e - Commerce

Session - 7

What’s in the store Today?

• E-commerce Software

• Legal & Ethical Issues

E- Commerce Software

• The components of a web server are:

– Hardware

– Software

• When determining what sort of server hardware

and software to use you have to consider:

– Size of the site

– Purpose of the site

– Traffic on the site

• A small, noncommercial Web site will require

less resources than a large, commercial site.

Web servers

• Facilitates business

– Business to business transactions

– Business to customer transactions

• Hosts company applications

• Part of the communications infrastructure

The role of a web server

Will the site be hosted in-house or by a provider?

Factors to consider:

• The bandwidth and availability needed for the

expected size, traffic, and sales of the site

• Scalability: If the Web site needs to grow or has

a sudden increase in traffic, can the provider

still handle it?

• Personnel requirements or restraints

• Budget and cost effectiveness of the solution

• Target audience: Business-to-customer (B2C) or

business-to-business (B2B)

Hosting considerations

• Access to hardware, software, personnel

• Domain name, IP address

• Disk storage

• Template pages to use for designing the site

• E-mail service

• Use of FTP to upload and download information

• Shopping cart software

• Multimedia extensions (sound, animation, movies)

• Secure credit card processing

Services provided

Three levels of e-commerce packages:

• Basic: Requires a few hundred dollars in fees

and less than an hour to set up. Typically

hosted by an ISP.

• Middle-tier: Ranges in price from $1K to $5K+,

and can take from one day to several days to

set up. Can connect with a database server.

Requires hardware purchase and some skills.

• Enterprise-class: For large companies with high

traffic and transaction volumes. Hardware and

in-house specialists needed.

Levels of packages

Basic packages are free or low-cost e-commerce

software supplied by a Web host for building sites

to be placed on the Web host’s system.

• Fundamental services

• Banner advertising exchanges

• Full-service mall-style hosting

Basic packages

Midrange packages

Distinction from basic e-commerce packages:

• The merchant has explicit control over

– Merchandising choices

– Site layout

– Internal architecture

– Remote and local management options

• Other differences include price, capability,

database connectivity, software portability,

software customization tools, computer

expertise required of the merchant.

Enterprise solutions

Distinguishing features:

• Price ($25,000 - $1 million)

• Extensive support for B2B e-commerce

• Interacts with a variety of back office systems,

such as database, accounting, and ERP.

• Requires one or more dedicated computers, a

Web front-end, firewall(s), a DNS server, an

SMTP system, an HTTP server, an FTP server,

and a database server.

• Hardware, operating system, and application server

software must be considered together since each

affects the other.

• Whatever your choice you must ensure that the

server hardware is scalable, meaning that it can be

upgraded or a new server added as necessary.

• Other needs, such as a database server, should be

handled by separate hardware. Database products

have large processing needs.

Web platform choices

• Hardware and operating system choice

• Speed of connection to the Internet

• User capacity

– Throughput: The number of HTTP requests

that can be processed in a given time period.

– Response time: The amount of time a server

requires to process one request.

• The mix and type of Web pages

– Static pages

– Dynamic pages: Shaped in response to users.

Factors in performance

Web server software

• There is no best package for all cases.

• The market is divided into intranet servers and

public Web servers.

• Three of the most popular Web server programs:

– Apache HTTP Server

– Microsoft Internet Information Server

– Netscape Enterprise Server

Apache HTTP Server

• Developed by Rob McCool while at UI in the

NCSA in 1994.

• The software is available free of charge and is

quite efficient.

• Can be used for intranets and public Web sites.

• Originally written for Unix, it is now available

for many operating systems.

•

Microsoft IIS

• Microsoft’s Internet Information Server comes

bundled with Microsoft’s Windows NT/2000.

• Can be used for intranets and public Web sites.

• It is suitable for everything from small sites to

large enterprise-class sites with high volumes.

•

Other Web server tools include:

• Web portals

• Search engines

• Push technologies

• Intelligent agents

Web server tools

Ethical & Legal Issues

in

E- Commerce

Ethical and Legal Issues

• Ethical Issues

• Privacy

– Stored and transferred personal information

– Tracking (i.e. cookies) Ethical Issues

• Disintermediation

– Value-added services that require expertise

– Job loss

How is private information

collected?• Reading your newsgroup postings

• Finding you in an Internet Directory

• Making your browser collect information about you

• Recording what your browser says about you

• Reading your email» From Rainone, et al, 1998)

• Most common methods are cookies and site registration

Privacy: Some Guidelines

• Four privacy principles for Web site administrators:– Use the data collected to provide improved customer

service

– Do not share customer data without people outside the company without their permission

– Tell customers why you are collecting the data that you are collecting

– Give the customers the right to delete any data you have collected about them

Ethical Issues

• E-commerce sites should adhere to some ethical

standard otherwise the company may suffer:

– Damaged reputation

– Long term loss of trust

– Loss of business

• Advertising should include only true statements

– Important facts should be included so not to mislead

Ethical Issues (I)

• In 1999 eBay decided to ban all firearm

sales

– Since people were auctioning illegal items,

such as assault weapons and drugs

• Although not legally obligated, eBay began

to screen items being auctioned

– To see if they were illegal or violated

copyright laws

Ethical Issues (II)

• Several legislative proposal have been made with regard to Web site’s visitors privacy, but none have been accepted

• A report in 1999 stated that– Although, some sites do not have posted privacy

policies, companies are developing privacy practices with sufficient speed

• Privacy advocate groups were outraged and called for legislation.

• The future of privacy regulation in the US is therefore unclear

Domain Names and

Cybersquatting• Cybersquatting is the practice of registering

a domain name (that is the same as acompany’s trademark) so that you can latersell it to them at for large amounts of money

• In the US, the Trademark ConspiracyPrevent Act was signed in 1999

– It prevents trademark names from beingregistered as domain names by other people

Domain Names and

Cybersquatting (I)• Parties found guilty of cybersquatting can be

forced to pay up to $100,000 per trademark

• E.g. three cybersquatters try to sell the URL barrydiller.com for $10million– Barry Diller sued and won

• Registering a generic name, e.g. Wine.com is different from registering a name in bad faith

• A dispute may arise if the Trademark is a common term, e.g. www.sting.com was not awarded to Sting (the singer)

Name Changing

• A similar concept is that of name changing where a person buys a name that is a variation of the company’s trademark– This increases the likelihood that the site will be

visited in error

• If it is true cybersquatting then the Anticybersquatting Consumer Protection Act can be enforced– Companies tend to register as many names as

possible, but as new high level domains are added it increases the difficulty of this

Name Stealing

• This occurs when someone other than the domain’s name owner changes the ownership of the domain name

– Ownership information maintained by a public registrar is changed in their database to reflect a different owner’s name and address

– This can result in redirection of online customers or the posting of graffiti on the site and loss of business for a short period of time

Intellectual Property

• Intangible property rights

• In E-Commerce

– Copyrights

– Patents

– Trademarks

• IP Rights are not absolute

– Perishable

– Legal exceptions to allow public use at a specific rate

Copyrighting

• Protects expression of idea – not the idea itself– Example , pull-down menus cannot be copyrighted

• Confers owner exclusive right to– Copy the work

– Distribute to the public

• Expires after certain number of years after death of copyright holder– 28 years in the US

– 50 years in UK

• Generally, contents of websites are copyrighted

Copyrights Protection

• Digital Watermarks

– Embedded invisible bits in the digital content

– Cannot prevent copying but helps identify who

is doing it

• Validation codes

• Activation or deactivation of software

Patents

• Grants holder exclusive rights on inventions for fixed time– 17 years in US

– 20 years in UK

• Innovation must be– Novel

– Sufficiently inventive step (not trivial)

– Capable of industrial application

• Amazon sued Barnes and Noble for patent infringement (1-click ordering)

• Priceline has patent on reverse-auction model –sued Expedia

Trademarks

• Graphical sign used by business to identify their

goods and services

– Type of IP

– Must meet criteria of distinctive, original, and not

deceptive

– Domain names can be trademarked if they meet

above criteria

Spamming

• Indiscriminate distribution of messages without

permission of receiver

• Spam comprised 30% of all AOL mail in 1998

– Now down to 10% with spam blockers

• Some legislation out there

– Unsolicited Commercial Electronic Mail Act

• Requires all spam to start with word “advertisement”

• Includes name and address of sender

Five Principles of Privacy

Protection• Notice/Awareness

– Notice of collection practices prior to collecting information

• Choice/consent

– Consumers to be made aware of options and give consent

• Access/participation

– Must be able to access and challenge information

• Integrity/Security

– Must be assured data is secure

• Enforcement/Redress

– Government legislation or legal remedies

Taxation

• Online business may be subject to:

– Income taxes

• Based on net income (levied by the government)

– Transaction taxes

• Include sales tax, use tax, excise tax and custom

duties are levied on products and services that a

company sells

European Value Added Tax

• Value added tax (VAT) is used

• It is collected by the seller

• not on food stuff