EVALUATION COPY. E-Commerce Specialist. Academic Student Guide Volume 1 Web Design Series. ECL05-CDECS1-PR-1012 version 1.

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1 E-Commerce Specialist Academic Student Guide Volume 1 Web Design Series ECL05-CDECS1-PR-1012 version 1.0 rd011111

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3 E-Commerce Specialist Academic Student Guide Volume 1

4 President/Chief Certification Architect James Stanger, Ph.D. Vice President, Operations Senior Content Developer Managing Editor Editor Project Manager/Publisher Customer Service Todd Hopkins Kenneth A. Kozakis Susan M. Lane Sarah Skodak Tina Strong Certification Partners, LLC 1230 W. Washington St., Ste. 111 Tempe, AZ (602) Copyright 2011, All rights reserved.

5 E-Commerce Specialist Developers Frank Miller and Rachelle Reese Contributors Kenneth A. Kozakis, Xuan-Nguyen Huynh, Stephen Schneiter and Susan M. Lane Editors David Oberman and Susan M. Lane Project Manager/Publisher Tina Strong Trademarks Certification Partners is a trademark of Certification Partners, LLC. All product names and services identified throughout this book are trademarks or registered trademarks of their respective companies. They are used throughout this book in editorial fashion only. No such use, or the use of any trade name, is intended to convey endorsement or other affiliation with the book. Copyrights of any screen captures in this book are the property of the software's manufacturer. Disclaimer Certification Partners, LLC, makes a genuine attempt to ensure the accuracy and quality of the content described herein; however, Certification Partners makes no warranty, express or implied, with respect to the quality, reliability, accuracy, or freedom from error of this document or the products it describes. Certification Partners makes no representation or warranty with respect to the contents hereof and specifically disclaims any implied warranties of fitness for any particular purpose. Certification Partners disclaims all liability for any direct, indirect, incidental or consequential, special or exemplary damages resulting from the use of the information in this document or from the use of any products described in this document. Mention of any product or organization does not constitute an endorsement by Certification Partners of that product or corporation. Data used in examples and labs is intended to be fictional even if actual data is used or accessed. Any resemblance to, or use of real persons or organizations should be treated as entirely coincidental. Certification Partners makes every effort to ensure the accuracy of URLs referenced in all its material, but cannot guarantee that all URLs will be available throughout the life of a course. When this course was published, all URLs were checked for accuracy and completeness. However, due to the ever-changing nature of the Internet, some URLs may no longer be available or may have been redirected. Copyright Information This training manual is copyrighted and all rights are reserved by Certification Partners, LLC. No part of this publication may be reproduced, transmitted, stored in a retrieval system, modified, or translated into any language or computer language, in any form or by any means, electronic, mechanical, magnetic, optical, chemical, manual or otherwise without written permission of Certification Partners, 1230 W. Washington Street, Suite 111, Tempe, AZ Copyright 2011 by Certification Partners, LLC All Rights Reserved ISBN:

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7 v Table of Contents Course Description... xii Courseware... xiii Course Objectives...xvi Classroom Setup...xvi System Requirements...xvii Conventions and Graphics Used in This Book...xx Lesson 1: Electronic Commerce Foundations Pre-Assessment Questions Introduction to Web Commerce Impetus for Web Commerce Electronic Commerce Defined Applying E-Commerce Concepts to Focus Companies Types of Electronic Commerce Microcommerce and Macrocommerce Benefits of Electronic Commerce Drawbacks of Electronic Commerce E-Commerce Solutions Web Storefront Hardware and Software Ingredients of a Web Storefront The Virtual Enterprise Site Implementation E-Commerce Guidelines Case Study Lesson 1 Review Lesson 2: Law and the Internet Pre-Assessment Questions Introduction to Internet Legal Issues Electronic Publishing Intellectual Property Issues Areas of Liability Copyright, Trademark and Patent Issues Privacy and Confidentiality Jurisdiction and Electronic Publishing Internet Taxation International Tax and the Internet Customs and E-Commerce Tariffs and E-Commerce Protecting a Brand Ethical Business Practices Case Study Lesson 2 Review Lesson 3: Web Marketing Goals Pre-Assessment Questions Marketing Overview Web Marketing Benefits Examples of Successful Web Marketing Marketing Goals Web Marketing Strategies Growth Drivers and Barriers in E-Commerce Selecting and Positioning Your Product Identifying Your Target Market Case Study Lesson 3 Review Lesson 4: Online Product Promotion Pre-Assessment Questions Online Promotion Overview...4-3

8 vi E-Commerce Promotion Considerations E-Commerce Site Categories Banner Ads Advertising Representatives Banner Ad Positioning Banner Ad Exchange Networks Referrer Programs Blogs and Blogads Pop-Up and Related Ads Search Engine Placement <Meta> Tags and Search Engines and Marketing Ad Performance Evaluation Offline Product Promotion Ad Campaign Implementation Case Study Lesson 4 Review Lesson 5: Site Usability Pre-Assessment Questions Overview of Usability Issues Usability Testing Designing the Site Hierarchy Page Layout Design Guidelines Browser Compatibility Issues Case Study Lesson 5 Review Lesson 6: Customer Relationship Management (CRM) and E-Services Pre-Assessment Questions Managing the Customer Customer Relationship Management Customer Service Concepts Customer Service Tools and Methodology E-Service Action Plan Integrating CRM and Customer Service Case Study Lesson 6 Review Lesson 7: Business-to-Business Frameworks Pre-Assessment Questions B2B E-Business Overview E-Commerce Fundamentals Business Concepts Internet Marketplaces Tools and Technologies Electronic Data Interchange (EDI) Open Buying on the Internet (OBI) Open Trading Protocol (OTP) Web Services Case Study Lesson 7 Review Lesson 8: E-Commerce Site Creation Packages Outsourcing Pre-Assessment Questions Outsourcing Site Creation Packages Entry-Level Outsourcing: Online Instant Storefronts Online Outsourcing Solutions Outsourcing: Mid-Level Offline Instant Storefronts Mid-Level Offline Storefront Products Outsourcing: High-Level Offline Instant Storefronts High-Level Offline Storefront Products Auctions: The Other E-Commerce Option

9 vii Case Study Lesson 8 Review Lesson 9: E-Commerce Site Creation Software Pre-Assessment Questions Microsoft Commerce Server 2007 Overview Web Server Overview Microsoft Internet Information Services (IIS) IIS 6.0 Preparation IIS 6.0 Installation IIS 6.0 Configuration Sun Java System Web Server Open-Source Solutions Sizing Your Hardware Case Study Lesson 9 Review Index... Index-1 List of Labs Lab 1-1: Exploring e-commerce trend and statistics Web sites Lab 1-2: Viewing the Habitat For Humanity Gift Shop Web site Lab 1-3: Locating and viewing a B2B Web site Lab 1-4: Locating and viewing a B2C Web site Lab 1-5: Reviewing electronic commerce basics Lab 1-6: Viewing an instant storefront option Lab 1-7: Viewing a site secured with SSL Lab 2-1: Examining electronic commerce law Lab 2-2: Searching for personal information on the Internet Lab 2-3: Selling Habitat For Humanity products in Europe Lab 2-4: Researching tariff data on the Internet Lab 3-1: Examining customer service options on the Internet Lab 3-2: Determining market globalization efforts and plans Lab 3-3: Introducing new products on the Internet Lab 3-4: Determining automation benefits for an e-commerce site Lab 3-5: Exploring demographics Lab 4-1: Determining ad rates at individual sites Lab 4-2: Visiting an advertising representative Web site Lab 4-3: Visiting a banner ad exchange program Lab 4-4: Using a referrer program Lab 4-5: Using a search-engine placement service Lab 4-6: Examining tracking service data Lab 4-7: Examining business hub services Lab 5-1: Using personas and role playing to analyze site usability Lab 5-2: Analyzing site usability and hierarchy Lab 5-3: Analyzing screen flow Lab 6-1: Evaluating a CRM application suite Lab 6-2: Using synchronous and asynchronous support tools Lab 6-3: Examining self-service support methods Lab 7-1: Investigating business management solutions Lab 7-2: Exploring Internet marketplace sites Lab 7-3: Researching EDI standards Lab 7-4: Previewing a simulated EDI transaction Lab 8-1: Comparing instant storefront options Lab 8-2: Registering for a 123 ecart trial store Lab 8-3: Building an online storefront site Lab 8-4: Adding shopping-cart details Lab 8-5: Installing ShopFactory Lab 8-6: Creating a new Web site with ShopFactory Lab 8-7: Creating a catalog with ShopFactory Lab 8-8: Assigning settings and testing your site

10 viii Lab 9-1: Evaluating IIS Lab 9-2: Installing IIS Lab 9-3: Creating a Web site and binding it to an IP address Lab 9-4: Comparing Web servers List of Figures Figure 1-1: ClickZ Network home page Figure 1-2: ECommerce-Guide home page Figure 1-3: E-Commerce Times home page Figure 1-4: Internet Retailer home page Figure 1-5: Habitat For Humanity Gift Shop home page Figure 1-6: Works home page Figure 1-7: Barnes & Noble home page Figure 1-8: Barnes & Noble title search Figure 1-9: Barnes & Noble search results Figure 1-10: Barnes & Noble item details Figure 1-11: Habitat For Humanity Gift Shop home page Figure 1-12: Verio Web site showing e-commerce options Figure 1-13: VeriSign SSL Certificates Support page Figure 1-14: VeriSign Search button Figure 1-15: Microsoft Internet Explorer Security Alert Figure 1-16: Netscape Navigator Security Information Figure 1-17: Browser lock icon showing secure connection Figure 2-1: Yahoo! Search Directory Figure 2-2: Yahoo! Law@ link Figure 2-3: Yahoo! links Figure 2-4: Yahoo! People Search Figure 2-5: Welocalize Web site Figure 2-6: EU External Trade policy information Figure 2-7: Yahoo! Currency Conversion site Figure 2-8: USITC tariff and trade data Figure 2-9: Tariff and trade data for specific products Figure 2-10: Trade database import values Figure 3-1: Dell home page Figure 3-2: Cisco Systems home page Figure 3-3: Amazon.com home page Figure 3-4: Dell home page Figure 3-5: Home & Home Office page Figure 3-6: Service & Support section Figure 3-7: Choose A Country/Region list Figure 3-8: Dell site product information for Argentina Figure 3-9: Dell site information for Argentina Figure 3-10: Barnes & Noble home page Figure 3-11: Shipping and delivery information Figure 3-12: Marketing pyramid Figure 3-13: Pew Internet & American Life Project Latest Trends page Figure 3-14: Demographics of Internet Users Figure 4-1: Full banner (468 x 60 pixels) Figure 4-2: Full banner with vertical navigation bar (392 x 72 pixels) Figure 4-3: Half banner (234 x 60 pixels) Figure 4-4: Vertical banner (120 x 240 pixels) Figure 4-5: Square button (125 x 125 pixels) Figure 4-6: Button 1 (120 x 90 pixels) Figure 4-7: Button 2 (120 x 60 pixels) Figure 4-8: Micro button (88 x 31 pixels) Figure 4-9: Yahoo! advertising link Figure 4-10: Excite advertising link Figure 4-11: Winstar Interactive Media Figure 4-12: Winstar Interactive Media site roster Figure 4-13: Effective banner ad placement area

11 ix Figure 4-14: Security Warning to install Flash Player Figure 4-15: LinkBuddies Features Overview Figure 4-16: Amazon.com home page Figure 4-17: Amazon.com Associates Figure 4-18: Amazon.com Associates Central Sign In Figure 4-19: Sample quarterly earnings report Figure 4-20: Selecting Build Links Figure 4-21: Amazon.com Build Links page Figure 4-22: Microsoft Small Business Center home page Figure 4-23: SearchEngines.com Figure 4-24: SearchEngineWatch.com Web site Figure 4-25: MyComputer.com Figure 4-26: SuperStats Demo Figure 4-27: How Web Page Statistics Work Figure 4-28: Microsoft Small Business Center Figure 4-29: Banner-advertising support features Figure 4-30: Search services support features Figure 4-31: Marketing support features Figure 5-1: Site hierarchy example Figure 5-2: Netflix landing point Figure 5-3: Dell home page Figure 5-4: Dell Sign In page Figure 5-5: Category page desktop computers Figure 5-6: Desktop computers product list Figure 5-7: Wine.com product list Figure 5-8: Barnes & Noble University Figure 5-9: Operating system and browser statistics Figure 6-1: MicroStrategy Web site Figure 6-2: MicroStrategy 8 Customer Analysis Starter Kit Figure 6-3: Reporting and analysis solution Figure 6-4: Sample Loyalty Analysis report Figure 6-5: 24-7 INtouch Web site Figure 6-6: Key Features And Benefits Figure 6-7: Live service request link Figure 6-8: Live chat request Figure 6-9: RoboHelp Figure 6-10: RoboHelp Features Figure 6-11: RoboHelp Features Figure 6-12: Sample survey form Figure 6-13: Netscape Network registration Figure 7-1: Multi-tier supply chain Figure 7-2: Partial supply chain Figure 7-3: Industry consortia Figure 7-4: Ariba Solutions link Figure 7-5: Ariba Spend Management Solutions Figure 7-6: Ariba Buyer Module link Figure 7-7: Supplier Solutions link Figure 7-8: Ariba Supplier Network information Figure 7-9: Premium Suppliers link Figure 7-10: Ariba White Paper Library Figure 7-11: Liquidation.com Figure 7-12: Liquidation.com Seller information Figure 7-13: Seller benefits Figure 7-14: BravoSolution Figure 7-15: BravoSolution Overview Impact Sourcing Figure 7-16: BravoSolution Integrated Services Figure 7-17: Dairy.com Figure 7-18: Dariy.com Products & Services Figure 7-19: EDI transaction Figure 7-20: DISA home page Figure 7-21: DISA mission

12 x Figure 7-22: ASC X12 site Figure 7-23: ASC X12 membership and mission Figure 7-24: ADX home page Figure 7-25: ADX Services Overview Figure 7-26: ADX WebAccess demo Figure 7-27: Outsourced EDI services Figure 7-28: ADX trading partner list Figure 8-1: Online instant storefront evaluation considerations Figure 8-2: MerchandiZer home page Figure 8-3: 123 ecart home page Figure 8-4: Yahoo! Small Business Merchant Solutions Figure 8-5: ebay store Figure 8-6: 123 ecart home page Figure 8-7: Yahoo! Shopping Figure 8-8: Build Your Own Online Store link Figure 8-9: Free Trial Request page Figure 8-10: EZ Setup Wizard page Figure 8-11: 123 ecart Admin Panel Figure 8-12: 123 ecart Look And Feel page Figure 8-13: Completed categories Figure 8-14: Mid-level offline storefront evaluation considerations Figure 8-15: AutomatedShops ShopZone Figure 8-16: WebDNA sample e-commerce site Figure 8-17: Website Startup Wizard Figure 8-18: Themes Figure 8-19: Adding paragraph to home page Figure 8-20: Paragraph Properties dialog box Figure 8-21: Page renaming Figure 8-22: Page preview Figure 8-23: Product Properties dialog box Figure 8-24: Site preview Figure 8-25: Properties button Figure 8-26: Contact information Figure 8-27: Shipping charges Figure 8-28: Practice Bagpipe dialog U.S. and Euro currency Figure 8-29: High-level offline instant storefront evaluation considerations Figure 8-30: InternetCommerce.com home page Figure 8-31: Sterling Commerce home page Figure 8-32: AnServ home page Figure 8-33: Visual Auction information Figure 9-1: Configure Your Server Wizard Figure 9-2: Server roles Figure 9-3: Application Server options Figure 9-4: Windows Components Wizard Figure 9-5: Application Server components Figure 9-6: IIS components Figure 9-7: World Wide Web Service components Figure 9-8: Web Service extensions Figure 9-9: Application Server role selection Figure 9-10: Enable ASP.NET tool Figure 9-11: Active Server Pages allowed Figure 9-12: IIS 6.0 user accounts Figure 9-13: Default Web Site Figure 9-14: New Web site description Figure 9-15: IP address and port settings Figure 9-16: Web site home directory path Figure 9-17: Web site access permissions Figure 9-18: TCP/IP configuration Figure 9-19: IP configuration with multiple IP addresses Figure 9-20: Default Web site Figure 9-21: IP address and host header

13 xi Figure 9-22: Path to files Figure 9-23: Home Directory tab Figure 9-24: Habitat Gift Shop home page Figure 9-25: Virtual directory alias Figure 9-26: Virtual directory path Figure 9-27: Default documents Figure 9-28: Directory browsing Figure 9-29: Directory tab Figure 9-30: Apache server default configuration Figure 9-31: Binding multiple IP addresses Figure 9-32: Default virtual host Figure 9-33: Virtual host configuration Figure 9-34: Apache default documents Figure 9-35: Apache HTTP Server information Figure 9-36: Sun Java System Web Server information List of Tables Table 4-1: Banner ad terminology Table 7-1: OBI support of open technologies Table 8-1: Product information Table 9-1: DNS records Table 9-2: IP addresses Table 9-3: LAMP components

14 xii Course Description E-Commerce Specialist teaches you how to conduct business online and manage the technical issues associated with constructing an e-commerce Web site. You will learn about the similarities and differences between traditional and electronic commerce, and you will explore e-commerce technologies at various levels of sophistication. Guided, step-by-step labs provide opportunities to practice new skills. You can challenge yourself and review your skills after each lesson in the Lesson Summary and Lesson Review sections. Additional skill reinforcement is provided in Activities, Optional Labs, Lesson Quizzes and a Course Assessment that are available from your instructor. This coursebook includes supplemental material that includes the lab files used in class. To practice the skills presented in class or to perform any labs that were not completed, refer to the Classroom Setup section for information about system requirements and using the lab files. Series E-Commerce Specialist is the second course in the CIW Web Design series: Web Design Specialist E-Commerce Specialist Prerequisites No prerequisites are mandated before taking this course. However, most students find it helpful to complete the CIW Web Foundations series of courses (Internet Business Associate, Site Development Associate and Network Technology Associate) and the CIW Web Design Specialist course; or be able to demonstrate equivalent knowledge of fundamental Internet and site design skills. Certification The CIW E-Commerce Specialist course prepares students to take the high-stakes CIW E-Commerce Specialist certification exam (1D0-525). Those who pass the CIW E-Commerce Specialist exam earn the CIW E-Commerce Specialist certification, which validates essential e-commerce site design skills. Those who also pass the CIW Web Design Specialist exam (1D0-520) earn the highly respected CIW Web Design Professional certification, which validates advanced skills in Web site and e-commerce solution development. For information about taking CIW exams, visit Target audience The CIW E-Commerce Specialist course is for individuals who already understand the foundations of Web technologies and want to become proficient in e-commerce practices and site design: Web designers Internet consultants IT professionals Marketing professionals Web and graphic artists Business professionals Entrepreneurs who want to develop their own Web presence

15 xiii Students with little or no background in Web design should consider starting with the CIW Site Development Foundations course to learn the basics of Web site authoring and development, and continuing with the CIW Web Design Specialist course to learn more advanced Web technologies as a foundation for learning about e-commerce design. Courseware This coursebook was developed for instructor-led training and will assist you during class. Along with comprehensive instructional text and objectives checklists, this coursebook provides easy-to-follow hands-on labs and a glossary of course-specific terms. It also provides Internet addresses needed to complete some labs, although due to the constantly changing nature of the Internet, some addresses may no longer be valid. The student coursebook is organized in the following manner: course title table of contents lessons list of labs list of figures list of tables lesson objectives pre-assessment questions narrative text supplemental movie clips labs lesson summary lesson review appendixes glossary index exam objective callouts graphics tables and figures warnings tech notes exam objective callouts graphics tables and figures warnings tech notes case study supplemental files When you return to your home or office, you will find this coursebook to be a valuable resource for reviewing labs and applying the skills you have learned. Each lesson concludes with questions that review the material. Lesson Review questions are provided as a study resource only and in no way guarantee a passing score on the CIW E-Commerce Specialist certification exam.

16 xiv Coursebook versions The CIW E-Commerce Specialist courseware is designed for various classroom environments: academic, learning center and corporate. This coursebook is available in both instructor and student versions. Student versions are available for both the academic environment and the learning center/corporate environment. Check your book to verify which version you have. Instructor (Academic, Learning Center and Corporate) Example syllabi for 10-week, 16-week and 32-week instruction periods are included with the instructor supplemental files available on CIW Online. Learning centers can teach this series at an accelerated pace; consult the implementation tables that can be found on CIW Online. The supplemental online files also include an appendix listing the CIW E-Commerce Specialist certification exam objectives and locations of corresponding material in the coursebook. The instructor version of this book includes Instructor Notes in the margin, which provide additional tips and commentary for the instructor to supplement course narrative. Margin callouts also direct instructors to material that relates directly to specified CIW E- Commerce Specialist objectives. The instructor book and supplemental online files contain all answers to Activities (pen-and-paper-based), Optional Labs (computer-based), Lesson Quizzes and the Course Assessment. The supplemental online files also include handout versions of all Activities, Optional Labs, Lesson Quizzes and the Course Assessment, which the instructor can print and assign during class or as homework. Lesson Quizzes and Course Assessments are provided as study and course-grading resources only; success on these materials in no way guarantees a passing score on the CIW E-Commerce Specialist certification exam. The movies provide supplementary instruction in a multimedia format, and enhance the coursebook narrative and labs. However, movie content does not comprehensively address CIW E-Commerce Specialist certification exam objectives and is not intended to replace coursebook content. Student (Academic) The student book and supplemental online files include Pre-Assessment and Lesson Review questions for each lesson. However, the student book does not provide answers to these questions. It also does not include any Activities, Optional Labs, Quizzes or the Course Assessment. Students can obtain these elements and answers only from the instructor. The student supplemental materials include appendixes and files used to perform many of the labs in the coursebook. The supplemental files also include an appendix listing the CIW E-Commerce Specialist certification exam objectives and locations of corresponding material in the coursebook. Lesson Quizzes and Course Assessments are provided as study and course-grading resources only; success on these materials in no way guarantees a passing score on the CIW E-Commerce Specialist certification exam. The movies provide supplementary instruction in a multimedia format, and enhance the coursebook narrative and labs. However, movie content does not comprehensively address CIW E-Commerce Specialist certification exam objectives and is not intended to replace coursebook content. Student (Learning Center/Corporate) Designed for the learning center/corporate environment, this student book includes Pre-Assessment and Lesson Review questions. The student supplemental online materials include appendixes; files used to perform many of the labs in the coursebook; and answers to the Pre-Assessment Questions, Lesson Review Questions, Course Assessment, Activities, Optional Labs and Lesson Quizzes. The supplemental files also include an appendix listing the CIW E-Commerce Specialist certification exam objectives and locations of corresponding material in the coursebook. Lesson Quizzes and Course Assessments are provided as study and course-grading resources only; success on these materials in no way guarantees a passing score on the CIW E- Commerce Specialist certification exam. The movies provide supplementary instruction in a multimedia format, and enhance the coursebook narrative and labs. However, movie content does not comprehensively address CIW E-Commerce Specialist certification exam objectives and is not intended to replace coursebook content.

17 xv Online resources You can visit CIW Online at to access supplemental course materials and to get help in preparing for the CIW Web Foundations Associate certification exam. CIW Online provides a variety of online tools you can use to supplement the Official CIW Courseware. CIW courseware supplemental files This coursebook includes supplemental material that can be accessed from CIW Online. Online materials are provided for both instructors and students, and include some elements required to complete the coursework and other optional elements that are provided for your interest or further study. Student materials include lab files used to complete the course labs, answers to student exercises and quizzes, and appendixes with related information (including the CIW E-Commerce Specialist Objectives And Locations Appendix). Instructor materials include course syllabi and implementation tables, answers to students exercises and quizzes, and appendixes with related information (including the CIW E-Commerce Specialist Objectives And Locations Appendix). See the CIW Supplemental Files section under Classroom Setup for information about accessing these files. CIW Online Exercises These interactive activities are instructional supplements to the official print and online books, designed to offer a blended-learning approach. Mapped directly to the Official CIW Courseware, the CIW Online Exercises enable you to review important concepts from the E-Commerce Specialist course and measure your proficiency on content relevant to the CIW E-Commerce Specialist certification exam. CIW Online Exercises challenge you with a wide range of activities, including glossary flashcards, matching exercises, fill in the blank, crossword puzzles and true/false questions all providing immediate feedback. CIW Course Reviews CIW Course Reviews are designed to assess your knowledge of the concepts, skills and best practices of Web technology taught in the Official CIW Courseware. The CIW Course Reviews assess lesson knowledge, reinforce classroom learning and enhance instruction. This online review program contains multiple-choice reviews and quizzes that cover E-Commerce Specialist courseware content lesson by lesson. CIW Certification Practice Exams After you have mastered the E-Commerce Specialist course material, you are ready to prepare for the highstakes CIW E-Commerce Specialist certification exam. The online CIW Certification Practice Exams program helps you build confidence with your knowledge of the CIW exam objectives. This program provides you with: Timed practice exams that simulate the high-stakes testing environment and help predict actual performance on CIW certification exams. A feedback review mode that allows you to check answers while taking the practice exam and gain valuable feedback that relates each question to a CIW exam objective and a lesson in the Official CIW Courseware. Exam results that report on your mastery of each CIW exam objective. Personalized performance reports and study plans to track individual progress and view overall class trends. CIW Movies The CIW E-Commerce Specialist course offers movie files from LearnKey that discuss selected technology topics. To view the movies, log on to CIW Online at Use the access code provided to register for the movies and view them online. If you have any questions, please contact Product Support at (866) or [email protected].

18 xvi Consider the following points about the CIW Movies: The movies provide supplementary instruction in a multimedia format, and enhance the coursebook narrative and labs. However, movie content does not comprehensively address CIW Internet Business Associate certification exam objectives and is not intended to replace coursebook content. E-Commerce Specialist coursebook include Movie Time alert boxes that signal appropriate points at which to view the supplemental movies. Instructors in a classroom environment are strongly encouraged to present movies to the entire class using a computer screen projector. Group presentations enable instructors to present and discuss movie content when appropriate. Controlling the presentation of movies also minimizes distractions from course material and essential lecture or lab time. Students are strongly encouraged to watch the movie clips on their own if they are unable to view them in class. Each student is provided access to CIW Online to view the movies. The access code provided allows instructors and students to view the movies. Do not distribute the code to unauthorized users. Course Objectives After completing this course, you will be able to: Evaluate an e-commerce site to maximize audience usability. Develop and host an e-commerce site using instant storefront services and stand-alone e-commerce software. Implement e-commerce-based learning solutions. Implement inventory and fulfillment strategies for an e-commerce site. Implement payment-processing services for an e-commerce site. Develop a knowledge base. Define and use standards, initiatives and e-commerce frameworks that support supplier transactions. Configure Web server software for an e-commerce site. Analyze and improve e-commerce site performance. Secure e-commerce transactions. Secure an e-commerce site. Identify the effects of e-commerce on business operations and revenue generation. Identify legal and governmental issues in e-commerce. Implement effective marketing for an e-commerce site. Implement strategies for effective customer service and manage customer relationships in e- commerce operations. Classroom Setup Your instructor has probably set up the classroom computers based on the system requirements listed in the following sections. Some software configurations on your computer are identical to those on your instructor's computer. However, your instructor may use additional software to demonstrate network interaction or related technologies.

19 xvii System Requirements This section lists the hardware, software and connectivity requirements to implement this course. Before class, the instructor should install and configure the instructor and student systems using the instructions in the Classroom Setup Guide section. This course uses several large software components that require a lengthy installation process. To reduce the amount of installation time for the students, most installation procedures have been moved to the Classroom Setup Guide, and are to be performed before the class begins. Hardware The following table summarizes the hardware requirements for courses in the CIW program. Each classroom should be equipped with an individual computer workstation for each student and the instructor. Give each station a unique name. Note: The CIW hardware requirements are similar to the minimum system requirements for Microsoft Windows XP Professional implementation except that CIW requires increased hard disk space (20 GB) and RAM (256 MB). CIW Hardware Specifications Processor L2 cache Hard disk RAM CD-ROM Network interface card (NIC) Sound card/speakers Video adapter Network hubs Monitor Router* Minimum Requirements Intel Pentium processor (or equivalent) 1-GHz minimum required (single or dual processor system) 256 KB 20 GB 1 GB 32X 10BaseT or 100BaseTX (10 or 100 Mbps) Required for instructor station, optional for student stations 4 MB Enough 10-port 10BaseT or 100BaseTX (10 or 100 Mbps) hubs to allow classroom computers to communicate Super VGA (800 x 600) resolution video graphics card and 17-inch monitor with 256 colors Multi-homed system with three NICs (Windows 2000/2003 server)* * Router only required for some security and networking courses. Please review the connectivity or network requirements for each course to determine if a router is required. Must meet universal CIW hardware requirements. Instructor software The recommended software configurations for instructor stations used to complete the labs in this book are as follows. Microsoft Windows Server 2003, with the following components: Microsoft Certificate Server Microsoft Windows Server 2003 Service Pack 2 Microsoft Internet Information Services (IIS) v6.0 Microsoft Internet Explorer 6 or later

20 xviii Netscape 7.2 or later (optional) Mozilla Firefox or later (optional) ShopFactory V7 Microsoft SQL Server 2005 Microsoft SQL Server 2005 Service Pack 2 Microsoft Commerce Server 2007 Microsoft Commerce Server 2007 Service Pack 2 Webserver Stress Tool WebReporter Adobe Acrobat Reader 7.0 or later Connectivity Internet access is required for full implementation of the courseware. You will experience optimal performance with a dedicated Internet connection (for example, a cable/dsl modem or a T1 line). Student software Note: Several labs are provided in which students install and configure Microsoft SQL Server, Microsoft Commerce Server and the sample site on their systems. These labs are complex and if not performed precisely, can take some time to correct and reinstall. Students are advised to take care to perform each lab step correctly. Instructors may choose to configure server software on student systems before class using a disk image ("ghosting") of the instructor setup. However, understand that this may deprive students of fulfillment of some CIW E-Commerce Specialist objectives. (Symmantec Ghost is recommended for this purpose, but other disk-imaging products are available.) The recommended software configurations for student stations used to complete the labs in this book are as follows. Microsoft Windows Server 2003, with the following components: Microsoft Internet Information Services (IIS) v6.0 Microsoft Windows Server 2003 Service Pack 2 Microsoft Internet Explorer 6 or later Netscape 7.2 or later (optional) Mozilla Firefox or later (optional) ShopFactory V7 Microsoft SQL Server 2005 Microsoft SQL Server 2005 Service Pack 2 Microsoft Commerce Server 2007 Microsoft Commerce Server 2007 Service Pack 2 Webserver Stress Tool WebReporter CyberSource Adobe Acrobat Reader 7.0 or later

21 xix Connectivity Internet access is required for full implementation of the courseware. You will experience optimal performance with a dedicated Internet connection (e.g., a cable/dsl modem or a T1 line). CIW supplemental files Each coursebook includes supplemental materials that are referenced and used throughout the course. These supplemental materials are provided online at You will need to create a directory for all supplemental materials for the course. The default location is C:\CIW\[Course_Title]. To view or download the materials, go to CIW Online, click the link for each file and save to this directory. You can then create a shortcut to this directory on your Desktop. As you conduct the course labs, you can use this shortcut to quickly access your lab files.

22 xx Conventions and Graphics Used in This Book The following conventions are used in the E-Commerce Specialist coursebook. Terms Lab Text Notations Program Code or Commands Technology terms defined in the margins are indicated in bold type the first time they appear in the text. However, not every word in bold type is a term requiring definition. Text that you enter during a lab appears in italic bold type. Names of components that you access or change in a lab appear in bold type. Notations or comments regarding screenshots, labs or other text are indicated in italic type. Text used in program code or operating system commands appears in the Lucida Sans Typewriter font. The following graphics are used in the E-Commerce Specialist coursebook. Tech Notes point out exceptions or special circumstances that you may find when working with a particular procedure. Tech Notes that occur within a lab are displayed without the graphic. Tech Tips offer special-interest information about the current subject. Warnings alert you about cautions to observe or actions to avoid. This graphic signals the start of a lab or other hands-on activity. The Movie Time graphic signals appropriate points in the course at which to view movie clips. All movie clips are 2011 LearnKey Inc. Each lesson summary includes an Application Project. This project is designed to provoke interest and apply the skills taught in the lesson to your daily activities. Each lesson concludes with a summary of the skills and objectives taught in that lesson. You can use the Skills Review checklist to evaluate what you have learned. This graphic indicates a line of code that is completed on the following line.

23 1Lesson 1: Electronic Commerce Foundations Objectives By the end of this lesson, you will be able to: 1.1.1: Identify specific business-to-business (B2B) and business-to-consumer (B2C) issues in developing an e-commerce site : Distinguish between in-house and online instant storefront options for creating an e-commerce site : Evaluate the advantages and disadvantages of using third-party instant storefronts : Evaluate the advantages and disadvantages of using e-commerce storefront software : Choose an appropriate payment method : Identify and implement microcommerce concepts (includes micropayments, microtransactions) : Compare the advantages and disadvantages of e-commerce and traditional sales methods : Identify business growth drivers and barriers.

24 1-2 E-Commerce Specialist Pre-Assessment Questions 1. Identify three guidelines for developing an effective ordering infrastructure. 2. Which of the following statistics is true? a. In the United States and Canada, 51 percent of online users are between the ages of 18 and 21. b. Approximately 65 percent of American Internet users purchase goods on the Internet. c. Females outnumber males two to one in Internet use. d. Web users have advanced educational degrees, with 90 percent having at least a bachelor's degree. 3. Which type of Web storefront requires the most significant investment in hardware? a. Online instant storefront b. In-house storefront c. Offline storefront d. Hybrid storefront

25 Lesson 1: Electronic Commerce Foundations 1-3 Introduction to Web Commerce During the past several years, large companies and small businesses have increased their presence on the World Wide Web. Web technology has grown tremendously since the mid-1990s, when Mosaic, the first graphical browser, was introduced. By the time Netscape released its browser, home computers were expected to access the Web in even greater numbers. Home computer users grew increasingly sophisticated, and the Web evolved from an academic curiosity into a mainstream necessity. By 1996, the Web was firmly entrenched in popular culture. and Web site addresses were traded as status symbols, and organizations rushed to register domain names and set up Web servers. Company Web servers promoted company goods in a primitive form of electronic commerce. In the new century, Web commerce has grown considerably. This lesson will introduce the fundamental background for understanding the Web commerce model and exploring the advantages of deploying a Web commerce infrastructure. To meet these goals, you will focus on several operational electronic commerce sites, one of which you will build during this course. The list of companies will include the following: Travelocity.com ( a travel-planning site that allows users to search schedules, compare prices and purchase tickets for travel. Dell Inc. ( a major corporate site that allows individuals and businesses to purchase computers and computer peripherals. Barnes & Noble ( a popular online vendor site that allows users to search, sample and purchase books, music CDs, tapes and other products. Habitat For Humanity Gift Shop ( an e-commerce site that sells merchandise that promotes Habitat For Humanity. Throughout the class, you will use a version of the Habitat For Humanity Gift Shop Web site to help you understand various aspects of electronic commerce. Impetus for Web Commerce Some experts believe that Web commerce will soon be a requirement for most businesses. According to Internet World Stats ( there were more than 812 million Internet users worldwide by September This number represents a growth of 125 percent from 2000 to These figures indicate that the Web is continuing to grow and that Web presence can help businesses reach customers around the world. Other statistics that support this assertion include the following: As of September 2004, 31.7 percent of Internet users were located in Asia, 28.4 percent were located in Europe, and 27.3 percent were located in North America, according to Global Reach ( As of the end of the third quarter of 2004, 66.3 million domain names were registered worldwide, according to VeriSign's Domain Name Industry Brief ( Brief/index.html).

26 1-4 E-Commerce Specialist By January 2004, the Internet consisted of an estimated 300 million hosts, according to Internet Systems Consortium Inc. ( By December 2007, 74 percent of women and 76 percent of men in the United States used the Internet, according to the Pew Internet and American Life Project ( At the end of the third quarter of 2004, there were 54.6 million Digital Subscriber Line (DSL) subscribers. This figure represents a 56 percent growth rate over the previous year, according to ClickZ Network ( By 2002, an estimated 140 million Internet appliances were in use worldwide. An Internet appliance is a limited-use computer that accesses the Internet for browsing and . By December 2007, 92 percent of people in the United States surveyed between the ages of 18 and 29 used the Internet, according to the Pew Internet and American Life Project ( English is still the leading language on the Internet, with 295 million Englishspeaking users as of September This figure represents 35.2 percent of Web users. The next most prevalent language is Chinese, with 110 million Chinesespeaking users on the Internet. By 2007, 72 percent of Americans who accessed the Internet spent an average of at least one hour per day online. Eighteen (18) percent of users spent an average of three to six hours per day online. Web users are well-educated: By December 2007, 93 percent of people with a college degree used the Internet, compared with 38 percent of people who did not graduate high school, according to the Pew Internet and American Life Project ( Web users are upscale: In the United States, 93 percent of people with an income higher than $75,000 per year used the Internet by December 2007, compared with 61 percent of those with an annual income lower than $30,000, according to Pew Internet and American Life Project ( Approximately 67 percent of Americans with Web access have used the Internet to purchase products, according to the Pew Internet and American Life Project ( More than 110,000 companies have used the Internet to distribute critical company information, such as press releases. Business owners, aware of the increasing number of potential customers using the Web, are responding by making their products and services available to these online users with Web technology. Electronic Commerce Defined Commerce is the exchange of goods and services for money. Historically, commerce has been accomplished when the buying party exchanges a fee with the selling party for the goods purchased or services rendered. Barter systems notwithstanding, the fee traditionally has been paper money, checks, bank drafts, credit cards or other representations of paper money.

27 Lesson 1: Electronic Commerce Foundations 1-5 OBJECTIVE: 3.1.1: E-commerce vs. traditional sales methods Data management for traditional transactions was limited to manual or, more recently, computer-based bookkeeping. Security was largely absent in the traditional transaction model; if the buyer had to be physically present to make a purchase, the chances of fraud were low. This view was bolstered when Visa began issuing credit cards containing the cardholder's photograph. OBJECTIVE: 3.1.1: E-commerce vs. traditional sales methods Electronic commerce (often called e-commerce or EC) can be defined on two levels: first, as commerce conducted via any electronic medium, such as TV, fax or the Internet. The first two media have been in use long enough so that issues such as data management and security are well understood. The third medium, the Internet, has changed the nature of these issues somewhat, because it ties commerce, data management and security capabilities together. A second, broader definition of electronic commerce is more suitable to Internet users. Electronic commerce is the integration of communication transport, data management and security capabilities that allow organizations to exchange information about the sale of goods and services. These three capabilities contribute to e-commerce as follows: Communication transport services support the transfer of information between the buyer and the seller. Unlike traditional transactions, the e-commerce communications aspects go beyond sharing a spoken language. Data management services define the exchange format of the information. These services help establish a common digital language between applications to complete electronic transactions successfully. Security mechanisms authenticate the source of information and guarantee its integrity and privacy. Security mechanisms are of paramount importance to e-commerce because unlike traditional transactions, electronic transactions do not require physical proximity between the buyer and seller to complete a transaction. Electronic commerce vs. traditional commerce The preceding paragraphs touched on some aspects of how electronic commerce differs from traditional commerce. These differences can be quantified more concretely. One difference is in how information is exchanged and processed. Traditionally, information was exchanged via person-to-person contact, or through telephone or postal systems. In electronic commerce, information is carried through a networked computer system. In traditional commerce, participants act on the information that accompanies a typical business transaction. In electronic commerce, physical presence is limited and almost the entire transaction processing is automated. Electronic commerce pulls together a variety of business support services, including , online directories, ordering and logistical support systems, settlement support systems, inventory control systems, and management information and statistical reporting systems. In traditional commerce, the physical proximity between the participating business entities allows nonrepudiation. It also allows a customer's identity to be verified (authentication) with a request for a standard identification item such as a driver's license or a passport. The electronic commerce infrastructure does not lend itself well to the traditional model: Nonrepudiation and authentication must be provided digitally. Also, that data must be kept confidential as it is passed across the Internet. Digital signatures and encryption frameworks have been developed to address these security issues.

28 1-6 E-Commerce Specialist In the following lab, you will visit various Web sites to view e-commerce trends and statistics. Suppose you plan to start your own e-commerce business and you need information about Internet growth, demographics, consumer confidence and other data. By tracking this information on the Internet, you will increase your understanding of your target audience and create a more successful business plan. Lab 1-1: Exploring e-commerce trend and statistics Web sites In this lab, you will visit several e-commerce information and statistics Web sites to search for data. The questions in this lab have no right or wrong answers because many of them involve predictions or quickly changing facts. 1. Open your browser. 2. If you are prompted that Microsoft's Internet Explorer's Enhanced Security Configuration is currently enabled, select In The Future, Do Not Show This Message and click OK. 3. Select Tools Internet Options and click the Security tab. 4. Change the security level for the Internet zone to Medium. If you receive a warning that the recommended security level for this zone is High, click Yes to verify that you want to change the security level. 5. Click OK. 6. In your browser, enter ClickZ Network (Figure 1-1) is an online source for information about Internet demographics and trends. If you are prompted to install Flash, click Yes. Figure 1-1: ClickZ Network home page

29 Lesson 1: Electronic Commerce Foundations ClickZ Network: Search for an article that estimates the expected growth of Internet users older than 55 years of age. If a security warning appears about sending information over the Internet, select the In The Future, Do Not Show This Message check box and click Yes. Consider what these estimates mean for the future, and record your thoughts in the following space. 8. Enter in your browser. ECommerce-Guide (Figure 1-2) provides articles and statistics for global e-commerce. Figure 1-2: ECommerce-Guide home page 9. In the Search ECommerce-Guide box, enter Consumer Confidence. Find the latest statistics on consumer confidence in e-commerce. Consider how consumer confidence might affect the success of your e-commerce site, and record your thoughts in the following space.

30 1-8 E-Commerce Specialist 10. Enter in your browser. E-Commerce Times (Figure 1-3) is a broad-based source for e-commerce news. Figure 1-3: E-Commerce Times home page 11. Read the current headlines and notice some of the current trends in the articles. Note some of your observations in the space provided.

31 Lesson 1: Electronic Commerce Foundations Enter in your browser. If you are prompted to display the Flash player, click Yes. Internet Retailer (Figure 1-4) provides news articles about e- commerce. Figure 1-4: Internet Retailer home page 13. Internet Retailer: Read some of the latest headlines and discuss them. 14. Class Discussion: What are your own predictions for e-commerce based on what you have learned? Does e-commerce affect your daily activities? Do you think that e-commerce is a short-term business trend or will it permanently change business? In your opinion, what factors will encourage or discourage e-commerce? Applying E-Commerce Concepts to Focus Companies The following focus companies have been chosen because of the diverse offerings they provide. They are categorized as either business-to-consumer (B2C) or business-tobusiness (B2B). Remember the following companies throughout the class. Compare the key concepts presented in class with the electronic commerce experiences of these specific companies. Habitat For Humanity Gift Shop (B2C) The Habitat For Humanity Gift Shop sells merchandise that promotes Habitat For Humanity, a non-profit organization that builds homes for underprivileged families. You will modify a version of the Habitat For Humanity Gift Shop e-commerce site throughout the course.

32 1-10 E-Commerce Specialist Travelocity.com (B2C) This Web site is managed by Sabre Inc. (originally the Sabre group and owned by AMR Corporation). In March 2000, it became an independent company. For years the Sabre group supplied flight and travel information to travel agencies worldwide. In "traditional commerce" terms, a retail component was accessed through participating travel agencies. Dell Inc. (B2C and B2B) Dell is a supplier of computers and computer peripherals. It was founded in 1984 and launched its Web site in Its e-commerce initiative was launched in Barnes & Noble (B2C) This well-known bookseller is a dominant figure in the retail environment, but electronic commerce competition such as Amazon.com forced Barnes & Noble to re-evaluate its business model to include e-commerce via the Internet. In the following lab, you will view the Habitat For Humanity Gift Shop Web site and note its current features and functionality. Suppose you have been hired by Habitat For Humanity to analyze how well it reaches consumers in various demographics. You would want to compare its features with those found on other e-commerce sites. Lab 1-2: Viewing the Habitat For Humanity Gift Shop Web site Note: This lab is the first of many labs throughout the coursebook in which you will examine the Habitat For Humanity Gift Shop Web site and review each of the three focus companies chosen for this class. Your goal will be to review and compare each company with the concepts discussed in each lesson. In this lab, you will view the version of the Habitat For Humanity Gift Shop Web site currently on the Internet. 1. Open your browser. 2. Browser: Navigate to The home page for the Habitat For Humanity Gift Shop will appear, as shown in Figure 1-5.

33 Lesson 1: Electronic Commerce Foundations 1-11 business-to-business (B2B) An e-commerce model in which a Web-based business sells products and/or services to other businesses. business-toconsumer (B2C) An e-commerce model in which a Web-based business sells products and/or services to consumers or end users. Figure 1-5: Habitat For Humanity Gift Shop home page 3. Spend some time looking at the features available on the site. 4. Consider the demographics discussed earlier in the lesson. How well do you think the site appeals to various groups of users? Consider international users, male versus female users, and users in different age groups. 5. Repeat Steps 2 through 4 with the other three focus sites. 6. Close the browser window. Movie Time! Go to CIW Online to view a movie about this topic. E-Business Models (approx. playing time: 05:00) All movie clips are 2011 LearnKey, Inc. Types of Electronic Commerce Broadly speaking, the two models of electronic commerce are business-to-business (B2B) and business-to-consumer (B2C), as you have already learned. Contrary to natural reasoning, the number of business-to-business electronic commerce transactions significantly exceeds that of business-to-consumer transactions.

34 1-12 E-Commerce Specialist OBJECTIVE: 1.1.1: B2B and B2C development issues supply chain The combination of the vendors from which a company receives products and raw materials and the customers to which the company provides products and raw materials. Business-to-business (B2B) In the B2B model, also referred to as intercompany business, e-commerce is conducted between two separate businesses. For example, consider a Fortune 500 company that wants to allow its employees to buy sundry items such as office supplies online. It can set up an open purchase order with an office supplier and allow employees to access the supplier's Internet site to make purchases. One characteristic of this model is multiple high-volume and low-price margins (such as 100 consumers buying a stack of notepads at U.S. $1.25 each) for each transaction. However, business-to-business e-commerce is not always characterized by high-volume purchases. Business-to-business e-commerce encompasses a variety of services that help companies optimize their supply chain, gather data for various purposes, and perform other activities that help them reduce costs and make their businesses more efficient. In recent months, more and more companies have been offering Web services as a way to reuse and resell business processes across multiple enterprises. In the following lab, you will view a B2B Web site. Suppose you were preparing a report for your company on business-to-business opportunities. Part of your report must include the B2B services offered by another company. Lab 1-3: Locating and viewing a B2B Web site In this lab, you will view the Web site of a company currently using a business-tobusiness model. 1. Open your browser. 2. Browser: In the Address field, enter 3. View and examine the Works Web site. It is set up for businesses to automate their purchasing process by using the Internet, as shown in Figure 1-6.

35 Lesson 1: Electronic Commerce Foundations 1-13 OBJECTIVE: 1.1.1: B2B and B2C development issues Business-to-consumer (B2C) Figure 1-6: Works home page In the B2C model, commerce is conducted between a business and a consumer, such as a home user on a personal computer. For example, to buy books or audio CDs on the Internet, the consumer accesses the business's Internet site and purchases the items. Often this model is characterized by low volume and high prices, but as Web sites begin to increase their customer base, as B2C sites often do, the model can also be characterized by high volume and lower-than-retail pricing margins (100 consumers buying a CD or book at a discount). Most consumers shop on the Web because of some form of discount or advantage that they cannot find at a traditional store location. In the following lab, you will examine a B2C Web site. Suppose you have been hired by an existing retail store to implement a B2C e-commerce site. You would need to note the e- commerce features available on an existing site. Lab 1-4: Locating and viewing a B2C Web site In this lab, you will view the Web site of a company using the business-to-consumer model. As you probably know, thousands of sites use this model. In this lab, you will look at one of your three focus companies, Barnes & Noble ( 1. Open your browser. 2. Browser: In the Address field, enter 3. View the Barnes & Noble Web site. It is set up for consumers to search for and purchase books, music, videos and software online, and have them delivered. Click the DVDs tab shown in Figure 1-7.

36 1-14 E-Commerce Specialist Figure 1-7: Barnes & Noble home page 4. Enter the title Titanic in the search box shown in Figure 1-8, then click the Search button. Figure 1-8: Barnes & Noble title search 5. The search results will return a listing of DVD and VHS movies that meet the search criteria. See Figure 1-9.

37 Lesson 1: Electronic Commerce Foundations 1-15 Figure 1-9: Barnes & Noble search results 6. Click the top title to display details about the movie, as shown in Figure Figure 1-10: Barnes & Noble item details If you are familiar with business-to-consumer buying on the Web, this process will seem familiar. In general, most B2C Web sites offer the same purchasing process, which has developed into an expected and understood format for the consumer. The next step the consumer takes is to add the product to his or her online shopping cart, continue shopping if desired, and then proceed to the purchase phase. Some sites offer returning customers easier purchasing by storing information gathered from past shopping sessions. Such information may include shipping addresses and credit card information.

38 1-16 E-Commerce Specialist Microcommerce and Macrocommerce OBJECTIVE: 1.5.8: Microcommerce concepts Microcommerce is a term used for e-commerce service or software purchases that are between U.S. $0.01 and $5.00 (up to five euros). Some microcommerce transactions can even be smaller than a penny. Microcommerce offerings are usually goods or services that are provided to customers on an individual basis. When a microcommerce transaction (or microtransaction) occurs, it is known as a micropayment. Many micropayments occur on a per-click basis. Such payments are, of course, small, but can add up to significant revenue. Enterprise microcommerce Enterprise microcommerce is a form of B2B commerce. A company can negotiate a contract to provide a service or product that has a very small cost associated with it (for example, a half-penny per transaction). However, this company may be able to sell this service hundreds or thousands of times a day to generate revenue. Examples of enterprise B2B-based microcommerce can include the following: Database connectivity A company provides access to databases. Software use A company provides software on a per-user basis. For example, a company might charge a penny ($0.01) for each use of a Java applet or PHP script that it has created. Web services A company might provide a Web service that costs a few cents each time it is accessed. A Web service is a software component that is accessed over the Internet using the Extensible Markup Language (XML). Content A company might provide online content and charge each time an article or learning object is accessed. Consumer-based microcommerce You are generally more likely to find examples of consumer-based microcommerce. Examples of consumer-based B2C microcommerce can include the following: Music purchases, including purchases from services such as Apple itunes ( and Napster ( Newspaper article purchases, including archived articles on a per-story basis Purchases of individual book chapters or portions of chapters from publishing companies Small service purchases, which can include sending voice calls Software purchases, which can include actual software as well as software service plans Member-only areas of a Web site that, for a fee, offer a no-advertisement section Purchases made on gaming and gambling sites Clip art purchases

39 Lesson 1: Electronic Commerce Foundations 1-17 Macrocommerce Macrocommerce is a term often applied to the sale of goods (for example, computer hardware) on the Internet. It is also used as a term that describes common e-commerce purchases that are over U.S. $5.00 (five euros). OBJECTIVE: 3.1.2: Growth drivers and barriers Internet Service Provider (ISP) An organization that maintains a gateway to the Internet and rents access to customers on a per-use or subscription basis. OBJECTIVE: 3.1.1: E-commerce vs. traditional sales methods Benefits of Electronic Commerce Electronic commerce has the potential to markedly increase the speed, accuracy and efficiency of business and personal transactions. Establishing a Web storefront can be as simple as allowing an Internet Service Provider (ISP) to host your electronic storefront for a low cost. Some ISPs charge very low fees for Web-hosting services. Compare this structure with the costs of leasing and upkeep of a prime real estate parcel, then consider the broader reach of a Web storefront. The benefits of electronic commerce include: Instant worldwide availability. The store is always open and is accessible to a global audience. A streamlined buyer-to-seller relationship resulting from simplified communication and direct interaction. Reduced paperwork, allowing a better focus on customer needs. Reduced errors, time and overhead costs in information processing because redundant data entry requirements can be eliminated. Reduced time to complete business transactions, specifically from delivery to payment. Easier entry into new markets, especially geographically remote ones. For instance, a Web site selling Persian rugs can be accessed by customers in Australia, North America and anywhere else that an Internet connection is available. New business opportunities as entrepreneurs design innovative ways to use the Internet for commerce. Improved market analysis. The large base of Internet users can be surveyed for an analysis of the marketability of a new product or service idea. Wider access to assistance and advice from experts and peers. Improved product analysis. Businesses can collect, collate and make available their product information over the Internet. The ability to streamline and automate purchasing. Companies allow customers to generate and send purchase orders online, minimizing the costs associated with handling sales orders. Drawbacks of Electronic Commerce So far you have considered many benefits that electronic commerce offers business owners and customers. However, electronic commerce also has some disadvantages. Electronic commerce may increase vulnerability to fraud. The public network allows anyone to offer products or services for sale with anonymity, thus increasing the potential for misrepresentation or fraud.

40 1-18 E-Commerce Specialist Other potential problems with electronic commerce include the following. intellectual property Products such as written materials, musical compositions and trademarks that are protected by copyright, trademark or patent law. Intellectual property Protecting intellectual property becomes a problem when duplicating information and creating illegal copies of copyright-protected material are so easy. Confidentiality Users need to transmit confidential financial information over the Internet to pay for goods and services. That information must also move through the e-commerce system and sometimes be stored for future use. Financial data must be protected to mitigate the risk that it will be viewed when it is transmitted over the network or illegally read from storage. Taxation If a Web user living in Illinois buys something from a Web site in California, is the purchase taxed? If so, does the buyer pay Illinois or California sales taxes? Customs and interstate boundaries The Internet spans international boundaries. Can Web users buy a product outlawed in one country from a Web site in another country if the product is legal in the country hosting the Web site? What are the laws and how will they be governed? What about products, such as alcohol, that are governed by state law? Regulations Government bodies and regulators may enforce restrictions that invade privacy or hinder security. What are the rules? Credit card fraud The U.S. Electronic Funds Transfer Act stipulates a limited liability of U.S. $50 to the cardholder in case of fraud. In electronic commerce, what are the legal protections against unauthorized or fraudulent transactions? Security Authentication, nonrepudiation, accountability and physical delivery are all handled somewhat differently under the various electronic commerce packages now in use. When will a consistent baseline be available? Trust If a Web-based business is easy to set up, it is just as easy to tear down. In traditional transactions, the buyer and seller assess each other before completing the transaction. How does a new Web business assure customers that it will be there when they need service or support? Availability 24 hours a day, seven days a week If constant worldwide availability is an advantage, it is also a risk. What happens to business opportunities that might be lost through service disruption? In the following lab, you will examine the Habitat For Humanity Gift Shop site and analyze its e-commerce model. Suppose you have been hired by Habitat For Humanity to make recommendations for improving its sales through e-commerce. You must examine the current site and think about how an e-commerce site will affect the business. Lab 1-5: Reviewing electronic commerce basics In this lab, you will examine the Habitat For Humanity Gift Shop Web site. You will analyze it in terms of the concepts discussed throughout this lesson. (This lab can be performed individually or as a group.) 1. Open your browser and navigate to

41 Lesson 1: Electronic Commerce Foundations Browse the Habitat For Humanity Gift Shop Web site and view its various elements. See Figure Figure 1-11: Habitat For Humanity Gift Shop home page During your examination of the Habitat For Humanity Gift Shop Web site, consider the following issues. Write your answers in the spaces provided. 3. What type of medium is this company using to help sell its product? Why? 4. How does the company's electronic commerce model compare with its traditional commerce model? 5. Is the company using the business-to-business or the business-to-consumer model? 6. What three advantages might the company enjoy from providing electronic commerce?

42 1-20 E-Commerce Specialist 7. Name three drawbacks the company might encounter from providing electronic commerce. OBJECTIVE: 1.2.1: In-house vs. online instant storefronts OBJECTIVE: 1.2.2: Third-party instant storefronts 8. If Time Permits: Repeat Steps 1 through 7 to evaluate the other three focus companies. E-Commerce Solutions Having looked at some electronic businesses, you will now examine different solutions for implementing an electronic business. You will briefly consider these now, but they will be discussed in greater detail later in the course. The choices for an e-commerce site can be categorized as: In-house solutions. Instant storefronts. In-house solution With the in-house option, a Web business must buy or develop and integrate an e- commerce software package, a service platform, redundant Internet connections, secure payment-processing network connections and round-the-clock maintenance. Generally speaking, this approach is reserved for large businesses that have the staff and financial resources to support this effort. The advantages of such a solution are considerable: complete control of the hardware and software infrastructure, and an easier integration into existing back-end enterprise systems. The disadvantages are mainly monetary: Implementing and maintaining an elaborate in-house electronic commerce system can cost more than U.S. $250,000. This cost effectively puts such systems beyond the range of most small businesses. Instant storefront The alternative to an in-house solution is to use a software package from a vendor that can provide the desired features at a lower cost. Typically, these packages require very little technical knowledge. The more advanced ones allow for customization, and also provide the necessary technology so the business can focus on selling goods and services. The two categories of instant storefront packages are online and offline (hybrid). Online storefront solution With an online package, the entire electronic commerce package is on the service provider's infrastructure. The business accesses it with a Web browser. The advantage of an online storefront business is that it can be managed from anywhere that has an Internet connection. The business is freed from constant upgrades and other logistical issues associated with maintaining an Internet infrastructure. The disadvantage is that control of the software package is with the ISP, and maintenance can be time-consuming, depending on the speed of the Internet connection. Yahoo! Store and Open Market's Shopsite are examples of online storefront solutions; others will be examined later in the course.

43 Lesson 1: Electronic Commerce Foundations 1-21 OBJECTIVE: 1.2.3: E-commerce storefront software Offline/hybrid storefront solution An offline package typically requires installing software on the business's computing infrastructure. The owner builds and maintains the online business inside the application. When the site is ready, it is uploaded to the hosting Web server to be accessed by the public. Any changes are made offline using the software and uploaded when ready. Advantages of an offline package include control (the business owns the software) and speed (changes to the store can be made quickly). The disadvantages include lack of software portability, and installation and upgrade problems. ShopFactory ( is an example of an offline/hybrid storefront. Small-business owners do not usually have the time or energy to worry about technology. Technology should be an enabling, not a disabling, force. Often, the quickest and easiest way for a small business to establish a Web presence is an online, ready-to-use package. In the following lab, you will examine the instant storefront options provided by Verio. Suppose you are beginning to evaluate the options for creating an e-commerce site for your business. You do not have an in-house Web development team or the resources required to implement an offline storefront. You would need an online storefront option that you can implement quickly and easily. Lab 1-6: Viewing an instant storefront option In this lab, you will examine a company that offers Web site hosting through an online storefront. 1. Open your browser. 2. Browser: In the Address field, enter 3. Click GO next to Get A Web Site Hosting Plan on the left side of the page. 4. Click Get An E-Commerce Hosting Plan in the menu on the left side of the page. 5. Examine the different types of e-commerce plans available. See Figure 1-12.

44 1-22 E-Commerce Specialist T1 A North American high-speed digital carrier used to transmit data at a speed of Mbps; transmits a DS1 formatted signal. Digital Subscriber Line (DSL) A high-speed direct Internet connection that uses all-digital networks. Integrated Services Digital Network (ISDN) An international standard that defines the transmission of data, voice and video over digital lines at 64 Kbps. An ISDN line consists of several 64-Kbps channels, which can be combined for faster speeds. T3 A North American high-speed digital carrier used to transmit data at speeds up to Mbps; usually used by major ISPs and other large organizations. Figure 1-12: Verio Web site showing e-commerce options Web Storefront Hardware and Software This section will discuss the hardware and software used in establishing a Web storefront. This list is not comprehensive, but should be used as a starting point for planning an electronic commerce-enabled site. Hardware The following hardware is required to establish an in-house Web storefront: A powerful Internet connection T1 (or fractional T1), Digital Subscriber Line (DSL), Integrated Services Digital Network (ISDN) or T3 is suitable. A dial-up ISP account is usually not a viable or reliable option for any type of Web server. Powerful systems Systems such as Sun Workstations or Windows 2000/Windows Server 2003 are needed to run the required servers and supporting software. End-user computers These computers are used as in-house clients accessing your electronic commerce site. When you establish an e-commerce site using an instant storefront, the ISP will provide the server hardware and software. The only hardware requirement is the computers used by the in-house personnel responsible for managing content and processing orders.

45 Lesson 1: Electronic Commerce Foundations 1-23 Software The following software is required to establish a Web storefront: database management system (DBMS) A program used to store, access and manipulate database information. A solid and dependable Web server software package Web server software from Apache ( Netscape or Microsoft will suffice. Web server software support of Secure Sockets Layer (SSL) is essential, and servers from all three companies mentioned previously support SSL. Certificates to authenticate the Web servers and encrypt traffic Certificates can be obtained from certificate authorities such as VeriSign. An operating system. Payment infrastructure VeriSign has the required servers and clients to implement the payment infrastructure, which includes a payment gateway. Other vendors, such as DigiCash, PayPal, Microsoft and Netscape, also provide certain components to support the payment infrastructure. A database and database management system (DBMS) Databases are critical for storing customer and product information and catalogs. Web page development software Although HTML can be written using a word processor, a number of benefits can be gained by using a development platform such as Microsoft Visual Studio.NET or Dreamweaver. These benefits include easier server-side development, debugging capabilities and drag-and-drop user interface design. When you purchase instant storefront services, most of these requirements will be met by the ISP. Professional staff To establish a Web storefront, you need the professional skills provided by the following personnel: Web designers, HTML writers and content developers Application programmers Network and database administrators Order fulfillment personnel Customer support personnel Depending on the size of the business and your available resources, some personnel can perform multiple tasks. Ingredients of a Web Storefront Turning a business into a Web-based enterprise can be deceptively simple, or if the business goals and expectations are not well defined, the task can also be unduly severe. The Web provides all the elements needed to turn a business into an electronic commerce-enabled organization. However, the final test is to ensure that these elements work well together. To this end, we will discuss the various aspects of ensuring that a traditional business can successfully make the transition into a Web-enabled commercial concern.

46 1-24 E-Commerce Specialist banner ad Clickable advertisement found on frequently visited Web sites. targeted Bulk sent to target consumers; the electronic equivalent of targeted junk mail. pop-up ad Separate advertisement window that appears either behind or in front of the page the user is viewing. Turning a business into a Web storefront is not a panacea, but simply an additional way to sell products and services, particularly for new businesses. If a business is well established and has excellent name recognition, turning it into a completely Web-based concern may be a mistake. For example, consider a well-established retail store such as Macy's department store. If Macy's decided to move completely to the Web, it would alienate customers who actually want to shop in a physical store; after all, walking the aisles of a department store is an important part of shopping for many customers. In this example, Macy's should use the Web as a supplement to its advertising and selling infrastructure to drive people to its retail outlets, and not as the only way it does business. A newer business has more leeway in using the Web. Because it does not have the less tangible assets of name recognition and customer loyalty, it can exercise considerable freedom in how it uses the Web to conduct its business. It can truly become a virtual business by carrying no inventory and possessing no real estate. The numbers and the message are apparent: Electronic commerce is here to stay. How does one guarantee the success of a Web storefront? The seven essential ingredients for success are as follows: Generating demand Generating orders Fulfilling orders Processing payments Providing service and support Enhancing security Providing community Generating demand For the storefront to be most effective, the following two situations must occur: 1. Traffic must be attracted to the storefront. 2. "Lookers" must be converted into buyers. The success of online advertising in attracting traffic to a Web storefront and converting lookers into buyers depends on the vehicle used for online advertising. Unlike traditional forms of advertising such as direct mail and telemarketing, Internet-based advertising is constantly changing. No single form of Internet advertising has proven more effective than others. In other words, despite the impressive numbers, the best method in all situations has not yet been established. Advertisers in general so far have focused on banner ads, targeted and pop-up ads. Portal sites such as Yahoo! and America Online sell impressions and banner ads that are randomly displayed throughout their Web sites. Companies pay for the impressions based on the cost per thousand (CPM) impressions. Targeted advertising is more cost-effective, although more intrusive than banner ads. Targeted lists are constructed when consumers subscribe to services or submit online registration forms. Demographic data is collected, collated, analyzed and

47 Lesson 1: Electronic Commerce Foundations 1-25 spoofed site A Web site designed to look like a legitimate site. cookie A text file that contains information sent between a server and a client to help maintain state and track user activities. Cookies can reside in memory or on a hard disk drive. compiled into various lists. Merchants can then purchase these lists based on their needs. One problem with advertising is that some scam artists have begun sending messages that impersonate legitimate e-commerce businesses. The messages include links to a site that appears to be the legitimate vendor, but is actually a spoofed site. The attacker uses the spoofed site to gather confidential information from consumers, such as credit card numbers. This technique is known as phishing (you will learn more about phishing later in the course). Pop-up advertising has recently become popular. However, it is so controversial that some browsers and ISPs have implemented pop-up "blockers" to help protect users from unwanted pop-up advertising. In fact, the United States government is considering laws that would regulate how pop-up windows can be displayed and used. Generating orders After the customer has been attracted to a Web site, the next challenge is to persuade him or her to order. The biggest challenge to generating orders is making sure that the ordering process is easy to use. Designing a Web storefront requires discipline in more than software engineering; it requires that the designer understand visual design and human psychology. When developing the ordering infrastructure, remember the following guidelines. Be consistent. This attribute cannot be overstated. Consistency is the key to a good Web site. It includes making sure that all the pages have a consistent look and feel; maintaining a navigation bar on each page; using consistent background and foreground colors; and using the same font size and logos. Eliminate redundant information. If the customer provided his or her name upon entering the site, do not ask for it again on a form. Make ordering easy. Use techniques such as shopping carts and cookies. Make sure the customer does not need to manually calculate any total. For instance, if the customer orders 63 CDs at U.S. $12.98 each, display the total amount of U.S. $ plus taxes, shipping and handling. Accept many substitutes. Ensure that a wide variety of payment mechanisms is available, including credit card, check, debit card, automated teller machine (ATM) card, or cash on delivery (c.o.d.). Include a bailout mechanism. Always include a phone number the customer can call with questions. If a navigation bar is being maintained, the phone number should appear on it so that the customer need not return to the main page to find the number. Fulfilling orders When the customer clicks the Order Now button, generate an order number (or any similar tracking number) and display it to indicate that the shipment is in progress. Ensure that the customer's expectations of timely and undamaged delivery are met. Some electronic commerce software packages aid in this process by generating shipping labels and packing slips. Most customers visiting your storefront will have addresses. As part of the ordering process, you should request the customer's address. Upon completing the order, send the customer a confirmation and tracking number by , along with a phone number to call in case of problems.

48 1-26 E-Commerce Specialist As an example, an electronic storefront that sells books can leverage its distributors' efficient shipping capabilities by having them drop-ship the products (in other words, shipping the product directly from the manufacturer, distributor or supplier to the consumer). By sending a UPS tracking number to customers by , the company directs users to the UPS Web site so they can track their merchandise during delivery. OBJECTIVE: 1.5.3: Appropriate payment methods Processing payments Payment processing is unarguably the most enjoyable step for the electronic merchant. At this juncture, the merchant verifies and transfers funds from the customer's credit card or checking account to his or her own bank. Approval must be timely so the merchant can expedite shipment of the order and still be sure of getting paid. Some e-commerce businesses accept traditional forms of payment, such as a check or money order sent in advance, and c.o.d. shipments. However, accepting one or more types of electronic payment is recommended. The three models for electronic payment are as follows: Cash model Check model Credit model Cash model The cash model, or e-cash, is the easiest to understand, but the hardest to implement on the Web. E-cash is analogous to the minting of electronic money or tokens. In electronic cash schemes, buyers and sellers trade electronic value tokens, which are issued or backed by some third party, usually an established bank. The buyer (customer) purchases the digital equivalent of money from an established bank and deposits it in a digital wallet, which is stored on the computer. When he or she makes a purchase from a Web site that accepts e-cash, the ordering software automatically deducts the correct amount from the customer's digital wallet. The advantage is that during a transaction, funds are transferred immediately and no backend processing is required. Check model Using this model, a customer presents a digital version of a check to a Web storefront. The digitized check is encrypted using the appropriate technologies (we will discuss security later in the course). The Web storefront verifies the check through its financial institution, which in turn consults the customer's financial institution to ensure that funds are available. The biggest disadvantage of this model, at least for the storefront, is that the funds are not transferred immediately. One of the leading vendors in this area is itransact Inc. ( Later in this course, you will examine this type of payment structure. Credit model The credit model works well on the Web, partly because existing credit-card processing already uses much of the network infrastructure needed for electronic commerce. For instance, when presented with a credit card, a merchant in a traditional transaction scans the card through a reader and in turn authorizes the transaction through a financial institution. This authorization may be performed over the existing phone network using modems.

49 Lesson 1: Electronic Commerce Foundations 1-27 On the Web, after a customer enters the credit card number on a Web order form, the Internet is used to deliver that information to an authorization server. From that point on, the transaction proceeds similarly in both the traditional commerce and the electronic commerce scenarios: Assuming that authorization succeeds and enough funds are available in the customer's account, a capture transfers the funds from the customer's bank to the merchant's account. Secure Sockets Layer (SSL) An encryption protocol used to protect data transmitted between a client browser and a server. We will examine issues of payment processing in more detail later. Providing service and support It is imperative to satisfy the customer's support needs, which include pre-sales inquiries, order tracking and post-sales support. As mentioned before, the business's Web page must be designed to allow the customer to easily contact the merchant using an online form, address or phone number. A number of software packages cater to the specific needs encountered during service and support by offering the following advanced support features. Automatic callback Many sites have a link that, when clicked, sends an (or phone) message to a Web business's automatic call distribution center. This feature enables the business's staff to call the customer back immediately, assuming the customer has a second phone line; with the push toward Voice over IP (VoIP), a single line suffices. Click-to-dial Some sites have a link that, when pressed, initiates a phone call to a Web storefront's operator (again, assuming that the customer has two phone lines or is using VoIP). The operator can assist the customer as he or she browses the Web site. Chat Many sites offer a customer support chat link that starts a text-based chat session with a customer service representative. Chat links are increasingly used for technical support and for quick resolution of customer support issues. Co-browsing After a customer has been assigned an operator through automatic callback or click-to-dial, the operator can assist the customer by sharing the Web page being viewed. Some software will show the same Web page to both the operator and the customer; a change of location by either party is reflected on both ends. Hipbone.com offers a co-browsing solution technology that is used by Oracle Corporation. Hipbone allows Oracle's sales and service representatives to interact visually with customers or prospects over the Web during a normal telephone call. Enhancing security Security is a major concern for customers during an electronic transaction. Will the credit card number be stolen? Will someone find the customer's home address? Although these are valid questions, customers should know that Web transactions are as secure as (if not more so than) traditional transactions in which customers routinely give their credit cards to waiters in restaurants or vendors over the phone. What is to prevent a waiter or a phone vendor from retaining the credit card number for future fraudulent charges? Customers can be made to feel more secure about transmitting personal information over the Internet when certificates are used to authenticate both parties in a transaction and when the transaction is encrypted. VeriSign ( is a leading certificate vendor. With a VeriSign certificate to authenticate the parties and Secure Sockets Layer (SSL) to encrypt the traffic, Web transactions can be made very secure.

50 1-28 E-Commerce Specialist In the following lab, you will visit the VeriSign site to learn how to list the SSL certificates for a company. To do so, you will use an SSL connection. Suppose you have been asked how an SSL certificate will affect the user's experience. You must demonstrate how an SSL connection works and how a user can know that the connection is secure. Lab 1-7: Viewing a site secured with SSL In this lab, you will view the VeriSign Web site. It is important to know that Thawte Consulting, a leading provider of digital certificates to Web sites and software developers, was acquired by VeriSign in December Open your browser. 2. Browser: In the Address field, enter You should see the VeriSign SSL Certificates Support page shown in Figure Figure 1-13: VeriSign SSL Certificates Support page 3. Scroll down the page. Under the Manage Your Certificates section, click the Search button, shown in Figure 1-14.

51 Lesson 1: Electronic Commerce Foundations 1-29 Figure 1-14: VeriSign Search button 4. If you see a message indicating that you are about to view pages over a secure connection, as shown in Figures 1-15 and 1-16, click OK (or Continue). Figure 1-15: Microsoft Internet Explorer Security Alert Figure 1-16: Netscape Navigator Security Information

52 1-30 E-Commerce Specialist 5. You are now on a secure connection. Look for the lock icon next to the address bar of your browser (shown circled in Figure 1-17). If you double-click the lock, a dialog will pop up indicating an SSL connection and the certificate information. Figure 1-17: Browser lock icon showing secure connection 6. From here, you can find a company's SSL certificate. For example, enter Amazon in the Common Name text box and click Search to see matching certificates. Consumers who are taught data security techniques can better discern what measures are being taken and how to detect them to ensure information security and privacy. Security will be discussed in more detail later in the course. Providing community Customer loyalty is something all Web businesses hope to obtain. As much as possible, a Web storefront, through its services, sales and support, must create a "stickiness" with the customer to build loyalty and encourage repeat business. Powerful tools to achieve this result include sending special offers and new item announcements to consumers via , crediting frequent flier miles for dollars spent, and other such promotions. Amazon.com generates 58 percent of its sales from repeat customers as a result of its developed community. The Virtual Enterprise The Web connects islands of information, and the people seeking that information, from within corporate intranets and across the Internet. Sharing information without regard to physical location has prompted new forms of virtual business endeavors. A virtual enterprise is a temporary partnership of independent companies or individuals, such as suppliers of goods and services, and those suppliers' customers. Modern

53 Lesson 1: Electronic Commerce Foundations 1-31 telephony and networking communications technologies link these parties so that they can profit from the rapidly changing business ventures and opportunities. In a virtual enterprise, parties generally share costs, skills and knowledge pertinent to that specific venture or goal. Each partner contributes skills according to specialty, and can disseminate regional information or products to a larger, possibly global, audience. Virtual Private Network (VPN) A secure network between two sites using Internet technology as the transport; an extended LAN that enables a company to conduct secure, real-time communication across an untrusted network. This enterprise is called "virtual" because it consists of core partners but does not have a central office or a hierarchical structure. Through electronic communication, team members can work together in real time, regardless of geographic location. Partnerships are often temporary, informal and focused on special opportunities. Upon completing a venture, a virtual enterprise typically dissolves. Specific technologies that enable a virtual enterprise include the requisite Web, application and database servers, and telephony services (help desks and teleconferencing services). A Virtual Private Network (VPN) is an encrypted data stream that exists between two computers. A VPN can exist between a standard client host and a server, between a client and a firewall, or between two firewalls. A VPN allows two parties to use encryption to freely communicate across public networks, such as the Internet. Although connectivity mediums such as leased lines and frame relay allow virtual enterprises to exist, the Internet is quickly becoming the medium of choice. Creating a VPN connection across the Internet is cost effective because it allows companies to connect to each other without requiring expensive hardware and software. It is also efficient because people can connect to the Internet from practically anywhere. The scope of this course precludes discussion in any detail of the issues involved in connecting the Internet, or more specifically, an electronic commerce Web storefront, to older legacy systems and mainframes. Although many companies store information about products, orders and inventory on mainframes, the focus of this course is to examine electronic commerce concepts and issues from a higher level. Site Implementation When a new site is implemented, the development usually occurs in phases. This structure allows the site to progress step-by-step until it achieves all its goals. It is especially common when a site is being converted or upgraded to allow functional e-commerce transactions. This approach is called a phased approach or implementation. Phased approach A gradual approach is generally advisable, especially for an established business with a reputation to uphold, and customers to attract and keep. A new business with few customers can afford to take a bigger risk in moving to electronic commerce. However, as a general rule, the following steps embody a phased approach to the Web storefront: 1. Information-only Web site 2. Limited transactions 3. Full transactions 4. Legacy system integration

54 1-32 E-Commerce Specialist Proper planning is important whether you are using a phased approach or implementing the Web site all at once. graphical user interface (GUI) A program that provides visual navigation with menus and screen icons, and performs automated functions when users click command buttons. Information-only Web site This phase is the digital equivalent of testing to see whether an online presence is appropriate for your business. An information-only Web site is the least intrusive and fastest way to establish a Web presence. In this stage, the business does not necessarily sell goods or services, but merely establishes an online presence to attract potential customers. In the earlier days of the Web, many businesses started using this step. Fortune 500 companies such as Coca-Cola, IBM, AT&T and newer companies such as Netscape Communications established Web presences by setting up information-only Web sites. Limited transactions After an information-only Web site has been established, the next phase is a limitedtransaction Web site. At this point, the intent is not to provide a fully developed Web storefront but a rather limited form of sales using the Internet as a transaction medium. This step is characterized by very limited Web-based customer support. The emphasis is more on offering limited goods and services with two goals: getting the customer accustomed to Web transactions and solving any problems in the merchant's ordering and delivery processes. Payment may be done through traditional means such as sending a check or giving a credit card number over the phone because the merchant may not be able or willing to deploy a fully integrated Internet security infrastructure. Full transactions The next step after limited transactions is full transactions. At this stage, items such as security infrastructure become necessities. The merchant now offers a complete digital purchase option. Other offerings at this stage include full service: product support and registration, a full catalog, and searching and querying capabilities. Legacy system integration Overlapping the full transaction transition is legacy system integration. If a merchant already has computerized inventory control and billing systems, the existing system is integrated into the Web storefront. Back-end databases are linked to the Web using browser-based front-end graphical user interface (GUI) applications (a front-end application, also known as the end-user application or end-user interface, is the part of a multi-tier application with which a user interacts). After you have established a transition path, you can continue building the ingredients for a successful electronic storefront. E-Commerce Guidelines Established companies take a slightly bigger risk in moving to a Web storefront; they risk losing customers if they move too fast or choose the digital medium exclusively over more traditional ones. Smaller companies can afford to adopt the new medium quickly because they have lower risks. Simply publishing a Web site does not constitute electronic commerce; the costs are high, but so are the advantages. Overall, the following guidelines will provide an effective path as your company moves toward a Web storefront: Know your customer and use the information you have. Notice how companies such as Amazon.com and Nabisco have used this information to their advantage.

55 Lesson 1: Electronic Commerce Foundations 1-33 Know whether you want to outsource or use in-house experts. For maximum control, the latter route is preferable; the disadvantage is its expense, and it may not be suitable for smaller companies. Outsourcing the electronic commerce infrastructure is an attractive solution for small businesses. Evolve. With standards being defined and key software (such as browsers) changing rapidly, evolution and adaptability are the keys to a successful electronic commerce site. Be flexible. Flexibility involves customer needs as well as technological needs. Businesses need to be flexible enough to accommodate varying customer needs including reverse credit, support and ensured satisfaction. Create a business framework. This guideline encompasses defining business processes and building relationships with customers and vendors. Anticipate hurdles. Some hurdles, such as expansion, will be anticipated. Others will not. Case Study Cooking Up an E-Commerce Solution El Pote de Cobre is a retail chain that sells copper cooking utensils. The chain has 10 stores, located throughout Mexico. The company does not currently have a presence on the Internet. Tina has been hired as a consultant to help the company design an e-commerce solution. She must assess the benefits, costs and risks of implementing an e-commerce site and make recommendations to the company. Tina analyzes the company's current business model and determines that the company should immediately proceed with an offline solution that implements full transactional support. She recommends implementing the site in only Spanish at first, and then phasing in other languages as the budget permits. * * * As a class, discuss the following issues with regard to El Pote de Cobre. What benefits will be gained by offering products for sale on the Internet? What risks are involved in offering products for sale on the Internet? Should the company use the implementation approach suggested by Tina? If not, how would you change the implementation phases? What advantages are provided by offering an English version of the Web site? Tina has recommended using an offline solution. Is this the best choice?

56 1-34 E-Commerce Specialist Lesson Summary Application project Now that you have examined the basics of e-commerce, including some of the statistics and predictions that have been made, how has your outlook or understanding changed? Has e-commerce changed the way you do things in your personal or professional life? Were these changes made out of necessity, such as mandates in procedures at the office, or were they made for convenience, to save time and money? However you view e-commerce, it will probably affect your life to some degree as businesses continue to discover how e-commerce can better serve them and their customers. Skills review In this lesson, you learned the definition of electronic commerce and the advantages and disadvantages associated with moving to such a system. You also saw why electronic commerce is a growing area in which businesses should establish a presence. You examined the seven ingredients of a successful Web storefront and discussed how to ensure that these ingredients are used to benefit the business. Finally, you examined some of the components required in hardware and software to deploy an e-commerce Web site. Now that you have completed this lesson, you should be able to: 1.1.1: Identify specific business-to-business (B2B) and business-to-consumer (B2C) issues in developing an e-commerce site : Distinguish between in-house and online instant storefront options for creating an e-commerce site : Evaluate the advantages and disadvantages of using third-party instant storefronts : Evaluate the advantages and disadvantages of using e-commerce storefront software : Choose an appropriate payment method : Identify and implement microcommerce concepts (includes micropayments, microtransactions) : Compare the advantages and disadvantages of e-commerce and traditional sales methods : Identify business growth drivers and barriers.

57 Lesson 1: Electronic Commerce Foundations 1-35 Lesson 1 Review 1. What is targeted ? 2. What are the two most important components of the demand-generation phase? 3. What is a Virtual Private Network (VPN)? 4. What are two possible drawbacks of electronic commerce? 5. What are the three payment models for electronic commerce?

58 1-36 E-Commerce Specialist