Design of E-Commerce in Online Store:

A Case Study of Amazon

Individual Final Examination Odd Year 2012

As the requisite of Management Information System Subject that lectured

by Prof. Eko Ganis Sukoharsono, SE, MCOM-HONS, PH.D

By:

Fatiah Putri R ( 105020307121016)

International Accounting Major

Economic and Business Faculty

University of Brawijaya

Malang

2012

1. Definition

E-commerce refers to the process of buying or selling products or services over the

Internet. Online shopping is becoming increasingly popular because of speed and ease

of use for customers. E-business activities such as selling online can be directed at

consumers or other businesses. Business to Consumer (B2C) involves the online sales

of goods, services and provision of information directly to consumers. Business to

Business (B2B) refers to the online exchange of products, services, or information

between businesses.

2. The advantages

Selling online can help the business reach new markets and increase sales and revenue

gains. If we are interested in selling to other businesses, we can use the Internet to

find sales leads, announce calls for tender, and to offer products for sale. Searching

for products and services online can save you time and money by allowing you to find

the best prices without having to walk. You can use the Internet to find new suppliers,

post buying requests or search for products and services. The benefits of effective

B2B e-commerce include lower costs associated with selecting suppliers, establishing

prices, ordering, and finalizing transactions. Online trading networks can also be used

to support efficient information exchange between buyers and sellers.

3. E-commerce design

In order to process an online sales transaction three things are needed:

Shopping Carts

Shopping cart software keeps track of what the user selects to buy from the

website before proceeding to the “checkout”. An online shopping cart consists of

three parts:

Product catalogue is made up of all the information needed to present any

product to the customer and to complete a sales transaction online.

Information to be included in the product database generally includes the

price, identification number (SKU), image or other multi- media

information, product options or choices.

Shopping list (i.e. list of selected products) allows users to track the items

they want to purchase. A shop- ping cart image is generally used to show

what items the shopper has selected for purchase. In order for the shop-

ping cart to function properly the user’s computer must be set to allow

“cookies”.

The checkout system allows customers to select prod- ucts by clicking an

“add items to cart” button and then enables them to pay for these products.

Secure Server

The secure server helps provide protection against the loss or modification of

personal information. Secure Socket Layer (SSL) is the most commonly used

tech- nology for secure online transactions. SSL encrypts

(or codes) all data between the shop’s server and the customer’s computer. This

makes it very difficult for third parties to decode any information exchanged such

as credit card numbers. The following diagram shows how a secure server can

protect information passed between the consumer and the merchant:

and we need a Digital Certificate for SSL technology to work. A Digital

Certificate is an electronic ID that helps to show the credibility of a website.

Payment Processing Options

There are three payment processing options:

Third Party Payment Processing Software: These services offer an

alternative to obtaining an Internet Merchant Account. The advantage of

this alternative is that it is possible to start selling online more quickly and

easily. There are registration, transaction, and month- ly fees attached.

There may also be a longer holdback period before the balance of a sale is

turned over to the merchant. PayPal (www.paypal.com) is the most

popular third-party online service provider. Both PayPal and merchant

accounts charge transaction fees, including a percentage of the sale plus a

flat fee per transaction. Charges based on the number of transactions may

be appropriate for micro businesses or where the number of transactions is

limited.

Internet Merchant Account: An Internet Merchant Account is an account

issued by a financial institution that enables a business to accept credit

card payments online. Businesses must obtain a separate Internet Merchant

Account for each type of credit card they wish to accept (e.g.VISA,

Mastercard, American Express).

Manual (Offline) Payment Processing:

You can set up an e-commerce website where users can order online, but

you process credit cards manually rather than rely on online payment

processing options. With this option, credit card information can be

obtained through a secure server and the transaction can be processed

manually. This option is feasible when you have a limited number of

online orders.

Hardware and Software

Hardware: Monitor, Keyboard, Mouse, CPU (tower), Modem, Network card

Software: An operating system (windows), Web design tools, Accounting

software (Quickbooks), word-processing software, spreadsheet stuff

(Microsoft Office), graphic design software (Photoshop, illustrator), VOIP

Software, Security software (McAfee, Ad-Aware, Malwarebytes).

Security and Privacy Issues

It is important to be aware of security and privacy issues associated with e-commerce.

Some common security threats include fraudulent use of credit cards, computer

viruses, spam (unsolicited e-mail messages), and theft of computers or information.

Phishing is another type of security threat that involves an e-mail message that looks

like it comes from an official source but links in the message go to a fake website

where you may disclose personal information. Common threats to privacy include

theft of personal information, and inadequate protection of private information. The

following are tips for minimizing security and privacy risks.

Review the security features/services offered by your web hosting service,

Internet Service Provider, web design and software company.

Pay attention to security alerts and install security patches as needed.

Regularly update software and scan for spyware and viruses.

Regularly backup systems and information.

Design of an e-commerce website should minimize security threats. For

example, once the consumer

presses the “buy” button the “back” button should then be disabled.

Obtain a digital certificate for your website. The digital certificate shows that

any personal data submitted to your site will be encrypted (coded). Two of the

largest certificate authorities on the Internet are: Verisign at

http://www.verisign.com and Thawte at http://thawte.com (source:

www.canadabusiness.ca).

Avoid storing customer credit card information in your systems. If you are

storing customer information make sure it is secure from access by employees

or computer hackers.

Develop a privacy policy. The policy should outline how information will be

collected and used, and the security procedures that will be used to protect

information from being lost, stolen or tampered with.

You may want to post this policy on your website. You may also want to

apply for a privacy seal. The privacy seal icon is displayed on the website and

can increase consumer confidence. According to www.entrepreneur.com, two

leading privacy seal programs are TRUSTe and BBBOnline.

Ensure you have SSL technology that encrypts all confidential information

during transmission and authorization of transactions.

Ensure you have appropriate security features for storing information. For

example a PCI (peripheral component interconnect: hardware) card is often

added for protection. Another approach is SET (Secure Electronic

Transaction) that has been developed by Visa and MasterCard. With this

approach, sensitive information is not seen by the business and is not stored on

the company’s website. Firewalls should be used to protect the network and

computers from viruses and computer hackers. You should also restrict access

to information, particularly sensitive information to authorized employees.

Review other fraud prevention tools and assess if they are right for you. For

example, Address Verification Service (AVS) compares the information in the

customers’ addresses with records stored by card-issuing banks. Major credit

card companies also have verification systems. Three-digit codes printed on

the back of major credit cards can help you assess if customers have legitimate

cards.

Always verify customer addresses.

Be suspicious of large orders or requests for multiple copies of the same

product, especially if the customer asks for rush delivery.

If you are selling valuable products that are easily resold consider whether you

need advanced fraud protection services provided through gateway providers

(e.g. fraud filters to screen for suspicious activity).

4. Company Profile

Amazon.com has always sold goods out of its own warehouses. It started as a

bookseller, pure and simple, and over the last decade has branched out into additional

product areas and the third-party sales that now represent a good chunk of its revenue

(some estimates put it at 25 percent). Both retailers and individual sellers utilize the

Amazon.com platform to sell goods. Large retailers like Nordstrom, Land's End and

Target use Amazon.com to sell their products in addition to selling them through their

own Web sites. The sales go through Amazon.com and end up at Nordstrom.com,

Land's End.com or Target.com for processing and order fulfillment. Amazon

essentially leases space to these retailers, who use Amazon.com as a supplemental

outlet for their online sales. Small sellers of used and new goods go to Amazon

Marketplace, Amazon zShops or Amazon Auctions. At Marketplace, sellers offer

goods at a fixed price, and at Auctions they sell their stuff to the highest bidder.

Amazon zShops features only used goods at fixed prices. If an item listed on zShops,

Marketplace or Auctions is also sold on the main Amazon.com, it appears in a box

beside the Amazon.com item so buyers can see if someone else is selling the product

for less in one of the other sales channels.

The level of integration that occurs on Amazon is a programming feat that few (if

any) online sales sites can match. Another sales channel called Amazon Advantage is

a place where people can sell new books, music and movies directly from the Amazon

warehouse instead of from their home or store. Sellers ship a number of units to

Amazon, and Amazon handles the entire sales transaction from start to finish. In all of

these programs, Amazon gets a cut of each sale (usually about 10 percent to 15

percent) and sometimes charges additional listing or subscription fees; in the case of

Amazon Advantage, the company takes a 55 percent commission on each sale. The

Advantage channel is something like a consignment setup, a sales avenue for people

who create their own music CDs or have self-published a book and are simply looking

for a way to get it out there.

One of the latest additions to Amazon's repertoire is a subsidiary company called

Amazon Services. Through Amazon Services, Amazon sells its sales platform,

providing complete Amazon e-commerce packages to companies looking to establish

or revamp their e-commerce business. Amazon sets up complete Web sites and

technology backbones for other e-commerce companies using Amazon software and

technology. Target, for instance, in addition to having a store on Amazon.com, also

uses Amazon Services to build and manage its own e-commerce site, Target.com.

But selling goods isn't the only way to make money with Amazon.com. The Web

site's affiliate program is one of the most famous on the Web. Through Amazon's

Associate Program, anyone with a Web site can post a link to Amazon.com and earn

some money. The link can display a single product chosen by the associate, or it can

list several "best seller" products in a particular genre, in which case Amazon updates

the list automatically at preset intervals. The associate gets a cut of any sale made

directly through that link. The cut ranges from 4 percent to 7.5 percent depending on

which fee structure the associate signs up for (see Amazon Associates for complete

program details). The associate can also take advantage of Amazon Web Services,

which is the program that lets people use Amazon's utilities for their own purposes.

The Amazon Web Services API (application programming interface) lets developers

access the Amazon technology infrastructure to build their own applications for their

own Web sites. All product sales generated by those Web sites have to go through

Amazon.com, and the associate gets a small commission on each sale.

Software Development Centers

While much of Amazon's software development occurs in Seattle, the company

employs software developers in centers across the globe. Some of these sites are run

by an Amazon subsidiary called A2Z Development.[58]

• North America

USA: Cambridge, MA;[59] Charleston, SC;[60] Cupertino, CA;[58] Orange

County, CA; San Francisco, CA; San Luis Obispo, CA;,[61] Seattle,

WA; and Tempe, AZ

Canada: Vancouver, British Columbia and Mississauga, Ontario

• Europe

UK: Slough (England), London (England) and Edinburgh (Scotland)

Ireland: Dublin

Romania: Iaşi

• Asia

India: Hyderabad, Bangalore and Chennai

Japan: Shibuya (Tokyo)

China: Beijing

• Africa

South Africa: Cape Town

5. E-Commerce Design of Amazon

E-Commerce web design is made easy with Amazon Webstore. Using online tools

that can control the website’s look and feel and quickly make changes with no

technical or HTML expertise. This powerful set of layout and merchandising tools

allow us to design and publish our website without technical resources. The online

store builder makes it easy to update and manage the website according to our

business needs. With a little effort we can develop a branded site that will show off

our business to the world.

Template Designs

Amazon Webstore has built-in website templates and website themes that

make launching our store quick and easy. These templates are completely

customisable and give your store a professional look and feel with very little

effort.

Custom Navigation and Product Categories

Webstore lets you build online store categories and product categories to suit

the needs of your business and brand. For example you can categorise clothing

items by season as opposed to gender or categorise electronics by

manufacturer. Additionally, you can manage multiple releases of your site

navigation and category structure making changes easy to implement and

release.

Merchandising Widgets

Leverage the eCommerce expertise of Amazon with built-in Merchandising

widgets that help you promote products to customers based on your business

rules and your customer’s actions on your website. Amazon personalization

widgets allow to efficiently merchandise a large catalogue helping you

increase average order value

Customer Reviews

Allow your customers to leave reviews of products specific to your business.

Customer reviews can be automatically filtered for known offensive language.

Additionally, Webstore gives you full control the reviews so you can delete

offensive or inaccurate posts.

Page Masters

Page Masters give you full control of your website’s look-and-feel. By

creating page masters you can quickly modify your website and apply the

changes across your entire site. With page masters you can define custom

layouts to match your brand and desired look-and-feel.

Built-in Hosting for Images and Assets

You can upload your product images and web page assets directly through the

Webstore interface. This makes it easy to use these images throughout your

website and leverages the powerful Amazon hosting and caching architecture

built in to Webstore. This image and asset caching makes your site load faster

regardless of the customer’s location and ensures both a positive customer

experience on your website as well as increased reliability and responsiveness

for search engine robots – helping with your sites search engine optimization.

Publish website updates without IT support

Once you’ve completed designing your eCommerce website you can preview

updates to the website design and merchandising that you have made. The

Webstore preview feature allows you to access and share a completely active

version of your eCommerce website so you can test the experience end-to-end

before releasing it to your customers. Your site can be published to production

with no IT resources making frequent or emergency changes a breeze.

References

http://www.edexcel.com/migrationdocuments/BTEC%20Nationals%20from

%202010/Unit-8-e-Commerce.pdf

http://www.studymode.com/subjects/what-software-and-hardware-used-to-

create-your-ecommerce-site-page1.html

http://webstore.amazon.co.uk/integration-with-other-systems-features/b/

1327838031?ie=UTF8&title=integration+with+other+systems

http://en.wikipedia.org/wiki/File:Amazon_warehouse_Glenrothes.jpg

http://aws.amazon.com/