eCommerce Basics

"The Internet proposes no threat to traditional marketing channels. All you need to keep everyone happy is to increase orders ".
paraphrased from:	Michael Dell, Owner
	Dell Computers

Part 2 - eCommerce Basics: The Technology & Participants

Players. No business exists in a vacuum. It is part of a market and marketing system. There are players in the market: customers, your business, competitors, manufacturers, and intermediaries (wholesalers, retailers). There are also facilitators, companies and organizations not involved in the buying and selling process, but supportive of the process. Examples are banks, transportation firms, credit card companies, etc. There are also legal and governing organizations that develop the technology and rules for the INternet and WWW.

The following diagram shows relationships between organizations, customers, businesses and other participants that make the Internet and WWW work for eCommerce.

What happens when a customer places an order?
Click here for a printable version

Who Runs the Internet?

Internet governance evoled haphazardly over the years. The U.S. Defence Department paid for most of the Internet's development in the 1960's. The "Internet Address Book" of DNS servers is operated by ICANN, an international consortium that still answers to the U.S. Department of Commerce. Technology standards and protocols are developed by ISOC, largely governed by international scientists and educational institutions. In January 1992, the Internet Society (ISOC) was chartered as a U.S. District of Columbia non-profit corporation.The World Wide Web standards are developed by the World Wide Web Consortium (W3C), which was created in 1994 and is an international consortium. The U.S. bears a disproportional influence on the Internet and the WWW compared to the rest of the world.

http://www.w3.org/Consortium/ Development and purpose of the W3C.

http://www.acm.org/ubiquity/views/v6i5_simoneli.html a guide to major Internet governing bodies.

http://www.cpsr.org/prevsite/onenet/whoruns.html a summary of governing bodies by type: tech firms, government, education, business, users, etc.

http://www.unh.edu/Internet/web/whoruns.html Groups that contribute to the Internet architecture and use.

What is your place in the Distribution Channel?

What kind of business are you and what roles will you play in the market?

In eCommerce, you may need to add new intermediaries even if you have an existing business. Why? Well, the current ones may be inadequate to the tasks, inadequate to the scale of business, or you may be reaching new markets or new geographies. Some intermediaries and facilitators necessary to eCommerce include:

Manufacturer
Intermediaries	Facilitators
	Warehouse
Retailers	Transportation
Wholesaler	Merchant Service Company
Drop shippers
Fulfillment Services Fulfillment House Fulfillment by Amazon Issue - RMA Module
E-tailers	Internet Merchant Bank
	ISP (Web Host) http://www.cruzio.com/ http://www.sasquatch.com/ http://www.attbroadband.com/services/
	Agents/Brokers
	eCommerce Providers http://store.yahoo.com/
Consumer

So, What is your place in the Distribution Channel? What kind of business are you and what roles will you play in the market?

We'll develop this entire concept later when we look closely at the whole Marketing Concept for your business.

"On the Internet, no one knows you're a dog."

(thanks to Topsy Smalley, Librarian, Cabrillo

Cat Lover's Click Here

How do computers find each other on the Internet? How do Servers and ISP's connect?

ISP's generally offer Internet connectivity AND other services to customers such as you and me: email, ftp, domain hosting, etc.

The backbone of the Internet is connected by large ISP's sometimes called IAP's or Internet Access Providers. IAP's don't deal with individuals or small businesses. Network Access Providers, NAP's, are at the top. They are the domain registrars and large, core Internet organizations that regulate and run the Internet.

Everyone must connect to the internet through an ISP: individuals, Banks, Colleges, Gas staions, retailers, businesses, etc.

Cabrillo College uses Calren to provide our network. This is done through SBC and a very large cabinet in the basement of the 100 building. We have a DS3 connection with potential to add several times the capacity.
http://www.cenic.org/CalREN/

ISP NAP

The Web servers and ISP connections might follow a hierarchy similar to the figure below.

How does a client computer ask for and find a particular web page?
aka: How Computers Find Each Other

eCommerce Trends, Models and Vocabulary on the Internet

What does a Business do on the Internet?

To understand the evolving relationship of business and the Internet we need to realize that our terminology is evolving to reflect the changes. We throw around terms loosely: e-tailing, Web business, e-business, e-commerce, EC, e-marketing, Electronic Commerce Online selling, digital business and so on. There are two we should develop our thinking around.

eBusiness - Any company with an online presence (a website) It's a broader view of the activities a business might carry on online other than operating an eCommerce shop. This could include online or e-auctioning, banking, informational directories, file sharing, database sharing, business collaborations, gambling, education & training, mailing, marketing (e-procurement or buying and selling goods and services via the Internet), operational resource management, distribution, stock trading, and more.
eCommerce - Creating a shop online, retail or wholesale. Selling and marketing online via the WWW and the related technologies like security, data encryption, cybercash, electronic database management etc. to do so. Sometimes all the activities to implement the shop's functions are included in the eCommerce concept (logistics, billing, managing supply, warehousing , marketing and other non-online support functions)
mCommerce - Mobile commerce is centered around individual participation (the so called cashless society): vending machine with a wireless connection can be accessed via
- a PDA (beam the payment info or open a web page for paying)
- a cell phone can add the charge to its billing
- a WAP-enabled "Smart Card"
  Related "mCommerce" technologies include electronic toll booth collection/smart tags, wand technology for payment (some MacDonalds have a keychain wand payment system

Some terms, jargon and their context that allow us to put together an online business presence include:

The Internet - A network of networks. Intranets and extranets are subsets of the Internet that can only be viewed by certain groups. The Internet is not just computers. It is a combination of computer networks and communication networks like fax, telephone, pager and satellite telecommunications. It is possible to convert/translate a fax to an email, an email to a cell phone message, text from English to French, programming languages to database languages and so on.
Intranets - Private networks (servers, Websites, databases) sharing products, software, calendars, front ends to databases, file and software sharing, email, and so on. You're on one now
Extranets - Partnerships of linked intranets
Client - A computer operated by an information consumer (you). As a user, you are part of the Internet, but if your computer broke down no one would know or care or be affected.
Your Computer - An access point to the Internet but not a "stop" on the "information highway." aka the "client" in a client-server relationship
Server - A Computer/information provider. It is part of the Internet "highway." aka the "server" in a client-server relationship
Brick & Mortar Business - A physical business (a building)
B2B - Business to business
B2C - Business to customer
B2G - Business to government
C2C - Consumer to consumer
24/7 - Open 24 hours, seven days a week
TCP/IP - Protocol for how computers find each other, identify themselves, and converse through electronic transmission.
Web Page - A single document (file) on the Web
Web Site - A collection of related Web pages.
Homepage - The first page you see when you visit a site; the front door. Sometimes called or preceded by a splash page.
Spam - Jack Mingo received an e-mailed ad that began:

"This is not spam. You are receiving this because you are on a list of e-mail addresses I have bought."

Bonus Jargon (extra Credit):
*What is a cookie?
*What is an Easter Egg?

The Client/Server Relationship

Server Characteristics Client Characteristics

hardware and software

Lives in a closet

not person friendly

operated by software

acts like a chauffeur, leaning against the limo, waiting

acts like a waiter running from table to table serving

hardware and software

operated by a person

lives in a ...

acts like a ...

eCommerce Business Models
Now, for your first class lesson on eCommerce basics we'll start with the basic eCommerce Business Models that get you started doing eBusiness. E-business can start with:

An Intranet, a network that is within the organization via a LAN, a local area network that uses the Internet standards and protocols for electronic communications. Those on the company Intranet can see the organization Web sites, but the rest of the world is blocked through firewalls and security devices. The company may still gateway to the Internet for messaging and other purposes but still be basically an Intranet eBusiness..
B2B, business-to-business done via the Extranet. Two or more Intranets are connected over the Internet and collaborate and share confidential information and accessibility, usually limited to selected information only. Financial projections expect B2B revenues to exceed $3.2 trillion in the U.S. and $6 trillion worldwide in 2004.
B2C, business-to-consumer, is what we commonly think of as eCommerce via the Internet. As with B2B, the sharing of confidential information and accessibility is usually limited to selected information only, such as the public Web sites and a database of products, services or information. ($204 million in the U.S. in 2003 - can you verify this figure?)
http://www.walmart.com/
http://www.polo.com/
C2C, or person to person (P2P) eCommerce is a rapidly growing use of the WWW. This is the auction model. http://www.auction.com/
B2G, growth has been slowed by the government's reluctance to embrace the Internet as a buying tool, partly due to Y2K concerns. It is becoming popular for both online bidding processes and purchases of items not large enough to merit a bid. With the U.S. government spending more than $500 billion a year opportunities abound. A related use of the Internet by government is to provide services and allow customer payments (G2C or C2G?): pay taxes, renew licenses, etc.

You should begin now to expand your notion of the B2C concept to include eCommerce, the activities necessary to support and implement eCommerce and the ideas of business included in the broader notion of eBusiness.

The following example may help you understand that you can use the Internet to do business without being directly connected to the Internet.

Hotels everywhere use the Internet as a communications gateway via the email to fax communication gateway for reservations. An individual on a home computer can view a hotel Website, send an email. The email is collected by the hotel's ISP and automatically sent to them as a fax. The hotel can respond by phone, fax, email, snail mail, etc. All this can be done by an individual in China to arrange a visit to Aptos-by-the-Sea for the cost of a local phone call.

Barriers to E-Commerce

There are a few recognized barriers that seems to stop most companies from going online. The same things that stop businesses from going into eCommerce might also serve as opportunities for the wise newcomer if they can respond to the challenges from a position of knowledge, Taking this class will address all these issue. Let's take an initial look at some "opportunities you can take on according to a survey conducted by CommerceNet in early 2000. .

Customer Opportunities & Challenges	Business Opportunities & Challenges
can't find what they want easily	no good models for B2B sites
images load too slowly	difficulty sharing order and customer info with existing databases and applications internally
afraid to give out information	not worth the cost and effort
no easy way to pay	sharing or loss of proprietary info
hard to figure out the ordering process	it will add to our problems not solve them
unacceptable Internet performance
not worthwhile

So, that's the basics. Next, we'll look at your reasons for getting into eCommerce. I'll bet they're good ones!