
e-Commerce. For example, if you buy software you have the right to use it
and not the right to distribute it.
The competition over domain names is another legal issue. Internet

addresses are known as domain names and they appear in levels. Due to
which e-Commerce businesses must implement varied contingencies to
ensure compliance with both domestic and foreign tax requirements
regarding the sale of products ad services.
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Intellectual property rights are the rights given to persons over the
creations of their minds. They usually give the creator an exclusive right
over the use of his/her creation for a certain period of time.
The Agreement provides for norms and standards in respect of following

areas of intellectual property
• Patents
• Trademarks
• Copyrights
• Geographical Indications
• Industrial Designs
The growing danger from crimes committed against computers, or against

information on computers, is beginning to claim attention in national
capitals. In most countries around the world, however, existing laws are
likely to be unenforceable against such crimes. This lack of legal protection
means that businesses and governments must rely solely on technical
measures to protect themselves from those who would steal, deny access
to, or destroy valuable information.
e-Commerce and the Internet have raised so many ethical, social and
political issues that it is difficult to classify them all and hence complicated
to see their relationship to one another. Clearly ethical, social, and political
issues are interrelated.
Governance has to do with social control. Who will control the internet?
Who will control the process of e-Commerce, the content, and the
activities? Because internet and e-Commerce are so closely
interconnected,controlling e-Commerce also involves regulating internet
protocols.
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1. Why does e-Commerce raise ethical, social and political issues?
2. Explain the basic concepts related to privacy.
3. Identify the practices of e-Commerce companies that threaten the

privacy.
4. Understand the various forms of intellectual property and the challenge

of protecting it.
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REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
! !302
SOCIAL NETWORKS AND PORTALS
Chapter 9

• Understand social networks and its use in e-Commerce
• explore the various social networking sites
• Understand how portal sites are used for e-Commerce
Structure:
9.1 Introduction
9.2 Social Networks and Online Communities
9.2.1 Facebook
9.2.2 Orkut
9.2.3 Linkedin
9.3 Blogs
9.4 Web Portal Sites
9.6 Activities
9.7 Summary
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9.1 INTRODUCTION
A social networking service is an online service, platform, or site that

focuses on building and reflecting of social networks or social relations
among people, e.g., who share interests and/or activities. A social network
service essentially consists of a representation of each user (often a
profile), his/her social links, and a variety of additional services.
Most social network services are web-based and provide means for users
to interact over the internet, such as e-mail and instant messaging. Online
community services are sometimes considered as a social network service,
though in a broader sense, social network service usually means an
individual-centered service whereas online community services are
groupcentered. Social networking sites allow users to share ideas,
activities, events, and interests within their individual networks.
9.2 SOCIAL NETWORKS
For success online, businesses need to try and make use of all of the latest
tools and tricks of the trade that are now associated with internet
marketing. While this may involve a wide variety of different tactics, one of
the most popular is social networking. This has almost become expected in
many cases, as consumers are used to being able to find their favorite
businesses or brands online.
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Picture 9.1
Source: blog.engagepr.com
! !304
The first step in utilizing internet marketing with the help of social
networking sites is to investigate which sites are currently the most
popular. This can be achieved by analyzing the latest social trends, and
then using this information to come up with the profiles that you think may
be the most beneficial for your company’s image. If you are unsure about
this, it can be a good idea to speak to a marketing professional or branding
consultant.
Setting up a profile for your business is not difficult, because the way that
social networking sites are set up is meant to be all-inclusive. That is why
so many of them have attracted fans of all ages these, fans will then have
access to your business information. It’s such a simple way to advertise,
that it almost seems remarkable that it doesn’t cost any money in most
cases. This is one of the simplest methods of internet marketing, as a
result.
Once you have established your profile with all of its pertinent information
online, the next step is to think about how to go about the process of
finding friends or fans that will have access to your business’s information.
Sending out newsletters or e-mail blasts is also easy this way, which are
two of the most effective forms of internet marketing in the past.
In a rapidly changing world, it’s vital to stay on top of the latest advertising
and internet marketing trends, in order to make sure that potential
customers are able to find you. This process is made quite simple with the
process of using social networking sites that have been put into place as a
bit of a social experiment at first. That experiment has blossomed and is
now the primary way in which the world is able to connect on a personal
level. Beyond that, it can also be taken over by businesses to relate to
their customers on a more personal level as well. This ends up changing
the way that we do business.
The main types of social networking services are those which contain
category places (such as former school year or classmates), means to
connect with friends (usually with selfdescription pages) and a
recommendation system linked to trust. Popular methods now combine
many of these, with Facebook and Twitter widely used worldwide and Orkut
in India.
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Emerging Trends in Social Networking
As the increase in popularity of social networking is on a constant rise, new

uses for the technology are constantly being observed.
At the forefront of emerging trends in social networking sites is the concept

of “real-time web” and “location based.” Real time allows users to
contribute content, which is then broadcasted as it is being uploaded – the
concept is analogous to live radio and television broadcasts. Twitter set the
trend for “real time” services, where users can broadcast to the world what
they are doing, or what is on their minds within a 140 character limit.
Facebook followed suit with their “Live Feed” where users’ activities are
streamed as soon as it happens. While Twitter focuses on words, Clixtr,
another real time service, focuses on group photo sharing where users can
update their photo streams with photos while at an event. Friends and
nearby users can contribute their own photos and comments to that event
stream, thus contributing to the “real time” aspect of broadcasting photos
and comments as it is being uploaded. In the location based social
networking space, foursquare gained popularity as it allowed for users to
“check-in” to places that they are frequenting at that moment.
One popular use for this new technology is social networking between
businesses. Companies have found that social networking sites such as
Facebook and Twitter are great ways to build their brand image. According
to Jody Nimetz, author of Marketing Jive, there are five major uses for
businesses and social media: to create brand awareness, as an online
reputation management tool, for recruiting, to learn about new
technologies and competitors, and as a lead gen tool to intercept potential
prospects. These companies are able to drive traffic to their own online
sites while encouraging their consumers and clients to have discussions on
how to improve or change products or services.
One other use that is being discussed is the use of Social Networks in the
Science communities. Julia Porter Liebeskind et al., have published a study
on how New Biotechnology Firms are using social networking sites to share
exchanges in scientific knowledge. They state in their study that by sharing
information and knowledge with one another, they are able to “increase
both their learning and their flexibility in ways that would not be possible
within a selfcontained hierarchical organization.” Social networking is
allowing scientific groups to expand their knowledge base and share ideas,
! !306
and without these new means of communicating their theories might

become “isolated and irrelevant”.
Social networks are also being used by teachers and students as a

communication tool. Because many students are already using a wide-
range of social networking sites, teachers have begun to familiarize
themselves with this trend and are now using it to their advantage.
Teachers and professors are doing everything from creating chat room
forums and groups to extend classroom discussion to posting assignments,
tests and quizzes, to assisting with homework outside of the classroom
setting. Social networks are also being used to foster teacher-parent
communication. These sites make it possible and more convenient for
parents to ask questions and voice concerns without having to meet face to
face.
Social networks are being used by activists as a means of low-cost grass

roots organizing. Extensive use of an array of social networking sites
enabled organizers of the 2009 National Equality March to mobilize an
estimated 200,000 participants to march on Washington with a cost
savings of up to 85% per participant over previous methods.
The use of online social networks by libraries is also an increasingly

prevalent and growing tool that is being used to communicate with more
potential library users, as well as extending the services provided by
individual libraries.
A final rise in social network use is being driven by college students using
the services to network with professionals for internship and job
opportunities. Many studies have been done on the effectiveness of
networking online in a college setting, and one notable one is by Phipps
Arabie and Yoram Wind published in Advances in Social Network Analysis.
9.2.1 Facebook
Facebook – Facebook has grown massively over the last few years, with a
143% growth in US accounts from $42m in 2009 to $103m in 2010. The
network was founded by Mark Zuckerberg and was inspired by an offline
yearbook that was informally known as ‘the face book’. Before 2006, users
had to provide a college or university address in order to access the site.
! !307
Since that restriction was lifted, the site’s growth in popularity has been
unstoppable.
Facebook (stylized facebook) is a social networking service and website

launched in February 2004, operated and privately owned by Facebook Inc.
As of January 2011[update], Facebook has more than 600 million active
users. Users may create a personal profile, add other users as friends, and
exchange messages, including automatic notifications when they update
their profile. Additionally, users may join common interest user groups,
organized by workplace, school or college, or other characteristics.
!
Picture 9.2
Source: www.facebook.com
Facebook was founded by Mark Zuckerberg with his college roommates and
fellow computer science students Eduardo Saverin, Dustin Moskovitz and
Chris Hughes. The website’s membership was initially limited by the
founders to Harvard students, but was expanded to other colleges in the
Boston area, the Ivy League, and Stanford University. It gradually added
support for students at various other universities before opening to high
school students, and, finally, to anyone aged 13 and over.
! !308
A January 2009, Compete.com study ranked Facebook as the most used

social networking service by worldwide monthly active users, followed by
MySpace. Entertainment Weekly included the site on its end-of-the-decade
“best-of” list, saying, “How on earth did we stalk our exes, remember our
co-workers’ birthdays, bug our friends, and play a rousing game of
Scrabulous before Facebook?” Quantcast estimates Facebook has 135.1
million monthly unique U.S. visitors in October 2010. According to Social
Media Today, in April 2010 an estimated 41.6% of the U.S. population had
a Facebook account.
Most of Facebook’s revenue comes from advertising. Microsoft is

Facebook’s exclusive partner for serving banner advertising, and as such
Facebook only serves advertisements that exist in Microsoft’s
advertisement inventory. According to comScore, an Internet marketing
research company, Facebook collects as much data from its visitors as
Google and Microsoft, but considerably less than Yahoo! In 2010, the
security team began expanding its efforts to reduce the risks to users’
privacy. On November 6, 2007, Facebook launched Facebook Beacon,
which was an ultimately failed attempt to advertise to friends of users
using the knowledge of what purchases friends made.
Facebook generally has a lower clickthrough rate (CTR) for advertisements

than most major websites. For banner advertisements, they have generally
received one-fifth the number of clicks on Facebook compared to the Web
as a whole. This means that a smaller percentage of Facebook’s users click
on advertisements than many other large websites. For example, while
Google users click on the first advertisement for search results an average
of 8% of the time (80,000 clicks for every one million searches),
Facebook’s users click on advertisements an average of 0.04% of the time
(400 clicks for every one million pages).
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!
Picture 9.3
Twitter – Twitter is a micro-blogging service that has had an incredible
growth since its launch in 2006. It was created by Jack Dorsey and now
has about 26m users in the USA. Twitter is relatively unique because so
many of its users access the service via third party software and/ or
remote devices. Twitter is also well known for its high profile users – many
celebrities and politicians use the site and attract many millions of
followers.
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Picture 9.4
Source: twitter.com, specht.com.au
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The food company will leverage interactive advertising to showcase recipe

videos and run Twitter integrated contests on the DTH platform.
!
Picture 9.5
Ching’s Secret, which spends more than 50% of its marketing budget on
online media and is pretty active on Facebook (Facebook.com/
chingssecret), is now all set to experiment with interactive advertising on
the direct-to-home (DTH) TV platform.
To begin with, the manufacturer of instant noodles, soups and sauces will
place a full-page banner ad as branded skin in the background on the
Electronic Programming Guide (EPG) page/ home screen of Airtel digital TV
(DTH) platform. Branded skin ads will be shown as a default background
image on the EPG page of all (more than 5 million) Airtel digital TV (DTH)
subscribers.
Later, the company will integrate Twitter and add interactive options to the
branded skin, a spokesperson from Capital Foods, the owner of Ching’s
Secret brand, tells afaqs! The branded skin will be used to run interactive
contests. Participants will be required to send their answers on the Twitter
address of Ching’s Secret (Twitter.com/chingssecret), instead of sending
SMSes to a mobile number.
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To make the banner ad/branded skin clickable, a red dot/button will be

displayed at a prominent position on the branded skin. The red button will
prompt the television user to click on the ‘red’ button on his DTH TV
remote control to get more information. Once the ‘red’ button is clicked,
the Ching’s Secret banner ad will redirect users to a full-screen landing
page, where the company will showcase clickable videos related to recipes
and its television commercial.
This is the first time that Ching’s Secret will use EPG branding on the main
menu of a DTH player, the spokesperson adds. Ching’s Secret also plans to
promote all its sub-brands - instant noodles, and soups and sauces –
through the interactive branded skin.
MySpace – 2 years ago, MySpace would’ve been top of this list. Today, it
still has a strong user-base of around 57 million, particularly among
teenagers and musicians, but has lost out massively in terms of market
share. It was founded by eUniverse employees after the success of
Friendster and grew quickly. It has been widely criticized for giving too
much control to the user, resulting in badly designed profile pages.
!
Picture 9.6
Source: www.myspace.com
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9.2.2 Orkut
Orkut – The social network is owned and operated by Google and is

named after its creator, Orkut Büyükk.kten. On August 25, 2007, Orkut
announced a redesign. The new UI contains round corners and soft colors
including small logotype at upper left corner. The redesign has been
announced on the official Orkut Blog.
By August 30, 2007, most users on Orkut could see changes on their
profile pages as per the new redesign. On August 31, 2007, Orkut
announced its new features including improvements to the way you view
your friends, 9 rather than 8 of your friends displayed on your homepage
and profile page and basic links to your friends’ content right under their
profile picture as you browse through their different pages. It also
announced the initial release of Orkut in 6 new languages: Hindi, Bengali,
Marathi, Tamil, Kannada and Telugu. Profile editing can take place by
clicking the settings button under the user profile photo (or alternatively,
clicking the blue settings link at the top of any page).
!
Picture 9.7
Source: www.orkut.com
! !313
On September 4, 2007, Orkut announced another new feature. The user

would be able to see an “Updates from your friends” box on the homepage,
where it’s possible to get real-time updates when friends make changes to
their profiles, photos and videos. Moreover, in case someone wants to keep
some things on their profile private, Orkut has added an easy opt-out
button on the settings page. Scraps were also HTML-enabled letting users
post videos or pictures. On November 8, 2007, Orkut greeted its Indian
users Happy Diwali by allowing them to change their Orkut look to a
Diwali-flavored reddish theme. On April Fools’ Day 2008, Orkut temporarily
changed its name on its webpage to yogurt, apparently as a prank. On 2
June 2008, Orkut has launched its theming engine with a small set of
default themes. Photo tagging also was available.
On 27 October 2009, Orkut released their 2nd redesigned version. It was

available to very few users at first (the chosen ones as they called). These
users were able to send invites to their Orkut friends to join this new
version. The new version uses Google Web Toolkit (GWT) and thus makes
extensive use of AJAX in the user interface. However, the users of the new
version of Orkut can switch back to the older version by clicking the “Older
Version” link near the top right corner of the page.
Google stated the new Orkut is faster, simpler and more customizable.
More particular features include video chat, promotions and easy
navigation. The look is completely new, leaving all traces of past designs.
User interface and workflow are also drastically changed. As part of “more
customizable”, Orkut added many different colors for the profile. The
Themes were removed and an Orkut badge is visible for those who haven’t
changed to the new Orkut. The new logo also has the word “My” in it, as in
My Orkut.
Orkut allows users to sign in with their Google Mail, or Gmail, credentials.
As described on http://orkutlogin.me, to login to Orkut always type the
URL http://www.orkut.com/ instead of clicking any links to open it. This is
the safest way to open Orkut. Originally hosted in California, in August
2008 Google announced that Orkut would be fully managed and operated
in Brazil, by Google Brazil, in the city of Belo Horizonte. This was decided
due to the large Brazilian user base and growth of legal issues.
! !314
As of March 2011[update], Alexa traffic ranked Orkut 102nd in the world;

the website currently has more than 100 million active users worldwide.
Anyone 18 years old or older can join Orkut.
An Orkut user can also add videos to their profile from either YouTube or
Google Video with the additional option of creating either restricted or
unrestricted polls for polling a community of users. There is an option to
integrate GTalk (An instant messenger from Google) with Orkut enabling
chatting and file sharing. Currently GTalk has been integrated in Orkut –
users can directly chat from their Orkut page. Similar to facebook, users
may also use a “like” button to share interests with friends.
Themes:
A new feature in Orkut is Changing Themes. Users can change their

interface from a wide range of colorful themes in library. Themes are
currently only available in India, Brazil and Pakistan.
Other Miscellaneous Features:
Members can make groups to join friends according to their wishes.

Further, each member can become a fan of any of the friends in their list
and can also evaluate whether their friend is “Trustworthy”, “Cool”, and
“Sexy” on a scale of 1 to 3 (marked by icons) and this is aggregated in
terms of a percentage. Unlike Facebook, where a member can view profile
details of people only on their network, Orkut allows anyone to visit
anyone’s profile, unless a potential visitor is on your “Ignore List” (this
feature has been recently changed so that users can choose between
showing their profile to all networks or specified ones).
When a user logs in, they see the people in their friends list in the order of
their logging in to the site, the first person being the latest one to do so.
Orkut’s competitors are other social networking sites including MySpace
and Facebook. Ning is a more direct competitor, as they allow creation of
social networks which are similar to Orkut’s communities.
! !315
9.2.3 Linkedin
Linkedin is a business-oriented social networking site. Founded in

December 2002 and launched in May 2003, it is mainly used for
professional networking.
As of 22 March 2011 (2011 -03-22)[update], Linkedin reports more than

100 million registered users, spanning more than 200 countries and
territories worldwide. The site is available in English, French, German,
Italian, Portuguese and Spanish. Quantcast reports Linkedin has 21.4
million monthly unique U.S. visitors and 47.6 million globally.
LinkedIn filed for an initial public offering in January 2011.
!
Picture 9.8
Source: www.linkedin.com
! !316
Features
One purpose of the site is to allow registered users to maintain a list of

contact details of people with whom they have some level of relationship,
called Connections. Users can invite anyone (whether a site user or not) to
become a connection. However, if the recipient of an invitation selects “I
don’t know”, this counts against the person inviting them, and after five
such “IDKs” a member cannot invite another to connect without first
supplying their recipient mail address.
This list of connections can then be used in a number of ways:
• A contact network is built up consisting of their direct connections, the

connections of each of their connections (termed second-degree
connections) and also the connections of second-degree connections
(termed third-degree connections). This can be used to gain an
introduction to someone a person wishes to know through a mutual
contact.
• It can then be used to find jobs, people and business opportunities
recommended by someone in one’s contact network.
• Employers can list jobs and search for potential candidates.
• Job seekers can review the profile of hiring managers and discover which
of their existing contacts can introduce them.
• Users can post their own photos and view photos of others to aid in
identification.
• Users can now follow different companies and can get notification about
the new joining and offers available.
• Users can save (i.e., bookmark) jobs which they would like to apply for.
The “gated-access approach” (where contact with any professional requires

either a preexisting relationship or the intervention of a contact of theirs) is
intended to build trust among the service’s users. Linkedin participates in
EU’s International Safe Harbor Privacy Principles.
Linkedin also allows users to research companies with which they may be
interested in working. When typing the name of a given company in the
search box, statistics about the company are provided. These may include
the ratio of female to male employees, the percentage of the most
common titles/positions held within the company, the location of the
! !317
company’s headquarters and offices, or a list of present and former

employees.
The feature Linkedin Answers, similar to Yahoo! Answers, allows users to

ask questions for the community to answer. This feature is free and the
main difference from the latter is that questions are potentially more
business-oriented, and the identity of the people asking and answering
questions is known.
Another Linkedin feature is Linkedin Polls. A mobile version of the site was
launched in February 2008 which gives access to a reduced feature set
over a mobile phone. The mobile service is available in six languages:
Chinese, English, French, German, Japanese and Spanish.
In mid-2008, Linkedin launched LinkedIn Direct Ads as a form of sponsored

advertising.
In October, 2008, LinkedIn revealed plans to opening its social network of

30 million professionals globally as a potential sample for business-to-
business research. It is testing a potential social-network revenue model-
research that to some appears more promising than
advertising.
In October, 2008, Linkedin enabled an “applications platform” that allows

other online services to be embedded within a member’s profile page.
Among the initial applications were an Amazon Reading List that allows
LinkedIn members to display books they are reading, a connection to
Tripit, and a Six Apart, Word Press and TypePad application that allows
members to display their latest blog postings within their Linkedin profile.
In November, 2010, Linkedin allowed businesses to list products and

services on company profile pages; it also permitted LinkedIn members to
“recommend” products and services and write reviews.
In January 2011, LinkedIn acquired CardMunch, a mobile app maker that

scans business cards and converts into contacts. Linkedin plans to
integrate this functionality into their services in the near future.
! !318
Navigation
The main difference is that Linkedin has replaced the previous tab-style
header with a number of drop-down menus:
!
Picture 9.9
The menu also stays on even when you move the cursor away, which
makes it easier to use. The new navigation style has been pushed out
across the entire site, which ensures a consistent look:
!
Picture 9.10
Source: blog.linkedin.com
! !319
Widgets
Having launched a developer platform in December, LInkedin has now

added more widgets to the site. The platform is more limited than other
social networks’, and new widgets need to match the culture of the site.
As well as the related news module on the homepage, a customizable

widget on the right hand side displays Linkedin Answers related to your
industry, as well as potential contacts and jobs.
Groups
Linkedin supports the formation of interest groups, and as of 24 March

2011, there are 8, 70,612 such groups whose membership varies from 1 to
377,000. The majority of the largest groups are employment related,
although a very wide-range of topics are covered mainly
aroundprofessional and career issues, and there are currently 128,000
groups for both academic and corporate alumni.
Groups support a limited form of discussion area, moderated by the group

owners and managers. Since groups offer the ability to reach a wide
audience without so easily falling foul of anti-spam solutions, there is a
constant stream of spam postings, and there now exist a range of firms
who offer a spamming service for this very purpose. Groups may be
private, accessible to members only or may be open to Internet users in
general to read, though they must join in order to post messages.
9.3 BLOGS
Blogs are online diaries, or journals, frequently updated and presented in

chronological order on Web pages. These are extremely useful in building
online communities.
A blog (a blend of the term web log) is a type of website or part of a

website. Blogs are usually maintained by an individual with regular entries
of commentary, descriptions of events, or other material such as graphics
or video. Entries are commonly displayed in reverse-chronological order.
Blog can also be used as a verb, meaning to maintain or add content to a
blog.
! !320
Most blogs are interactive, allowing visitors to leave comments and even
message each other via widgets on the blogs and it is this interactivity that
distinguishes them from other static websites.
Many blogs provide commentary or news on a particular subject; others

function as more personal online diaries. A typical blog combines text,
images, and links to other blogs, Web pages, and other media related to its
topic. The ability of readers to leave comments in an interactive format is
an important part of many blogs. Most blogs are primarily textual, although
some focus on art (art blog), photographs (photo blog), videos (video
blogging), music (MP3 blog), and audio (podcasting). Micro blogging is
another type of blogging, featuring very short posts.
After a slow start, blogging rapidly gained in popularity. Blog usage spread
during 1999 and the years following, being further popularized by the near-
simultaneous arrival of the first hosted blog tools:
Bruce Ableson launched Open Diary in October 1998, which soon grew to
thousands of online diaries. Open Diary innovated the reader comment,
becoming the first blog community where readers could add comments to
other writers’ blog entries.
Brad Fitzpatrick started Live Journal in March 1999.
Andrew Smales created Pitas.com in July 1999 as an easier alternative to

maintaining a “news page” on a Web site, followed by Diary land in
September 1999, focusing more on a personal diary community.
Evan Williams and Meg Hourihan (Pyra Labs) launched blogger.com in

August 1999, (purchased by Google in February 2003).
On 6 December 2002, Josh Marshall’s talkingpointsmemo.com blog called

attention to U.S. Senator Lott’s comments regarding Senator Thurmond.
Senator Lott was eventually to resign his Senate leadership position over
the matter.
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Types of Blogs
Picture 9.11
Source: modernl.com
There are many different types of blogs, differing not only in the type of
content, but also in the way that content is delivered or written.
Personal blogs: The personal blog, an ongoing diary or commentary by

an individual, is the traditional, most common blog. Personal bloggers
usually take pride in their blog posts, even if their blog is never read. Blogs
often become more than a way to just communicate; they become a way
to reflect on life, or works of art. Blogging can have a sentimental quality.
Few personal blogs rise to fame and the mainstream, but some personal
blogs quickly garner an extensive following. One type of personal blog,
referred to as a microblog, is extremely detailed and seeks to capture a
moment in time. Some sites, such as Twitter, allow bloggers to share
thoughts and feelings instantaneously with friends and family, and are
much faster than emailing or writing.
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Corporate and organizational blogs: A blog can be private, as in most

cases, or it can be for business purposes. Blogs used internally to enhance
the communication and culture in a corporation or externally for marketing,
branding or public relations purposes are called corporate blogs. Similar
blogs for clubs and societies are called club blogs, group blogs, or by
similar names; typical use is to inform members and other interested
parties of club and member activities. Some blogs focus on a particular
subject, such as political blogs, travel blogs (alsoknown as travelogs),
house blogs, fashion blogs, project blogs, education blogs, niche blogs,
classical music blogs, quizzing blogs and legal blogs (often referred to as a
blawgs) or dreamlogs. Two common types of genre blogs are art blogs and
music blogs. A blog featuring discussions especially about home and family
is not uncommonly called a mom blog. While not a legitimate type of blog,
one used for the sole purpose of spamming is known as a Splog.
By media type: A blog comprising videos is called a vlog, one comprising

links is called a link log, and a site containing a portfolio of sketches is
called a sketch blog or one comprising photos is called a photo blog. Blogs
with shorter posts and mixed media types are called tumble logs. Blogs
that are written on typewriters and then scanned are called typecast or
typecast blogs; see typecasting (blogging). A rare type of blog hosted on
the Gopher Protocol is known as a Phlog.
By device: Blogs can also be defined by which type of device is used to

compose it. A blog written by a mobile device like a mobile phone or PDA
could be called a mob log. One early blog was Wearable Wireless Webcam,
an online shared diary of a person’s personal life combining text, video,
and pictures transmitted live from a wearable computer and EyeTap device
to a website. This practice of semi-automated blogging with live video
together with text was referred to as surveillance. Such journals have been
used as evidence in legal matters.
9.4 WEB PORTAL SITES
Web portal sites: A site that provides a starting point or a gateway to other
resources on the Internet or an intranet.
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Types of portals:
Horizontal and Vertical Portals: Two broad categorizations of portals are

horizontal portals, which cover many areas, and vertical portals, which are
focused on one functional area. Another definition for a horizontal portal is
that it is used as a platform to several companies in the same economic
sector or to the same type of manufacturers or distributors. A vertical
portal consequently is a specialized entry point to a specific market or
industry niche, subject area, or interest, also called vortal.
Personal portals: A personal portal is a site on the World Wide Web that
typically provides personalized capabilities to its visitors, providing a
pathway to other content. It is designed to use distributed applications,
different numbers and types of middleware and hardware to provide
services from a number of different sources. In addition, business portals
are designed to share collaboration in workplaces. Personal portals can be
related to any specific topic such as providing friend information on a social
network or providing links to outside content that may help others beyond
your reach of services. Portals are not limited to simply providing links.
Information or content that you are putting on the internet creates a
portal, or a path to new knowledge and/or
capabilities.
News portals: The traditional media rooms all around the world are fast
adapting to the new age technologies. This marks the beginning of news
portals by media houses across the globe. This new media channels give
them the opportunity to reach the viewers in a shorter span of time than
their print media counterparts.
Government web portals: At the end of the dot-com boom in the 1990s,
many governments had already committed to creating portal sites for their
citizens. These included primary portals to the Governments as well as
portals developed for specific audiences. Examples of Government web
portals include;
• Australia.gov.au for Australia.

• USA.gov for the United States (in English) and GobiernoUSA.gov (in
Spanish).
• Disability.gov for citizens with disabilities in the United States.
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• Directgov for citizens and businesslink.gov.uk for businesses in the

United Kingdom.
• India.gov.in for India.
Europa (web portal) links to all EU agencies and institutions in addition to
press releases and audiovisual content from press conferences.
Health-EU portal gathers all relevant health topics from across Europe.
National Resource Directory links to resources for United States Service

Members, Veterans and their families (NRD.gov).
Corporate web portals: Corporate intranets became common during the

1990s. As intranets grew in size and complexity, webmasters were faced
with increasing content and user management challenges. A consolidated
view of company information was judged insufficient; users wanted
personalization and customization. Webmasters, if skilled enough, were
able to offer some capabilities, but for the most part ended up driving
users away from using the intranet.
!
Picture 9.12
Source: Micrtosoft.com
Many companies began to offer tools to help webmasters manage their

data, applications and information more easily, and through personalized
views. Portal solutions can also include workflow management,
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collaboration between work groups, and policy-managed content

publication.
The concept of content aggregation seems to still gain momentum and

portal solution will likely continue to evolve significantly over the next few
years. The increase in user generated content, disparate data silos, and file
formats, information architects and taxonomist will be required to allow
users the ability to tag (classify) the data. This will ultimately cause a
ripple effect where users will also be generating ad hoc navigation and
information flows. Corporate Portals also offer customers and employees
self-service opportunities.
Stock portals: Also known as stock-share portals, stock market portals or

stock exchange portals are Web-based applications that facilitates the
process of informing the share-holders with substantial online data such as
the latest price, ask/bids, the latest news, reports and announcements.
Some stock portals use online gateways through a central depository
system (CDS) for the visitors to buy or sell their shares or manage their
portfolio.
Search portals: Search portals aggregate results from several search

engines into one page.
Tender’s portals: Tender’s portals stands for a gateway to search/modify/

submit/archive data on tenders and professional processing of continuous
online tenders. With a tender portal the complete tendering process—
submitting of proposals, assessment, administration—are done on the web.
Electronic or online tendering is just carrying out the same traditional
tendering process in an electronic form, using the Internet. Using online
tendering, bidders can do any of the following:
• Receive notification of the tenders.

• Receive tender documents online.
• Fill out the forms online.
• Submit proposals and documents.
Domain-specific portals: A number of portals have come about that are

specific to the particular domain, offering access to related companies and
services, a prime example of this trend would be the growth in property
portals that give access to services such as estate agents, removal firm,
! !326
and solicitors that offer conveyancing. Along the same lines, industry-
specific news and information portals have appeared, such as the clinical
trials specific portal: IFPMA Clinical Trials Portal.
Case Study: Social networking website development
Abstract
Client for this SNS is an investment company based in the Netherlands.

Since SNS become more and more popular and profitable on the Internet,
the client decided to develop an eyecatching SNS which should be
convenient and user-friendly to attract massive potential users. Special
requirements for this SNS are: The user can add his/her events of their
lives to the system; then the system will turn the events into a line
presented by Flash. SNC can also interface with other social network
websites, like Facebook and MySpace, so users can easily use this system
when they visit Facebook and MySpace.
Situation
Before this project was outsourced to us, two Russian teams had already
spent almost one year on the development.
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It was just the first release of this project when we took over the
development. This 1.0 version was difficult to be maintained, because this
version was built on .NET 1.1, and the code style was not original ASP.NET
style. We even had to work on the new development tasks including
developing the widget for MySpace and Facebook. Therefore the time was
very tight.
In the mean time, the client had not enough experience in software
engineering. At first the requirements were not clear enough, so there
were some difficulties for us to have a good grasp of the requirements and
estimate the total workload.
Before long we found that the goal of this website development was to
attract users. However the web site itself was not attractive enough and
the user experience was not good enough either, which would cause
negative impact on the operation of this website.
Solutions
Technology required:
• NET Framework 2.0

• Web Client Software Factory
• Hibernate
• Flash/Flex
• OpenSocial API
• Facebook API
• jQuery
• Development Process
In the first place, we helped the client release the 1.0 version.
After 1.0 version was released, we redesigned the project taking advantage
of ASP.NET 2.0, and reconstructed the website. In the mean time, we
developed the widgets in MySpace and Facebook.
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For the Flash, we implemented the MVC pattern.We helped the client
analyze this project and channeled their indistinct requirements into
refined specification using our rich experience. Accordingly we have
considerably reduced the time spent on workload estimation and
successfully avoided reduplicative and invalid efforts arising from
ambiguous requirements.
In order to make the website more interesting and attractive, we held a

brainstorm meeting internally in the development team. After putting
together all the advices gathered from our brainstorm meeting, we
submitted our proposal to this client and he agreed with most of our
suggestions.
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Benefits to Client
The system is more stable, easier to be extended and maintained. We have

helped our client largely reduce their development cost so that they can
focus on marketing to their target market.
We involved in the design of the website, and helped the customers

complete the requirements in a technically feasible way with our expertise
at a faster and easier pace.
9.6 ACTIVITIES
• Visit cpsr.org computer professionals for social responsibility site. Learn

about how this organization concerned with the development and use of
computers.
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9.7 SUMMARY
diverse sources in a unified way.
A blog (a blend of the term web log) is a type of website or part of a

website. Blogs are usually maintained by an individual with regular entries
of commentary, descriptions of events, or other material such as graphics
or video.
A social networking service is an online service, platform, or site that

focuses on building and reflecting of social networks or social relations
among people, e.g., who share interests and/or activities
Facebook (stylized facebook) is a social networking service and website

launched in February 2004, operated and privately owned by Facebook Inc.
As of January 2011[update], Facebook has more than 600 million active
users.
Twitter – Twitter is a micro-blogging service that has had an incredible

growth since its launch in 2006. It was created by Jack Dorsey and now
has about 26m users in the USA.
MySpace – 2 years ago, MySpace would’ve been top of this list. Today, it
still has a strong user-base of around 57 million, particularly among
teenagers and musicians, but has lost out massively in terms of market
share.
Orkut – The social network is owned and operated by Google and is named
after its creator, Orkut Büyükk.kten.
Linkedin is a business-oriented social networking site. Founded in

December 2002 and launched in May 2003, it is mainly used for
professional networking.
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1. Explain the difference between a traditional social network and online

social network.
2. Explain how a social network differ from a portal?
3. Describe the different types of social network and online communities.
! !332
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !333
E-BUSINESS AND E-COMMERCE CASE STUDIES
Chapter 10
e-BUSINESS AND e-COMMERCE CASE
STUDIES
• To review the major industry segments on the web

• To explore the ways the internet and web have improved business
• To evaluate business models being implemented by companies on the
web
• To discuss challenges facing online business
• To examine the successful methods of conducting business in the internet
economy
Structure:
10.1 Introduction
10.2 Online Industries
10.2.1 Medical Services Online
10.2.2 Online Travel
10.2.3 Transportation and Shipping
10.2.4 Online Automation Sites
10.2.5 Energy Online
10.2.6 Selling Brainpower Online
10.2.7 Online Art Dealers
10.2.8 Online Grocery Stores
10.2.9 Online Real Estate
10.2.10 Online Trading
10.2.11 Government Online
10.2.12 Insurance Online
10.2.13 Online Retail
10.2.14 Children Online
10.3 Banking and Investing
10.4 e-Learning
10.5 e-Publishing
10.6 Online Auction
10.7 Online Career Services
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10.8 Advertising Online

10.9 Activities
10.10 Summary
10.1 INTRODUCTION
In this chapter, we discuss the notion of business models in an industry-

specific manner. We include many leading e-Business and major industry
categories. Each industry uses web effectively to improve current business
practices and to diversify into new areas. Each of these industry
understand the importance of providing unique and highly targeted
information.
10.2 ONLINE INDUSTRIES
10.2.1 Medical Services Online
The health information website co-founded in 1998 by Reagan

administration Surgeon General Dr. C. Everett Koop made a splash when it
raked in $88.5 million in its June 1999 initial public offering.
The site was quickly ranked the No. 1 health care content site on the
Internet, with an average of about 1.4 million unique visitors per month in
1999. Drkoop.com attracted the attention of AOL a month after going
public when the drkoop.com’s stock hit a high of $45.75 a share. The two
companies entered a $89 million four-year strategic partnership to display
drkoop.com content on AOL’s portal. Before there was WebMd, there was
drkoop.com.
But drkoop.com didn’t last quite that long. The dot.com bubble burst, and
investors became increasingly skeptical about the prospects of a health
content provider that relied on advertising revenue to build its
business.The company began to lose tens of millions of dollars per quarter
in 2000, and it announced it would shut down its operations in December
2001.
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!
Figure 10.1: Industry Medical Portal
!
Figure 10.2
Source: WebHealthcentre.com
! !336
10.2.2 Online Travel
Companies like Boeing and Airbus build civilian and military aircraft. Many
planes take off without being filled to capacity. Since relatively fixed
overheads are spread over fewer people, ticket prices are higher. Internet
helps to commercialize the industry to fill more seats and reduce cost.
People can save time and money by booking travel arrangements through
travel agents and various web portals provided on the internet.
They can select cheap flights as per their convenience.
Site59.com was an online travel agency that aimed to make “the best deals
available at the last minute.” The site was launched in May 2000 by travel
and tourism professionals from The Boston Consulting Group (BCG), and
was further developed and backed by iFormation Group, a partnership
between BCG, Goldman Sachs and General Atlantic Partners.
Named for the 59th minute, Site59 assembled inventory in real time from
thousands of industry suppliers, including major airlines, hotel companies,
car rental companies and hundreds of specialty providers worldwide. In
addition to its own website, Site59 operated a private label distribution
(ASP) product, powering last-minute sections of Travelocity, AOL Travel,
CheapTickets, Yahoo! Travel, American Airlines Vacations, Delta Air Lines
Vacations, Continental Airlines Vacations, Northwest’s nwa.com, and
Bestfares.com, among others.
In March 2002, Travelocity acquired Site59 for $43 million in cash. Site59’s
CEO and founder, Michelle Peluso joined Travelocity with the acquisition as
senior vice president, product strategy and distribution. Peluso became
Travelocity’s COO in April 2003 and was then named president and chief
executive officer of Travelocity in December 2003.
Site59 ceased operations in 2011 and now directs to travelocity.com.
! !337
!
Figure 10.3
Source: site59.com
! !338
Site59
The world’s a fun place, you should get out more!
Site59 specializes in retailing truly last minute packages to leisure

travelers. Over 80% of customers buy and travel within one week,
approximately 60% buy and travel within 3 days of departure, and nearly
10% buy and travel on the same day.
Packages are sold through numerous distribution channels, such as

www.site59.com and www.Travelocity.com, as well as additional partner
sites:
General travel Websites and portals, such as AAA, AARP, American Express,
AOL Travel, Best Fares, Compuserve, MySabre, Netscape, Worldchoice
Travel, Worldspan Go and Yahoo! Travel
Supplier websites, such as American Airlines, Continental Airlines, Delta Air

Lines, Intercontinental Hotel Group, Marriott Hotels, Northwest Airlines and
US Airways.
Products and Solutions
Using dynamic packaging technology, Site59 pushes deals to consumers

from two weeks up to 3 hours before departure. Themed promotions and
unique merchandising help hotels target customers and drive incremental
revenue through distressed inventory sales. Hotel rates are packaged with
deeply discounted flights, meaning rates are never exposed to the buying
audience.
!
Figure 10.4
Source: Site59.com
! !339
10.2.3 Transportation and Shipping
Transportation and shipping is a big industry, where internet is playing a

vital role. Major shipping vendors including UPS (ups.com), DHL (dhl.com),
First Flight (firstflight.com), Federal Express (fedex.com) have built web
portals to support and service the industry.
! !340
!
Figure 10.5
Source: fedex.com
!
Figure 10.6: (ups.com)
10.2.4 Online Automation Sites
Many sites allow users to research and purchase new and used cars.
Whether or not you make final arrangement for the purchase of vehicle
online, many of the preliminary steps can be completed on the web. Users
can explore options more efficiently than by travelling to geographically
dispersed dealership. The Web gives easy access to information so dealers
can search online database for cars to boost their inventories.
! !341
!
Figure 10.7
Source: Autobytel.com
! !342
Autobytel.com
Autobytel Inc. operates as an automotive marketing services company that

helps automotive retail dealers and manufacturers that sell new and used
vehicles through its Internet lead referral and online advertising programs.
The company’s lead programs include new vehicle lead program that allows
consumers to submit requests for pricing and availability of specific makes
and models; used vehicle lead program, which allows consumers to search
for used vehicles according to specific search parameters, such as the
price, make, model, mileage, year, and location of the vehicle; and finance
lead program designed to provide consumers opportunity to obtain vehicle
financing and other services. Its consumer-facing automotive Websites,
which include Autobytel.com, Autoweb.com, AutoSite.com, Car.com,
CarSmart.com, CarTV.com, and MyRide.com, provide consumers the
information and tools to aid them in their automotive purchase decisions,
and the opportunity to submit lead requests. The company was formerly
known as autobytel.com inc. Autobytel Inc. was founded in 1995 and is
headquartered in Irvine, California.
Through Autobytel’s marketing network, the company provides both

automotive dealers and manufacturers with brand and product marketing
opportunities.
Autobytel offers automotive dealers tools to manage their business.

Specific products include: the Rapid Response program, designed to
connect dealers to online customers via phone, as well as the E-mail
Manager program, which manages long-term e-mail campaigns on behalf
of the dealership. Additionally, LeadCall a live call program that sets in-
dealership appointments and scores customer readiness to buy for auto
dealers.
Autobytel also offers the AutoReach Ad Network, an automotive ad network

of third party Web publishers visited by in-market automotive consumers.
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!
Figure 10.8
Source: autobytel.com
10.2.5 Energy Online
On November 29, 1999, Enron launched Enron Online, an electronic

transaction platform that offered free, real time pricing information for
2,100 commodities, including electricity, natural gas, coal, pulp and paper,
clean air credits, bandwidth, weather and credit derivatives, petrochemicals
and plastics, and oil and refined products.
Unlike other Internet commodity service providers, Enron Online did not
match buyers with sellers. Instead, commodity consumers and producers
around the world were able to instantaneously conduct transactions
directly with an Enron company as a principal dealer. Enron Online was
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simply an extension of what occurred within the various Enron companies

via the telephone on a daily basis. Enron Online worked by matching itself
with every potential buyer or seller, making money on every transaction.
Enron Online ran on an Oracle database and Web Logic Java application
servers that ran on Windows NT. Portions of the site took advantage of
Macromedia shockwave, and transactions were secure using SSL
encryption.
Efficiency gains made possible by dynamic pricing and trading were

especially well suited to Enron’s online business because electronic trading
could match the speed with which commodity pricing changed.
Transactions that used to take up to three minutes to complete over the
phone now took just a second or two.
Enron charged no commission and no subscription fee, an offer which led

some analysts to forecast the extinction of traditional brokerages.
Though it didn’t last long enough to put traditional brokerages out of

business, Enron Online quickly made its presence known. It became the
largest e-Commerce website in the world. In just two years it bought and
sold $880 billion worth of products, averaging 6,000 transactions a day
worth an average $6 billion.
A particular element of symmetry: Enron Online closed down for online

trading on the morning of November 28, 2001, exactly two years after it
went live, and only six months after it reached the one-millionth
transaction milestone.
10.2.6 Selling Brainpower Online
Finding people qualified enough to turn a good business idea into reality is
often a major challenge. In many cases the business is started by
technically adept individuals with little management experience.
Outsourcing is the process of hiring another company or individual to do a

job when there is a lack of qualified resources within a company (see Hello
brain.com).
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!
Figure 10.9
Source: HellowBrain.com
10.2.7 Online Art Dealers
Art is traditionally sold in galleries, exhibitions or through small vendors.

The internet gives an artist the opportunity to showcase their work and
reach the global market.
Art.com sells fine art, photography, posters and paint. You can search by
artist, medium, décor, size and subject.Art.com uses a shopping cart model
and can have a piece delivered to the customer in a few days.
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Guild.com is another art dealer offering more than 7000 various products
online.
One of my sister’s from Mumbai, Mrs Jyoti Raut is a commercial artist and
has spent her life in drawing beautiful paintings, posters and is
instrumental in textile design. The Internet is a platform for such unknown
Artist to reach globally.
Jyoti has created her Blog “jyotiraut” and received many online enquires
and orders from US and all over world. View Roop Ganesh displayed on her
block. While painting this picture she was not able to draw two eyes so, she
drew only one! To her surprise if you look from any angle, it seems Roop
Ganesh looks at you! You also experience the same.
!
Figure 10.10
Source: indiaart.com
Indiaart.com is a website that provides famous pictures of old masters like

Haldankar, Ravi Varma and many others, worth visiting.
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10.2.8 Online Grocery Stores
Buying groceries online, especially staple items is a time saver. You can
create an electronic shopping list and make small edits to reflect your
special needs each week.Webvan.com recently purchased competitor
Homegrocer.com in a billion-dollar stock swap to become the largest home
delivery company.
!
Figure 10.11
Source: homegrocer.com
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!
Figure 10.12
Source: Homegrocer.com
10.2.9 Online Real Estate
Real estate transactions are an ideal area for e-Commerce, for the
following reasons. First, you can view many properties on the screen,
saving time for you and the broker. Second, you can sort and organize
properties according to your criteria and preview the exterior and interior
designs of the properties, shortening the search process. Finally, you can
find detailed information about the properties and frequently get even
more detail than brokers will provide. In some locations brokers allow the
use of such databases only from their offices, but considerable information
is now available on the Internet. For example, Realtor.com allows you to
search a database of over one million homes across the United States. The
database is composed of local “multiple listings” of all available properties
and properties just sold, in hundreds of locations.
In another application, homebuilders now use virtual reality technology on

their Websites to demonstrate three-dimensional floor plans to potential
home buyers.
They use virtual models that enable buyers to walk through mockups of
homes.
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!
Figure 10.13
10.2.10 Online Trading
Investing is one of the most popular industries on the internet. There are
variety of sites providing full services and discount brokerage online trading
services.
!
Figure 10.14
Source: MDchoice.com
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!
Figure 10.15
Source: ingdirect.com
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!
Figure 10.16
Source: tazza.com
10.2.11 Government Online
e-Government (short for electronic government, also known as e-gov,

digital government, online government, or connected government) is
digital interactions between a government and citizens (G2C), government
and businesses/Commerce (G2B), government and employees (G2E), and
also between government and governments/agencies (G2G). Essentially,
the e-Government delivery models can be briefly summed up as (Jeong,
2007):
• G2B (Government to Businesses)

• G2E (Government to Employees)
• G2G (Government to Governments)
• C2G (Citizens to Governments)
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This digital interaction consists of governance, information and

communication technology (ICT), business process re-engineering (BPR),
and e-citizen at all levels of government (city, state/province, national, and
international).
e-Government’ (or Digital Government) is defined as ‘The employment of

the Internet and the world-wide-web for delivering government information
and services to the citizens.’ (United Nations, 2006; AOEMA, 2005).
‘Electronic Government’ (or in short ‘e-Government’) essentially refers to

‘The utilization of Information Technology (IT), Information and
C o m m u n i c a t i o n Te c h n o l o g i e s ( I C Ts ) , a n d o t h e r w e b - b a s e d
telecommunication technologies to improve and/or enhance on the
efficiency and effectiveness of service delivery in the public sector.’ (Jeong,
2007).
e-Government describes the use of technologies to facilitate the operation

of government and the dispersement of government information and
services. e-Government, short for electronic government, deals heavily
with Internet and non-internet applications to aid in governments. e-
Government includes the use of electronics in government as large-scale as
the use of telephones and fax machines, as well as surveillance systems,
tracking systems such as RFID tags, and even the use of television and
radios to provide government-related information and services to the
citizens.
Examples of e-Government and e-Governance
e-Government should enable anyone visiting a city website to communicate

and interact with city employees via the Internet with graphical user
interfaces (GUI), instant-messaging (IM), audio/video presentations, and in
any way more sophisticated than a simple e-mail letter to the address
provided at the site” and “the use of technology to enhance the access to
and delivery of government services to benefit citizens, business partners
and employees”. The focus should be on
• The use of Information and communication technologies, and particularly

the Internet, as a tool to achieve better governance.
• The use of information and communication technologies in all facets of
the operations of a government organization.
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• The continuous optimization of service delivery, constituency

participation and governance by transforming internal and external
relationships through technology, the Internet and new media.
Whilst e-Government has traditionally been understood as being centered

on the operations of government, e-Governance is understood to extend
the scope by including citizen engagement and participation in governance.
As such, following in line with the OECD definition of e-Government, e-
Governance can be defined as the use of ICTs as a tool to achieve better
governance.
Delivery Models and Activities of e-Government
The primary delivery models of e-Government can be divided into

Government-to-Citizen or Government-to-Consumer (G2C). In this model,
the G2C model apples the strategy of Customer Relationship Management
(CRM) with a business concept.
By managing their customer (citizen) relationship, the business

(government) can provide the needed products and services to fulfill the
needs of the customer (citizen).
In the United States, the NPR (National Partnership for Reinventing

Government) has been implemented from 1993.
• Government-to-Business (G2B)
• Government-to-Government (G2G)
• Government-to-Employees (G2E)
Within each of these interaction domains, four kinds of activities take

place:
• Pushing information over the Internet, e.g.: regulatory services, general

holidays, public hearing schedules, issue briefs, notifications, etc.
• Two-way communications between the agency and the citizen, a
business, or another government agency. In this model, users can
engage in dialogue with agencies and post problems, comments, or
requests to the agency.
• Conducting transactions, e.g.: lodging tax returns, applying for services
and grants.
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• Governance, e.g.: To enable the citizen transition from passive

information access to active citizen participation by:
— Informing the citizen

— Representing the citizen
— Encouraging the citizen to vote
— Consulting the citizen
— Involving the citizen
10.2.12 Insurance Online
!
Figure 10.17
Source: easyinsuranceindia.com
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!
Figure 10.18
Source: hdfcbank.com
10.2.13 Online Retail
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!
Figure 10.19
Source: ebay.com
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!
Figure 10.20
Source: flipcart.com
10.2.14 Children Online
!
Figure 10.21
Source: oecd.org
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10.3 BANKING AND INVESTING
Online banking (or Internet banking or e-banking) allows customers of a

financial institution to conduct financial transactions on a secure website
operated by the institution, which can be a retail or virtual bank, credit
union or building society. It may include any transactions related to online
usage.
To access a financial institution’s online banking facility, a customer having

personal Internet access must register with the institution for the service,
and set up some password (under various names) for customer
verification. The password for online banking is normally not the same as
for telephone banking. Financial institutions now routinely allocate
customer numbers (also under various names), whether or not customers
intend to access their online banking facility. Customer numbers are
normally not the same as account numbers, because a number of accounts
can be linked to the one customer number. The customer will link to the
customer number any of those accounts which the customer controls,
which may be cheque, savings, loan, credit card and other accounts.
Features
Online banking facilities offered by various financial institutions have many

features and capabilities in common, but also have some that are
application specific. The common features fall broadly into several
categories. A bank customer can perform some non-transactional tasks
through online banking, including –
• viewing account balances

• viewing recent transactions
• downloading bank statements, for example in PDF format
• viewing images of paid cheques
• ordering cheque books
• download periodic account statements
• Downloading applications for m-banking, e-banking, etc.
Bank customers can transact banking tasks through online banking,

including –
• Funds transfers between the customer’s linked accounts
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• Paying third parties, including bill payments (see, e.g., BPAY) and
telegraphic/wire transfers
• Investment purchase or sale
• Loan applications and transactions, such as repayments of enrollments
• Register utility billers and make bill payments
• Financial institution administration
• Management of multiple users having varying levels of authority
• Transaction approval process
Some financial institutions offer unique Internet banking services, for

example, Personal financial management support, such as importing data
into personal accounting software. Some online banking platforms support
account aggregation to allow the customers to monitor all of their accounts
in one place whether they are with their main bank or with other
institutions.
Security
Security token device for online banking
Security of a customer’s financial information is very important, without

which online banking could not operate. Financial institutions have set up
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various security processes to reduce the risk of unauthorised online access

to a customer’s records, but there is no consistency to the various
approaches adopted.
The use of a secure website has become almost universally adopted.
Though single password authentication is still in use, it by itself is not

considered secure enough for online banking in some countries. Basically
there are two different security methods in use for online banking.
The PIN/TAN system where the PIN represents a password, used for the
login and TANs representing one-time passwords to authenticate
transactions. TANs can be distributed in different ways; the most popular
one is to send a list of TANs to the online banking user by postal letter. The
most secure way of using TANs is to generate them by need using a
security token [citation needed]. These token generated TANs depend on
the time and a unique secret, stored in the security token (two-factor
authentication or 2FA). Usually online banking with PIN/TAN is done via a
web browser using SSL secured connections, so that there is no additional
encryption needed.
Another way to provide TANs to an online banking user is to send the TAN
of the current bank transaction to the user’s (GSM) mobile phone via SMS.
The SMS text usually quotes the transaction amount and details; the TAN is
only valid for a short period of time. Especially in Germany, Austria and The
Netherlands, many banks have adopted this “SMS TAN” service as it is
considered very secure.
Signature based online banking where all transactions are signed and
encrypted digitally. The Keys for the signature generation and encryption
can be stored on smartcards or any memory medium, depending on the
concrete implementation.
Attacks
Most of the attacks on online banking used today are based on deceiving
the user to steal login data and valid TANs. Two well known examples for
those attacks are phishing and pharming. Cross-site scripting and key
logger/Trojan horses can also be used to steal login information.
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A method to attack signature based online banking methods is to

manipulate the used software in a way, that correct transactions are shown
on the screen and faked transactions are signed in the background.
A 2008 U.S. Federal Deposit Insurance Corporation Technology Incident

Report, compiled from suspicious activity reports banks file quarterly, lists
536 cases of computer intrusion, with an average loss per incident of
$30,000. That adds up to a nearly $16-million loss in the second quarter of
2007. Computer intrusions increased by 150% between the first quarter of
2007 and the second. In 80% of the cases, the source of the intrusion is
unknown but it occurred during online banking, the report states.
The most recent kind of attack is the so-called Man in the Browser attack,
where a Trojan horse permits a remote attacker to modify the destination
account number and also the amount.
Countermeasures
There exist several countermeasures which try to avoid attacks. Digital

certificates are used against phishing and pharming, the use of class-3
card readers is a measure to avoid manipulation of transactions by the
software in signature based online banking variants. To protect their
systems against Trojan horses, users should use virus scanners and be
careful with downloaded software or e-mail attachments.
In 2001 the U.S. Federal Financial Institutions Examination Council issued

guidance for multifactor authentication (MFA) and then required to be in
place by the end of 2006.
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!
Figure 10.22
Source: icicibank.com
10.4 e-LEARNING
e-Learning the use of the internet and related technologies for

development of learning resources has enormous potential as a new
medium for education.
Gone are the days when you had to travel long distance to attend classes.
Now with the aid of technology and with several institutes offering a slew
of professional distance learning courses, you can study and enhance your
qualifications from the comfort of your home. Open and Distance Learning
System (ODL) has gained impetus in India during the last two and half
decades particularly since the establishment of Indira Gandhi National
Open University (IGNOU) in the year 1985, as a result it has witnessed
exceptional growth in terms of enrolment.
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As in every other walk of modern life, the answer to the challenge of

education for development will include the use of information and
communication technologies, provided the necessary organizational and
policy changes can be implemented to make the technologies effective. A
range of technological devices is now widely available and relatively cheap
(e.g., CD-ROM, various Internet services).
Therefore the growing awareness has posed serious challenges before the
educationists, planners and policymakers. Consequently necessary
adjustments have to be made to cope up with the ever-increasing demand
for online support services, analysing its pros and cons.
Leading institutes offering online education are briefed here:
Indira Gandhi National Open University
Currently the largest and most popular distance education providing

university, IGNOU provides certificate courses for most of the disciplines at
affordable rates. Offering a gamut of programs across almost all the
educational disciplines this is the best among the top ten distance
education universities in India.
Open and Distance Learning System (ODL) has gained impetus in India
during the last two and half decades particularly since the establishment of
Indira Gandhi National Open University (IGNOU) in the year 1985, as a
result it has witnessed exceptional growth in terms of enrolment. In IGNOU
alone 0.636 million learners were registered during 2009 and 2.47 million
were on the roll of the university. It has also been estimated that about
one third learners among college entrants would be accommodated in the
ODL system. Shift of learners to ODL system in their pursuit to higher
learning is mainly due to relaxed and flexible rules and regulations in terms
of place, pace and duration of the study as well as availability of diversified
learning packages including print and audio-video material etc. ODL system
also provides opportunity to the learners to interact with the teachers in
face to face (f2f) counseling and discussion with the peers during their visit
to Learners Support Centers (LSCs). The use of Information and
Communication Technologies (ICTs) has opened up the new channel of e-
learning, e-board, e-gyankosh (digital library) and online discussion among
divergent groups including teacher, taught and peer. World Wide Web
(WWW) has become a common utterance for distance learners because
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their reliance for online support services is increasing day by day.

Therefore the growing awareness has posed serious challenges before the
educationists, planners and policymakers. Consequently necessary
adjustments have to be made to cope up the ever-increasing demand for
online support services, analyzing its pros and cons. The use of internet
has already captured the attention of urban learners and rural learners are
likely to take its advantage, therefore corrective measures are required to
be made in the student support services (SSS). IGNOU has visualized the
implications of a large-scale use of internet by its learners in time to come
and initiatives have been taken to supplement its LSCs with computer and
internet facilities. The use of ICT to supplement the learning stated in
IGNOU in 1991, by outsourcing production of audio-video programmes,
nevertheless it gained momentum with the establishment of Electronic
Media Production Centre (EMPC). Consequently it has equipped its LSCs
with teleconferencing (TC) facilities to facilitate tele-counseling, where one
way video and two ways audio is possible. The educational input is also
provided through Gyan Darshan, Gyanvani, and Interactive Radio
Counselling (IRC). Online interaction by using EduSat and Shakhat portal,
which are specially designed to supplement the online learning are likely to
play a major role in due course of time. Therefore, EduSat has added new
dimensions to the ODL system, particularly in India as both ways audio-
video interaction and opportunity of online interaction and chatting with the
tutors would encourage a large number of learners to join the ODL system.
With the evolution of electronic media to support the learners through the
audio, video tapes/discs, broadcasting, computer-mediated and online
learning, virtual classroom, fax, telephone teaching mail, etc., the nature of
the support service has also undergone a tremendous change.
Paradigm Shift
Distance Education is essentially a mode of education whose main focus is

helping learners in their learning. This mode of imparting quality education
has crossed many stages of evolution starting from private study to
correspondence courses, distance mode and then ODL. Distance Education
involves both teaching and learning at a distance. The theoretical
framework for distance education is the concept of distance as separation
between teacher and learner. The reaching of the so-called unreached
learners is the concern of the ODL. Since it is often said that equal access
to education is a basic human right and it is not a privilege, therefore,
education shall reach the unreached also. Besides that people who are at
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work in the country, especially those who are in the far-flung areas need
opportunities to upgrade their expertise and qualifications, the ODL mode
can provide opportunities for updating, broadening and diversifying their
knowledge and skills so that they can also contribute in the development of
the nation. Education, particularly the ODL system has all the
characteristics of entrepreneurship and developing such skills is the
learners right from the college stage, will provide them opportunities of
creativity, freedom and ability to generate wealth through setting up
ventures, producing marketable products. Open Universities (OUs) are
making this possible by introducing such programmes and imparting
training in productive skills that are relevant to the world of work. The last
decade has seen a phenomenal growth in the enrolment of distance
learners as DE institutions particularly OUs have joined the bandwagon to
meet the increasing demand for such type of education. Distance
Education, variously known as open learning, distance learning, flexible
learning, distributed learning, online learning, e-learning, resource-based
learning, technology mediated learning and such other nomenclature, with
different shades of meaning and also used interchangeably has come to
stay as an important philosophy and form of education in the 21st century.
Ever increasing enrolment share of ODL in higher education at tertiary level
has encouraged the ODL educationalists and manager to predict its share
as high as 40% at tertiary level. This phenomenon shift will necessitate
continuous need for skill development, regular monitoring and
strengthening of support services to ensure quality, efficacy and efficiency.
This is an indication of the important place, distance education has come to
occupy in India’s education and human resource development efforts. At
the same time, there is insufficient public understanding of distance
education functions and awareness about concerns regarding its quality
assurance. Even though distance education systems and practices greatly
vary and are context specific, the experts in the field consider quality
assurance as the common priority. Therefore, the ODL system has
emerged as an alternative as well as complementary channel of education
and training in India. It has already established its credibility and
recognition. The growth of distance education, both quantitatively and
qualitatively, has been phenomenal during the last two decades,
particularly after the introduction of the single mode open universities in
the country. Further, the application of ICTs gave a major Flip to the
accelerated development of distance education (Panda et.al., 2005). But,
so far the progress in this direction has been quite limited. Use of ICT has
become an essential requirement of distance education for delivery of
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programmes as it facilitates the learning and provides the flexibility of

place. It increases the interest of the user in addition to providing
consistency, privacy, and reduced learning. Multi-media technologies can
motivate the students and increase their interest in the learning GROWTH
OF IGNOU. In order to accomplish the marathon task, IGNOU has
developed a suitable SSS network, not only across the country but its
presence can also be witnessed in 36 countries of the world. SSS network
of the university include Regional Centers (RCs), Recognized Regional
Centers (RRCs), Learners Support Centers (LSCs) and Partner Institutions
(PIs), based on the principle of convergence, networking and resource
sharing. In order to provide efficient and effective SSS across the country,
IGNOU has so far established more than 3000 LSCs and 61 RCs, and 60PIs
involving premier institutions of variant nature including medical and
engineering colleges, leading NGOs, paramilitary forces and armed forces
as well as conventional and technical universities and colleges. IGNOU
University has made incredible progress since its inception in the year
1985. The total enrolment has increased manifolds during the last two and
half decades. It is evident to note that in the year 1987, the total
enrolment of the university was 4528 and only 2 academic programmes
were on offer and the same has increased to 6,36,489 in 2009. On the
other hand, while looking at the enrolment figure of the university for the
last 10 years, a growth of 224% has been registered, consequently the
number of learners appeared in the Term End Examination (TEE) also
increased considerably. Therefore, the number of candidates who appeared
in TEE has also increased from 1,44,098 in 2000 to 6,39,407 in 2009
recording 343.73% growth. This phenomenal growth in enrolment has set
the platform for all-round development of the SSS network. While
analyzing the other crucial aspects, it has been revealed that the number
of successful candidates, who were awarded university degrees, diplomas
and certificates also increased significantly. It may be noted that in the first
convocation 1,171 learners were the recipients of university degrees/
diplomas and certificates.
The Manipal Academy
Manipal Institute of Technology founded in 1953, is a private effort, which

has built for itself, a tremendous market reputation. It consists of 53
professional colleges under the umbrella of the Manipal Academy of Higher
Education (MAHE). It now has a 30,000 strong student body, studying all
subjects from hotel management to software development. PSG College of
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Engineering in Tamil Nadu and Pune Institute of Advanced Technologies are

in a similar role. Companies like Motorola Inc., and EMC Corporation often
recruit students from Manipal Institute. Infosys, Tata Consultancy, Wipro
and Satyam Computers together employed more than 40,000 engineers in
2004.
There are collaborative efforts with the industry, which provides course
material, case studies as well as training to lecturers on new areas like chip
design, radio frequency identification. This collaboration pays off in
reducing training time from 76 days to 52 days.
Sikkim Manipal University
Strongly believing in the theory that education knows no barriers, not even
geographic this institute is one of the most sought after distance Education
University in India. With a wide range of distance courses, it is mostly
known for its distance education programs in MBA, Executive MBA and
MSC.
Annamalai University
Annamalai University founded in the year 1929 by Dr. Rajah Sir Annamalai
Chettiar is the second best distance education university in India. Spread
over forty nine departments with 2500 professionally trained staff, this
university offers a wide range of post-graduate courses.
Osmania University
Established on 1918, Osmania university is the seventh oldest distance

education universities in India. Set up with the ideal of providing excellence
in teaching and research, this university believes in achieving a synthesis
of oriental and occidental learning.
Nalanda Open University
This University is the only distance education providing universities in the

Bihar region. Providing PhD, Post-graduate Degree Programs, Post-
graduate Diploma Programs and Bachelors Degree programs in a wide
variety of disciplines, this university facilitate education for housewives, in-
! !368
service personnel, and people living in remote areas and to the physically
disabled.
University of Madras
Organized on the same lines as the London University, this distance

education university was established in 1857 by the British. Referred to as
one of the top ten distance education providing universities in India, this
institute boasts of a number of departments.
Mahatma Gandhi University
Founded in the year 1983, the Mahatma Gandhi University is recognized by

the University Grants Commission. The university has 18 colleges affiliated
to it. One of the top ten universities in India offering distance education,
this university has 25 teaching departments spread over
different disciplines.
Karnataka State Open University
Established in 1996 by the government of Karnataka, this university is

considered to be one of the most reputed in South India. Created with the
motive of catering to the educational needs of the people of the country as
a whole and the state in particular this university offers various degree,
diploma and certificate programs via distance learning.
ICFAI University
One of the latest universities offering degrees in MBA, MCA, BA, and BBA
via distance education ICFAI University is counted among the top ten
distance education universities in India. Educating its students via the
medium of audio visuals on the internet, this university also helps its
students find good jobs.
IMT-CDL
Institute of Management technology Centre for Distance Learning offers a

wide spectrum of management and information technology programmes.
The curriculum is constantly updated to be in touch with the dynamic
global and Indian environment. Learning is further enhanced by
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information technology that connects students to resources and data

around the globe. The approach to management education is founded on
continuous innovation, development of practical knowledge and a relentless
commitment to academic excellence.
SYMBIOSIS
Symbiosis Centre for Distance Learning (SCDL) is a centre of excellence,

offering quality Distance Education where latest technology, innovative
teaching methodologies and quality education are blended together to
create a unique learning experience. SCDL is an approved distance learning
institute by Distance Education Council (DEC), Government of India.
SCDL offers several programmes in various disciplines including

Management. SCDL derives its strength from its core, in-house Academics
team and over 400 visiting faculty/subject matter experts who assist the
institute in various academic activities.
NMIMS
Narsee Monjee Institute of Management Studies is one of the nation’s

prime educational and research institutions. With more than 9000 students
spanning over 50 programs across 7 specialised schools, NMIMS has
transformed itself from Mumbai’s pride to become India’s most sought after
academic community.
MITCOM
MIT College of Management, Pune is successfully running Post-graduate

Programme in Management and Executive MBA programmes. Established in
2007, with a view to impart value based education in these new-age fields
of Management Sciences.
Welingkar
Welingkar Institute of Management Development & Research offers several

programmes in various disciplines including Management. A range of
technological devices is now widely available and relatively cheap (e.g.,
CD-ROM, various Internet services).
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Welingkar Institute aims at providing the corporate sector, professionally

sound, sophisticated and dynamic leaders with a vision and endeavor to
meet the challenges of the new millennium. They provide a digital library
for students to access online lectures of experts in management for
different subjects also on popular topics which are very useful for corporate
training.
10.5 e-PUBLISHING
e-Publishing also known as Desktop publishing, Online publishing, Web

publishing. Many major publishing companies, including Pearson, Simon &
Shuster and Random House, Himalaya Publication have invested in
electronic publication. In publishing, break-even points is the lowest sales
volume where total revenues equals to total expenses.
The internet and the web gives freelance writers access to the global
audience. Many writers do not have the technical expertise or business
savvy to sell their book on the web. One option for these writers is subsidy
e-Publishing.
To accommodate the recent surge in digital content creation, many of the

leading electronic manufactures have created electronic readers or e-book
readers. These products resemble a personal digital assistance (PDA) with
rectangular shape and LCD screen. Peanut Press (www. Peanutpress.com)
offers e-book for your Palm and packet PCs. The site offers e-content from
leading authors at a traditional book price.
10.6 ONLINE AUCTION
An auction is a market mechanism by which sellers place offers and buyers

make sequential bids. Auctions are characterized by the competitive nature
by which a final price is reached. Auctions have been an established
method of commerce for centuries, and they are especially suited to deal
with products and services for which conventional marketing channels are
ineffective or inefficient. Auctions can expedite the disposal of items that
need liquidation or a quick sale, and they ensure prudent execution of
contracts.
The Internet provides an infrastructure for executing auctions at a lower

cost, and with many more involved sellers and buyers. Individual
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consumers and corporations alike can participate in this rapidly growing

form of e-Commerce. There are several types of auctions, each with its
motives and procedures. Auctions are divided here into two major types:
forward auctions and reverse auctions.
• Forward auctions. Forward auctions are used mainly as a selling

channel. A single seller auctions item(s) to many potential buyers. The
specific alternative mechanisms in a forward auction are as follows.
• English auctions. Buyers bid on one item at a time. The bidding price
increases with additional bids. The highest bidder wins (if price is the
only criterion).
• Yankee auctions. These are similar to English auctions, but multiple

identical items are offered. You can bid on any number of items. Biddings
prices are escalating.
• Dutch auctions. These are usually for multiple, identical items (e.g.,
flowers). Prices are set high and are reduced as the auction clock runs
down until a bid for a specific quantity is submitted. The first bidder wins.
• Reverse auctions. In reverse auctions, there is one buyer, who wants to

buy a product or a service. Suppliers are invited to submit bids. The
supplier that submits the lowest bid wins. Several rounds may take place
if the lowest bid is not satisfactory to the seller.
Auctions are used in B2C, B2B, C2B, e-Government, and C2C commerce,
and they are becoming popular in many countries.
Electronic auctions started in the 1980s on private networks, but their

use was limited. The Internet opens many new opportunities for e-
auctions, and millions of sellers and buyers participate. Auctions can be
conducted from the seller’s site or from a third-party site. For example,
eBay offers hundreds of thousands of different items in several types of
auctions (see the screen capture at our Website). Over 300 other major
companies, including Amazon.com, offer online auctions.
Bartering – Related to auctions is electronic bartering, the exchange of

goods or services without a monetary transaction. In addition to the
individual-to-individual bartering ads that appear in some newsgroups,
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bulletin boards, and chat rooms, there are several intermediaries that
arrange for corporate bartering (e.g., barterbrokers.com).
10.7 ONLINE CAREER SERVICES
The online job market. The Internet offers a perfect environment for job
seekers and for companies searching for hard-to-find employees. The
online job market is especially effective for technology-oriented jobs.
However, there are thousands of companies and government agencies that
advertise available positions in all types of jobs, accept resumes, and take
applications via the Internet. The online job market is used by:
1. Job seekers. Job seekers can reply to employment ads online. Or they
can take the initiative and place resumes on their own home pages or
on others’ websites, send messages to members of newsgroups asking
for referrals, and use recruiting firms such as Career Mosaic
(careermosaic.com), Job Center (jobcenter.com), and Monster Board
(monster.com). For entrylevel jobs and internships for newly minted
graduates, job seekers can use jobdirect.com. Need help writing your
resume? Try resume-link.com or jobweb.com.
Job offers. Many organizations advertise openings on their website.

Others use sites ranging from Yahoo! to bulletin boards and recruiting
firms.
2. Recruiting firms. Hundreds of job-placement brokers and related

services are active on the Web. They use their own Web pages to post
available job descriptions and advertise their services in electronic malls
and on others’ websites. Recruiters use newsgroups, online forums,
bulletin boards, and chat rooms. Job-finding broker’s help candidates
write their resumes and get the most exposure. Matching of candidates
and jobs is done by companies such as discoverme.com.
3. Newsgroups. Job finding is of interest to many newsgroups. Jobs in a

certain category or location are posted, discussions are conducted, and
resumes can be sent. In addition to low cost and wide exposure,
participants in the online job market cite the ease of transmitting
information and documents (resumes and job descriptions) and the
speed of the recruiting process as motivators for using the Internet
Also, the recruiting companies save time on data entry by using
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electronic forms for taking applications. Finally, the ability to widen an

employee’s search geographically is an advantage to both, the recruiter
and the recruited. Hot Jobs (hotjobs.com) provides links to many
sources for further research, for accessing job listings, and for finding
for-fee counselors. A Manager’s Checklist at the website lists the
benefits and limitations of the online job market.
10.8 ADVERTISING ONLINE
Generalized Portal High-volume traffic, typically tens of millions of visits per

month, driven by generic or diversified content or services.
Competition for volume has led to the packaging of free content and
services, such as e-Mail, stock portfolio, message boards, chat, news, and
local information.
Examples:
Search engines and Web catalogs like
Excite (www.excite.com), AltaVista (www.altavista.com), Yahoo!

(www.yahoo.com).
Content driven sites like AOL (www.aol.com).
The high volume makes advertising profitable and permits further

diversification of site services.
The generic nature of a generalized portal undermines user loyalty. This

has led to the creation of personalized portals that allow customization of
the interface and content. This increases loyalty through the user’s own
time investment in personalizing the site.
The profitability of this portal is based on volume and possibly the value of
information derived from user choices. Personalization can support a
“specialized portal” model.
Examples: My. Yahoo!
(my.yahoo.com), My. Netscape
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(my.netscape.com).
Specialized Portal: Also called a “vortal” (i.e., vertical portal). Here

volume is less important than a well-defined user base (perhaps 0.5 - 5
million visits per month). For example, a site that attracts only young
women, or home buyers, or new parents, can be highly sought after as a
venue for certain advertisers who are willing to pay a premium to reach
that particular audience.
Example: iVillage.com
(www.ivillage.com).
!
Figure 10.23
Source: ivillage.com
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Classifieds
List items for sale or wanted for purchase. Listing fees are common, but
there also may be a membership fee.
Examples:
Monster.com (www.monster.com) and Match.com (www.match.com).
!
Figure 10.24
Source: monster.com
! !376
Contextual Advertising
Freeware developers which bundle ads with their product. For example, a
browser extension that automates authentication and form fill-ins, also
delivers advertising links or pop-ups as the user surfs the web.
Contextual advertisers can sell targeted advertising based on an individual

user’s surfing behavior.
Example:
Gator (www.gator.com), eZula (www.ezula.com).
!
Figure 10.25
Source: gator.com
! !377
10.9 ACTIVITIES
1. Visit Xlibris (www. xlibris.com) and Mighty words

(www.mightywords.com). Compare and contrast two sites.
— How do their product offering differ?

— How does an author get published through each site?
— Does the site charge fees of its publishing services?
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2. Visit the E Ink home page (www.eink.com) and view the demo.
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10.10 SUMMARY
Each industry uses web effectively to improve current business practices

and to diversify into new areas. Each of these industry understand the
importance of providing unique and highly targeted information.
The health information website co-founded in 1998 by Reagan

administration Surgeon General Dr. C. Everett Koop made a splash when it
raked in $88.5 million in its June 1999 initial public offering.
Companies like Boeing and Airbus build civilian and military aircraft. Many
planes take off without being filled to capacity. Since relatively fixed
overheads are spread over fewer people, ticket prices are higher. Internet
helps to commercial industry to fill more seats and reduce cost. People can
! !378
save time and money by booking travel arrangements through travel

agents and various web portals provided on internet.
Transportation and shipping is a big industry where internet is playing vital

role. Major shipping vendors including UPS (ups.com), DHL (dhl.com), First
Flight (firstflight.com), Federal Express (fedex.com) have built web portals.
Many sites allow users to research and purchase new and used cars.
Whether or not you make final arrangement for the purchase of vehicle
online, many of the preliminary steps can be completed on the web. Users
can explore options more efficiently than by travelling to geographically
dispersed dealership. The Web gives easy access to information.
Finding people qualified enough to turn a good business idea into a reality
is often a major challenge. In many cases business is started by technically
adept individuals with little management experience.
Outsourcing is the process of hiring another company or individual to do a
job when there is lack of qualified resources within company (see Hello
Brain.com).
Art is traditionally is traditionally sold in galleries, exhibitions or through

small vendors. The internet gives artist to showcase their work and reach
global market. Art.com sells fine art, photography, posters and paint. You
can search by artist, medium, décor, size and subject. Art.com uses a
shopping cart model and can have apiece delivered to customer in a few
days.
Buying groceries online, especially staple items is a time saver. You can
create electronic shopping list and make small edits to reflect your special
needs each week. Webvan.com recently purchased competitor
Homegrocer.com in a billion-dollar stock swap to become largest home
delivery company. Real estate transactions are an ideal area for e-
Commerce, for the following reasons. First, you can view many properties
on the screen, saving time for you and the broker. Second, you can sort
and organize properties according to your criteria and preview the exterior
and interior designs of the properties, shortening the search process.
Investing is one of the most popular industries on internet. There are

variety of sites providing full services and discount brokerage online trading
service. e-Government (short for electronic government, also known as e-
! !379
gov, digital government, online government, or connected government) is

digital interactions between a government and citizens (G2C), government
and businesses/commerce (G2B), government and employees (G2E), and
also between government and governments/agencies (G2G).
Online banking (or Internet banking or e-banking) allows customers of a

financial institution to conduct financial transactions on a secure website
operated by the institution, which can be a retail or virtual bank, credit
union or building society. It may include of any transactions related to
online usage. e-learning relies heavily on technology and will only improve
as bandwidth, multimedia techniques advance.
Gone are the days when you had to travel long distance to attend classes.
Now with the aid of technology and with several institutes offering slew of
professional distance learning courses, you can study and enhance your
qualifications from the comfort of your home. Open and Distance Learning
System (ODL) has gain impetus in India during the last two and half
decades particularly since the establishment of Indira Gandhi National
Open University (IGNOU) in the year 1985, as a result it has witnessed
exceptional growth in terms of enrolment.
e-publishing also known as Desktop publishing, Online publishing, Web

publishing. Many major publishing companies, including Pearson, Simon &
Shuster and Random House, Himalaya Publication have invested in
electronic publication. In publishing, break-even points is the lowest sales
volume where total revenues equals to total expenses.
An auction is a market mechanism by which sellers place offers and buyers

make sequential bids. Auctions are characterized by the competitive nature
by which a final price is reached. Auctions have been an established
method of commerce for centuries, and they are especially suited to deal
with products and services for which conventional marketing channels are
ineffective or inefficient. Auctions can expedite the disposal of items that
need liquidation or a quick sale, and they ensure prudent execution of
contracts.
The online job market. The Internet offers a perfect environment for job
seekers and for companies searching for hard-to-find employees. The
online job market is especially effective for technology-oriented jobs.
! !380
However, there are thousands of companies and government agencies that

advertise available positions in all types of jobs, accept resumes, and take
applications via the Internet.
1. Explain e-Governance with example of online sites.
2. Compare online digital library offered by leading Distance Learning

Education Institutes 
! !381
REFERENCE MATERIAL
chapter
Summary
PPT
MCQ
Video Lecture
! !382
APPENDIX A
APPENDIX A
Inspirational e-Commerce Website Designs
Many e-Commerce sites aren’t the most attractive websites. There’s often
a lot of clutter with little to distinguish the design from any other site. Of
course, selling products is more important to an e-Commerce site than
having a pretty design, but these examples show that some e-Commerce
sites display excellent design
Morphica
Me & Mommy-to-be
! !383
APPENDIX A
Bridge 55
UNIQLO
! !384
APPENDIX A
Big Brown Box
Little Catwalk
! !385
APPENDIX A
Shoon
Keedo
! !386
APPENDIX A
Bagolitas
Shop Curious
! !387
APPENDIX A
Itself
CellyShop
! !388
APPENDIX A
Wunderbloc
Tilly Moss
! !389
APPENDIX A
Cacties
La Licious
!
Mozilla Store
! !390
APPENDIX A
Habitat Shoe
A Better Tomorrow
! !391
APPENDIX A
Subnormals
Bored
! !392
APPENDIX A
Brand Neusense
Martique
! !393
APPENDIX A
Galante
Von Dutch
! !394
APPENDIX A
Bonjour Mon Coussin
RedisWhite
! !395
APPENDIX A
Composition
Wire&Twine
! !396
APPENDIX A
like.com
Fugitive Toys
! !397
APPENDIX A
One Horse Shy
Cosmic soda
! !398
APPENDIX A
Threadless
EvelMerch
! !399
APPENDIX A
ShoeGuru
Urban Originals
! !400
APPENDIX B
APPENDIX B : PORTALS
Sponsored Links
• Indiainfo.com: India’s leading portal that covers news, finance, e-

Commerce, e-Mail, sports, travel, and chat and entertainment news.
• AAR Communications: This website is about the AAR Communications.
• Adentity.com: Adentity.com helps you in knowing about travel agents,

money savers, gambling, services, leisure and many more.
• AllIndianSite: All Indian Site is a news portal. It gives you all information
about National, International, Business, Sports News and many more
informations.
• AndhraHelpline: Andhra Helpline is a portal that provides all the

information about Andrapradesh.
• AndhraOnline.com: AndhraOnline.com is an internet portal that provides

information in online about Andra Pradesh state.
• apnainfo.com: A general Indian portal.
• AustraliaHostinginfo: australiaHosting.INFO, reliable webhosting,

affordable webhosting, domain name, Linux hosting, windows hosting,
Fast webhosting, Reliable WebHosting, cheap webhosting, domain
registration, cheap webhosting, domain registration, australia
Hosting .INFO.
• AustralianIndiansPortal: IndoAust.Com is the global force in new media

for Indians. First Indian Grocery Store Online in Australia.
• Autobasthi.com: Autobasthi.com is an online marketplace for Indian auto

buyers an sellers.
• BusinessStandardMotoring: A premier Auto portal from Business

Standard newspaper.
! !401
APPENDIX B
• CricketWatchdogs.com: Mission is to become cricket’s ultimate watchdog

by fostering healthy debates amongst the cricketing fraternity. This is a
site devoted to bringing cricket fans from across the globe to vent their
opinions and feelings without needlessly having to worry about upsetting
the hierarchy, the cricketing stalwarts, their chums or the overtly
sensitive media that pounces on anything that doesn’t conform to
traditionalist views.
• DevNetJobsIndia: DevNetJobs.org is a portal to jobs in India in the

international development, environment and trade sector. Over 1300
Indian and international organizations currently post their jobs with this
website.
• EastIndiaVyapaar: East India Vyapaar is the ultimate site that focuses on

the business, trade, industries, and economy of East India – West
Bengal, Orissa, Bihar, Jharkhand, Assam, and North East India States.
• EconomyWatch.com: Economywatch.com is a complete portal on Indian

economy since 1999. This user-friendly site offers a wide range of
information about the current Indian economy, in the form of economic
overview of India with respect to national socioeconomic criteria and
world global market effect.
• EducationBangalore: One Spot Information On Everything About

Education In Bangalore. know which are the schools and colleges which
offer the subject of your interest.
• ErenthubCars: Erenthub is one stop rental portal. It provides online

rental platform for hiring cars, service apartments, furniture, office
equipments, mobile phones, air conditioners and complete relocation
assistance to the corporate and expatriates visiting India.
• Exporterpages.com: Exporterpages.com is a Global Opportunity to

expend your business Globally covering Exporters, Importers,
Manufacturers and Service Providers.
• HYDonline.com: HYDonline.com is a professionally run portal on

Hyderabad. A skilled team of professionals covering all aspects of running
a portal is at mouse control.
! !402
APPENDIX B
• IndiaAGROIndustry: From decades back to the 21st century, India has

come a long way in the agriculture sector. To trace the latest in the
agricultural scenario and Indian agro industry, agricultural reserves, EXIM
Policies, Trade Leads, business directories, catalogs and related
international events, Indian Agriculture Industry Portal is the right
business to business (b2b) platform.
• IndiaImage: Government of India Websites is a one point source for

information about India and Indian Government, ministries,
departments, organizations, states an UTs, task forces, banking, financial
institutions, educational institution and universities.
• IndiaMonumentsPortal: It is a comprehensive guide to national

monuments of India, ancient art and architecture, Indian national
monuments, place of interest, religious monuments, ancient forts and
palaces, caves, excavations etc.
• India’sFirstPortalonDogs&Vets: DogsVets.net is India’s first Portal on

Dogs and Veterinarians. This portal is introduced with an idea to bring
dog lovers and Veterinarians to a common platform. It was observed that
there is no complete site on Dogs and Veterinarians, where people can
get complete information; simultaneously there is no platform for young
veterinarians who wish to publish their papers, articles online. Now dog
lovers can know anything and everything about dogs by visiting this site.
Similarly veterinary students, researchers, young doctors can use this
platform to put their ideas to common masses and can seek help from
our experienced panel of doctors for their study purpose.
• Indiacity: Indiacity.com is a portal that gives information about travels

and tourism in India, gambling, entertainment, etc.
• IndianChemicalPortal: A complete chemical marketplace giving an insight

into the Indian Chemical Industry with the latest in Trade Offers, EXIM
Policies, Events and Organizations.
• IndianMetals.com: IndianMetals.com is India’s first and leading portal

website serving the Metal, Steel, Ferro Alloy, Minerals, and Recycling and
Commodities Industries since 1997. Having started as a venture to
spread Internet awareness amongst all Indian Metal and Steel
companies.
! !403
APPENDIX B
• Indiastat.com: Indiastat.com is India’s comprehensive information portal

that provides recent, authentic and exhaustive socio-economic data/
information.
• IndustrialProductsFinder: is a portal for visitors from industries/business

to interact, participate, buy and sell industrial products. The website is a
veritable storehouse of data on industrial products and is empowered by
search so that you can locate the desired industrial product profile with
ease.
• Instrumentationguide.com: Instrumentationguide.com is India’s first

instrumentation portal, which is serving the whole instrumentation
industry, project and maintenance engineers, manufacturers, buyers,
sellers, students.
• IXploid.comNewexperience: IXploid.com – New experience.
• JobsinIndia, Delhi, Bangalore, Mumbai: Jobs in India - Delhi, Mumbai,

Bangalore, Kolkata. Jobs for each specialization. Post your CV Today. Find
your dream career with eJobguru.com. Visit us for jobs and career, job
search, career builder, career search, hot jobs, job listings, internet jobs,
job bank, job opportunity, job search engine, resume builder.
• Khazana.com: Khazana.com is the oldest and most comprehensive online

source of ethnic products. Over the past 15 years they have provided
their customers with diverse, high-quality products that would otherwise
be inaccessible in most regions of the world.
• LiveIndiaInternetServices: India’s First Multi Dimensional Non-

Commercial Portal, which tells about Fashion, Models, Horoscope, Art
Gallery, Pencil Shading, Learn Piano, Kama Sutra, Taj Mahal, Kailash
Mansarover, Amar Nath and so many other.
• LogisticsFocus.com: LogisticsFocus.com is not just another vertical

portal, which simply talks about its industry. It provides a much broader
perspective, with a commitment to simplify the working patterns of the
industry.
• Mapsofindia.com: 1997: Realizing that the Internet would become the

next medium of mass usage after the invention of television, few IT
! !404
APPENDIX B
savvy entrepreneurs emerged out of IT, as well as non-IT companies, to

together form Compare InfoBase Pvt. Ltd.
• myCyberLucknowcom: Website, webhosting, community, forum, chat.
• nadar.org: This website is one of the leading web portals for Nadar
Community.
• PharmaBiz: India’s most comprehensive portal on pharmacy.
• Rediff: Rediff.com is a general portal on India that contains information

regarding cricket, movies, sports, shopping, fun, etc.,
• Shivaji Park: Shivaji Park has seen it all – the fight for independence, the
quest for Sanyukta Maharashtra, to the big rallies of the day, meetings
and demonstrations, the huge park or rather ground is almost like a
historical monument by itself.
• Sify: One of the portal players in India.
• Skyhorizion: India’s largest news and entertainment service online. Here,

you will find weekly update news, information from India in the areas of
news, business, movies, and shopping, free online exams, Quiz, Careers
and more.
• Sysindia.com: Sysindia.com is one of the first and leading Tamil portals.
• TamilHeritageFoundation: An international initiative aimed at digitizing

and archiving centuries old Tamil heritage materials available in the form
of text, speech and visuals from the Tamil speaking world of India, Sri
Lanka, Malaysia, Singapore, South Africa and other parts of the world.
• Travel-India.com: Travel-India.com website contains information about

various tourist places in India.
• VGreets.com: VGreets.com – Greetings for All Occasions, Free Greetings.
• Vjads.com: Vjads.com is the biggest and most popular online community

and social/ professional works, keeping Indians in touch with the world.
! !405
APPENDIX B
• WebDesignerDelhiIndia: At Designer Pro India firm we are a group of

professionals and we specialize in providing complete corporate identity
solutions and beyond. Our stronghold encompasses a range of services in
design, web, print, identity packages and other media alternatives.
• WebDirectoryTravelIndia: It is a portal that tells about Indian Culture,

travels, etc., with other links, indexed demographics, that satisfies the
user needs.
Table 1: Some of the portals accessible for transaction in India
!  
! !406
APPENDIX C
APPENDIX C: REFERENCE
1. e-Business and e-Commerce for Managers, Harvey M. Deitel, Paul J.
Deitel and Kate Steinbuhler
2. e-Commerce Business, Technology, Society, Keneth C. Laudon and Carol

Guercio Traver
3. Computers, Internet and e-Commerce, Nandan Kamat
4. Website WKm13
5. e-Commerce: Concepts and Technologies, Prof. Dr. Ralf Möller

(r.f.moeller@tuhh.de)
6. www.paypal.com/security
7. Dynamic Pricing Models for Electronic Business, Y. Narahari, C.V.L. Raju,

K. Ravikumar and Sourabh Shah
8. Boriana Koleva bnk@cs.nott.ac.uk
9. Jim Douglas, co-creator of FreeFind.com.
10.Free webhosting – FreeWebspace.net
11.Website design Gallery homested.com
12.V Rajaraman, Jawaharlal Nehru Advance Research Centre
13.BizTalk Server. http://www.microsoft.com/biztalk/
14.Autobytel Inc http://www.autobytel.com/
15.Wikipedia, the free encyclopaedia
16.Enron Inc http://www.enron.com/
17.HelloBrain.com Corp.
! !407
APPENDIX C
18.Various homepages of websites referred are indicated as sources in

respective figures
! !408

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E-Commerce

Chapter Chapter Name Page

After completing this chapter, you should be able to:

• understand the complexity of e-Commerce and its many facets.

Electronic commerce is a revolution in business practices. If organizations

In order to understand electronic commerce, it is important to identify the

'Electronic commerce' is sharing business information, maintaining

In the 1960s, a cooperative effort between industry groups produced a first

EDI is the electronic transfer of a standardized business transaction

• Electronic trading of physical goods and of intangibles such as

• All the steps involved in trade, such as online marketing, ordering

• The electronic provision of services such as after sales support or online

1.2 WHAT IS e-COMMERCE?

Some of the definitions of e-Commerce often heard and found in

Electronic Commerce (EC) is where business transactions take place via

Electronic commerce describes the buying and selling of products, services,

Electronic commerce is about doing business electronically.

e-Commerce, or Electronic Commerce is defined as the conduct of a

The wide range of business activities related to e-Commerce brought about

1.3 WHAT IS e-BUSINESS?

Internet sales are increasing rapidly as consumers take advantage of lower

As with e-Commerce, e-Business (electronic business) also has a number

• e-Business is the conduct of business on the Internet, not only buying

• e-Business includes customer service (e-service) and intra-business

• e-Business is the transformation of key business processes through the

• e-Business is everything to do with back-end systems in an organisation.

In practice, e-Commerce and e-Business are often used interchangeably.

1.4 e-COMMERCE, e-BUSINESS, WHO e-CARES?

Here's the important thing: e-Commerce, e-Business or whatever else you

The different names, definitions and words referred to in the previous

recommendations, and business to validate and implement the new

In fact, there is no one definitive meaning of e-Commerce or e-Business

'Attempting to define e-Commerce or e-Business is guaranteed to generate

Because of this trend, it is necessary when undertaking any electronic

For the purpose of clarity, the distinction between e-Commerce and e-

By association, e-Commerce can be seen to include the electronic medium

Business, on the other hand, is defined as 'a commercial enterprise as a

activities such as business process re-engineering and change

Figure 1.1 illustrates the major differences in e-Commerce and e-Business,

Introduction to e-Commerce. Although different, both e-Commerce and e-

1.6 WHAT ARE KEY DRIVERS?

It is important to identify the key drivers of e-Commerce to allow a

The criteria that can determine the level of advancement of e-Commerce

1. Technological factors: The degree of advancement of the

2. Political factors: Including the role of government in creating

3. Social factors: Incorporating the level and advancement in IT

4. Economic factors: Including the general wealth and commercial health

• Organisational culture: Attitudes to research and development (R&D);

• Commercial benefits: In terms of cost savings and improved efficiency

• Skilled and committed workforce: That understands, is willing and

• Requirements of customers and suppliers: In terms of product and

• Competition: Ensuring the organisation stays ahead of or at least

Table 1.1 Key drivers of e-Commerce

Technological factors: • Telecommunications infrastructure

• Access to new technology developments

• Speed of development and implementation of new

• Legislation-number and type of supportive or

• Public policies – Whether government supports the

Social factors: • Skills of workforce

• Number of users online

• Penetration rate of PCs

• Level of education; computer literacy and IT skills

• Culture of technophilla – a willingness and ability to

Economic factors: • Economic growth - GDP

4. What are the limitations of e-Commerce? 