E-Commerce and its Application

Unit-I
Introduction of e-commerce
Electronic Commerce is a modern business methodology that
addresses the needs of organizations merchants, and
consumers to cut costs while improving the quality of goods
and services and increasing the speed of service delivery.
E-commerce is associated with the buying and selling of
information, products, and services via computer networks
today and in the future via any one of the myriad of networks
that make up the Information Superhighway(I-Way).
I-Way will transform information transport technology for
electronic commerce applications and provide and economic
windfall similar to what the interstate highway system did for
productivity in the nation’s manufacturing, travel, and
distribution system.
Introduction of e-commerce
The I-way is not a U.S phenomenon but a global one,
as reflected by its various labels worldwide.
For instance, it is also called the National Information
Infrastructure (NII) in the United States, data-dori in
Japan, and jaring, which is Malay for “net”, in
Malaysia.
E-commerce is the well suited to facilitate the current
reengineering of business processes occurring at many
firms.
The broad goals of reengineering and e-commerce are
remarkably similar: reduced costs, lower product cycle
times, faster customer responses, and improved service
quality.
Introduction of e-commerce
One major goal of the reengineering effort is to use electronic
messaging technologies - a key building block of e-
commerce – to streamline business processes by reducing
paperwork and increasing automation.
For example, electronic data interchange (EDI) a fast and
dependable way to deliver electronic transactions by computer
to computer communication – combined with just-in-time
(JIT) manufacturing methods, enables suppliers to delivery to
the factory floor, resulting in savings in inventory,
warehousing, and handling costs.
EDI is primarily inter organizational, electronic mail(e-mail)
does the same thing, enabling firms to accelerate the
document-based business processes both inside and across the
organization.
Introduction of e-commerce
Technologies such as EDI and e-mail, widely used for years in
work-flow and reengineering applications.
The effects of e-commerce are already appearing in all areas of
business, from customer service to new product design. It
facilitates new types of information based business process for
reaching and interacting with customers-on-line advertising
and marketing, on-line order taking, and on-line customer
service.
Clearly a key element of e-commerce is information
processing. All steps of e-commerce, except for production,
distribution, and delivery of physical goods, are forms of
information gathering, processing, manipulation, and
distribution, which computers and networks are perfectly
suited to handle.
Introduction of e-commerce
 This information processing activity is usually in the form of
business transactions, for which several broad categories can
be observed:
Transactions between a company and the consumer over
public networks for the purpose of home shopping or home
banking using encryption for security and electronic cash,
credit, or debit tokens for payment.
Transactions with trading partners using EDI.
Transactions for information gathering such as market
research using barcode scanners, information processing for
managerial decision making or organizational problem
solving, and information manipulation for operations and
supply chain management.
Transactions for information distribution with prospective
customers, including interactive advertising, sales, and
Electronic Commerce Framework
Electronic Commerce Framework
It is clear that e-commerce applications will be built on the
existing technology infrastructure – a myriad of
computers, communication networks, and communication
software forming the nascent information Superhighway.
Electronic commerce applications are listed below…
Supply chain management
Video on-demand
Remote banking
Procurement and purchasing
On-line marketing and advertising
Home shopping
The information Superhighway
Infrastructure
Electronic Commerce Framework
Building blocks in the infrastructure.
Common business services, for facilitating the buying and
selling process.
Messaging and information distribution, as a means of
sending and retrieving information.
Multimedia content and networking publishing, for creating a
product and a means to communicate about it.
The information Superhighway – the very foundations – for
providing the highway system along which all e-commerce
must travel.
Electronic Commerce Framework
The two pillar supporting all e-commerce applications and
infrastructure are just as indispensable.
 Public policy, to govern such issues as universal access, privacy, and
information pricing.
 Technical standards, to dictate the nature of information publishing, user
interfaces, and transport in the interest of compatibility across the entire
network.
To better understanding the integration of the various infrastructure
components in our framework, let us use the analogy of a traditional
transportation business.
Any successful e-commerce application will require the I-Way
infrastructure in the same way that regular commerce need the
interstate highway network to carry goods from point to point.
You must travel across this highway, whether you are an
organization purchasing supplies or a consumer ordering a movie on
demand.
Electronic Commerce Framework
I-way will be a mesh of interconnected data highways of
many forms: telephone wires, cable TV wires, radio-based
wireless-cellular and satellites.
Building the various highways is not enough. Transport
vehicles are needed, routing must be addressed, and of
course the transportation costs must be paid.
On the I-way, the nature of vehicular traffic is extremely
important. The information and multimedia content
determines what type of vehicle is needed.
Movies = video + audio
Digital games = music + video + software
Electronic books = text + data +graphics + music +
photographs + video
Electronic Commerce Framework
Once these vehicles (multimedia contents) are created,
where are they housed?
What sort of distribution warehouses are needed to store
and deliver their multimedia cargo?
In the electronic “highway system” multimedia content is
stored in the form of electronic documents. These
documents are often digitized, compressed, and stored in
computerized libraries or multimedia storage warehouses
called servers that are linked by transport networks to each
other and to the software/hardware clients that allow
customers to access them.
Electronic Commerce Framework
Exactly how do the vehicles move from one distribution
warehouse to another?
In a traditional transportation business, diesel engines or
gasoline powered motors move the trucks along the
roadways.
On the I-way, messaging software fulfills this role, in any
number of forms: email, EDI, or point to point file transfer.
How can businesses assure customers of safe delivery?
How can customers pay for using the I-way?
Encryption and authentication methods have been developed
to ensure security of the contents while traveling the I-way
and at their destination and
Numerous electronic payment schemes are being developed
to handle highly complex transactions with high reliability.
Electronic Commerce Framework
In the case of vehicular traffic over the interstate traffic
over the interstate highway system, public policy issues
concern pollution consumers from fraud, environmental
impact, and taxation.
Similarly in information traffic, public policy issues deal
with the cost of accessing information, regulation to
protect consumers from fraud and to protect their right to
privacy, and the policing of global information traffic to
detect information pirating or pornography.
Traditional Vs Electronic Commerce
Applications.
Traditional Vs E-Commerce Applications
Due to the increased popularity and availability of Internet
access many traditional small business are considering e-
commerce as a valid and profitable sales channel.
However, e-Commerce and traditional commerce are very
different.
Direct Interaction
Lower Costs
Reach
Returns Rate
Credit Card Fraud
Traditional Vs E-Commerce Applications
Direct Interaction
 Traditional commerce is often based around face to face interaction.
The customer has a chance to ask questions and the sales staff can
work with them to ensure a satisfactory transaction. Often this gives
sales staff an opportunity for up selling, or encourage the client to
buy a more expensive item or related items, increasing the shop
profits. On the other hand, e-Commerce doesn't offer this benefit
unless features such as related items or live chats are implemented.
Lower Costs
 E-Commerce is usually much cheaper than maintaining a physical
store in an equally popular location. Compared with costs such as
commercial space rent, opening an online store can be done at a
fraction of the price for less than $50 per month. This can prove
invaluable for small business owners who don't have the startup
capital to rent prime retail space and staff it to be able to sell their
goods.
Traditional Vs E-Commerce Applications
Reach
With an online shop you can do business with
anybody living on a country you are able and willing
to send mail to, unlike traditional commerce where
you are restricted to people who actually come to
your shop. This also opens the door to many other
forms of marketing that can be done entirely online,
which often results in a much larger volume of sales
and even foot traffic to the store. An online store has
no capability limits, and you can have as many
clients as your stock can serve.
Traditional Vs E-Commerce Applications
Returns Rate
In a traditional store, the customer will be
purchasing the product in person, which has some
benefits for both the him and the store. The customer
will be able to touch and check the items, to make
sure they are suitable, and even try them on, which
reduces the number of returned items or complaints
due to an item not being as advertised on a catalogue.
or promotional leaflet. Expect a significantly higher
rate of returns if you start trading online, as many
will just order and try the items at home, and won't
hesitate to return them as they can do it by post
without having to talk with anybody in person.
Traditional Vs E-Commerce Applications
Credit Card Fraud
The remote nature of E-Commerce makes much
more difficult to detect fraud, which means stores
can lose money due to fraud. While traditional
commerce is not totally secure, it's easier for a sales
attendant to verify that the person buying something
is actually the owner of the credit card, by asking for
photographic ID. However, the fight against card
fraud is well underway and banks and responsible e-
Commerce owners work together to verify that all
card use is legitimate.
Traditional Vs E-Commerce Applications
Selling online means learning new ways of dealing with
customers, marketing your products and fulfilling your
orders, but the benefits are great.
 You can keep your costs lower, reach a wider audience and
do business 24/7, having time to focus on improving your
products and services and your customer experience instead
of being on the store floor waiting for clients.
Some products sell better online than others: selling jewelry
for cash online is much easier than trying to sell houses or
cars.
However, having an online store can increase the customers
on your traditional commerce as well, as people are now able
to find you online and see what products you are offering.
The anatomy of e-commerce
applications.
The anatomy of e-commerce applications
 Multimedia Content for E-Commerce Applications
 Multimedia Storage Servers and Electronic Commerce
Applications
 Client-Server Architecture in E-Commerce
 Internal Processes of Multimedia Servers
 Video Servers and Electronic Commerce
 Importance Delivery/Transport and E-commerce
applications
 Consumer Access Devices
Multimedia Content for E-Commerce
Applications
What is multimedia?
The technical definition of multimedia is the use of digital
data in more that one format, such as the combination of text,
audio, video and graphics in a computer file/document.

TEXT IMAGES

GRAPHICS AUDIO
Multimedia
V
NUMERCAL DATA
VIDEO

HOLOGRAM ANIMATION
Multimedia Content for E-Commerce Applications
It purpose is to combine the interactivity of a user-friendly
interface with multiple forms of content.
Multimedia has come to mean the combination of computers,
television, and telephone capabilities in a single device.
Business professional are well aware that more than 90% of
the information that firms use for business operations and
decision making lives outside the “traditional” database
systems.
This external information in the form of technical manuals,
memos, e-mail, problem reports, sales brochures, and product
design is crucial for smooth organization functioning.
The goal of multimedia is to increase the utility of all
information through the processing and distribution of new
forms such as images, audio, and video.
Multimedia Content for E-Commerce Applications
The term “multimedia” covers so many things that it is often
difficult to conceptualize.
And, adding to the turmoil, telecommunications,
cable/broadcasters, computer software and hardware providers
each have a different view of what multimedia means.
Everyone does agree, however, that whatever multimedia proves
to be, business must be involved in it one way or another.
The traditional, separate business divisions present in table. No
longer hold true in the world of multimedia. For instance, an
electronic book, no longer text only, often includes photographs,
voice, video clips, animation, and a host of other things.
In other words, every form of content is interrelated to other
forms.
Multimedia Content for E-Commerce Applications
Traditional Divisions of Content by industry
Industry Content Produced
Cartoons, games, movies,
Entertainment producers
video, music
Game shows,
Broadcast television
documentaries,
productions
entertainment programs
Books, reference
Print publishing collections, directories,
catalogs.
Software programs:
animation, games,
Computer Software
productivity-enhanced
Multimedia Content for E-Commerce Applications
Access to multimedia content depends on the hardware
capabilities of the customer.
Telecommunications and cable companies, now aware of
the importance of content for the future of e-commerce
applications.
The real catalysts to the business computing boom in the
1980s proved to be productive enhancing software like
spreadsheets, word processing, desktop publishing
programs, icon-based user interface, and graphics.
The success of e-commerce applications also depends on
the variety and innovativeness of multimedia content and
packaging. The advantages goes to the current providers of
multimedia content- to entertainment, broadcast television
productions, traditional print publications, and software and
information services.
Multimedia Content for E-Commerce Applications
Supporting these content providers are hidden brigade of
small businesses or individuals producing content-writing
articles, creating videos, developing software programs,
and other important entrepreneurial activities.
Plenty of opportunity, remains, how ever, for new players
who can provide innovative content that meets consumer
demands not fulfilled by existing technology.
Multimedia Storage Servers and E-Commerce Applications
E-commerce requires robust servers to store and distribute
large amount of digital content to consumers.
These multimedia storage servers are large information
warehouses capable of handling various content, ranging
from books, newspapers, advertisement catalogs, movies,
games and x-ray images.
These servers, deriving their name because they serve
information upon request, must handle large scale
distribution, guarantee security, and complete reliability.
 Client-Server Architecture in E-Commerce
 Internal Processes of Multimedia Servers
 Video Servers and Electronic Commerce
Multimedia Storage Servers and E-Commerce Applications
 Client-Server Architecture in E-Commerce
Multimedia Storage Servers and E-Commerce Applications
 Client-Server Architecture in E-Commerce
 Clients- Clients are computers + software that request
information from servers.
 Servers- Servers are computer+ software that responded to
the client request with information.
 All e-commerce applications follow that client-server model.
The client server model replaces traditional mainframe-based
models that worked well for a long time.
 Mainframe computing, which traditionally meant “dumb”
terminals attached to a computer housed in a glass house, is
too costly and slow to cope with new data types like audio
and video.
Multimedia Storage Servers and E-Commerce Applications
 Client-Server Architecture in E-Commerce
 In contrast, the client server architecture links PCs to a
storage existing client-server models on PC servers, while
providing back-end technology for scalable and flexible
database management, have to be reengineered to
accommodate new data types.
Distribution of processing in multimedia client-server
Processed request
Application Application
Logic Processed reponse Logic

Presentation Multimedia
Logic Content

Multimedia Desktop Multimedia Server

Multimedia Storage Servers and E-Commerce Applications
 The client-server model, allows the client to interact with
the server through a request-reply sequence governed by a
paradigm known as message passing.
 The server manages application tasks, handles storage and
security, and provides scalability-ability to add more
clients as needed for serving more customers- and client
devices handle the user interface.
 In effect, the multimedia servers handles the critical
elements(distribution, connectivity, security, accounting)
and so is expected to simplify and make scaling more cost-
effective.
Multimedia Storage Servers and E-Commerce Applications
 Internal processes of Multimedia Servers
 The internal processes involved in the storage, retrieval, and
management of multimedia data objects are integral to e-
commerce applications.
 In general, a multimedia server is a hardware and software
combination that converts raw data into usable information
and then “dishes out” this information where and when users
need it.
 It captures, processes, manages, and delivers text, images,
audio, and video.
 Most multimedia servers provide a core set of functions to
display, create, and manipulate multimedia documents; to
transmit and receive multimedia documents over computer
networks, and to store and retrieve multimedia documents.
Multimedia Storage Servers and E-Commerce Applications
 Internal processes of Multimedia Servers
 To make interactive multimedia reality, a server must do the
following.
 Handle thousands of simultaneous users;
 Manage the transactions of these users (eg purchases, specific
information requests, customer billing) and
 Deliver information streams to consumers at affordable costs.
 Let us illustrate the issues by looking in video on demand.
Here, a single 90 minute video consuming over 100
gigabytes of storage space must be distributed to a large
number of consumers.
 For these requirements, platform choices include high-end
symmetric multiprocessors, clustered architecture, and
massive parallel systems.
Multimedia Storage Servers and E-Commerce Applications
 Internal processes of Multimedia Servers
 Massive parallel systems harness and power of cheap
processors and intricately chain them to create a web that
behaves as one single unit, although each processor has its
own communications pathway to the outside world.
 This process avoids the congested path ways of traditional
models while affording thousands of users information
from the server.
Multimedia Storage Servers and E-Commerce Applications
 Video Servers and Electronic Commerce.
 The e-commerce applications related to digital video will
include telecommuting and video conferencing,
geographical information systems that require storage and
navigation over maps, corporate multimedia server,
postproduction studios, and shopping kiosks.
 Consumer applications will include video on-demand and
a range of interactive services such as shopping, video
navigation and directories.
Multimedia Storage Servers and E-Commerce Applications
 Block diagram of a generic video on-demand system

Video Server
(wholesaler or distributor)

Video encoder (data compression

unit)

Billing
Cable Tv, telco, satellite and
based or other hybrid accountin
Subscriber delivery and router system g server
Subscriber
Subscriber
Subscriber
Subscriber
Subscriber Program or service
Subscriber selection interface
Multimedia Storage Servers and E-Commerce Applications
 Video Servers and Electronic Commerce.
 Video servers are an important link between the content
providers (entertainment/media) and transport providers
(telcos/wireless/cable operators).
 One important between video server and client-server
computer systems used extensively for data processing is that
video servers are designed to deliver information to hundreds
of consumers simultaneously via public telecommunications
and cable networks.
 Video servers tackle the “simultaneous overlapping” supply
problems that arises when providing on-demand services to
large number of homes. Numerous households will want to
watch the film either simultaneously or at overlapping times.
 The problem can be approached from either the hardware and
software.
Multimedia Storage Servers and E-Commerce Applications
 Video Servers and Electronic Commerce.
 In the case of hardware solutions, servers can harness the
power of massive parallel architectures – that is using
thousands of inexpensive microprocessors that are interlinked
to create the illusions of one large computer.
 Each processor acts as a “video pump” and distributes a
portion of the film. So that a single film can be viewed by
numerous household on demand.
 One example of such a video server is nCube. Which
contains 512 processors, each equivalent to an Intel Pentium
chips. The total random-access memory in such an
architecture is 16,000 megabytes (16 gigabytes) – dwarfing
the typical 8 megabytes found in a desktop computer.
Multimedia Storage Servers and E-Commerce Applications
 Video Servers and Electronic Commerce.
 Instead of massive parallel machine, Microsoft has
approached the problem as a customizable software issue.
 This software architecture, being developed under the code-
name Tiger, is based on the windows NT operating system.
 Tiger is expected to be implement in many ways – on
personal PCs for individual or work-group use, as corporate
servers for small - or mid-sized private networks, and as
large servers for large-scale consumer use.
 The goal is to provide the power functionality, and scalability
to give users split-second access to thousands of media files
and to allow laser disc-type functions such as pause, reverse,
fast-forward, and jump-ahead to user specified locations.
Information Delivery/Transport and E-Commerce Applications
Transport providers are telecommunications, cable, and
wireless industries; computer networks including
commercial networks such CompuServe or America
Online; and public networks such Internet.
The architecture is a mix of many forms of high-speed
network transport whether it be land-based telephone, air-
based wireless, modem-based PCs, or satellite
Information Transport Providers
transmissions. Information Delivery Methods
Long-distance Telephone lines; local
Telecommunication Companies
telephone lines
Cable TV coaxial, fiber optic, and
Cable Television companies
satellite lines
Internet; commercial on-line service
Computer Based online servers
providers
Cellular and radio networks; paging
Wireless communications
systems.
Information Delivery/Transport and E-Commerce Applications
Telecom-based:
These providers the most visible(and vocal) of all
competitors, include long-distance and local telephone
service providers.
The technology, known as asymmetric digital subscriber line
(ADSL), has some unresolved drawbacks:
 It cannot handle live transmission, and
 The picture it produces is not as clear as that provided by a well-tuned
cable hookup.
The researchers have recently improved the quality of the
picture and with further compression expect to accommodate
several channels of live video over a single telephone wire.
Information Delivery/Transport and E-Commerce Applications
Cable-based:
These providers depend on coaxial cable as transport roads
and will help determine which broadband applications and
services the viewing public prefers.
All leading cable providers are conducting trails with a
variety of hardware and software, and most are expected to
use fiber optic cable and coaxial wire as the delivery medium.
The strategy among cable companies is to develop a
“network neutral” content that uses digital compression and
is adaptable to alternative delivery systems, such as wireless
and satellites.
Coaxial cable
Fiber
Information Delivery/Transport and E-Commerce Applications
Computer network-based:
These providers are often dial-up linkages of lower
bandwidth when compared to telecom and cable highways.
Bandwidth is analogous to the number of lanes on a highway.
Examples of on-line transport architecture are CompuServe,
Prodigy, and America Online, which often tend to serve as
both a transport road and content providers.
Information Delivery/Transport and E-Commerce Applications
Wireless:
These operators are typically radio-based – cellular, satellite
and light-based - infra-red. In fact some of the most exciting
transport architecture are invisible.
New wireless based systems require new ways of thinking
about information delivery.
The 1990s have been characterized by record-breaking
growth in most wireless segments, including cellular, paging,
and specialized mobile radio.
Consumer Access Device
A myriad of devices can provide access to information:
videophones, PCs capable of handling multimedia,
personal digital assistants like Apple’s Newton, televisions
capable of two-way transmission, cellular phones, mobile
and portable computers.
Information Consumer Access Devices
Personal/desktop computing(workstations,
Computers with audio and video multimedia PC) mobile computing(laptop
capabilities and notebook) CD-ROM equipped
computers
Telephone Devices Videophone
Consumer electronics Television + set-top box , Game Systems
Pen-based computing, Voice-driven
Personal digital assistants (PDAs)
Computing, Software agents
Consumer Access Device
Almost everyone has a TV, and everyone is far more
comfortable using a TV than a PC.
TV made it far more appealing and affordable, advances in
computers are making it much easier to operate, much more
useful, and much less expensive.
The newest generation of PCs, for example, operates
microprocessors powerful enough to run video with the
resolution of a television picture
All access devices need not be hardware based, moreover. A
new breed of software based devices called software agents is
being created that will act as the consumer’s personal digital
assistants.
To illustrates difficulties in interface design in e-commerce
applications lets look at some specifics, beginning with on-line
newspapers and magazines.
Consumer Access Device
One major drawback is readers inability to decide which
stories to read. Readers of printed magazines can browse the
headline, the subheads, the photos, the captions, or perhaps
read three paragraphs and then hop to another story, all within
a few seconds.
On-line browsing is not easy. Often, users are confronted with
a menu of brief headlines, each describing a story. One selects
the story by typing a number at the keyboard, or if confronted
with a graphical user interface, by clicking on a mouse pointer.
Often, the menu doesn’t yield enough information to make an
informed decision, so time is wasted opening up stories and
then finding that they are not relevant.
Even if the material is not relevant, it is not that much fun
reading copy on a screen because the colors and layout are
often not attractive.
Consumer Access Device
To delve into interface design further, consider video on-
demand. It is clear that simply presenting the consumer
with 500 films without any clips would be a highly
ineffective marketing method.
On the other hand, playing a continuous cycle of 15-
second clips for 500 movies would require almost two
hours and would be just as ineffective as a list of 500 titles
sorted by category.
Currently, companies are bypassing the entire issue of
effective user interface design and focusing on getting the
basic conducted.