Chapter 4 E-Commerce Fundamentals

E-commerce and Information E-commerce and Information Technology in Hospitality and TourismTechnology in Hospitality and Tourism

Copyright 2004 by Zongqing Zhou, PhDNiagara University

4.1 The Internet and E-Commerce

E-Commerce allows businesses to be more effective and efficient in responds to customers’ needs and wants as well as in conducting transactions with suppliers and within the company itself.

It has changed the way that business is being conducted.

4.2 E-Commerce Defined

The meaning of E-Commerce is not one simple definition it can mean many things to different people.

One basic definition is a system of conducting business activities using the Internet and other information technologies.

4.2 E-Commerce Defined

Common definitions include, but not limited to the following:Buying and selling onlineSelling through the InternetCustomer service using the InternetMarketing and advertising through the

Internet

4.2 E-Commerce Defined (cont.)

Putting up a website for product and service information, together with an email address for customers to email in orders.

E-commerce is creating a website that can accept credit card information to sell online directly to consumers.

E-commerce involves 1) a website where customers can find information, place an order, 2) an order fulfillment center that tracks and ships the orders, and 3) a customer service mechanism where questions

4.3 Components of E-Commerce

Our definition consists of three components:

A. It requires a systematic approach in conducting business. It involves: research, planning, operation and selling, marketing, budgeting, customer service, and human resource management.

4.3 Components of E-Commerce

B. E-commerce is a special type of business, but it is still a business. Just as there are all kinds of businesses, there are all kinds of ecommerce businesses. Some ecommerce businesses sell tangible products such as computers and clothes. Others offer intangible products and services such as providing information and reservation services. Most of the hospitality and travel ecommerce borders between these two, if tickets can be considered as a tangible product.

4.3 Components of E-Commerce

C. Thirdly and lastly, e-commerce is conducting business using technologies. For a company to be successful in ecommerce, it has to understand these technologies and make the best use of what is available to the business.

4.3 Components of E-Commerce

Types of E-Commerce B2B- between businesses B2C- between business and consumer C2C- between two or more individuals C2B- consumer initiated interactions and

transactions.

4.4 Classification of E-Commerce

Online-only businesses- Base the entire operation online.

Direct sellers- sell directly to the consumer Intermediaries- the middleman Fee-free-and-as-based- free to the

consumer and paid by advertisers, who then advertise on the site.

Fee-based- Charged a fee to use their service.

4.4 Classification of E-Commerce (Cont.)

Bricks-and clicks businesses- Operation both online and in a physical space.

Full-engaged models-product or service is available online to sell directly to the consumer.

Partially-engaged models- Some of the product or service is available online, but not all only the products suitable to be sold on the internet are available.

Same-line business- Can be full or partial but sell the same line of products online.

Expanded models- See E-Commerce is a way to expand their business.

By operation Mode By transaction parties

Online-only business

Bricks-and-clicks business

Buyer

Business Consumer

Bus

ines

sC

onsu

mer

Seller

•Direct Sellers

•Intermediaries

•Fee-free-and-ad-based business

•Fee-based business

•Full-engaged models

•Partial-engaged models

•Same-line models

•Expanded models

B2B B2C

C2B C2C

Process of simple e-commerce operation

Establish a Web presence Provide information (online catalog and

product information.) Get the customers (marketing) Fill the order (secure payment methods and

fast shipping service) Provide customer support and service

(communications through both Web and traditional means)

4.5 Establishing Web Presence

To establish an e-commerce presence on the Web:Apply for a domain name or use a third

party domain nameFind a server to host the domainCreate Web pages and load them to the

server Set up a payment method to receive

payment of the internet.

Applying for a domain name

Website and homepage are interchangeable. Domain name is a convenient way to

recognize the homepage and to locate information on the internet.

What’s Needed: IP address DNA domain name system- distributed base. TCP/IP Transmission Control Protocol/Internet

Protocol- map between hostname and IP address

Domain name continued…

Registering a domain name Go to an ICANN-accredited registrar.

ICANN- Internet Corporation for Assigned Names and Numbers

Can rent a cyber home on other people’s domains Benefits

Credibility on the Web More power in marketing Better control Professionalism and security Branding opportunity

Domain Name .com .edu .gov .mil .net .org .int .biz .info .name

Meaning Commercial Organization Educational Institutions Government Institutions Military groups Major network support

centers Organizations other than

those listed here International organizations Business Unrestricted use For registration by individuals

Domain Name Purpose Status in 2002.aero Air transport industry Operational .biz Business Operational and accepting

live registration.coop Cooperatives Operational .info Unrestricted use Operational and accepting

live registration.museum Museums Operational .name For registration Operational and accepting

by individuals live registration.pro For accountants, Under negotiation

lawyers, physicians,and other professionals

Source: InterNIC (www.internic.net), January, 2003.

123 Registration, Inc. (US) Capital Networks Pty Ltd. (Australia) Domaninfo AB (Sweden) DomainRegistry.com, Inc. (US) Go Daddy Software, Inc. (US) Internet Domain Registrars, d/b/a (Canada & US) Key-Systems GmbH, d/b/a (Germany) Melbourne IT Limited, d/b/a Internet News Worldwide (Australia) Mr. DomReg.com, Inc. (Canada) Namebay (Monaco) Network Solutions, Inc. Registrar (US) NORDNET (France) Register.com, Inc. (US) Xin Net Corp. (China)

Source: UCANN (www.icann.org). For complete list, see ICANN’s Website.

Finding an ISP or Web Host

Website is a series of WebPages (HTML files) that reside on a serverTwo ways to host a Web site:

Purchase your own server, set it up, and manage your own site.

Find an ISP or Web hosting company without having to invest in the server hardware and software.

Creating Web Pages and loading them to the Server

Depending on the ISP you may need to create your own Web files and then load them up to the server.

Web host companies will create the Web files for you based on the information you provide.

Software needed: FTP- file transfer protocol- allows one computer to

transfer files from another computer over the internet.

Allocated Server Storage SpaceShared hosting or dedicated serverE-mail accountsService and technical supportOnline Security

Purpose of your Web siteDetermine who your customers areAvoid excessive use of graphics and

animationsPut yourself in the visitor’s shoes when

designing a Web siteHow to make visitors repeat visitors

Setting up Payment Methods

Concerns: Secure transmission Safety of information Who has access to the information

Solutions: SSL (Secure Sockets Layer)- encrypts data transfer

Encryptions: Asymmetric or public-key Symmetric

Digital signature Certificate Authority

IssuesSecurityPrivacy and

Identity

SolutionsSSL, SHTTPSET, digital

signature, digital certificate

Figure 4.1 Typical Offline Payment Process

Figure 4.2 Typical Online Payment Process

Payment continued…

Means of online payment:Traditional Credit CardsE-moneyeCashPayPalBillpointSmart CardPowerWallet

Major criteria For dominant payment systems

SecurityReliabilityPrivacyConvenienceUser friendlyUniversalityCost free

Security Issues

SSL (Secure Sockets Layer) asymmetric encryption, also called

public-key encryption digital signature digital ertificate Certificate Authority (CA)