Introduction to Computer Information Systems/E-Commerce

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What is E-Commerce?[edit | edit source]

E-commerce, short for electronic-commerce, is “a term for any type of business, or commercial transaction, that involves the transfer of information across the Internet”. [1] Currently, e-commerce is mostly used via the Internet, but before the Internet was available, a form of electronic transactions occurred over Electronic Data Interchange (EDI). Businesses and customers used EDI by setting up a data link specifically reserved for commerce between them. [2] In 1979, Michael Aldrich invented the concept of “teleshopping” which gave the base structure that evolved into the online shopping ability we know today. In the 1990’s, websites like Amazon and eBay were created. Because e-commerce is now done through the Internet, it has made a global market-place for businesses and consumers to make trades and transactions all across the world. [3] For example, businesses in Europe can ship items to customers in America, and vice versa. Just like any other technology, a user needs to know how e-commerce works and how to navigate through it. One of the basic concepts is knowing what a "shopping cart" is and how to use it. A "shopping cart" is a software that allows buyers to have a virtual chart, just like you would at a physical store, to collect multiple items and be able to buy all the items at once when you “check out”. [4] Other concepts that one should know are the advantages and disadvantages of shopping online.

Advantages of E-Commerce[edit | edit source]

For businesses, the most prominent advantages to using E-Commerce are the reduced costs associated with it, the broader customer base, the increased customer satisfaction, and the potentially higher sales it produces. Because E-Commerce transactions are done through a website and not a brick and mortar store, much of the overhead associated with running a retail store is reduced. The need to pay for heating, lighting, staffing, and restocking a store is practically eliminated. This results in fewer employees and smaller facilities which in turn allows for larger capital gains. Usually, only a company headquarters is needed along with a few warehouses that can cover larger areas than a single retail store normally would. Also, more individuals can be reached through a website rather than the small geographical area that a retail store would cover. Multiple retailers are required to cover larger geographical areas, but with E-Commerce anyone anywhere can access the website at anytime! This increases the possible number of customers dramatically. Websites also allow people to shop from the comfort of their own home without having to consume time and money (gas) to view a company's products in their retail store. Plenty of times have people gone to the store for a specific item only to be disappointed that it wasn't in stock. With E-Commerce this doesn't happen. The comfort provided, the time saved, and the money saved can easily increase the consumer's satisfaction. The potentially higher sales is another advantage. By using E-Commerce, a business can be open every hour of the year and accessible to everyone across the globe. They're no longer limited by a geographical area or a 40-hour work week.[5]

For consumers, the greatest advantages lie in its convenience, selection, customization, price comparison, and potential cost savings. As mentioned above, the convenience of shopping from home (in your underwear if you like) is very appealing to many consumers. Shopping can be done during anytime of the day or night through the use of a website and it is no longer a necessity to rush home from work to buy an item before its store closes. A person can also compare the prices, quality, and features of multiple items from multiple stores. Their selection is no longer limited to the facilities closest to them, but to their attention span. Before, consumers would drive from store to store comparing these characteristics before driving back to make their final purchase. The time, effort, and expense involved in this type of comparison is nullified through E-Commerce. Many individuals want to make their purchases unique to their preferences. With the option to communicate with a company directly through their site instead of buying a pre-manufactured item on a store shelf, the ability to customize the item they are looking for is greatly improved. The company can take the order and payment while putting it through to the warehouse so that the final product to be shipped is tweaked to the consumer's desire. Also, the ability to save on cost is increased for the consumer using E-Commerce. The person can compare prices to find the lowest and often the item can be shipped to their front door for less than it would normally have taken to find it in a motor vehicle. They say time is money, so if your spending less time looking for what you need then you can potentially spend more time working for what you want.[6]

Disadvantages of E-Commerce[edit | edit source]

Wikimedia Servers-0051 19

As mentioned above, there are a lot of advantages, but it is not perfect. One of these disadvantages is that those who are running the site must keep the site open 24/7 since at any point it is morning somewhere in the world. This takes money to run the servers and takes money to pay the programmers to make the site in the first place. Also a business that is running a site should make it interesting by having something change, like having a daily deal like Newegg[7] or return coupons like Kohls[8], otherwise people may not return to the site. Another disadvantage is that anyone can make a website, driving competition and prices. So, some sites may spend extra money on multimedia for some extra allure.

Not quite a physical shopping cart

There are disadvantages for consumers as well. E-commerce doesn't have the same kind of physical, personal interaction that traditional commerce has, and for some consumers, the asocial experience of sitting behind a screen and clicking a virtual cart icon isn't as desirable as the experience of actually getting out and pushing a cart around, even if it can be easier. E-commerce is also slower: if you purchase a good from a physical store, you have it right there that same day, but if you have to wait for shipping, it'll typically take at least several days before it arrives. Also, very many goods can't be purchased online, so even to the extent that e-commerce is useful, it isn't useful in all areas or for all purchases. The fact that anyone anywhere can set up an e-commerce website is as risky for consumers as it is undesirable for businesses; some sites may be fraudulent and set up to steal info or get a consumer to waste money on faulty goods. Thus, when considering making an electronic purchase, a consumer should consider whether the convenience outweighs the artificiality, whether the goods they desire can wait and can actually be purchased online, and should take reasonable security measures to ensure that they're buying what they want.[9]

Safe Practices for E-Commerce[edit | edit source]

Using E-Commerce for anything from home shopping to online banking can be very convenient for both the consumer and business. However, when using E-Commerce, there are possible disadvantages. Fraud and hacking are something everyone should be informed about. One tip for a business to safeguard against these things is to use a secure platform. Shawn Hess, a software manager for VoIP Supply states, “Put your e-commerce site on a platform that uses sophisticated object-orientated programming language.” Another tip for businesses to use is to use a strong SSL (Secure Socket Layer) authentication. This provides both Web and data protection. This will authenticate the identity of a business and encrypt customer data in transit which protects the company and consumer from having their financial information stolen. Another way for businesses and consumers to protect themselves in E-Commerce is by using strong passwords. A business should require the consumer to make a password consisting of a minimum number of characters as well as symbols and numbers. Using more complex passwords makes it less likely for a criminal to access the site. A business would also be able to avoid threat by layering its security. They can use firewalls to stop a cyber attack before someone is able to get into the network and gain important information. Being aware of the possibility of fraudulent and criminal activity and knowing ways to protect oneself from it is extremely important for both businesses and consumers, especially since E-Commerce continues to expand globally.[10]

E-Commerce Business Models[edit | edit source]

Four E-Commerce Business Models[edit | edit source]

Online Shop

There are four types of E-Commerce business models. The four types of E-Commerce business models are B2C which stands for Business-to-Consumer, B2B which stands for Business-to-Business model, C2C which stands for Consumer-to-Consumer, and B2G which stands for Business-to-Government. When working, selling, or buying with any of these models, it is important to be familiar with what each model contains. B2C represents most of E-Commerce websites. Businesses that sell to consumers are considered B2C. Online stores and shopping are all examples of B2C. B2B are businesses selling products to other businesses. B2B are usually larger companies that are supplying a service to other businesses. For example, office max is a business that sells office supplies to other businesses. Also, they are almost always doing business over the web. C2C is a website that consumers sell to other consumers. People are brought together to sell and buy products for this model. For example, EBay is a common place for consumers to sell and buy items. B2G consists of businesses working with the government. For example, the IRS is a way for businesses to pay their taxes through the web. These four E-Commerce business models are very common in this day-in-age. [11]

Business-to-Consumer[edit | edit source]


Business-to- consumer (B2C) model is a business or transactions conducted directly between a company and consumers who are the end-users of its products or services. [12]The term became popular during the dot-com boom[13] of the late 1990s. While many online B2C websites shut down, the companies such as Amazon and Priceline survived and became the most successful companies in the world. This model is likely familiar to most people. If a person have purchased an item online for their own use, the person e-tailed. The concept was first developed in 1979 by Michael Aldrich, an English inventor, who connected a television set to a transaction processing computer with a telephone line and coined the term "teleshopping."[14]

Business-to-Government[edit | edit source]

A “B2G”, meaning business-to-government is a variation of the term B2B, or business-to-business approach to commerce, also called e-government. It refers to businesses and government agencies using the Internet to mutually exchange information and trade with each other more efficiently. This is prompted by government solicitations that are accepted by businesses offering something a government needs. A site specializing in B2G services may provide businesses with a single place to locate tax applications and other financial forms, the ability to send in payments, or request answers to specific questions. B2G may also include e-procurement services, whereby businesses understand the purchasing demands of agencies, who in turn request proposal responses. B2G generally supports the idea of a virtual workplace, or the collaboration of businesses and agencies working on a contracted project. This is done by sharing a common site to coordinate online meetings, review plans, and manage progress. This concept also incorporates the rental of online applications and databases designed specifically for government agencies. According to the Gartner Group, B2G revenue grew from approximately $1.5 billion in 2000 to $6.2 billion in 2005. The American Recovery and Reinvestment Act of 2009 has spurned the use of B2G. [15]

Business-to-Business[edit | edit source]


Business-to-business (B2B) is a type of commerce transaction that exists between businesses, such as those involving a manufacturer and wholesaler, or a wholesaler and a retailer. A typical supply chain involves multiple business to business transactions, as companies purchase components and other raw materials for use in its manufacturing processes.[16] An example that illustrates the business to business concept is automobile manufacturing such as buying tires, glass for windscreens, and rubber hoses for its vehicles.[17] B2B is also used in the context of communication where employees from different companies can connect and communicate with one another, such as through social media like

A well-known business to business supplier is Grainger. Grainger is known for have a massive catalogue that contains almost any product a company needs, not matter if that company is clothing retain of tool manufacturing. Grainger’s system is unique in that their online order system and brick a mortar locations work together seamlessly. When you order from most online wholesale business, your order is processed and shipped from a central warehouse. This can result in high shipping costs, and order delays as the order is filled, and eventually shipped from the central warehouse. Grainger has a central warehouse where they ship from, but the also can ship from their individual brick an mortar stores, which function as satellite warehouses. Because of this system, shipping time is dramatically reduced, sometime measure in hours as opposed to days, since the order is coming from a few miles away as opposed to a few states away. Further, shipping is less expensive, and is some cases free because of the short distance. Also, if you want to see a product for yourself or get advised about a product, you have the option of going to a Grainger store and talking to a sales person there. Grainger’s system combines the efficiency and ease of online ordering with the familiarity of the physical store. [18]

Grainger logo
Grainger logo

Consumer-to-Consumer[edit | edit source]


Consumer-to-Consumer (C2C) is a type of electronic commerce in which consumers buy, sell, or trade products and services from one another through a third party website. [19] The third party website can be either fee-based or free as long as transactions are between consumers. Some popular websites known for Consumer-to-Consumer transactions include Craigslist, eBay, and AutoTrader. There are many advantages of C2C e-commerce. Because business transactions are done between consumers and not businesses, buyers and sellers do not need to account for taxes. Also, the transactions are done on a personal level and there are no legal obligations like companies might have. This allows for prices to be negotiated and sometimes bartering can take place. Most transactions that take place on websites like Craigslist, however, are paid for with cash, so it is difficult to return items or purchase them with credit cards. There is also a lot of safety concerns with consumer-to-consumer transactions. Because many sales are completed from people’s houses, there is a lack of privacy. Also, because the buyers may be going to someone’s house to buy a product, there are in danger of being kidnapped. That is why many Craigslist users suggest meeting in a public area. The best part about C2C commerce is that there are many different websites that you can use to match both the product you are selling as well as the way you would like to sell it. If you don’t want to have someone coming to your house through Craigslist, then you can simply sell your item through eBay and ship it to another consumer. It is all about putting more power into the consumer’s hands. [20]

E-Commerce Web Sites[edit | edit source]

Shopping Cart

Ecommerce began to gain traction in the early nineties and has grown rapidly ever since.[21] Ecommerce offers many advantages over traditional brick and mortar stores. Consumers can easily search for the products and services they are looking for. Online retailers, or e-tailers, are incredibly convenient, in that they are available 24 hours a day. Today, most brick and mortar retailers also have an ecommerce option. While an ecommerce consumer does not get the immediate gratification of having their purchase immediately in hand, they can place orders from the comfort of their own home without having to deal with the hustle and bustle of a shopping mall. Some stores offer a combination, allowing a customer to order their merchandise online, and pick it up almost immediately at their local store. E-tailer sites like Amazon paved the way for many others. Amazon is arguably one of the most successful e-tailer sites around. It began as an online bookstore with a primary focus on the customer experience. It was so successful that it did not take long before it expanded beyond the sale of books. Today, you can order almost anything from Amazon. They have also crossed over from strictly being an e-tailer to an e-tailer and subscription site with its Amazon Prime offering.

Manufacturer and E-Tailer Sites[edit | edit source]

An example of a manufacturer site

Manufacturer and E-tailer sites are basically just companies that can sell their product directly to their customers via a website. [22] They are just online stores. Most websites like this have an online catalog of their products for the consumer to look at and choose their desired product. Then if the product is shipped to the home there is a shipping fee, or some products like music or books can just be directly downloaded. This would include websites like Amazon, Charlotterusse, or Walmart.

Subscription Sites[edit | edit source]

An example of a subscription site

Subscription sites are an online product that a consumer purchases and pays periodically and then receives the product periodically via the Internet. An example would be Netflix, which is a monthly fee and then you can receive streaming of movies or TV shows through the Internet. Some sites are considered subscription sites even if they don’t require a monthly fee. They may just require you to subscribe to their site to receive all the information provided. [23]

Spotify, which is an AVOD subscription service

One of the most popular types of subscription e-commerce is video-on-demand (VOD) and audio-video-on-demand (AVOD). These subscriptions allow a consumer to access video and audio whenever they want. Some popular examples of subscription e-commerce are Netflix, Hulu, Pandora, and Spotify. While Netflix and Hulu allow a user to access movies or TV shows, Pandora and Spotify allow users to access countless amounts of streamed audio. The biggest benefit a subscription offers to a consumer is that the consumer no longer needs to wait for specific broadcast times in order to watch or listen to a program. Sometimes airlines take advantage of subscriptions in order to please their customers during long flights. The airlines that support VOD will often have a small screen on the backsides of headrests. This in-flight entertainment system usually allows each individual passenger to select various cartoons, TV shows, and movies. Airlines that support AVOD will often have an embedded unit in armrests. This unit usually allows a passenger to listen to various music channels.[24] In the past few years the online subscription market has taken off. Companies like HBO and Amazon have created their own VOD services. HBO’s VOD service is called HBO Instant and has become popular in 2014. Amazon’s VOD service is called Amazon Prime and is believed to have inspired the Amazon Fire TV.[25]

Brokerage Sites[edit | edit source]

Online Auction Site example

A Brokerage Site is used to bring sellers and buyers together to simplify transactions between the two. The site earns revenue as a form of commission for every sale it incurs. Online auction sites are examples of brokerage sites, in that they enable consumers to buy and sell goods and services to one another. The site acts as a median between the two. One clear example of this is eBay. Business online auction sites are online auctions sites that are mostly for business transactions. An automatic bidding system is used by eBay so that consumers can easily keep up with the bidding process if he or she wishes to make a bid on a specific item. There are rules put in place so that every bidder is treated the same. A dynamic pricing site can be used instead of online auction sites. is an example of how this works: buyers are allowed to bid on items for sale, and the seller can then make the final decision of who shall receive the item. Financial brokerage sites are also used between buyers and sellers for stock, bonds, opinions, and more. These sites earn money by charging for each transaction. Real estate and travel are other types of brokerage sites. A market exchange site matches organizations with different goods or services to sell with buyers and to help the buyers look for specific items that the suppliers can provide. Commodity exchanges are sometimes used when dealing with natural resources and raw goods.

Implementing E-Commerce[edit | edit source]

Business Models and E-Commerce Applications[edit | edit source]

Like this smiling tech support worker, you need to be both innovative and eager to please if you hope to get your online business off the ground.
eBay former logo

If you're a business owner living in today's technological age, your eye is surely on expansion through e-commerce. Whether you are the owner in question who is tech-savvy enough to build your own site, or a third-party Web page developer, there are 5 rough steps to keep in mind to ensure the success of your e-commerce endeavors.

The first of these steps is to just figure out what your website hopes to accomplish. You can either pick one model (such as B2B, or Business to Business) or combine a few of them depending on your ambition and the needs of your business. Within this model, you also need to be making decisions such as whether your site will be taking a Storefront approach (basically being an online version of a physical store) a Subscription approach (where customers pay for premium content that is web-only), or even Affiliate Marketing (where your business would sell the products of another business for a commission).[26] As you browse the Web and study the models of your competitors you'll get a good idea about what is and is not the goal of the e-commerce site you are creating. A business to consumer model is just selling straight to the consumer. E-bay is a good example of a consumer to consumer business model. Consumer to consumer is really convenient since it always the buyer to pay the owner on the spot, not tax, no driving, etc. It is also nice for collector items that are hard to find. Anyone can go on this website to be able to sell and buy items. It is just an online auction and is also worldwide. E-bay is not free though, a user has to pay an invoice fee if they sold or listed anything. [27] The last business model is to have business to government. These businesses usually already have a previously drawn contract with the government because they have something that the government needs. An example of a business to government is actually being able to pay fees online. If a business has a fee to pay they can just go online and pay it off. It is also more convenient to have fees available to pay online because the use of mail is declining. Before the use of these government websites a person would have to send in the mail of have to go somewhere to pay it off.

The next important step is deciding on the applications of your e-commerce page. If you're a business owner creating a Web page, it's a given that one part of your site will be online selling, but there are ways you can establish the name of your company that go above and beyond so your customers will remember you in a positive light and keep coming back, hopefully with their friends and family in tow. These extra features are called e-commerce applications and they can range from merely providing in-depth product information to providing technical support, or even letting them track online purchases through the mail. For the adventurous and creative developers, you can program games, surveys, and even music, all for the sake of providing a more intriguing online shopping experience.[28]

After selecting the appropriate business model and type of Web site along with the desired e-commerce application, another valuable procedure to consider is the procedures for handling electronic financial transactions. The kind of payment type an e-commerce Web site uses depends on the type of site it is and the types of customers involved. The available payment options will usually be displayed on the checkout page of the Web site. Nowadays, credit card processing is the most used payment option. A business needs to open an e-commerce merchant account (a.k.a. an Internet merchant account) in order to accept credit cards. A bank is hired by the merchant to monitor the transactions with credit and debit cards and usually charges a monthly fee, a transaction fee, and a commission for this service. Customers are also able to use single-use virtual credit card numbers, which they request by logging onto their credit or debit card account. A virtual credit card number can be used to purchase an item online so that hackers cannot intercept the actual account number during the transition. Smart cards are also becoming increasing popular. A smart card is a credit or debit card that is embedded with a computer chip. The chip usually contains identifying data for authentication purposes. Other customers online may use PayPal, digital gift certificates, gift cards, and digital wallets. [29]

E-Сommerce center logo

Navigation Through a Web-based E-Commerce[edit | edit source]

For customer satisfaction, the ability for them to find their way around to the products and information they need is very important. If something takes too many clicks to find then businesses start to lose customers due to their inability to change with the pace of technology. With the steps to implement Web-based E-Commerce covering different ways to successfully please consumers, storyboards, flowcharts, etc., can be used to improve navigation through E-Commerce Web-sites. Making “parent categories” that have more depth is an effective way to increase consumer satisfaction when browsing. Drop down menus that have many options make it so people do not have to guess where their product/service will be located, but instead have the actual category listed out for them along with many others. Along with this, sub categories should be put in appropriate places to separate the options as well. Another interesting navigation tool is the ability for users to see “what’s new” on the business’ web page. With this available, new products can increase their popularity and in turn make the businesses more money. When users see a picture, their instinct is to click it to find information such as price or availability of colors, sizes, etc. If the link on a picture goes elsewhere, consumers will often be irritated or give up on a search. [30] All of these small methods can build up to create a better experience for any user; and can boost a company’s sales.

Web Sites are very important in the E-commerce world

Now that practically everyone has a smartphone, businesses should make sure that their websites have a mobile version. Otherwise, their website would not be as accessible to everyone who may want to do business with them on their phones. When they do make a mobile version of their website, they might as well take advantage of the fact that the consumer is using a smartphone by making use of its features such as using the phone's camera for scanning credit cards or using the touch screen interface for easier interaction. They should also make it easier for the consumer to ask for help if they did not know what they were doing or how to do something. Because no matter how much you try to make a website accessible or user friendly there will be someone who will not know how to use or do something. Of course, to minimize the need for help you might as well make the website simple and organized. Otherwise, the need for help would be very necessary and that is not very good for business. Another good tip is to add supplemental information to whatever is on your website to minimize confusion.[31]

Effective E-Commerce Websites[edit | edit source]

The fourth step to follow when implementing Web-based e-commerce is designing and developing an effective Web site. If not the most, Web site design and development are definitely a few of the main features that have to be straight on-point to gain or manage existing customer support. Whereas Web site design is the process of planning what a Web site will look like and how it will function, Web site development is the process of actually building the Web site, testing it out, and publishing it on the Internet for public use. Without obstructing the site’s usability, a Web site creator’s ultimate goal is for the Web site to be balanced equally between its attractiveness and user friendliness, while still providing 100% security. Therefore, in addition to perfect design and development, e-commerce sites also have to ensure that order forms and checkout pages are located on a secure Web server, to avoid any potential security threat. With that step comes another responsibility of continually evaluating the security of the Web site and any collected sensitive data to ensure that the customer, or the user’s, security and privacy are being taken care of diligently. Lastly, all of the previously mentioned e-commerce features can be created using two types of software: Storefront software and Shopping Cart software. The storefront software facilitates the creation of an online store; while on the other hand, the shopping cart software is designed to add only the ordering and checkout capabilities to an existing Web site. [32]

E-commerce is something we are bombarded with on a daily basis. Any time that we go to the internet we are almost guaranteed to see an ad or access some kind of site that is selling something to consumers. Whether or not we choose to click and access these sites is another story. Although, when we do, there are a few things that these sites can take advantage of to try to ensure user purchases are made. Firstly, these sites are going to want to look appealing to the group they are advertising to (e.g. a website selling kids toys would want to be colorful and full of pictures not just plain black and white text with limited images). Next, it is important that the website be user friendly. This involves: easy navigation, pages loading in a timely manner, and having some special perks like a search box or a dropdown of links to all the main pages on the site. While these are not necessary things to create a website, they are useful things for websites to contain in order to satisfy visitors. Other helpful, but not necessary, things to include are contact information, special promotions, and even social media links so customers can share about their experience with the site[33].

In the realm of E-commerce, there are two things that are very important: the shopping cart and security when processing transactions. Have you ever bought (or tried to buy) something from a site and had a hard time finding the shopping cart? Or have you had trouble editing the items in your shopping cart? These problems are big E-commerce no-no's and something most sites do try to avoid. However, they do still happen. The shopping cart is something that, ideally, would be accessible and easy to find from any page on a website, and once you are looking at the items in your cart, it should be simple to modify the items (add or delete products). Another thing that E-commerce sites should do is ensure that their checkout page is in fact secure. When purchases are made online, most people use their credit/debit cards to pay for their items. With the number of people in the world who know how to hack computer systems or decrypt code, it is important that websites ensure the security of such important personal information. Without this security there would be virtually no way to protect yourself from credit fraud or identity theft. While there are still ways for people to access the information, it is much harder to access it from a secured site. There are a few ways to check a sites security including the "http://" section of a URL being green in color, the URL beginning with "https" instead of just "http", as well as the security certificates that most secure sites will post on their pages to advertise their security to their customers.

E-Commerce Sales and Marketing Strategies[edit | edit source]

Click Fraud[edit | edit source]

Click Fraud

Click fraud is an illegal practice that occurs when individuals click on the Web site’s advertisements in order to increases the number of click through to the advertiser. The individuals who use click fraud use it in order to increase their own personal banner ad revenues and also by companies who use click fraud as a way to deplete a competitor's advertising budget. Click fraud was once known to be a very large problem within paid searches in which Google was first introduces with the invalid click to be known as a metric. A metric was intended to provide some insight into how much fraud was occurring and ease the minds of advertisers. Google identifies three areas they determine to be invalid clicks: Manual clicks intended to increase your advertising costs or to increase profits for website owners hosting your ads, Clicks by automated clicking tools, robots, or other deceptive software, Extraneous clicks that provide no value to the advertiser, such as the second click of a double-click. The difference between then and now and the source of the invalid clicks of today. Click fraud still occurs in paid search, and at some level always will. However, the engines at this point do a solid job at monitoring the problem. The issue for search marketers is to ensure the metrics don't go out of whack from a normal level of variance. Meanwhile the focus will be on emerging media types where fraud is ahead of the development curve.[34]

Procedures for Handling Electronic Financial Transactions[edit | edit source]

Learn to do it safely

There are different ways an e-commerce site can set up payment options, and it is important to understand what type of payment option is best for the nature of the site. Credit cards, debit cards, PayPal, Bill Me Later, and gift cards are the most common payment options used by e-commerce sites. Payment by credit/debit card is the dominant method. Businesses usually open an e-commerce merchant account to allow for these payments. For payment with credit, a buyer makes a transaction with the credit card where money is then transferred from the credit credit card company to the merchant account. For debit cards, money is simply taken from the checking account and transferred to the merchant account. Businesses pay fees to the banks for this service. A relatively new system is for consumers to use low-cost card-swipe devices that enable merchants to get by the higher rates when the card is not physically present. Airline and travel sites are some businesses currently taking advantage of this method.

Virtual account numbers, smart cards and prepaid credit cards are all used to better improve the security and safety of both the transaction process and the account information of the card holder. These cards can be secured with a PIN and/or a one-time password (OTP) to decrease the chances of a hacker obtaining account information.

Online payment services, like PayPal, and the use of gift cards, coupons and digital gift certificates are two other popular payment options. PayPal allows individuals to transfer money from their online payment account to another, and it is the prefered payment method for transactions on Ebay.[35] This type of service is prefered because it does not require consumers to reveal their credit card numbers to the merchants, and merchants pay lower fees than conventional credit and debit card purchases. Lastly, gift cards, coupons, and digital gift certificates allow gift recipients to select their own items at an online store. These can be purchased in physical or digital form where the codes are then entered in the checkout process. Also, coupons are becoming much more popular with the increasing use of mobile phones.

Physical Credit-cards

Virtual account numbers work the same as the number on the actual card. However, they are used with limits set by the user within a certain time frame. The primary use of this virtual account number is to enable users a safer way to use a single credit card for purchases by using a temporary account number. The code is a typical 16- digit code. Users claim that this option takes around 60 seconds to set up. The way a user can set up these virtual account numbers is very simple. First, a user must log-in to their credit card account, navigate through a few boxes, and set the expiration date. Although the concept of virtual account numbers is not new, they are becoming more popular today. Especially with the expansion of smart phones. The actual account number is not a physical card, and it is primarily used for online transitions. With security becoming an increasing primary factor for users to consider, virtual account numbers seem very handy. Many consumers choose to shop online. With the use of virtual account numbers, users can be assured security from the first payment they make. The set time limit makes it very convenient to fit the consumer's needs. Overall, with such effective security features, it is a surprise that virtual account numbers are not used as often. [36]

Bitcoins[edit | edit source]

Bitcoin is a new cryptocurrency, which was created by an unknown programmer (or a group of programmers) under the pseudonym Satoci Nakamoto. This happened in 2009. Nobody knows where this man is and what his name is in the real world. Cryptocurrency Bitcoin has the basic functions and properties of conventional money from different countries. It could exchange, stored and used to purchase. However, Bitcoin is cryptocurrency, which is a type of digital currency. Its emissions and accounting based on different cryptographic methods. A decentralized operation occurs, in a distributed computer network. Cryptocurrency - this is the real software, the growth rate of which depends on supply and demand, not by subsequent investors. Each member of the network can make instant transactions cryptocurrency without intermediaries. That is, the buyer sends the money directly to the seller. No need to go to the bank, you simply send Bitcoins to the person. Coins in the system are the cryptographic (mathematical) hash functions. Each of them is completely unique and cannot be used twice. Bitcoin can be used to purchase goods and services on the Internet anonymously. Moreover, it is easier and cheaper to make international payments because Bitcoin is not tied to a particular country. To store Bitcoins have a few options. Offline purse is being installed and is created on your PC. Usually, it is encrypted to prevent tampering. But, there are some cons, if you forget the password to log into a purse or on your computer hard drive died you lost your money. Online Bitcoin wallet has advantages over the offline version. You can access it using not only PCs but also tablet or phone. One of the main problems of these wallets is that all the data stored on the server. Many online stores or retail outlets that accept bitcoin currency side by side with local currency, debit cards or credit cards, opens the window of opportunity for users to compare the benefits of shopping via bitcoin payment. [37]

Driving Business through Meta Tags[edit | edit source]

Drive your search engine business through meta tags!

Keeping and maintain your company’s website is very important in working towards driving business. Many of us, when we search the Internet, are not just going directly to one specific page. We want to browse and find what pages pull up for the topic in which we are searching for. That is why most of us use search engines such as Google, Yahoo, etc. The problem is, you need to make sure that your getting business and traffic from these searches. Most of the time, people don’t make it past the second page of results to find what they are looking for, so what does a company need to do to make its page relevant? They use meta tags, which are essentially labels that search engines such as Google and Bing can use to find web sites related to search terms. For example, a hair salon’s website would likely include meta tags such as haircuts, hairstyles, and other related terms. Good website design includes many variations of meta tags, to increase search matches. This is crucial to making sure that the page is getting the traffic that it needs to drive business. [38]

Anticybersquatting Consumer Protection Act[edit | edit source]

Trademark symbol

Domain names are unique and are registered through an official domain name registrar. This forces businesses to come up with a very unique website domain name that will only attract their customers. Some people try to register domain names in the hopes of stealing profit from a company or another person, but this is actually illegal. The Anticybersquatting Consumer Protection Act protects businesses trademarks in cyberspace, by making it illegal for others to create a confusingly similar domain name with the intent to profit off the trademark without regards to the goods or services of the original trademark owner. This can be related to the recent news of Johnny Manziel’s friend trying to trademark “Johnny Football” in the hopes of profiting off of Johnny Manziel’s legacy. The only difference is that the ACPA affects online domain names instead of the actual trademark. There are many factors that are considered when a domain name is registered. This includes if the domain name is the legal or nickname of the registrant, if the registrant has a trademark of the same name, if the intent of the website is to harm the trademark owner’s good will, if the registrant resells the domain name without having ever used it for the sell of goods or services, and multiple more factors. All of this has come into fruition to help protect trademark owners from being scammed out of their rightful profit and to stop people of ill will from buying a wrongful domain name. [39]

Search Engine Optimization[edit | edit source]

Getting to the top of Google results is important.

Search site optimization is one way that a website can make themselves more easily found online when being searched for through search engine websites like Google. Typically, the most popular website with the most relevant information based on the searched keywords is displayed as the top result. To optimize a website, one can edit the content of the website itself and the HTML code so that when the search engine is crawling through its database that page is determined to be more relevant. Another way of optimizing a website is through increasing the amount of backlinks, or incoming weblinks that lead to that page. The more back links that a website has, the more popular the website is to the search engine. In the modern world, search engine optimization is a huge deal for any businesses that are trying to promote themselves on the internet. Regardless of the size and content of a website, proper search engine optimization can get any web page to the top of the search results, which would therefore increase the overall visits to that site. [40] Most users of search engines do not look much farther than the first few results or the first page, making it crucial for any company trying to break into the business and beat the competition to be amongst those results. [41]

[edit | edit source]

A banner ad

Business' employ several online advertisement strategies in order to appeal to the consumer. A popular method of displaying a product or to promote a business is to place banner ads on popular websites. Banner ads are size-able pictures that display what the business would like it to, and when clicked on, the ad will link the user to the business' page. While banner ads used to be static ads, today it is much more popular to use dynamic banner ads such as videos or animations. To place banner ads, typically an online advertising firm is used and the company pays a fee to each Web site on which the ad is displayed, as well as a fee to the advertising company. Another advertisement strategy is the use of behavioral ads, which are ads that are targeted to individuals based on their preferences, buying habits, or interests. These preferences are usually determined by cookies places in participating Web sites by advertising networks. The data that behavioral advertising collect about the consumer is not tied to personal information, but rather online activity. Examples of what a behavioral ad tries to find out about the consumer includes the consumers age, gender, and purchase interests.[42]

Review[edit | edit source]

brick-and-mortar store A conventional store with a physical presence.

brokerage site A type of Web site that brings buyers and sellers together to facilitate transactions between them; the site earns revenue in the form of commissions on sales made via the site.

digital wallet A program or online service that holds a buyer’s information (such as electronic payment, billing, and shipping information) that can be used to speed up online purchase transactions.

dot-com An Internet-only store with no physical presence.

e-commerce The act of doing business transactions over the Internet or similar technology.

meta tag A special HTML or XHTML tag containing information about a Web page that is added by the person creating the Web page and is used primarily by search sites.

online auction site A Web site where potential buyers bid on an item and, at the end of a set time period, the highest bidder buys the item as long as all bidding criteria (such as minimum selling price) have been met.

online payment service A type of payment service accessed via the Internet and used to make electronic payments to others, such as via deposited funds, a bank account, or a credit card.

search site optimization (SSO) The process of evaluating a Web site and making changes to improve search site results.

shopping cart software E-commerce software designed to add ordering capabilities to an existing Web site.

storefront software E-commerce software that facilitates the creation of an online store.

subscription site A site that sells access to its online content.

Review Questions[edit | edit source]

1. What is the process of evaluating a web site to improve the search site results?

2. What is a program that holds a buyer’s information?

3. What is a type of Web site that brings buyers and sellers together to facilitate transactions between them?

4. What is a special HTML tag containing information about a Web page?

5. What is a web site where potential buyers bid on an item?

6. What is a type of payment service accessed via the Internet which are made to make electronic payments to others?

7. What is E-commerce software that facilitates the creation of an online store?

8. What is a site that sells access to its online content?

9. What is a type of Web site that brings buyers and sellers together to facilitate transactions between them?

10. What is a conventional store with a physical presence?

11. A brokerage site is a type of web site that brings buyers and sellers together to facilitate transactions between them?

12. An online payment service is a type of payment service accessed via the Internet which are made to make electronic payments to others?

Answers: 1. search site optimization 2. digital wallet 3. brokerage site 4. meta tag or online auction site 5. online auction site 6. online payment service 7. storefront software 8. subscription site 9. brokerage site 10. brick-and-mortar store 11. True 12. True

References[edit | edit source]