1 MSIT-116B: E-Commerce 2 _____________________________________________________________ Course Design and Editorial Committee Prof. M.G.Krishnan Prof. Vikram Raj Urs Vice Chancellor Dean (Academic) & Convener Karnataka State Open University Karnataka State Open University Mukthagangotri, Mysore – 570 006 Mukthagangotri, Mysore – 570 006 Head of the Department and Course Co-Ordinator Rashmi B.S Assistant Professor & Chairperson DoS in Information Technology Karnataka State Open University Mukthagangotri, Mysore – 570 006 Course Editor Ms. Nandini H.M Assistant Professor of Information Technology DoS in Information Technology Karnataka State Open University Mukthagangotri, Mysore – 570 006 Course Writers Mr. Naresh Mr. Narendra Assisstant Professor Assistant Professor B.Tech and MS (Chinese program) Department of Computer Science Department of Computer Science Manasagangothri, University of Mysore Manasagangothri, University of Mysore Mysore Mysore Publisher Registrar Karnataka State Open University Mukthagangotri, Mysore – 570 006 Developed by Academic Section, KSOU, Mysore Karnataka State Open University, 2014 All rights reserved. No part of this work may be reproduced in any form, by mimeograph or any other means, without permission in writing from the Karnataka State Open University. Further information on the Karnataka State Open University Programmes may be obtained from the University‘s Office at Mukthagangotri, Mysore – 6. Printed and Published on behalf of Karnataka State Open University, Mysore-6 by the Registrar (Administration) 3 Karnataka State Open University Manasagangothri, Mysore – 570 006 MSc in Information Technology III Semester MSIT – 116B E-Commerce UNITS Contents PAGE NO. Module I UNIT 1 INTRODUCTION TO E-COMMERCE 1 -15 UNIT 2 STRATEGIES IN E-COMMERCE 16- 32 UNIT 3 INTEGRATION OF APPLICATIONS 33-48 UNIT 4 LAUNCHING A E-BUSINESS ON THE INTERNET 49-77 Module II UNIT 5 DESIGNING WEBSITES 78-85 UNIT 6 BUILDING A CORPORATE WEBSITE 86-100 UNIT 7 BUSINESS TO BUSINESS E-COMMERCE (B2B) 101-116 UNIT 8 REQUIREMENT FOR INTERNET BASED SYSTEMS 117-133 Module III UNIT 9 ELECTRONIC PAYMENT MEDIA, CREDIT CARDS, DEBIT 134-152 CARDS, SMART CARDS AND DIGITAL SIGNATURE UNIT 10 SECURITY IN CYBERSPACE AND DESIGNING FOR 153-169 SECURITY UNIT 11 HOW MUCH RISK CAN YOU AFFORD, THE VIRUS: 170-185 COMPUTER ENEMY NUMBER ONE. UNIT 12 SECURITY PROTECTION AND RECOVERY. MARKETING 186-201 4 ON THE INTERNET. CYBER FRAUDS, FINANCIAL FRAUDS, E-MAIL FRAUDS. Module IV UNIT 13 ONLINE SHOPPING, INTERNET MARKETING 202-217 TECHNIQUES UNIT 14 LEGAL AND ETHICAL ISSUES, LEGAL 218-235 INFRASTRUCTURE FOR E- COMMERCE IN INDIA UNIT 15 INTERNATIONAL CYBER LAW (IT ACT 2000 AND THE 236-253 LATEST CYBER LAW) UNIT 16 UNIT 16: THE E-CYCLE OF INTERNET MARKETING 254-271 CASE STUDY 5 Preface In recent few years, there has been enormous global change in business firms, markets and consumer behavior. In the next 5 years, e-commerce is projected to continue growing at high single-digit rates, becoming the fastest-growing form of commerce in the world. Recent technologies have created a better-informed consumer and a manager who is equipped with up- to-the-second information. Communities have sprung up and supply chains have been redesigned. In the course material for this semester, we have four modules which cover many topics in E-commerce. Each module has four units. Many of the important issue have been included. Security issues of electronic payments systems is a key issues which has been elaborated in a detailed manner. This material addresses some case studies in E-commerce. We take this opportunity to welcome you to your education on E-Commerce. Preparing this course material has been a lot of a good experience for us and we sincerely hope that you get a lot out of it. We have tried to be balanced in presenting both the advantages and disadvantages of some of the new ides. We encourage you to adopt a similar open and critical stance when reading this course material. Wish you happy reading!!! UNIT 1: INTRODUCTION TO E-COMMERCE Structure 1.0 Objectives 1.1 Introduction to electronic commerce 1.2 Introduction to e-business 1.3 Distinction between e – commerce and e– business 1.4 The impact of electronic commerce 1.5 Levels of e-commerce 1.6 Benefits of e-commerce 1.7 Limitations of e-commerce 6 1.8 Summary 1.9 Review questions 1.0 OBJECTIVES After studying this unit we will be able To understand the meaning of E-commerce and difference with E-Business To understand the levels of E-Commerce To understand the benefits and limitations of E-commerce 1.1 INTRODUCTION TO ELECTRONIC-COMMERCE Today, some considerable time after the so called ‗dot com/Internet revolution‘, electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology. There has been and continues to be much publicity and discussion about e-commerce. Library catalogues and shelves are filled with books and articles on the subject. However, there remains a sense of confusion, suspicion and is understanding surrounding the area, which has been exacerbated by the different contexts in which electronic commerce is used, coupled with the myriad related buzzwords and acronyms. This book aims to consolidate the major themes that have arisen from the new area of electronic commerce and to provide an understanding of its application and importance to management. In order to understand electronic commerce it is important to identify the different terms that are used, and to assess their origin and usage. With the advent of the Internet, the term e-commerce began to include: Electronic trading of physical goods and of intangibles such as information. All the steps involved in trade, such as on-line marketing, ordering payment and support for delivery. The electronic provision of services such as after sales support or on-line legal advice. Electronic support for collaboration between companies such as collaborative on-line design and engineering or virtual business consultancy teams. Some of the definitions of e-commerce often heard and found in publications and the media are: 7 Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet. Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet. Electronic commerce is about doing business electronically. E-commerce, ecommerce, or electronic commerce is defined as the conduct of a financial transaction by electronic means. The wide range of business activities related to e-commerce brought about a range of other new terms and phrases to describe the Internet phenomenon in other business sectors. Some of these focus on purchasing from on-line stores on the Internet. Since transactions go through the internet and the Web, the terms I-commerce (Internet commerce), icommerce and even Web- commerce have been suggested but are now very rarely used. Other terms that are used for on- line retail selling include e-tailing, virtual-stores or cyber stores. A collection of these virtual stores is sometimes gathered into a ‗virtual mall‘ or ‗cybermall‘. 1.2 INTRODUCTION TO ELECTRONIC-BUISNESS As with e-commerce, e-business (electronic business) also has a number of different definitions and is used in a number of different contexts. One of the first to use the term was IBM, in October 1997, when it launched a campaign built around e-business. Today, major corporations are rethinking their businesses in terms of the Internet and its new culture and capabilities and this is what some see as e-business. E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners. E-business includes customer service (e-service) and intra-business tasks. E-business is the transformation of key business processes through the use of Internet technologies. An e-business is a company that can adapt to constant and continual change. The development of intranet and extranet is part of e-business. E-business is everything to do with back-end systems in an organisation. In practice, e-commerce and e-business are often used interchangeably 8 1.3 DISTINCTION BETWEEN E-COMMERCE AND E-BUISNESS Commerce is defined as embracing the concept of trade,‗exchange of merchandise on a large scale between different countries‘. By association, e-commerce can be seen to include the electronic medium for this exchange. Thus electronic commerce can be broadly defined as the exchange of merchandise (whether tangible or intangible) on a large scale between different countries using an electronic medium – namely the Internet. The implications of this are that e- commerce incorporates a whole socio-economic, telecommunications technology and commercial infrastructure at the macro-environmental level. All these elements interact together to provide the fundamentals of e-commerce. Business, on the other hand, is defined as ‗a commercial enterprise as a going concern‘. E-business can broadly be defined as the processes or areas involved in the running and operation of an organisation that are electronic or digital in nature. These include direct business activities such as marketing, sales and human resource management but also indirect activities such as business process re-engineering and change management, which impact on the improvement in efficiency and integration of business processes and activities. Figure 1.1 illustrates the major differences in e-commerce and e-business, where e-commerce has a broader definition referring more to the macro-environment, e-business relates more to the micro-level of the firm. 9 THE KEY DRIVERS It is important to identify the key drivers of e-commerce to allow a comparison between different countries. It is often claimed that e-commerce is more advanced in the USA than in Europe. These key drivers can be measured by a number of criteria that can highlight the stages of advancement of e-commerce in each of the respective countries.