E-Commerce

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E-Commerce

• BADM 435
• By
• Alex Johnson

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Growth of E-commerce

• Tremendous exponential growth in the last 5 7
  years.
• One of the biggest jumps
• 4th quarter Retail E-commerce sales in 2000 was
  8.7b, up 67.1 from 99 sales
• In 2003, retail sales were 17.2b up 25.1 in 2002
• 21.6b in 4th quarter 04

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Growth Cont.

• Biggest growth is in the Travel Industry
• 2003 35 million Americans made travel
  arrangements online.
• Up 17 from 2002
• First significant boom in travel arrangements
  online
• Continues to grow each year

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Growth Cont.

• Reasons for growth?
• Tremendous advertising and marketing
• Not only can the customer book travel online they
  can also
• Make reservations at a hotel
• Have a rental car waiting
• Join travel groups at their destination
• They can even buy tickets to sporting events in
  the area in which they are traveling to
• It is Estimated that 50-70 of all travel
  arrangements will be made online by 2010

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Growth Cont

• Other Reasons for growth
• Women outnumber men
• Dominate spenders of the home, buy not only for
  themselves but also for the kids and often times
  the husband.
• Tremendous amount of information that is online
  that you could not find out in a brick and mortar
  store
• Information about the product and competitors
  product and price.

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Advertising and Marketing

• Forms of Advertising
• POP-UPS!!!!
• Banners
• SPAM
• Permission Marketing
• Email promotions
• Mailing promotions

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Advertising and Marketing Cont.

• Cooked SPAM
• Recent law has pretty much eliminated SPAM emails
• Must have your permission to email you anything,
  or at least a notable reason
• Sign ups on the internet
• Purchased items from the company before
• Must have an unsubscribe link in the email

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Advertising and Marketing Cont.

• Down with Pop-ups
• Started off as a good tool for advertising
• Now, they can actually hurt the companies brand
  name
• Also, in a recent survey, 1/3 of the people
  surveyed said they had ill feelings towards the
  companies website on which the pop-ups occurred.
• Spending on Pop-ups increased 25 in 2003
• CNN. Com and ESPN.com are the worst two sites for
  Pop-ups averaging 400 million per month.

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Advertising and Marketing Cont.

• Other forms
• Promotional activities and email
• Email people who have made purchases and offer
  promotions like 20 off online only, to initiate
  repeat purchases.
• Promotions to sign up and register with the
  company to have speedy checkouts
• The registration will often ask for your
  billing/shipping addresses and also a credit card
  number so when you checkout, all you have to do
  is click Pay

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Advertising and Marketing Cont.

• New Age for Retail Marketing
• A new tool for some online clothing retail stores
  are figure models
• Enter your height, weight, and build
• A figure model will try the clothes on for you,
  so you have an idea of how you will look
• Has some kinks that need to be worked out, but
  proves to be a promising idea for the future
• Ideas include scanning a picture of yourself in
  and drop and dragging clothes on the scanned
  picture.

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Advertising and Marketing Cont.

• Perhaps the most outstand statistic is one that
  cannot be measured.
• How many people have looked online to make
  purchases online?
• It is said that 3 out of 4 buyers of new cars go
  into the dealership knowing what make, model,
  features, and color they want, and often times
  competing dealers offers
• Other example include furniture, houses, and
  stock.

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Security

• Spyware that can be attached to Pop-ups is a big
  concern
• With spyware, companies can track your every
  movement on the internet.
• Sites visited
• Shopping habits etc.
• Programs like adaware or spybot can help reduce
  but not eliminate spyware
• Regular scans using software will help protect
  you from spyware.

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Security Cont.

• Bigger concern that Spyware is the safety of your
  personal information and credit card numbers!
• People fear ID fraud
• In the banking world, a teller transaction at a
  bank costs an average of 7, but the same online
  transaction costs only a nickel, but only 35 of
  people bank online, because fear ID fraud.

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Security Cont.

• We have all heard horror stories about ID fraud
  on the internet and most likely know somebody
  that it has happened to.
• One of the biggest cases of fraud occurred back
  in 2000
• A Hacker named Maxus stole 300,000 credit card
  numbers from the database of CDuniverse and
  parent company eUniverse.
• Wanted 100,000 or he was going to post all of
  the numbers on the internet
• Company called his bluff, he was true to his word
  and posted the numbers.
• The site was taken down before too much damage
  was done, but the real damage was in the
  reputation of the company and the fear it struck
  in online shoppers.

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Security Cont.

• What's being done?
• AVS (Address Verification System)
• Cross references the billing/shipping address
  with the credit card address
• Returns a code indicating whether or not its
  valid
• Rules System
• Specific rules that can be tailored to each
  company
• Example
• if there are more than three of the same items
  ordered with an amount exceeding five hundred
  dollars then you must deny the transaction and
  manually review it
• The rules can be endless, the company can pretty
  much include anything they want in their system.

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Security Cont.

• Neural System
• Very sophisticated system
• Compares patterns in transactions with a database
  which entails profiles and patterns of other
  known fraudulent activities
• Extremely accurate!
• Main problem with this system
• System is only as good as the data that is
  compares with (GIGO)!
• To be accurate it must compare to a large number
  of transactions.

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Security Cont.

• Smart Cards
• Have a tiny computer chip installed in them
• Even if the number is stolen, it will not do them
  any good without the PIN number
• Main capability is to consolidate payment
  functionality with software applications
• Verifies both the card and the card holder
• Card verifies itself by encrypting and decrypting
  secret messages in accordance to the systems
  software
• Passwords, personal preferences, purchasing
  history, and even certain reward or loyalty
  programs are stored on the chip that is installed
  within the card
• now have cards that have personal information
  embedded in them such as hospital or clinical
  information and insurance information

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Security Cont.

• Process of security
• Must secure all different parts of the e-commerce
  server
• client system
• the transport protocol
• the web server
• the operating system
• Expensive!
• In 2003, Companies spent over 15B on security
• Worth it in the long run over the potential losses

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Conclusion

• E-commerce is no long the wave of the future, the
  future is now, and e-commerce is here to stay
• Has changed the way companies do business
• Has changed the way companies compete online and
  offline.
• It will be interesting to see what effect is has
  on brick and mortar stores in the future as the
  potential for online sales grow.

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Any Questions?? You can email me and
johnsona_at_pluto.dsu.edu