Transcript E-Commerce - Dakota State University

E-Commerce
BADM 435
By
Alex Johnson
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
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
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
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.
Advertising and Marketing
• Forms of Advertising
– POP-UPS!!!!
– Banners
– SPAM
– Permission Marketing
• Email promotions
• Mailing promotions
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
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.
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”
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.
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.
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.
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.
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.
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.
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.
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
Security Cont.
• Process of security
– Must secure all different parts of the ecommerce 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
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.
Any Questions?? You can email
me and [email protected]