A

PRESENTATION REPORT

ON

TOPIC: - E-COMMERCE

`

SUBMITED TO:

PROF: PRAGATI GOYAL

SUBMITED BY

Nilesh Joteeram Chikane

CONTENT

1. Introduction

2. Eight Ingredients Of Business Model

3. Categorizing E-Commerce Business Models

4. Strategies

5. Technology infrastructure for E- Commerce

6. E-Commerce Security Environment

7. Risk Management

8. Payment System

9. Online Market Research

10. Online Marketing

11. E-Governance

E-Commerce:

Business has been looking for ways to increase their profits and market share. The

search for more efficient ways of doing business has been driving another revolution in

the conduct of business .This revolution is known as electronic commerce which is any

purchasing or selling through an electronic communications medium. Business planners

in institutions and organizations now see technology not only as a supportive cofactor,

but as a key strategic tool. They see electronic commerce as a “wave of future”.

Information technology has revolutionized and digitalized economic activity, and

made it a truly global phenomenon .One of the most visible icons of the IT Revolution is

the internet – the world wise web. Which is a gigantic anarchic network of computers

world wide, which is essentially used for communicating, interaction, interactive long

distance computing and exchange of information giving rise to a host of applications

from military and government to business, education and entertainment?

E-commerce exists because of internet. It has been born on the net and is growing

with the net. It involves carrying business on and through the net.

E-commerce is a product of the digital economy. It is a source of a paradigm shift, in

redefining technology, individual and global societies as well as national and global

economies.

Electronic commerce is a symbolic integration of communications, data

management, and security capabilities to allow business applications within different

organizations to automatically exchange information related to the sale if goods and

services. Communication services support the transfer of information from the originator

to the recipient. Data management services define the exchange format of the

information. Security mechanisms authenticate the source of information, guarantee the

integrity of the information received, prevent disclosure of information to inappropriate

users, and document that the information was received by the intended recipient.

Prior to the development of e-commerce, the process of marketing and selling

goods was a mass-marketing and sales-force driven process. Customers were viewed as

passive targets of advertising “campaigns” .Selling was conducted in well-insulated

“channels” .Consumers were trapped by geographical and social boundaries, unable to

search widely for the best price and quality.

E-commerce has challenged much of this traditional business thinking.

E-Commerce Defined:

“The use of internet and the WEB to transact business. More formally, digitally enabled

commercial transactions between and among organizations and individuals.”

“Electronic commerce is commerce via any electronic media, such as TV, fax, and online

networks. Internet-based commerce makes use of any Internet facility and service. Web-

based commerce focuses on the opportunity of the World Wide Web apparatus, in

particular, its ubiquity and its ease of use.”

Benefits/Features of E-Commerce:

Electronic commerce increases the speed, accuracy, and efficiency of business and

personal transactions. The benefits of E-commerce include the following:

• Ubiquity: E-commerce is ubiquitous, meaning that it is available just about

everywhere, at all times. It liberates the market from being restricted to a physical

space and makes it possible to shop from your desktop, at home, at work, or even

from your car using mobile commerce .From customer point of view, ubiquity

reduces transaction costs – the costs of participating in a market. To transact it is

no longer necessary to spend time and money traveling to market. At a broader

level, the ubiquity of e-commerce lowers the cognitive energy required to transact

in a marketplace. Cognitive energy refers to the mental effort required to

complete a task.

• Global Reach: E-commerce technology permits commercial transactions to cross

cultural and national boundaries far more conveniently and cost effectively than is

true in traditional commerce. As a result, the potential market size for e-

commerce merchants is roughly equal to the size of the world’s online population.

The total number of users or customers an e-commerce business can obtain is a

measure of its reach.

• Universal Standards: The technical standards for conducting e-commerce are

universal standards – they are shared by all nations around the world. The

universal technical standards of e-commerce greatly lower the market entry costs

- the cost merchants must pay just to bring their goods to market. At the same

time, for consumers, universal standards reduce search cost – the effort required

to find a suitable products.

• Richness: Information richness refers to the complexity and content of a

message.

• Interactivity: E-commerce technologies are interactive, meaning they allow for

two-way communication between merchant and consumer .It allows an online

merchant to engage a consumer in ways similar to a face-to face experience , but

on a much more massive , global scale.

• Information Density: the internet and the Web vastly increase information

density –the total amount and quality of information available to all market

participants, consumers, and merchants alike. E-commerce technologies reduce

information collection, storage, processing, and communication costs .At the sale

time; these technologies increase greatly, the accuracy and timeliness of

information-making information more useful and important than ever. As a result

information becomes more plentiful, cheaper and of higher quality.

• Personalization/Customization: E-commerce technologies permit

personalization – merchants can target their marketing messages to specific

individuals by adjusting the message to a person’s name, interests, and past

purchases. The technology also permits customization –changing the delivered

product or service based on a user’s preference or prior behavior. Given the

interactive nature of e-commerce technology, a great deal of information about

the consumer can be gathered in the marketplace at the moment of purchase. With

the increase in information density, a great deal of information about the

consumer’s past purchases and behavior can be stored and used by online

merchants. The result is increase in the level of personalization and

customization.

Types of E-Commerce:

There are different types of e-commerce and many different ways to characterize these

types.

The five major types of e-commerce are:

1. B2C

2. B2B

3. C2C

4. P2P

5. M-Commerce

B2C: (Business-to-Consumer)

The most commonly discussed type of e-commerce is Business-to-Consumer (B2C) e-

commerce, in which online business attempt to reach individual consumers is done .It has

grown exponentially since 1995, and is the type of e-commerce that most consumers are

likely to encounter . Within the B2C category there are many different types of business

models: portals, online retailers, content providers, transaction brokers, market creators ,

service providers , and community providers.

B2B: (Business-to-Business)

In this type of e-commerce, one business focuses on selling to other business .It is the

largest form of e-commerce. The ultimate size of B2B e-commerce could be huge . At

first, B2B e-commerce primarily involved inter-business exchanges, but a number of

other B2B business models have developed, including e-distribution, B2B service

providers, matchmakers, and info-mediaries that are widening the use of e-commerce.

C2C: Consumer-to-Consumer

C2C e-commerce provides a way for consumers to sell to each other, with the help of an

online market maker such as the auction site .In C2C e-commerce, the consumer prepares

the product for market, places the product for auction or sale, and relies on the market

maker to provide catalog, search engine, and transaction clearing capabilities so that

products can be easily displayed, discovered, and paid for.

P2P: (Peer-to-Peer)

Peer-to-Peer technology enables Internet users to share files and computer resources

directly without having to go through a central Web server. In peer-to-peer’s purest form,

no intermediary is required. Entrepreneurs and venture capitalists have attempted to adapt

various aspects of peer-to-peer (P2P) e-commerce.

E.g. Napster.com established to aid internet users in finding and sharing music files (mp3

files). It is partially peer-to-peer because it relies on a central database to show which

users are sharing music files.

M-commerce:

Mobile commerce or m-commerce refers to the use of wireless digital devices to enable

transactions on the Web. These devices utilize wireless networks to connect cell phones

and handheld devices to the Web. Once connected, mobile consumers can conduct many

types of transactions, including stock trades, banking, travel reservations, and more.

B2G: Business to Government

E-Commerce Business Models:

A business model is a set of planned activities (sometimes referred to as business

process) designed to result in a profit in a marketplace. The business model is at the

center of the business plan.

A business plan is a document that describes a firm’s business model.

An e-commerce business model aims to use and leverage the unique qualities of the

internet and the World Wide Web.

There are Eight Key Ingredients of a Business Model:

1. Value proposition: It defines how a company’s product or service fulfils the

needs of the customers. To develop and/or analyze a proposition, the following

questions need to be answered :

- Why will customers choose to business with your firm instead of another

company?

- What will your firm provide that other firms do not and cannot?

From the consumer point of view, successful e-commerce value propositions include:

personalization and customization of product offerings, reduction of product search costs,

reduction of price discovery costs, and facilitation of transactions by managing product

delivery.

2. Revenue model:

The firm’s revenue model describes how the firm will earn revenue, generate profits, and

produce a superior return on invested capital. The function of business organizations is

both to generate profits and to produce returns on invested capital that exceed alternative

investments.

* The advertising model:

A website that offers its users content, services, and/or products also provides a forum for

advertisements and receives fees from advertisers. Those websites that are able to attract

the greatest viewer ship and are able to retain user attention are able to charge higher

advertising rates.

* Subscription Revenue Model:

In the subscription revenue model, a Web site that offers its users content or services

charges a subscription fee for access to some or all of its offerings.

* Transaction fee revenue model:

In this model a company receives a fee for enabling or executing a transaction. (e.g.

Online auction websites taking some commission from buyer as well as the seller).

* Sales Revenue Model:

In the sales revenue model, a company derives revenue by selling goods, information, or

services to customers.

E.g. amazon.com

* Affiliate Revenue model:

In the affiliate revenue model, sites that steer business to an “affiliate” receive a referral

fee or percentage of the revenue from any resulting sales.

3. Market Opportunity:

The term market opportunity refers to the company’s intended marketplace and the

overall potential financial opportunities available to the firm in that marketplace. The

market opportunity is usually divided into smaller market niches. The realistic market

opportunity is defined by the revenue potential in each of the market niches.

4. Competitive Environment:

The firm’s competitive environment refers to the other companies operating in the same

marketplace selling similar products. The competitive environment for a company is

influenced by several factors: how many competitors are active, how large their

operations are, what the market share of each competitor is, how profitable these firms

are, and how they price their products.

5. Competitive Advantage:

Firms achieve a competitive advantage when they can produce a superior product a

superior product and/or bring the product to market at lower than most, or all, of their

competitors. Firms also compete on scope .Some firms can develop global markets while

other firms can only develop a national or regional market .Firms that can provide

superior products at lowest cost on global basis are truly advantaged.

6. Market strategy:

Market strategy is the plan the company put together that details exactly how the

company intend to enter the market and attract new customers.

7. Organizational Development:

Describes how the company will organize the work that needs to be accomplished.

8. Management Team:

Employees of the company responsible for making the business model work.

Categorizing E-Commerce Business Models:

Major B2C business models:

There are a number of different models being used in the B2C e-commerce arena. The

major models include the following:

• Portal:-Offers powerful search tools plus an integrated package of content

services; typically utilizes a combined subscription/advertising

revenue/transaction fee model may be general or specialized.

• E-tailer: - Online version of traditional retailer; includes virtual merchants

(online retail stores), clicks and mortar e-tailers (online distribution channel for a

company that also has a physical store); catalog merchants (online version of

direct mail catalog); online malls (online version of mall); manufacturers selling

directly over the Web.

• Content Provider: - Information and entertainment companies that provide

digital content over the Web; typically utilizes an advertising, subscription, or

affiliate referral fee revenue model.

• Transaction broker: - Process online sales transactions; typically utilizes a

transaction fee revenue model.

• Market creator: - Uses Internet technology to create markets that brings buyers

and sellers together; typically utilize a transaction fee revenue model.

• Service provider: - Offers services online.

• Community provider: - Provides an online community of like-minded

individuals for networking and information sharing; revenue is generated by

referral fees, advertising, and subscription.

Major B2B business models:

The major business models used to date in B2B arena include:

• Hub, also known as marketplace/exchange – electronic market place where

suppliers and commercial purchasers can conduct transactions; may be general (a

horizontal marketplace) or specialized (a vertical marketplace).

• E-distributor: - Supplies products directly to individual businesses.

• B2B service provider: - Sells business services to other firms.

• Matchmaker: - Link business together, changes transaction on usage fees.

• Infomediary: - Gathers information and sells it to business.

Major C2C business models:

A variety of business models can be found in the customer-to-customer e-commerce,

peer-to-peer e-commerce, and m-commerce areas:

• C2C business models connect consumers with other consumers .The most

successful has been the market creator business model used by eBay.com.

• P2P business models enable consumers to share files and services via Web

without common servers. A challenge has been finding a revenue model that

works.

• M-commerce business models take traditional e-commerce models and leverage

emerging wireless technologies to permit mobile access to the Web.

• E-commerce enablers business models focus on providing the infrastructure

necessary for e-commerce companies to exist, grow, and prosper.

Key business concepts and strategies applicable to e-commerce:

• Industry structure : The nature of players in an industry and their relative

bargaining power – by changing the basis of competition among rivals , the

barriers to entry , the threat of new substitute products , the strength of suppliers ,

and the bargaining power of buyers.

• Industry value chains: The set of activities performed in an industry by suppliers,

manufacturers, transporters, distributors and retailers that transforms raw inputs

into final products and services – by reducing the cost of information and other

transaction costs.

• Firm value chains: The set of activities performed within an individual firm to

create final products from raw inputs – by increasing operational efficiency.

• Business strategy: A set of plans for achieving superior long-term returns on the

capital invested in a firm – by offering unique ways to differentiate products,

obtain cost advantages, compete globally, or compete in a narrow market or

product segment.

Technology Infrastructure for E-Commerce

The Internet and World Wide Web E-Commerce Infrastructure

The Internet: Technology Background

The Internet is an interconnected network of thousands of networks and millions of

computers (sometimes called as host computers or just hosts) linking business ,

educational institutions , government agencies , and individuals together .The internet

provides services such as e-mail, news-groups, shopping, research , instant messaging ,

music videos and news . No one organization controls the Internet or how it functions,

nor it is owned by anybody, yet it has provided the infrastructure for a transformation in

commerce, scientific research, and culture .The word internet is derived from the word

internet work or the connecting together of two or more computer networks. The World

Wide Web is one of the internet’s most popular services, providing access to over one

billion Web pages , which are documents created in a programming language called

HTML and which can contain text , graphics , audio, video, and other objects, as well as

“hyperlinks” that permit a user to jump from one page to another.

The Internet: Key Technology Concepts;

Based in the definition , the internet means a network that uses the IP (Internet Protocol)

addressing scheme, supports the Transmission Control Protocol (TCP), and ,makes

services available to users much like a telephone system makes voice and data services

available to the public.

Behind this formal definition are three extremely important concepts that are the basis for

understanding the Internet: packet switching, the TCP/IP communications protocol, and

client/server computing .Although the Internet has evolved and changed dramatically,

these three concepts are at the core of how the Internet functions today and are the

foundation for Internet.

Packet Switching: It is a method of slicing digital messages into parcels called “packets”

sending the packets along different communication paths as they become available, and

then reassembling the packets once they arrive at their destination .Prior to the

development of packet switching, early computer networks used leased, dedicated

telephone circuits to communicate with terminals and other computers.

In packet-switched networks, messages are first broken down into packets. Appended to

each packet are digital codes that indicate a source address (the origination point) and the

destination address, as well as sequencing information and error-control information for

the packet. Rather than being sent directly to the destination, in a packet network, the

packets travel from computer to computer until they reach their destination. The

computers are called Routers. Routers are special purpose computers that interconnect

thousands of different computer networks that make up the internet and route packets

along to their ultimate destination as they travel. To ensure that packets take the best

available path towards their destination, the routers use computer programs called routing

algorithms.

Packet switching makes full use of almost all available communication lines and

capacity. If some lines are disabled or too busy, the packets can be sent on any available

line that eventually leads to the destination point.

TCP/IP:

TCP refers to the Transmission Control Protocol. IP refers to the Internet Protocol. A

protocol is a set of rules for formatting, ordering, compressing, and error checking

messages. It may also specify the speed of transmission and means by which devices on

the network will indicate they have stopped sending and/or receiving messages. Protocols

can be implemented in either hardware or software .TCP/IP is implemented in Web

software called server software .It is the agreed upon protocol for transmitting data

packets over the Web. TCP establishes connections among sending and receiving Web

computers, handles the assembly of packets at the point of transmission, and their

reassembly at the receiving end.

IP addresses: TCP handles the packet zing and routing of Internet messages. IP provides

the Internet’s addressing scheme .Every computer connected to the Internet must be

assigned an address – otherwise it cannot send or receive TCP packets .When a user

sign’s onto the Internet using a dial-up telephone modem, the computer is assigned a

temporary address by the Internet service provider.

Internet addresses known as IP addresses, are 32-bit numbers that appear as a series of

four separate numbers marked off by periods such as 201.61.186.227. Each of the four

numbers can range from 0-255. This “dotted quad” addressing scheme contains up to 4

billion addresses of the computer ( 2 to the 32nd power).The leftmost number typically

indicates the network address of the computer , while remaining numbers help to identify

the specific computer within the group that is sending (or receiving) messages.

Domain Names and URLs: Most people cannot remember 32-bit numbers .IP addresses

can be represented by a natural language convention called domain names. The domain

name system (DNS) allows expressions to stand for numeric IP addresses.

Uniform Resource Locators (URLs ) are addresses used by Web browsers to identify the

location of content on the web, also use domain names as a part of the URL.A typical

URL contains the protocol to be used when accessing the address, followed by its

location. The protocol used is HTTP (Hypertext Transfer Protocol).A URL can have

more than one paths.

Client/Server computing:

It is a model of computing in which very powerful personal computers called Clients are

connected together in a network together with one or more server computers. These

clients are sufficiently powerful to accomplish complex tasks such as displaying rich

graphics, storing large files, and processing graphics and sound files, all on a local

desktop or hand held device. Servers are networked computers dedicated to common

functions that their client machines on the network need. Such as storing files, software

applications, utility programs such as Web connections, and printers.

Other Internet Protocols:

SMTP: Simple mail transfer protocol

POP : Post Office Protocol

IMAP: Internet message access protocol

FTP : File Transfer Protocol for transferring files

SSL : Secure Socket Layers for Security

E-Commerce Security Environment

It is difficult to estimate the actual amount of e-commerce crime for a variety of reasons.

In many instances, e-commerce crimes are not reported because companies ear of losing

the trust of legitimate customers. And even when crimes are reported, it may be hard to

quantify the losses incurred .The most serious losses involved theft of proprietary

information and financial fraud. Online credit card fraud is perhaps the most high profile

form of e-commerce crime. In some cases, the criminals aim to just deface, vandalize

and/or disrupt a Web site, rather than steal goods or services. The cost of such an attack

includes not only the time and effort to make repairs to the site but also damage done to

the site’s reputation and image as well as revenues lost as a result of the attack.

Estimates of the overall cost of the various forms of cyber vandalism range into billions.

What is Good E-Commerce Security?

What is a secure commercial transaction?

Anytime a user goes into a market place , he/she takes risks, including the loss of privacy

(information about what you purchased).The prime risk as a customer is that you do not

get what you paid for. As a merchant in the market, you don’t get paid for what you sell,

Thieves take merchandise and then either walks off without paying anything, or pay you

with a fraudulent instrument, stolen credit card, or forged currency.

Burglary, breaking and entering, embezzlement, trespass, malicious destruction,

vandalism – all crimes in traditional commercial environment – is also present in e-

commerce. However, reducing risks in e-commerce is a complex process that involves

new technologies, organizational policies and procedures, and new laws and industry

standards that empower law enforcement officials to investigate and prosecute offenders.

Security Threats in the E-Commerce Environment:

From the technology perspective, there are three key points of vulnerability when dealing

with e-commerce: the client, the server and the communication pipeline.

Malicious Code

It includes a variety of threats such as viruses, worms, Trojan horses, and “bad applets”.

A virus is a computer program that has the ability to replicate or make copies of it, and

spread to other files. In addition to the ability to replicate, most computer viruses deliver

a “payload” (destroying files, reformatting the computers hard drive or causing programs

to rum improperly.

A Trojan horse does something other than expected. The Trojan horse is not itself a virus

because it does not replicate, but is often a way for viruses or other malicious code to be

introduced into a computer system.

Bad applets also referred to as malicious mobile code, are expected to become an

increasing problem as java and Active X controls become more commonplace.

Malicious code is a threat to the system’s integrity and continued operation, often

changing how a system functions or altering documents created on the system. In many

cases the user is unaware of the attack until it affects the system and the data on the

system.

Hacking and Cyber vandalism:

A hacker is an individual who intends to gain unauthorized access to a computer system .

Within the hacking community, the term cracker is typically used to denote a hacker with

criminal intent although in the public press, the terms hacker and cracker are used

interchangeably. Hackers and crackers get unauthorized access by finding weaknesses in

the security procedures of Web sites and computer system , often taking advantages of

various features of internet that make it an open system that is easy to use.

Cyber vandalism is intentionally disrupting, defacing, or even destroying the site.

Group of hackers called as “tiger teams” are used by corporate security departments to

test their own security measures. By hiring hackers to break into the system from outside,

the company can identify weaknesses in the computer systems.

Dimensions of E-Commerce security:

There are six dimensions to e-commerce security:

1. Integrity

2. No repudiation

3. Authenticity

4. Confidentiality

5. Privacy

6. Availability

Integrity refers to the ability to ensure that information being displayed on a Web site , or

transmitted or received over the internet , has not been altered in any way by an

unauthorized party.e.g. An unauthorized person intercepts and changes the contents of an

online communication, such as by redirecting a blank wire transfer into a different

account, the integrity of the message has been compromised because the communication

no longer represents what the original sender intended.

Non repudiation refers to the ability to ensure that e-commerce participants do not deny

(I.e. repudiate) their online actions.

Authenticity refers to the ability to identify the identity of a person or entity with whom

you are dealing on the internet. How does the customer know that the Web site operator

is who it claims to be? How can the merchant be assured that the customer is really who

he/she say he/she is? Someone who claims to be someone they are not is “spoofing” or

misinterpreting themselves.

Confidentiality refers to the ability to ensure that messages and data are available only to

those who are to view them. Confidentiality is something confused with privacy, which

refers to the ability to control the use of information a customer provides about himself or

herself to an e-commerce merchant.

Availability refers to the ability to ensure that an e-commerce site continues to function

as intended.

E-Commerce security is designed to protect these six dimensions. When any one of them

is compromised, it is a security issue.

Risk management

Risk: “The possibility of loss or injury.”

E-commerce risk involves understanding potential problems that might occur in the

business and affect on success.

Risk management is an activity undertaken to lessen the impact on potentially adverse

events on business. Risk management is an investment .There is costs associated with it.

The investment in risk management depends upon the nature of the business.

Risk Assessment:

The first step is to inventory the information and knowledge assets of E-commerce site

and company. What information is at risk? Is it customer information, proprietary

designs, business activities, secret processes, or other internal information, such as price

schedules, executive compensation, or payroll?

For each type of information try to estimate the losses for the firm.

Based on the quantified list of risks, one can start to develop a security policy I.e a set of

statements prioritizing the information risks, identifying acceptable risk targets, and

identifying the mechanisms for achieving these targets.

Technology Solutions protecting internet communications

Because e-commerce transactions must flow over the public internet, and therefore

involved thousands of routers and servers through which the transaction packets flow,

security experts believe the greatest security threats occur at the level of internet

communications. This is very different from a private network where a dedicated

communication line is established between the two parties. A number of tools are

available to protect security of internet communications, the most basic of which is

message encryption.

 

ENCRYPTION

Encryption is the process of transforming plain text data in to cipher text that can not read

by anyone outsider of the sender and the receiver. The purpose of encryption is (a) to

secured stored information and (b) to secure information transmission . Encryptions can

provide four of the six key dimensions of

E- Commerce security.

• Message integrity – provides assurance that the message has not been altered

• Non repudiation – prevents the user from denying he or she sent the message.

• Authentication – provides verification of the identity of the person (or machine)

sending the message.

Confidentiality – gives assurance that the message was not read by others. This

transformation of plain text to cipher text is accomplished by using a key or cipher. A

key (or cipher) is any method of transforming plain text to cipher text. Encryption can be

practiced since the earliest form of writing and commercial transaction. Ancient Egyptian

and Phoenician commercial records were encrypted using substitution and transposition

ciphers. In a substitution cipher, every occurrence of given letter is replaced

systematically by another letter. For instance, if we used the cipher ”letter plus two”-

meaning replace every letter in a word with a new letter two places forward – then the

word “hello” in plain text would transformed into the following cipher text :”jgnnq”. In a

transposition cipher, the ordering of the letters of each word is changed in some

systematic way.

Symmetric Key Encryption: In order to decipher this message, the receiver would have to

know the secret cipher that was used to encrypt the plain text. This is called symmetric

key encryption or secret key encryption. In symmetric key encryption, both the sender

and the receiver use the same key to encrypt and decrypt the message. How do the sender

and the receiver have the same key? They have to send tit over some communication

media or exchange the key in person .The possibilities for substitution and transposition

ciphers are endless, but they all suffer from common flaws. First, in the digital age,

computers are so powerful and fast as these ancient means of encryption can be broken

quickly. Second, symmetric key encryptions require that both parties share the same key.

In order to share the same key, they should send the over a presumable insecure medium

where it could be stolen and used to decipher messages. If the secret key lost or stolen,

entire encryption system fails.

Third, in commercial use where we are not all parts of the same team or army, you would

need a separate key for each of the parties with whom you transacted, that is, one key for

the bank, another for a department store, and another for the government. In large

population of users, this could result in as many as n (n - 1) keys. In population of

millions of Internet users, thousands of millions of keys would be needed to

accommodate all e-commerce customers (established at about 35 million purchasers in

the United States). Potentially, (35 millions) 2 different keys could be needed. Clearly

this situation would be too unwieldy to work in practice.

Modern encryption system are digital. The ciphers or keys used to transform plain text in

to cipher text are digital strings. Computers store text or other data as binary strings

composed of 0s and 1s. For instance, the binary representations of the capital letters “A”

in ASCII computer code is accomplished with eight binary digits (bits):01000001. One in

which digital strings can be transformed into cipher text is by multiplying each letter by

another binary number, say, an eight- bit key number 01010101. If we multiplied every

digit character in our text messages by this eight-bit key, sent the encrypted message to a

friend along with the secret eight-bit key, the friend could decode the message easily.

The strength of modern security protection is measured in terms of the length of the

binary key used to encrypt the data. In the above example, the eight-bit key is easily

deciphered because there are only 28 or 256 possibilities. If the intruder knows you are

using eight-bit key, then he or she could decode the message in a few seconds using a

modern desktop PC just using the brute force method of checking each of the 256

possible keys. For this reason, modern digital encryption systems use keys with

56,128,256, or 512 binary digits. With encryption of 512 digits, there are 2512possiblities

to check out. It is estimated that all the computers in the world would need to work for

ten years before stumbling upon the answer.

The most widely used systematic key encryption on the internet today is the Data

Encryption Standard (DES) developed by the National Security Agency (NSA) and IBM

in the 1950s. DES uses 56-bit encryption key. To cope with much faster computers,

Triple DES – essentially encrypting the message three times each with a separate key,

has improved it recently. There are many other symmetric key systems; DES requires a

different set of keys for each set of transactions.

PUBLIC KEY CRYPTOGRAPHY

Two mathematically related digital keys are used: a public key and private key. The

private is kept secret by the owner, and public is widely disseminated. Both keys can be

used to encrypt and decrypt the message. However, once the keys are used to encrypt a

message, that same key can not be used to unencrypt the message.

 To check the confidentiality of the message and ensured it has not been altered in transit,

a hash function is used first to create a digest of the message. A hash function is an

algorithm that produces a fixed length number called a hash or message digest. A hash

function can be simple, and count the number of digital “1s”in a message, or it can more

complex, and produce a128-bit number that reflects the number of 0s and 1s, the number

of 00s, 11s, and so on.

One more step is required to ensure the authenticity of the message, and to ensure

the no repudiation, the sender the encrypts the entire block of cipher text one more time

using the sender’s private key. This produces a digital signature (also called an e-

signature) or “signed” cipher text that can be sent over the internet.

Digital envelop - a uses symmetric encryption for large documents, but public key

encryption to encrypt and the symmetric key.

PAYMENT SYSTEM:

TYPES OF PAYMENT SYSTEM

There are five main types of payment systems:

1. Cash

2. Checking transfer

3. Credit cards

4. Stored value and

5. Accumulating balance.

 Cash 

Cash, which is legal tender, defined by a national authority to represent value, is the most

common form of payment in terms of number of transactions.

The key feature of cash is that it is instantly convertible into other forms of value

without the intermediation of any other institution. For instance, free airline miles are not

cash because they are not instantly convertible into other forms of value- they require

intermediation of by a third party (the airline) in order to be exchanged for value (an

airline ticket) . Private organizations sometimes create a form of private cash called scrip

that can be instantly redeemed by participating organizations for goods or cash. Example

includes Green Stamps and other forms of consumer loyalty currency.

Checking Transfer

Checking Transfers which are transferred directly via a signed draft or check from a

consumer’s checking account to a merchant or other individual are the second most

common form of payments in terms of number of transactions and the most common in

terms of total amount spent.

Checks can be used for both small and large transactions, although typically they are not

used for micro payments. Checks have some float (it can take up to ten days for out-of-

state checks to clear) and the unspent balances can earn interest. Checks are not

anonymous and required third party institutions to work. Checks also introduce security

risks for merchants. They can be forged more easily than cash; hence authentication is

required. For merchants, checks also present some additional risk compared to cash

because they can be cancelled before they clear the account or they may bounce if there

is not enough money in the account.

Money orders, cashier checks, and traveler’s checks are ensured checks that address

some of the limitations of personal checks described above. Ensured checks reduced the

security risk of a personal check by requiring an up-front payment to a trusted third party

– A bank or money transferred company such as American express, Wells Fargo, or

Western Union. These trusted third parties then issue a guaranteed payment draft called

money order that is as good as cash, although less anonymous. Merchants are guaranteed

the funds in an any transaction with an ensured check. Trusted third parties make money

by charging consumers a fee and receiving interest on the money consumers deposited

with them. Ensured checks provide merchants with lower risk, but they add cost for the

consumer. In return, consumers have a payment instrument that is accepted almost

everywhere and in some cases is insured against loss.

Credit card

A credit card represents an account that extends credit to consumer, permits consumers to

purchase items while deferring payment, and allows consumers to make payment to

multiple vendors at one time. Credit card association such as Visa and MasterCard are

nonprofit associations that set standards for the issuing banks – such as Citibank- that

actually issue the credit cards and process transactions. Other third parties (called

processing centers or clearinghouses) usually handle verification of accounts and

balances. Credit card issuing banks act as financial intermediaries, minimizing the risk to

the transacting parties.

Stored Value

Accounts created by depositing funds in to an account and from which funds are paid out

or withdrawn as needed are stored-value payment systems. Stored value payment systems

are similar in respects to checking transfers – which also stored funds – but do not

involve writing a check. Example includes debit card, gift certificates, prepaid cards and

smart cards. Debit cards look like credit cards, but rather than providing access to a line

of credit, they instead immediately debit a checking or other demand deposit account. For

many consumers, the use of debit card eliminates the need to write a paper check. Be

cause debit cards are dependent on funds being available in consumer’s bank account,

however, large purchases are still generally paid for by credit card.

Accumulating balance

Accounts that accumulate expenditure to which consumers make periodic payments are

Accumulating balance payment systems. Traditional examples include utility, phone, and

credit card bills s, all of which accumulate balances, usually over a specified period

(typically a month), and are paid in full at the end of the period.

Digital Checking Payment Systems have many advantages:

1. They do not require consumers to reveal account information to other individuals

when settling an auction.

2. They do not require consumers to continually send sensitive financial information

over the WEB.

3. They are less expensive than credit cards for merchants. And

4. They are much faster than paper-based traditional checking.

Digital Payment Systems and the Wireless Web:

Wireless device usage has exploded and is expected to continue as new products and

services are introduced .From cellular phones to pagers and personal digital assistants

(PDAs), wireless devices have spurred the creation of new Web sites to support them.

One area in which there is substantial interest is in financial services, including stock

trading and money transfer.

B2B Payment System:

B2B payment systems pose special challenges and are much more complex than B2C

payments, in large part because of the complexity involved in business purchasing.

Sometimes a dozen of more documents may be needed to consummate the transaction,

including purchase order , invoice , bill of landing or shipping , insurance papers ,

financial documents , regulatory documents , credit verifications , service documents (if

any) , authentication , letters of credit (foreign transactions), and payment methods or

instruments . In addition, B2B payment systems must link to existing ERP (Enterprise

Resource Planning) systems that integrate inventory, production, shipping, and other

corporate data , and into EDI (Electronic Data Interchange) systems which are systems

that replace paper-based purchase orders with electronic equivalents .

The B2B payment market is actually much larger than the B2C market because of the

larger size of transactions among businesses and the frequency of transactions

Online Market Research:

Market research involves gathering information that will help a firm identify

potential products and customers .There are two general types of market research .

Primary research involves gathering first-hand information using techniques such as

surveys, personal interviews and focus groups. This type of research is typically used to

gain feedback on brands, products, or new marketing campaigns where no previous study

has been done.

Secondary research relies on existing, published information as the basis

for analyzing the market.

Both primary and secondary research can be completed online more efficiently,

less expensively, and more accurately than offline. In addition to two different

approaches to market research, there are two types of data to be studied. Quantitative data

is data that can be expressed as a number, such as percentage. Quantitative data can be

analyzed using statistical programs that identify relationship between certain variables, or

factors that affect how someone responds. Qualitative data is data that cannot be easily

quantified, such as opinions, survey questions that yield qualitative responses are

analyzed by grouping responses into similar sub segments based on the answer given.

One type of analysis is content analysis, which tries to identify the major categories of

responses given.

Primary Research:

Surveys and questionnaires are the most popular and frequently used market

research tools. Using a survey instrument, which is a list of questions, researchers can

approach groups of people to ask their views on virtually any imaginable topic.

Online surveys can be typically being administered more quickly and less expensively

than traditional mail or telephone surveys. Companies can hire an outside market

research firm to conduct the survey or create and administer their own.

Online surveys also make it possible to track respondents and follow up with those who

haven’t yet completed survey, which help to improve response rates, the percentage of

people who complete a survey. A low response rate can damage the validity, or

believability, of a survey’s results.

Feedback forms, which ask users to provide input regarding a site’s operations in

a set format, are another type of inline survey. Requesting regular input from site visitors

may provide more qualitative data, which is more difficult to analyze, but the resulting

information can assist in improving and enhancing site performance.

Personal interviews are another primary research tool. The interview is generally guided

by a set of questions very similar to survey instrument. Although it is more difficult to

incorporate personal interviews within Web sites, it is possible to conduct research online

via live chat or e-mail, with trained researcher interacting with the study

participant’s .Personal interviews offer an opportunity to gather more in-depth

information on a topic. In some cases, personal interviews are used as second phase of a

research project, following initial information gathering by survey.

Secondary Research:

It involves gathering information using WEB sites as the information source.

The Key to being efficient and effective as a researcher is identifying the WEB sites most

likely to provide answers to the questions posed in the research .By establishing and

agreeing on the key question to be answered through market research , as well as why

that information will be useful , researchers can zero in on their information needs.

Understanding how the information will impact other decisions also helps to further

refine information collection.

Online Marketing

Technologies that support Online Marketing:

• Web transaction logs: Records that document user activity at the Web site.

• Transaction logs : Coupled with data from the registration forms and

shopping cart database, these represent a treasure trove of marketing information

for both individual sites and the online industry as a whole.

• Cookies : A small text files that Web sites place on visitors /client

computers every time they visit, and during the visit, as specific pages visited.

Cookies provide Web marketers with a very quick means of identifying the

customer and understanding his or her prior behavior at the site.

• Web bugs : Tiny graphic files hidden in marketing e-mail messages and on

Web sites. Web bugs are used to automatically transmit information about the

user and the page being viewed to a monitoring server.

• Databases , data warehouses, data mining , and “profiling “ :Technologies that

allow marketers to identify exactly who the online customer is and what they

want , and then to present the customer with exactly what they want, when they

want it, for the right price.

• Advertising networks: best known for their ability to present users with banner

advertisements based on a database of user behavioral data. Specialized ad servers

are used to store and send users the appropriate banner ad.

CRM systems:

A repository of customer information that records all of the contacts that a customer has

with a firm and generates a customer profile available to everyone in the firm who has a

need to “know the customer”.

IT enabled marketing and branding strategies:

• Online marketing techniques to online customers include permission marketing,

affiliate marketing, viral marketing, and brand leveraging.

• Online techniques for strengthening customer relationships include one-to-one

marketing; customization, transitive content; and customer service (CRMs, FAQs,

live chat, intelligent agents, and automated response system).

• Online pricing strategies include offering products and services for free,

versioning, bundling, and dynamic pricing.

• Strategies to handle the possibility of channel conflict.

Direct E-mail marketing:

E-mail marketing messages sent directly to interested users (direct e-mail marketing)

have proven to be one of the most effective forms of marketing communications. The key

to effective direct e-mail marketing is “interested users”. Direct e-mail marketing is not

spam. SPAM involves sending unsolicited e-mail to a mass audience of Internet users

who have expressed no interest in the product. Instead, direct e-mail marketing messages

are sent to an “opt in” audience of Internet users who have expressed at one time or

another interest in receiving messages from the advertiser. By sending e-mail to an opt-in

audience, advertisers are targeting interested customers. Because of the comparatively

high response rates and low cost, direct e-mail marketing is the fastest growing form of

online marketing.

The primary cost of e-mail marketing is for the purchase of the list of names to which the

e-mail will be sent.

Due to the cost savings possible with e-mail, the short time to market, and high response

rates, companies are expected to increasingly use e-mail to communicate directly with

customers.

Online Marketing Metrics:

1. Impression

2. Click through Rate (CTR)

3. Hits

4. Page Views

5. Stickiness (Duration)

6. Unique visitors

7. Loyalty

8. Reach

9. Regency

10. Acquisition rate

11. Conversion rate

12. Attrition rate

13. Abandonment rate

14. Retention rate

1. Impressions are the number of times an ad is served.

2. Click through rate (CTR) measures the percentage of people exposed to an online

advertisement who actually click on the advertisement.

3. Hits are the number of http requests received by a firm’s server .Hits can be

misleading as a measure of site activity because a “hit” does not equal a page: a

single page may account for several hits if the page contains multiple images or

graphics. A single site visitor can generate hundreds of hits.

4. Page views are the number of pages requested by visitors. A single page that has

three frames will generate three page views.

5. Stickiness (Duration) is the average length of time visitors remain at a site .The

longer amount of time a visitor spends at a site , the greater the probability of

purchase.

6. Unique visitors count the number of distinct, unique visitors to a site, regardless of

how many pages they view.

7. Loyalty measures the percentage of users who return in a year. This can be good

indicator of the trust shoppers place in site.

8. Reach is typically a percentage of the total number of consumers in market who

visit a site.

9. Regency like loyalty measures the power of site to produce repeat visits and is

generally measured as the average number of days elapsed between shopper and

customer visits.

10. Acquisition rate measures of the percentage of visitors who register or visit product

pages (indicating interest in the product)

11. Conversion rate measures the percentage of visitors who actually purchase

something.

12. Attrition rate measures the percentage of customers who purchase once , but

never return within a year.

13. Abandonment rate measures the percentage of shoppers who begin a shopping

cart form but then fail to complete the form and leave the site.

14. Retention rate indicates the percentage of existing customers who continue to buy

on a regular basis.

Online Advertisement:

It is the most common and familiar marketing communications tool .The

advantages of online marketing are the ability to target ads to narrow segments and to

track performance of advertisements in almost real time. Online advertisements also

provide greater opportunities for interactivity – two – way communication between

advertiser and the potential customer.

Different forms of online advertisements include:

• Banner and rich media ads

• Paid search engine illusion and placement

• Sponsorships , and

• Affiliate relationships

• Direct E-mail marketing

IT enabled services for Governance:

E-governance is an opportunity to re-think the business process following a logic that

places the user at the center of every task performed.

E-governance facilitates economic efficiency, transparency as a means of preventing

corruption and the importance of information in the analysis, articulation and acceptance

of policy choices.

E-governance involves transformation from being passive information and service

provider to active citizen involvement.

It includes the following dimensions:

1. Single source of information for user/customer

2. Equality and easy of access

3. Optimizing resource of multiple organizations with the aid of inter-

organizational Information System

4. Intergovernmental participation

5. Public relation

6. Involving various stakeholders

7. Simulating debates

8. Exchanging views and information

9. Increasing participation by employees, customers in decision making

10. Public information feedback

E-governance from the government point of view is smoothen interface between

government and citizens for Simple, Moral, Accountable, Responsive and Transparent

(SMART) governance.

E-governance is “people, process and policies associated with managing technology.”

Why E-governance:

The major objective of any business organization is to provide better services and at the

same time monitor the whole process. It facilitated the managers or role players to

perform the task easily. It enables:

1. More responsive and accessible to changing needs of the customers

2. Provide high quality monitoring with lesser people

3. Economic growth can be achieved by means of wealth creation

4. Bring efficiency by quality delivery services

5. Better transparency and integrity in dealing with customer and government.

6. Greater synergy in decision making

7. Enable to create electronic/digital forums

8. Increased productivity and enhance the overall competitiveness

9. Reduction in duplication of information

10. Monitoring of business transaction at lower cost

11. Market expansion and contribute to the macro-economy of the state and country.

E-governance in organization:

In order to adopt change in the system one has to face challenges of different types. An

organization may have to deal with the following issues and develop strategies for the

same.

1. Mindset of people

2. Power of Knowledge

3. Structure

4. Legal framework

5. Labour and union

6. Knowledge Management

7. Language

8. Process Reengineering

9. Infrastructure

10. Connectivity

Issues for Implementation:

Following are the issues to be considered before an organization goes for implementing

e-governance:

1. Technology issues

2. Change related issues

3. Funding issues

4. Language

5. Content

Technology issues: The organization has to decide about the technology infrastructure

required to be a part of E-governance .This is as well an essential factor to provide

efficient services .The technology issues can be categorized into:

1. Hardware issues

2. Software issues

Change Related Issues: These can be grouped under

1. Organizational issues

2. Political issues

3. Employee related issues

4. Language issues

Funding issues:

Cost is a critical factor to be considered irrespective of private or public sector

organizations .Since huge investment is required to introduce computers at different

working levels both in government and business organizations one can think of leasing

this activity to reduce cost involves in buying the computers.

Language issues:

In India adoption of vernacular language poses a major challenge in the electronic

environment .This will facilitate access to resources available in local languages.

Content:

Content is the focus on E-Governance. The challenge is to develop web content

into an integrated online experience that enhances the value of printed and online

products .Content convergence is an important issue as it has a major relationship with

• Compute industry

• Information industry

• Communication networking