shopping carts, payment

wallbroadΑσφάλεια

3 Δεκ 2013 (πριν από 3 χρόνια και 4 μήνες)

63 εμφανίσεις

Implementing basic eCommerce:
shopping carts, payment
gateways, security, fulfillment

MGMT 230

WEEK 4

After today’s class you will
understand…


The basic requirements for an organization or
business to conduct eCommerce (basic selling
on the web)


Shopping carts and merchant solutions


Payment systems and payment gateways


Security


Fulfillment and logistics




SMALL / MEDIUM BUSINESSES AND
ECOMMERCE REQUIREMENTS

SMEs and EC


Many small /medium businesses are uncertain how to
deal with the technical issues and potentially high costs
of getting into full electronic commerce



Creating an online selling environment requires time,
money, and expertise
-

most businesses look to
outsourcing in one form or another


Key functions of an electronic
commerce system (merchant
solutions)


The e
-
commerce system must provide:


Product information (catalogue database, metadata,
search functionality)


Shopping cart and inventory systems


Secure transaction capability / payment gateway


Shipping / fulfillment


Linkages with other IT systems in the firm (inventory,
financial systems etc)


Customer service


Secure transaction
















A basic electronic commerce transaction: the process

Catalogue
browse and
search


Fill out
shipping
details

Enter CC
#

Order
verified and
processed

$$
$

CC verified
by provider

Chapters.ca

Options for acquiring
eCommerce

functionality

1.
Build from scratch


custom programming


2.
Build from pre
-
programmed components


3.
Build using templates, infrastructure and services
provided by a vendor (hosted solution)


4.
Use someone else’s storefront technology





1. Build from scratch


custom programming



Programmers create the software (including
databases and middleware) required for all the
functionality


Can be slow to develop, expensive, and error
-
prone


But, can have whatever features and functionality is
desired


Usually only v. large companies, or very small
internet startups take this approach


Can give exclusivity and competitive advantage


Amazon

and
Craigslist



2. Build
from pre
-
programmed components





Built for
scaleability



can handle large numbers of
simultaneous transactions


Shopping cart, catalog and payment gateway
managed by the company itself


Can be customized to some extent, but may not fit
business purpose as well as custom
-
built solution


Advantage is that it can be customized to work
with legacy accounting and inventory systems


Usually faster to deploy


Medium to large sized companies are major user
group of this type of software


3. Build using templates, infrastructure and
services provided by a vendor (outsourced /
hosted solution)


Relatively inexpensive


targeted at small business


Limited functionality and tailoring for particular
business needs


Your site may look very similar to a competitor’s site


Pricing often depends on sales volume / usage


Vendor will take care of all the management of the
software so no IT experience is required


Yahoo Small Business Merchant Solutions
is an example
of this




4. Use someone else’s storefront technology


Place products in another company’s store


Use their payment and fulfillment functionality


Eg.
Amazon Services


Selling on Amazon


Fulfillment by Amazon


Payment by Amazon


Price: subscription fee + commission fee


What are the advantages & disadvantages of this
model?


Or you could use the Amazon infrastructure for
your
Amazon Webstore
via your own domain

FOCUS ON PAYMENT SYSTEMS AND
GATEWAYS…

Electronic payments


Confidence in a secure payment environment is
one of the most important success factors in
eCommerce


B2B transactions


Electronic Data Interchange (EDI)


Electronic Funds Transfer (EFT)


Consumer
eCommerce


Credit cards


Person
-
to
-
person transactions (
eg
. PayPal)


Other forms of
eCash

such as
BitCoin

P2P Digital
currency


Credit cards


The most popular form of payment on the web


The process of using a credit card involves several parties


Cardholder
-

purchaser


Merchant
-

the entity that accepts the card in exchange for goods or
services


Card issuer
-

financial institution (usually a bank) that establishes an
account for the cardholder, and issues credit


Acquirer
-

financial institution (usually a bank) that establishes the
merchant account, and acquires the credit card vouchers / sales slips


Card association
-

association of issuers and acquirers
eg
. Visa,
MasterCard
-

authorizes the credit transaction, and guarantees
payment to the merchant


Third party processors
-

outsourcers who perform some of the duties
of issuers and acquirers


signing up merchants, billing customers etc




Cost of credit card payment
provision


$100 purchase (approximate division of amount)


merchant $98


acquirer $0.67 (bank that establishes the merchant account)


association $0.08 (issuers and acquirers)


issuer $1.25 (bank that issues the card to the customer)



Electronic payment gateway: handling
online credit card transactions


Electronic payment gateway:
software and hardware
interfacing merchants and credit
-
card authorization networks.



When an order is received, the gateway passes the payment
information to an off
-
site server run by the gateway company



The gateway company then handles the processing activities
and authorizations



Moneris

and Dejardins are examples of gateway providers
used by Canadian banks



Source: Electronic Commerce 7th ed.
Schneider. Thompson. 2006

What happens when someone uses a credit

card on a website


Submits card number and
purchase amount (protected by
SSL) to merchant


The information plus merchant’s
ID# is passed to the merchant’s
acquirer


The acquirer sends the information
to the customer’s issuing bank for
approval


The issuer sends its response
(approve/disapprove) back to the
acquirer, where it is passed on to
the merchant


After the transaction is complete,
the issuer settles the transaction

Merchant

Merchant’s
acquirer
(bank)

Credit card fraud


Serious problem for merchants


The merchant has to bear the loss


treated as “card not present” transactions, where
the merchant takes the risk
-

not the card holder
or the credit card company


merchant loses the value of the sale, and has to
pay the credit card company not only the
commission, but also a “charge
-
back” fee
(typically $25
-

$100)


VerifiedByVisa

program

Person
-
to
-
person payments


Enables the transfer of funds between individuals


PayPal

is the most successful
-

there were several
competitors, including Yahoo for a while (strong network
effect makes it difficult)


User must open an account with the selected service, and
provide a credit card number or bank account number


Put money into the account


Specify the email address of the recipient of the payment and
the payment amount


PayPal emails the specified email address and puts the money
into an account for the recipient, that can be credited to a
bank account or credit card

Some payment service providers


PayPal is now offering a range of services to
help small businesses take payments on the
web (including credit cards)


PayPal Business Solutions


Similar range of services offered as part of
Yahoo hosting and merchant services


Moneris

targets medium and large firms


B2B focus with
EFT Canada

Trends toward other electronic payment options


Broader markets
-

now including more and more people who
don’t have credit cards


Low value transactions (micropayments)
-

pay per view, pay
per song, online gaming, MMOGs, mobile payments etc


Electronic micro
-
payments include smart cards, digital cash,
digital checks (often using credit cards for an initial payment)


They all allow money to be transferred over a network,
without any face to face transaction


Many firms have tried to get proprietary forms of
eCash

to
work (
eg
. Peppercorn)


difficult to do: has a strong “network
effect”


Now seeing other forms of
eCash

such as
BitCoin

P2P Digital
currency



MAKING YOUR TRANSACTIONS
SECURE

Transport Security Layer / Secure
Socket Layer


If the average user had to figure out how to encrypt and decrypt
messages in order to pay for something on the web, there would be far
less
eCommerce


All these issues are handled automatically and transparently by web
browsers and web servers
-

primarily through a protocol called
Transport Security Layer
-

previously known as Secure Socket Layer
(SSL)


When a website user clicks on a link whose web address begins with
https rather than http, the communication is then encrypted using SSL


The client (web browser) negotiates with the server to obtain a session
key and to pass the message (
eg
. credit card number) in a secure
fashion (in IE
-

indicated by a padlock symbol)


Simple
explanation of digital encryption
using toolbox and key
example


Digital certificates and certificate
authorities


For these security measures to work, we need
“trusted third parties” to ensure that firms are
who they say they are


Digital certificates verify that holders of public
and private encryption keys are who they say
they are


Digital certificates are issued by Certificate
Authorities (CAs)
-

the most well known of
these is
VeriSign

(now owned by Symantec)


SSL Certificates: What are they?
(video)

FULFILLMENT: MAKING SURE YOUR
CUSTOMER GETS THE GOODS….ON
TIME

Fulfillment


The term fulfillment includes:


Logistics


Supply chain management


Transportation and inventory management


Physical distribution management

Fulfillment issues


How will the customer pay for the product or service?


What is the best way to deliver the product or service
to the customer on time?


The “last
-
mile” problem


What customs issues are involved for international
orders?


How will I maintain sufficient inventory to ensure that
I can fulfill all the orders?


What business processes will need to be altered to
accommodate these fulfillment issues?


Customer Support: Questions
eCommerce customers ask


Where is my order?


Can I change my order?


When will my order arrive?



The only way to effectively answer these is to
move
information along with goods and services.


provide customers with real
-
time, 24/7
access to the status of their shipments.


supply chain from the factory through
transportation to delivery must be completely
visible


Outsourcing logistics


Tie the eCommerce front end to a fulfillment
back
-
end


Very often outsourced to a third
-
party logistics
specialist


Fulfillment by Amazon


Package tracking


Full service example



Reverse logistics (returns)


Increased likelihood of returns in eBusiness