e commerce 2016

E-commerce 2016

Amir Manzoor Bahria University, Pakistan

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Copyright 2015 by Amir Manzoor No part of this book shall be reproduced, stored in retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission form the author. No patent liability is assumed with respect to the use of the information contained herein. While every precaution has been taken in the preparation of this book, the publisher and authors assumes no responsibility for errors and omissions. Neither is any liability assumed for damages resulting from the use of the information contained herein. All inquiries should be addressed to the author. E-commerce 2016 First Edition 2015 ISBN-13: 978-0-692-35927-3 All rights reserved under the copyright act. Printed in the United States of America Trademark Acknowledgements Full acknowledgement is given of all proprietary trademarks and registered trademarks that are mentioned in this book. In addition, terms suspected of being trademarks or series marks have been appropriately capitalized, author cannot attest to the accuracy of this information. Use of a term in this book should not be regarded as affecting the validity of any trademark or service mark.

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DEDICATION

To my loving brother Dr. Tahir Manzoor M.D.

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ABOUT THE AUTHOR

Amir Manzoor holds a bachelors degree in engineering from NED University, Karachi, an MBA from Lahore University of Management Sciences (LUMS), and Chartered Banker MBA from Bangor University, UK. He also holds more than 12 international IT industry certifications. He has served at senior managerial and consulting positions in USA and Pakistan for many years. He is currently serving as Faculty member in Management Sciences department of Bahria University, Karachi. He has published five book and many research articles in international referreed journals of repute. His research interests include electronic business and business use of information technology for competitive advantage.

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PREFACE The growth of the Internet continues to influence our lives and businesses. Irrespective of their type and size, all firms and organizations are rethinking their strategies and operations. An increasing number of businesses are using e-commerce to gain competitive advantage. However, doing e-commerce is complex and requires understanding a vast array of topics. Rapid advancement of technologies has made things possible we never thought of. Simulation of physical touch, augmentd reality, Internet-of-Things (IoT), and semantic web are just some examples. This book provides coverage of essential topics in E-commerce i.e. technology infrastructure, building blocks of e-commerce, online marketing, online payment systems, online business models, online business environment issues, website usability, e-commerce strategy, mobile commerce, e-CRM/e-SCM/e-SRM, and e-commerce site development. Compared with available texts on e-commerce, the perspective of this book is global e-commerce. The book is written in simple language, provides up-to-date coverage of material and associated research, and filled with examples to support material presented. This book is useful for undergrad and graduate students, professionals, and anyone looking to gain a solid foundation to continue their learning of dynamic e-commerce environment.

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ACKNOWLEDGEMENTS

The final shape of this book would not have been possible without the contribution of so many people that invested their time and energy to provide valuable ideas and suggestions. Collective wisdom, work, and experience of many professors, researchers, students, and practitioners have enriched the text. All the references to the published work have been provided in the bibliography section of each chapter. I am highly indebted and thankful to all those people who helped shape the development of this text. My special thanks and appreciation for all those people helped shape the development of this text by providing valuable material and suggestions for this book. I would like to thank my colleagues and friends at many universities in Pakistan, India, United States, Canada, Germany, France, Japan, UK, China, Netherlands, Turkey, Russia, Belgium, Australia, Austria, Denmark, Sweden, Spain, and New Zealand. I also want to thank you, the reader, for investing the time and effort to read and study this text. I have put significant energy and effort to make sure this text provides you the knowledge required to underatand, formulate, implement, and evaluate e-commerce solutions for any organization with which you become associated. Finally, I want to welcome and invite your suggestions, ideas, thoughts, comments, and questions regarding any part of this text or the supplementary materials. Please contact me at [email protected] or write me at the Management Sciences Department, Bahria University, 13, National Stadium Road, Karachi, Pakistan 75260. I sincerely appreciate and need your input to continually improve this text in future editions. I will especially appreciate if you are willing to draw my attention to specific errors or deficiencies in coverage or exposition. Thank you for using this text. Amir Manzoor

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List of Figures FIGURE 1-1: THE DIGITAL ECONOMY .............................................................................................. 9FIGURE 1-2: THE FORMULA OF DIGITAL ECONOMY ................................................................. 10FIGURE 1-3: DIMENSIONS OF E-COMMERCE ................................................................................ 11FIGURE 1-4: B2B BUSINESS MODELS ................................................................................................ 14FIGURE 1-5: FLOW OF INFORMATION BEFORE EDI .................................................................. 20FIGURE 1-6: FLOW OF INFORMATION AFTER EDI ..................................................................... 20FIGURE 1-7: STRUCTURE OF EDIFACT ........................................................................................... 23FIGURE 1-8: DATA ENCODING AND DECODING IN EDI ........................................................... 24FIGURE 1-9: TRANSLATION SYSTEM IN EDI ................................................................................ 24FIGURE 1-10: A VALUE-ADDED NETWORK .................................................................................... 26FIGURE 1-11: WORKING OF WEB-BASED EDI ................................................................................. 31FIGURE 1-12: WEB-BASED EDI TRANSACTION PROCESSING ................................................... 32FIGURE 2-1: A TYPICAL E-COMMERCE INFRASTRUCTURE ..................................................... 74FIGURE 2-2: E-COMMERCE AND BUSINESS PROCESSES ........................................................... 76FIGURE 2-3: A TYPICAL E-COMMERCE SYSTEM .......................................................................... 77FIGURE 2-4: OPEN SYSTEMS INTERCONNECTION (OSI) MODEL ......................................... 80FIGURE 2-5: POP, NAP, AND INTERNET BACKBONE ................................................................. 84FIGURE 2-6: IPV6 ADDRESS ................................................................................................................ 86FIGURE 2-8: CLASSIFICATION OF MARKUP LANGUAGES ......................................................... 94FIGURE 2-9: VPN STRUCTURE ......................................................................................................... 100FIGURE 2-10: DIAL-UP INTERNET CONNECTION ..................................................................... 104FIGURE 2-11: ISDN INTERNET CONNECTION ............................................................................ 105FIGURE 2-12: DSL INTERNET CONNECTION .............................................................................. 106FIGURE 2-13: LASED-LINE CONNECTION .................................................................................... 107FIGURE 2-14: SATELLITE INTERNET CONNECTION ............................................................... 108FIGURE 3-1: CLIENT-SERVER COMMUNICATION ..................................................................... 127FIGURE 3-2: DYNAMIC PAGE PROCESSING .................................................................................. 128FIGURE 3-3: PROCESSING OF CGI SCRIPT .................................................................................... 130

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FIGURE 3-4: PROCESSING OF HTML PAGES ................................................................................ 130FIGURE 3-5: PROCESSING OF ASP PAGE ........................................................................................ 131FIGURE 3-6: WORKING OF JSP PAGE .............................................................................................. 132FIGURE 3-7: WORKING OF PHP SCRIPT ........................................................................................ 133FIGURE 3-8: DATABASE CONNECTIVITY ..................................................................................... 139FIGURE 3-9: DATABASE CONNECTIVITY USING CGI SCRIPTS ............................................... 139FIGURE 3-10: BLADE SERVER .......................................................................................................... 175FIGURE 3-11: THIN CLIENT ............................................................................................................. 176FIGURE 3-12: A FILL-IN ORDER FORM .......................................................................................... 178FIGURE 3-13: A TYPICAL SHOPPING CART ................................................................................... 179FIGURE 3-14: WEB SERVICE ARCHITECTURE ............................................................................. 189FIGURE 4-1: INTERNET VALUE CHAIN ........................................................................................ 219FIGURE: 6-1: THREE-CLICK NAVIGATION ................................................................................... 307FIGURE 7-1: MARKETING FUNNEL................................................................................................ 339FIGURE 7-2: USE OF UTM TAGS ....................................................................................................... 339FIGURE 7-3: ERROR MESSAGES TO BE AVOIDED ...................................................................... 346FIGURE 7-5: B2B PROMOTION CONTENT ................................................................................... 374FIGURE 7-6: BING ADS ....................................................................................................................... 382FIGURE 7-7: CONTEXTUAL TARGETING ..................................................................................... 391FIGURE 7-7: BEHAVIORAL TARGETING ....................................................................................... 392FIGURE 7-8: GEO-TARGETING ........................................................................................................ 392FIGURE 7-9: WORKING OF CRAWLER-BASED SEARCH ENGINE ............................................ 411FIGURE 7-10: EYE-TRACKING HEAT MAP .................................................................................... 413FIGURE 7-11: CHAID TREE ................................................................................................................ 437FIGURE 7-12: FTC SHOPPING ASSISTANT TOOL ........................................................................ 442FIGURE 7-13: WORKING OF RECOMMENDER SYSTEM ............................................................ 443FIGURE 7-14: THE 2015 GLOBAL RETAIL E-COMMERCE INDEX ............................................ 444FIGURE 7-15: TOP LAW VIOLATIONS FOR E-COMMERCE COMPLAINTS) ........................... 452FIGURE 7-16: TOP PRODUCTS OR SERVICES FOR E-COMMERCE COMPLAINTS .............. 452

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FIGURE 8-1: NON 3D-SECURE TRANSACTION ........................................................................... 497FIGURE 8-2: 3D SECURE TRANSACTION PROCESSING ............................................................ 498FIGURE 8-3: SET OPERATION ......................................................................................................... 500FIGURE 8-4: WORKING OF SSL ........................................................................................................ 502FIGURE 8-5: COMPARISON OF HTTP AND HTTPS .................................................................... 504FIGURE 8-6: MOBILE TRANSACTION ............................................................................................ 506FIGURE 8-7: A PHISHING MESSAGE ............................................................................................... 510FIGURE 8-8: CLOSED-LOOP PAYMENT SYSTEM ........................................................................ 527FIGURE 8-9: OPEN-LOOP PAYMENT SYSTEM............................................................................. 527FIGURE 8-10: TRANSACTION AUTHORIZATION CYCLE .......................................................... 549FIGURE 8-11: ONLINE TRANSACTION SETTLEMENT ............................................................. 550FIGURE 8-12: ELECTRONIC CHECK FORM .................................................................................. 557FIGURE 8-13: E-CHECK CONFORMATION PAGE ........................................................................ 558FIGURE 8-14: E-CHECK PROCESSING ............................................................................................ 559FIGURE 9-1: AN E-CRM SYSTEM ...................................................................................................... 573FIGURE 9-2: E-CRM CYCLE .............................................................................................................. 574FIGURE 10-2: RELATIONSHIP BETWEEN THREAT, VULNERABILITY, AND COUNTERMEASURE .......................................................................................................................... 601FIGURE 10-3: CATEGORIES OF SECURITY THREATS ................................................................. 601FIGURE 10-5: ACTIVE/PASSIVE ATTACKS CLASSIFICATION ................................................... 603FIGURE 10-6: PASSIVE ATTACKS ..................................................................................................... 604FIGURE 10-7: ACTIVE ATTACKS ....................................................................................................... 604FIGURE 10-9: FRONT AND BACK-END SYSTEMS ........................................................................ 608FIGURE 10-10: DDOS ATTACK ............................................................................................................ 612FIGURE 10-11: SOCIAL ENGINEERING ........................................................................................... 617FIGURE 10-12: WORKING OF A DMZ ............................................................................................... 625FIGURE 10-13: BASIC FIREWALL OPERATIONS ........................................................................... 626FIGURE 10-14: WORKING OF PROXY SERVER .............................................................................. 627FIGURE 10-15: WORKING OF IPS ...................................................................................................... 629FIGURE 10-16: WORKING OF IPS ...................................................................................................... 630

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FIGURE 10-17: PRIVATE KEY CRYPTOGRAPHY ........................................................................... 631FIGURE 10-18: HASH FUNCTION CRYPTOGRAPHY ................................................................... 632FIGURE 10-19: PUBLIC KEY CRYPTOGRAPHY .............................................................................. 632FIGURE 10-20: PUBLIC KEY CRYPTOGRAPHY .............................................................................. 633FIGURE 10-21: ENCRYPTION PROCESS ......................................................................................... 634FIGURE 10-22: WORKING OF FTP OVER TLS/SSL ....................................................................... 637FIGURE 10-23: WORKING OF DIGITAL SIGNATURES ................................................................. 639FIGURE 10-24: WORKING OF PKI ..................................................................................................... 640FIGURE 10-25: A DIGITAL CERTIFICATE ....................................................................................... 641FIGURE 10-26: EVOLUTION OF ANTI-VIRUS SOFTWARE ......................................................... 644FIGURE 10-28: RISK MANAGEMENT FRAMEWORK .................................................................... 650FIGURE10-29: WORKING OF SHELLSHOCK .................................................................................. 654FIGURE 10-30: WORKING OF HEARTBLEED ................................................................................ 655FIGURE 11-1: WORKING OF MOBILE PAYMENT SYSTEM ......................................................... 681

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List of Tables TABLE 1-1: E-COMMERCE BUSINESS TYPES ................................................................................... 4TABLE 1-2: E-COMMERCE HISTORY ................................................................................................. 4TABLE 2-1: GENERAL AND COUNTRY TLDS ................................................................................. 88TABLE 3-1: LINUX AND WINDOWS OS COMPARISON ................................................................ 147TABLE 3-2: TOP WEB SERVER PRODUCTS .................................................................................... 148TABLE 3-3: EDITIONS OF SQL SERVER ......................................................................................... 153TABLE 3-4: RANKING OF DBMS ....................................................................................................... 157TABLE 4-1: AD TYPES AND WEBSITES ........................................................................................... 221TABLE 4-2: MAJOR INDIAN E-COMMERCE ACQUISITIONS .................................................... 227TABLE 4-3: DIFFERENT TYPES OF MODELS ADOPTED BY WEBSITES ............................... 242TABLE 7-1: APPLICATIONS OF INTERNET TOOLS .................................................................... 372TABLE 7-2: MARKETING APPLICATIONS OF INTERNET, INTRANET, AND EXTRANET 373TABLE 7-3: COMMONLY USED STANDARD BANNER SIZES ................................................... 379TABLE 8-1: ADVANTAGES OF ELECTRONIC CASH .................................................................... 489TABLE 8-2: PAYPAL FEES ................................................................................................................... 491TABLE 9-1: EVOLUTION OF CRM TO SCRM ................................................................................. 577TABLE 10-1: TIME TAKEN TO BREAK DES ENCRYPTION........................................................ 633TABLE 10-2: TIME TAKEN TO BREAK RC-4 ENCRYPTION ....................................................... 633TABLE 12-1: TYPES OF INTELLECTUAL PROPERTY RIGHTS ................................................. 697TABLE 12-2: GENERICIDE TERMS .................................................................................................. 700

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CONTENTS

CHAPTER 1: INTRODUCTION TO E-COMMERCE .......................................................................... 2E-COMMERCE: THE DEFINITION ................................................................................................................................ 2E-COMMERCE AND E-BUSINESS ................................................................................................................................... 2E-COMMERCE HISTORY ................................................................................................................................................ 4COMMERCIALIZATION OF THE INTERNET ................................................................................................................. 6

Role of Privatization in Commercialization of Internet .................................................................................................... 6DRIVING FORCES OF E-COMMERCE ............................................................................................................................ 7FUNCTIONS OF E-COMMERCE ...................................................................................................................................... 8DIGITAL ECONOMY, E-COMMERCE, AND E-BUSINESS............................................................................................. 8DIMENSIONS OF E-COMMERCE .................................................................................................................................. 11INTERNET VS. NON-INTERNET E-COMMERCE ........................................................................................................ 12CATEGORIES OF E-COMMERCE .................................................................................................................................. 12

Business-to-Business (B2B) .......................................................................................................................................... 12Characteristics of B2B E-commerce .............................................................................................................................. 12B2B Market Size ........................................................................................................................................................ 13B2B Ecommerce Business Models ................................................................................................................................ 13One-to-Many ............................................................................................................................................................... 13Many-to-Many ............................................................................................................................................................ 14B2B E-commerce Trends ............................................................................................................................................. 14Business-to-Consumer (B2C) ....................................................................................................................................... 15Characteristics of B2C E-commerce .............................................................................................................................. 16Business-to-Business-to-Consumer (B2B2C) ................................................................................................................. 16Business-to-Government (B2G) .................................................................................................................................... 16Consumer-to-Business (C2B) ....................................................................................................................................... 17Consumer-to-Consumer (C2C) ..................................................................................................................................... 17Business-to-Employee (B2E) ........................................................................................................................................ 17Government-to-Government (G2G) .............................................................................................................................. 18Government-to-Employee (G2E) .................................................................................................................................. 18Government-to-Business (G2B) .................................................................................................................................... 18Government-to-Citizen (G2C) ..................................................................................................................................... 18Other Forms of E-commerce ......................................................................................................................................... 18

ELECTRONIC DATA INTERCHANGE (EDI) .............................................................................................................. 19Components of EDI .................................................................................................................................................... 21Advantages and Disadvantages of EDI ....................................................................................................................... 25Security in EDI .......................................................................................................................................................... 25Selecting an EDI System ............................................................................................................................................. 25Future of EDI ............................................................................................................................................................ 26

VALUE ADDED NETWORKS (VAN) .......................................................................................................................... 26

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Advantages and Disadvantages of VAN ..................................................................................................................... 27Examples of Value-added Networks ............................................................................................................................ 28

INTERNET-BASED (OR WEB-BASED) EDI .................................................................................................................. 29Working of Internet-based EDI ................................................................................................................................... 31Benefits of Internet-based EDI ..................................................................................................................................... 32Applications of Internet-based EDI .............................................................................................................................. 32

XML AND EDI ............................................................................................................................................................. 33FORMS OF E- COMMERCE ORGANIZATIONS ............................................................................................................ 33INTERMEDIATION, DISINTERMEDIATION, REINTERMEDIATION, HYPERMEDIATION, AND SYNDICATION IN E-COMMERCE ................................................................................................................................................................ 36DEVELOPMENT AND GROWTH OF E-COMMERCE ................................................................................................... 37GENERATIONS OF E-COMMERCE............................................................................................................................... 38E-COMMERCE: CRITICAL SUCCESS FACTORS (CSF) ................................................................................................ 39

Internal Factors ........................................................................................................................................................... 39External Factors ......................................................................................................................................................... 40

E-COMMERCE: TECHNOLOGY TRENDS .................................................................................................................... 42E-COMMERCE: SUITABILITY OF PRODUCTS AND SERVICES ................................................................................... 45ADVANTAGES AND DISADVANTAGES OF E-COMMERCE ....................................................................................... 47

Advantages of E-commerce ........................................................................................................................................... 47Disadvantages of E-commerce ....................................................................................................................................... 49

IMPACTS OF DIGITAL ECONOMY AND ORGANIZATIONAL RESPONSES............................................................... 50The New Business Environment ................................................................................................................................... 50Business Pressures ........................................................................................................................................................ 52Organizational Responses ............................................................................................................................................. 53Intrabusiness Applications ........................................................................................................................................... 55

PROMOTING GLOBAL E-COMMERCE: INTERNATIONAL COOPERATION, COLLABORATION, AND REGULATIONS ............................................................................................................................................................... 55E-COMMERCE OUTLOOK ........................................................................................................................................ 57REVIEW QUESTIONS .................................................................................................................................................... 61BIBLIOGRAPHY ............................................................................................................................................................. 62

CHAPTER 2: E-COMMERCE INFRASTRUCTURE .......................................................................... 72PRINCIPAL COMPONENTS OF E-COMMERCE INFRASTRUCTURE ........................................................................... 72KEY ECOMMERCE-INFRASTRUCTURE DECISIONS ................................................................................................... 74E-COMMERCE AND BUSINESS PROCESSES ................................................................................................................ 76WORKING OF A TYPICAL E-COMMERCE SYSTEM .................................................................................................... 77MAJOR PLAYERS IN E-COMMERCE ............................................................................................................................. 78NETWORKS AND INTERNET ....................................................................................................................................... 79

The Internet ................................................................................................................................................................. 79The structure of the Internet ................................................................................................................................................. 79

Internet Tools and Services ........................................................................................................................................... 80USENET .................................................................................................................................................................................. 80FTP ............................................................................................................................................................................................ 80

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Mailing List ............................................................................................................................................................................... 81Gopher ...................................................................................................................................................................................... 81Email .......................................................................................................................................................................................... 81Archie ........................................................................................................................................................................................ 81Veronica .................................................................................................................................................................................... 81WAIS ......................................................................................................................................................................................... 82Finger ......................................................................................................................................................................................... 82Telnet ......................................................................................................................................................................................... 82WWW ........................................................................................................................................................................................ 82Search Engine ........................................................................................................................................................................... 82

Switching ..................................................................................................................................................................... 83Circuit Switching Vs. Packet Switching ................................................................................................................................ 83

Routing ....................................................................................................................................................................... 83TCP/IP ..................................................................................................................................................................... 83Working of Internet ..................................................................................................................................................... 83

Function of Router .................................................................................................................................................................. 84Protocol ..................................................................................................................................................................................... 85IP Addresses ............................................................................................................................................................................. 85Domain Name Systems (DNS) ............................................................................................................................................. 86URL: Uniform Resource Locator.......................................................................................................................................... 87

INTERNET CLIENT-SERVER MODEL ......................................................................................................................... 88Ports and HTTP ........................................................................................................................................................ 89

E-MAIL PROTOCOLS ..................................................................................................................................................... 89SMTP and POP ........................................................................................................................................................ 90Interactive Mail Access Protocol (IMAP) ..................................................................................................................... 90Messaging Application Program Interface (MAPI) ....................................................................................................... 91

INTERNET SERVICE PROVIDER (ISP) ........................................................................................................................ 91Selecting an ISP .......................................................................................................................................................... 91

WORLD WIDE WEB (WWW) ...................................................................................................................................... 92MARKUP LANGUAGES AND THE WEB ...................................................................................................................... 92

Standard Generalized Markup Language (SGML) ..................................................................................................... 94Hypertext Markup Language (HTML4 and HTML5) ............................................................................................. 95Scripting Languages and Style Sheets............................................................................................................................ 96Extensible Markup Language (XML) ........................................................................................................................ 97XML and HTML Editors ........................................................................................................................................ 97XHTML (Extended Hypertext Markup Language) ................................................................................................... 97

INTRANETS AND EXTRANETS .................................................................................................................................... 98Intranets ...................................................................................................................................................................... 98Extranets .................................................................................................................................................................... 99

VIRTUAL PRIVATE NETWORK (VPN) ..................................................................................................................... 100STORAGE AREA NETWORKS (SANS)....................................................................................................................... 101INTERNET TELEPHONY OR VOICE OVER IP (VOIP) ............................................................................................ 102

Advantages of Internet Telephony ............................................................................................................................... 102Methods of Accessing VoIP ....................................................................................................................................... 102

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VoIP Applications in E-commerce ............................................................................................................................. 103INTERNET CONNECTIVITY OPTIONS ...................................................................................................................... 103

Dial-up ..................................................................................................................................................................... 104Integrated Services Digital Network (ISDN) ............................................................................................................. 105Broadband Connections .............................................................................................................................................. 105

Cable modems ........................................................................................................................................................................ 105Digital Subscriber Line (DSL) .............................................................................................................................................. 105Leased-Line Connections ..................................................................................................................................................... 107T1 and T3 Lines ..................................................................................................................................................................... 108

Wireless Connections .................................................................................................................................................. 108Satellite Internet ..................................................................................................................................................................... 108Bluetooth ................................................................................................................................................................................. 109Ultra Wideband (UWB) ........................................................................................................................................................ 109Wireless Ethernet (Wi-Fi) ..................................................................................................................................................... 109Li-Fi ......................................................................................................................................................................................... 110Fixed-Point Wireless ............................................................................................................................................................. 110Cellular Telephone Networks .............................................................................................................................................. 110

EVOLUTION OF INTERNET AND WORLD WIDE WEB ........................................................................................... 111Internet2 .................................................................................................................................................................... 111Web 2.0 .................................................................................................................................................................... 112Semantic Web ............................................................................................................................................................ 112

Semantic Web Technologies ................................................................................................................................................ 113Semantic Web and E-commerce ......................................................................................................................................... 113

E-COMMERCE 2.0........................................................................................................................................................ 114Significance of E-commerce 2.0 ................................................................................................................................... 114E-commerce 2.0 Trends .............................................................................................................................................. 115E-commerce 2.0 Features ........................................................................................................................................... 115

SOFTWARE AGENTS ................................................................................................................................................... 116INTERNET OF THINGS (IOT) AND E-COMMERCE .................................................................................................. 116REVIEW QUESTIONS .................................................................................................................................................. 119BIBLIOGRAPHY ........................................................................................................................................................... 120

CHAPTER 3: ELEMENTS OF E-COMMERCE ................................................................................ 127INTRODUCTION .......................................................................................................................................................... 127CLIENTS AND SERVERS .............................................................................................................................................. 127WEB CONTENT ........................................................................................................................................................... 127

Static Content ............................................................................................................................................................ 127Dynamic Content ....................................................................................................................................................... 128

Dynamic Page-Generation Technologies ........................................................................................................................... 129Server-Side Scripting .................................................................................................................................................. 129Common Gateway Interface (CGI) ............................................................................................................................. 129Active Server Pages (ASP) ........................................................................................................................................ 130Adobe Cold Fusion .................................................................................................................................................... 131JAVA SERVER PAGES (JSP).......................................................................................................................... 131

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Prehypertext Processor (PHP) .................................................................................................................................... 133PERL ...................................................................................................................................................................... 133Python ....................................................................................................................................................................... 134Django ...................................................................................................................................................................... 134Ruby on Rails (RoR) ................................................................................................................................................. 134

DIFFERENCES BETWEEN CLIENT-SIDE AND SERVER-SIDE SCRIPTING ENVIRONMENT ................................. 137Client-side Environment ............................................................................................................................................ 137Server-side Environment ............................................................................................................................................. 137

ADVANTAGES AND DISADVANTAGES OF SCRIPTING LANGUAGES ................................................................... 137USES OF SCRIPTING LANGUAGES ............................................................................................................................ 138

Tools for Producing and Running Scripts .................................................................................................................... 139On-line Database Accessibility ................................................................................................................................... 139

SOFTWARE FOR WEB SERVERS ................................................................................................................................. 140Open Source Software vs. Commercial Software .......................................................................................................... 140Web Server Software .................................................................................................................................................. 140

Basic Functions of Web Server Software ........................................................................................................................... 140Evaluating Efficiency of Your Website .............................................................................................................................. 143Operating Systems (OS) for Web Servers .......................................................................................................................... 143

Salient Features of OS for Web Server ....................................................................................................................... 143Popular Operating Systems for Web Server ................................................................................................................. 144Selecting Best Server Operating System ....................................................................................................................... 145

Web Server Market ................................................................................................................................................................ 147Finding Web Server Information ........................................................................................................................................ 150

Database Management Systems (DBMS) for Web Severs ........................................................................................... 150DBMS Features ...................................................................................................................................................................... 151Popular DBMS for E-commerce ........................................................................................................................................ 151Selecting a DBMS for your E-commerce Business .......................................................................................................... 158Implementing DBMS for E-commerce ............................................................................................................................. 160

E-mail ...................................................................................................................................................................... 161Spam ........................................................................................................................................................................................ 161

CONTENT FILTERING ................................................................................................................................................ 167E-mail Content Filtering ........................................................................................................................................... 167Web Content Filtering ............................................................................................................................................... 168Bypassing Content Filtering........................................................................................................................................ 168Content Filtering Software ......................................................................................................................................... 168

WEBSITE AND INTERNET UTILITY PROGRAMS ..................................................................................................... 169Finger and Ping Utilities............................................................................................................................................ 169Traceroute and Other Route-Tracing Programs ........................................................................................................... 169Telnet and FTP Utilities ........................................................................................................................................... 170Indexing and Searching Utility Programs ................................................................................................................... 170Data Analysis Software ............................................................................................................................................. 171Link-Checking Utilities............................................................................................................................................. 171Remote Server Administration Software ..................................................................................................................... 171

E-COMMERCE HARDWARE ....................................................................................................................................... 171

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Web Server Hardware: Components and Requirements ............................................................................................... 172Web Server Performance ............................................................................................................................................. 173WEB Server Overloading .......................................................................................................................................... 173

Techniques to Prevent Overloading ................................................................................................................................... 173Web Server Hardware Architectures ........................................................................................................................... 174

Centralized Vs. Decentralized or Distributed Architecture ............................................................................................ 174E-COMMERCE SOFTWARE ......................................................................................................................................... 176

Selecting E-commerce Software .................................................................................................................................... 176Basic Functions of E-commerce Software ..................................................................................................................... 176Product Catalog ......................................................................................................................................................... 177Shopping Cart ........................................................................................................................................................... 178

Advantages of Shopping Cart .............................................................................................................................................. 180Features of Shopping Cart .................................................................................................................................................... 180Some Popular Shopping Cart Software .............................................................................................................................. 185Storing Shopping Cart Information .................................................................................................................................... 185Types of Shopping Cart Software ....................................................................................................................................... 185Shopping Cart: Buy vs. rent ................................................................................................................................................. 187

Transaction Processing ................................................................................................................................................ 187ADVANCED FUNCTIONS OF E-COMMERCE SOFTWARE ........................................................................................ 188

Middleware ................................................................................................................................................................ 188Enterprise Application Integration.............................................................................................................................. 188Web Services .............................................................................................................................................................. 188

E-COMMERCE SOFTWARE FOR SMALL AND MEDIUM ENTERPRISE .................................................................... 190E-commerce Service Providers ..................................................................................................................................... 190

Some Popular E-commerce Service Providers .................................................................................................................. 191ESTIMATED OPERATING EXPENSES FOR A SMALL ONLINE BUSINESS .............................................................. 192INTEGRATION IN E-COMMERCE .............................................................................................................................. 193SERVICE-ORIENTED ARCHITECTURE (SOA) ......................................................................................................... 194CLOUD COMPUTING IN E-COMMERCE ................................................................................................................... 194SOFTWARE AS A SERVICE (SAAS) .............................................................................................................................. 195INFRASTRUCTURE-AS-A-SERVICE (IAAS) ................................................................................................................. 195PLATFORM-AS-A-SERVICE (PAAS) ............................................................................................................................ 196UTILITY COMPUTING ................................................................................................................................................. 196E-COMMERCE SOFTWARE FOR MID-SIZE TO LARGE BUSINESSES ...................................................................... 196

Web Site Development Tools ...................................................................................................................................... 196Mid-Range E-commerce Software ............................................................................................................................... 197

eBay Enterprise ...................................................................................................................................................................... 197Digital River ............................................................................................................................................................................ 197Intershop ................................................................................................................................................................................. 198IBM WebSphere Commerce ................................................................................................................................................ 198Microsoft Commerce Server 2009 ...................................................................................................................................... 198

E-COMMERCE SOFTWARE FOR LARGE BUSINESSES .............................................................................................. 199Top Providers of Enterprise E-commerce Software ....................................................................................................... 199

IBM .......................................................................................................................................................................................... 199

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Hybris ...................................................................................................................................................................................... 200Oracle ...................................................................................................................................................................................... 200Demandware .......................................................................................................................................................................... 200

CUSTOMER RELATIONSHIP MANAGEMENT SOFTWARE ....................................................................................... 201SUPPLY CHAIN MANAGEMENT (SCM) SOFTWARE ............................................................................................... 201CONTENT MANAGEMENT SOFTWARE .................................................................................................................... 201

Important Features of CMS ....................................................................................................................................... 202Popular Content Management Systems for E-commerce ............................................................................................... 203Mobile Content Management System (MCMS) .......................................................................................................... 205

Features of mobile CMS ....................................................................................................................................................... 205Popular Mobile CMS ............................................................................................................................................................. 205

KNOWLEDGE MANAGEMENT SOFTWARE (KMS) ................................................................................................. 206Popular Knowledge Management Software .................................................................................................................. 207

REVIEW QUESTIONS .................................................................................................................................................. 209BIBLIOGRAPHY ........................................................................................................................................................... 210

CHAPTER 4: E-COMMERCE BUSINESS MODELS ....................................................................... 216TRADITIONAL VS ELECTRONIC BUSINESS MODELS ............................................................................................. 216E-COMMERCE BUSINESS MODELS ........................................................................................................................... 216

Benefits of E-commerce Business Model ...................................................................................................................... 217COMPETITION IN THE E-COMMERCE ...................................................................................................................... 217INTERNET AND ITS IMPACT ON BUSINESS .............................................................................................................. 217

Internet Value Chain ................................................................................................................................................ 218KEY ELEMENTS OF E-COMMERCE BUSINESS MODEL .......................................................................................... 219PRIMARY REVENUE MODELS IN E-COMMERCE .................................................................................................... 220REVENUE MODEL ISSUES ......................................................................................................................................... 222

Channel Conflict ........................................................................................................................................................ 222Handling Channel Conflict in E-commerce ...................................................................................................................... 222

STRATEGIC ALLIANCES IN E-COMMERCE ............................................................................................................... 226MERGERS AND ACQUISITIONS IN E-COMMERCE .................................................................................................. 227FUNDAMENTAL CATEGORIES OF E-COMMERCE BUSINESS MODELS................................................................. 228

Business to Consumer (B2C) Models.......................................................................................................................... 228Storefront Model ................................................................................................................................................................... 228Portal Model ........................................................................................................................................................................... 229Dynamic Pricing Models ...................................................................................................................................................... 229

Consumer-to-Consumer (C2C) Models ....................................................................................................................... 231Auction Model ....................................................................................................................................................................... 231

Business-to-Business (B2B) Models ............................................................................................................................ 232Business-to-Business Auction Model ................................................................................................................................. 232B2B Exchanges ...................................................................................................................................................................... 233Affiliate Model ....................................................................................................................................................................... 233Infomediary Model ................................................................................................................................................................ 233B2B E-Commerce Portals .................................................................................................................................................... 234Advertising Model ................................................................................................................................................................. 234

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Collaboration Platform Provider ......................................................................................................................................... 234E-procurement ....................................................................................................................................................................... 234

Internet (or Digital) Content Revenue Models ............................................................................................................. 235Types of Digital Content Revenue Models ........................................................................................................................ 235

Other Business Models ............................................................................................................................................... 236Online Trading Model ........................................................................................................................................................... 236Trust Brokerage Model ......................................................................................................................................................... 237Virtual Community Model ................................................................................................................................................... 237Social Network Provider ....................................................................................................................................................... 237Third-Party Marketplaces ..................................................................................................................................................... 238Information Brokerage ......................................................................................................................................................... 238Catalog Merchant Model ...................................................................................................................................................... 238Bit Vendor Model .................................................................................................................................................................. 238Buy/Sell Fulfillment Provider .............................................................................................................................................. 238Transaction Broker ................................................................................................................................................................ 238E-learning ................................................................................................................................................................................ 238E-Loan ..................................................................................................................................................................................... 239E-Recruiting ............................................................................................................................................................................ 239E-News .................................................................................................................................................................................... 239E-Travel .................................................................................................................................................................................. 239E-Entertainment .................................................................................................................................................................... 239E- Automotive ....................................................................................................................................................................... 239E-Energy ................................................................................................................................................................................. 240E-Brainpower ......................................................................................................................................................................... 240E-Art Dealers ......................................................................................................................................................................... 240E-Advertising ......................................................................................................................................................................... 240Sponsored Downloads .......................................................................................................................................................... 240Sponsored Webinars .............................................................................................................................................................. 240Sponsored Directories ........................................................................................................................................................... 240Native Advertising ................................................................................................................................................................. 240Custom E-Newsletters .......................................................................................................................................................... 241Freemium Model .................................................................................................................................................................... 241Selling Data ............................................................................................................................................................................. 241Sponsorship/Donations ....................................................................................................................................................... 241Build to sell ............................................................................................................................................................................. 241Mobile and Gaming Revenue Models ................................................................................................................................ 242

REVIEW QUESTIONS .................................................................................................................................................. 243BIBLIOGRAPHY ........................................................................................................................................................... 243

CHAPTER 5: E-COMMERCE STRATEGY ....................................................................................... 248DEFINING E-COMMERCE STRATEGY ...................................................................................................................... 248E-COMMERCE: GOALS, STRATEGIES AND TACTICS ............................................................................................... 249E-COMMERCE STRATEGY: THE PHASES .................................................................................................................. 250

Strategy Initiation ...................................................................................................................................................... 250First Mover or Follower ....................................................................................................................................................... 250Domestic or Global? ............................................................................................................................................................. 254

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Separate Online Firm or Integrated Company? ................................................................................................................ 254Single Brand or Separate Online Brand? ............................................................................................................................ 255

Strategy Formulation ................................................................................................................................................. 255Strategy Implementation ............................................................................................................................................. 256

COMMON E-COMMERCE STARTUP MISTAKES ....................................................................................................... 258SWOT ANALYSIS FOR E-COMMERCE ...................................................................................................................... 264

Strengths ................................................................................................................................................................... 265Weaknesses ............................................................................................................................................................... 265Opportunities ............................................................................................................................................................. 265Threats ...................................................................................................................................................................... 265

RESEARCHING YOUR COMPETITORS ....................................................................................................................... 266Research Tools to Gather Competitive Intelligence ....................................................................................................... 267

CUSTOMER SERVICE FOR ECOMMERCE .................................................................................................................. 271Improving Customer Service in E-commerce ................................................................................................................ 271

MEASURING SUCCESS OF E-COMMERCE BUSINESS .............................................................................................. 272Important Metrics to Measure Success ........................................................................................................................ 273

Additional Metrics ................................................................................................................................................................. 275E-COMMERCE INVESTMENTS ................................................................................................................................... 275FUNDING YOUR E-COMMERCE BUSINESS .............................................................................................................. 276

Angel Investors .......................................................................................................................................................... 276Venture Capitalists (VC) ......................................................................................................................................... 278Business Line of Credit or Commercial Bank Loans .................................................................................................. 278Crowd Funding ......................................................................................................................................................... 279

STRATEGIES OF SUCCESSFUL E-COMMERCE BUSINESSES .................................................................................... 280STRATEGIES TO COMPETE AGAINST E-COMMERCE GIANTS ............................................................................... 284REVIEW QUESTIONS .................................................................................................................................................. 288BIBLIOGRAPHY ........................................................................................................................................................... 288

CHAPTER 6: WEBSITE USABILITY ................................................................................................. 294WEB PRESENCE OF E-COMMERCE BUSINESS ......................................................................................................... 294

Importance of Effective Web Presence .......................................................................................................................... 294Pillars of Effective Web Presence ................................................................................................................................ 295Web Presence Goals ................................................................................................................................................... 296Achieving Web Presence Goals ................................................................................................................................... 296Web Presence and Brand Image ................................................................................................................................. 296

WEBSITE USABILITY .................................................................................................................................................. 297What does usability measure? ..................................................................................................................................... 297

CUSTOMER-CENTRIC WEB SITE DESIGN ............................................................................................................... 297Creating a User-Centric Web Site .............................................................................................................................. 299

Planning ................................................................................................................................................................................... 299Analysis ................................................................................................................................................................................... 300Design ...................................................................................................................................................................................... 302Testing and Reinforcement .................................................................................................................................................. 303Implementation and Retest .................................................................................................................................................. 304

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USABILITY IMPROVEMENT GUIDELINES/CHECKLIST .......................................................................................... 304REVIEW QUESTIONS .................................................................................................................................................. 322BIBLIOGRAPHY ........................................................................................................................................................... 322

CHAPTER 7: E-COMMERCE MARKETING.................................................................................... 327INTRODUCTION .......................................................................................................................................................... 327IMPACT OF E-COMMERCE ON MARKETING............................................................................................................ 327INTERNET MARKETING AND E-MARKETING ........................................................................................................ 327COMMON INTERNET MARKETING MISTAKES ....................................................................................................... 328ADVANTAGES AND DISADVANTAGES OF INTERNET MARKETING .................................................................... 329METHODS OF E-COMMERCE MARKETING ............................................................................................................. 329THE 7 P'S OF INTERNET MARKETING ..................................................................................................................... 331MARKETING STRATEGIES FOR E-COMMERCE........................................................................................................ 332

Product-based Marketing Strategy .............................................................................................................................. 332Customer-based Marketing Strategy ............................................................................................................................ 334

CUSTOMER SEGMENTATION IN E-COMMERCE ...................................................................................................... 334Software-based Customer Segmentation ....................................................................................................................... 335

ANALYTICS IN E-COMMERCE .................................................................................................................................... 335Web Analytics ........................................................................................................................................................... 336Popular Tools for Web Analytics ............................................................................................................................... 337The Marketing Funnel ............................................................................................................................................... 338Traffic Tracking ........................................................................................................................................................ 339Setting up Web Analytics ........................................................................................................................................... 340Social Media Tools for E-commerce Analytics ............................................................................................................. 340

Competitive Analysis Tools.................................................................................................................................................. 340Content Discovery Tools ..................................................................................................................................................... 341Campaign Management Tools ............................................................................................................................................. 342Publishing Automation Tools .............................................................................................................................................. 343Conversation Listening Tools .............................................................................................................................................. 343

PERSONALIZATION IN E-COMMERCE MARKETING .............................................................................................. 344OPTIMIZING YOUR PRODUCT PAGES FOR E-COMMERCE MARKETING ............................................................. 344OPTIMIZING USER INTERFACES FOR E-COMMERCE MARKETING ..................................................................... 345PERSONA ANALYSIS ....

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