Transcript MPA Atlanta 9/2000 Workshop

E-Commerce and Magazines:
Programs and Ideas that Work
presented by:
David Strom
Port Washington NY USA
[email protected], +1 (516) 944-3407
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What This Course is Not About
 Mathematics
of Public Key Cryptography
 In-depth discussion of Visa® and MasterCard®
operating regulations for eCommerce
 Legal advice for eCommerce issues related to
operating a web storefront
 Writing your own storefront systems from
scratch
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Why This Tutorial
A successful magazine must incorporate and
coordinate print and web editions
 Any web site will eventually get involved in selling
something online
 Good storefront design and tactics will increase
sales
 Tough to evaluate various payment systems and
products
 Tough to stay on top of current eCommerce
technologies and still run your publication!

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For Future Reference
 Copy
of this presentation (Powerpoint), links to
sites and resources:
www.strom.com/pubwork/ecommerce
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Course Topics
 Good
and bad web storefront design, defining
successful and secure eCommerce ventures
 What are the things a magazine person should
know about eCommerce and web publishing?
 Overview of working Internet payment systems
 Choosing service providers or suites
 Installing and operating your own magazine
web site
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Course Approach
 Overview
of major payment systems and
storefront products
 Give real-life examples and online demos
 Help relate information to your own situation
 Provide insight into different approaches,
technologies
 Discuss pros and cons of each
 Multiple Q&A sessions
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Recommended Books
 Magdalena
Yesil's Creating the Virtual Store :
Taking Your Web Site from Browsing to Buying
(1997)
 Dan
and Emma Minoli's Web Commerce
Technology Handbook (1998)
 Phil
Greenspun's Database Backed Web Sites
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Thanks
 Marshall
Rose
 Stephanie Denny
 … for their help in preparing this presentation
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My Background
 I’ve
been involved in the Internet for some time
 Have used most of the products we demonstrate
 Have consulted to a few of the vendors, but still
have strong opinions
 Founding editor-in-chief of Network Computing
magazine
 Built several hi-tech publishing web sites
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My Beliefs
 My
perspective is from the consumer’s
viewpoint, as well as from the publisher’s
 I believe that coordinating print and web is a
natural evolutionary step for magazines
 Most eCommerce has had accidental success to
date
 The web is a very different animal from print!
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Topic 1: Introduction to Internet Marketing
 Advantages
and disadvantages
 Speed of adoption is immense!
 Different kinds of approaches
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Internet Marketing
 Look

good to the public,
be on the cutting edge
 Supplement

be real-time
 Focus

on global niches,
be high-content
 Avoid

traditional channels,
the trailing edge,
the competition is already doing it
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Advantages
 Direct,
one-to-one marketing opportunity
 Allows you to learn useful information and
build subscriber relationships
 Relatively inexpensive medium compared to
advertising, direct mail or telemarketing
 Capacity to be a major distribution channel
 Results are measurable, sometimes
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Internet is Cheapest Cost Per Contact
 Internet:
$.98
 Direct mail: $1.68
 Telemarketing: $31.16
 Tradeshows: $162.00
Penton Research, www.penton.com, 11/97
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Obstacles to Wide Deployment
 Easy
forms of payment
 Trust in the system
 Perceived benefits and profits
 Technology and infrastructure still primitive
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What can go wrong on the Internet
 Store
is offline
 Overall lax security with ConEd bills
 Visitors steal your subscriber lists and other
privacy glitches
 Credit card fraud
 Shopping cart hacks
 Stealing your domain name
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General security practices
 Make
sure you protect your web site!
 See “Ten ways” article from Winn Schwartau
 Limit access, isolate servers, lock down scripts,
so forth
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Accidental downloads
 Ikea
hack
 Others such as Nissan, DeBeers, Butterball
 Even Amazon’s affiliate email addresses were
briefly exposed!
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Other notable privacy mistakes
 Real
Networks collecting user song playlists
 Amazon.com displaying book buying habits of
corporations
 Infobeat sending email addresses to their
advertisers
 This can happen to you!
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What Went Wrong
 All
collected key information without their
customer’s knowledge or approval
 All were leading edge companies that should
have known better
 All quickly corrected their mistakes and
informed the public
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Some Lessons Learned
 Consumer

control of privacy is essential
most folks simply want the choice of opting out
 The
granularity of control must be fine, e.g.,
over number and frequency;
 over categories of interests; and/or
 over (indirect) dissemination to third-parties

 If
you promise privacy protection, make sure
you actually deliver it throughout your site!
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Preventing Credit Card Fraud








Don't accept orders unless full address and phone
number present
Be wary of different "bill to" and "ship to" addresses
Be careful with orders from free email services
Be wary of orders that are larger than typical amount
Pay extra attention to international orders
When in doubt, call the customer to confirm the order
Use software or services to fight fraud
When you’ve found fraud, contact your merchant bank
immediately
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Be Aware of Shopping Cart Hijacking
 Example
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Stealing your domain name
 Typo.net
and AmericaOffline.com
 Both sell ad space for things like:
amazom.com
 www.eartlink.net

 acivilaction.com
vs civil-action.com
 whitehouse.gov vs. whitehouse.com
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Dealing With Rogue Domains
bestbuys.com vs bestbuy.com
 United Airlines vs untied.com
 Use same colors, try to go after same audience
 Lawyers are standing by to take your call…
 Use various tools to track down offenders:

companysleuth.com
 dejanews.com
 whois.userland.com
 bannerstake.com

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And The New Domain Suffixes
 Seven

new ones approved to begin this spring:
.biz, .pro, .coop, .museum, .aero, .info, .name
 Others
are certainly on their way
 New registrars and new procedures to make
things more complex
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Topic 2: What Becomes Success?
 Overview
of eCommerce market
 Review physical storefront success factors
 Propose some definitions
 Define success for the web
 Draw up eCommerce principles
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Let’s Keep Our Perspective
 Size
of US movie industry -- $7B!
 Size of adult video rentals - $6B!
 Total US music sales -- $6B!
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Ticketmaster
 Started
11/96
 US$20 million/month via the web in sales
 Ten percent of total sales via the web
 Generating lots of new single ticket buyers,
people who don’t like to order via the phone
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Then there is Disney.com
 Web
site Daily Blast signing up 15k
members/month
 Sales via web are equal to 3x-5x of physical
Disney store!
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Sad State of Today’s eCommerce
Marketplace
 Poor
quality tools
 Hard-to-find stores
 Limited payment methods
 Credit card snooping perceptions
 Older browser versions can’t view latest sites
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Case in Point: Buying a Bike Rack
 Item
not carried: outdated catalog
 Telesales not familiar with web
 No cross-sell or substitutions online
 Needed three phone calls to complete purchase
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Compare Moviefone vs. BAM
 BAM
web site doesn’t carry event information
in real time
 BAM orders are fulfilled weeks later, and no
indication on web site of sold-out events
 MF: Real time ordering, easy navigation via
web and phone
 MF: no surcharge on tix, no waiting in long
ticket lines!
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Let’s Learn From the “Real World”
 Compare
what works for physical stores
 Try to extend to the web
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Critical Success Factors for Physical
Storefronts
 Location
 Branding
 Good
service
 Good product selection
 Proper pricing and margins
 Traffic
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First Problem:
 None
of these translate on the ‘net!
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Now Try to Agree on Definitions for Web
Stores
 What
determines a good location?
Position on a search page
 Nearness to popular destination
 Ad on a popular server

 What
determines branding?
Memorable domain name
 Popular search category destination

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An Example of bad location: Montana
Meats
 Link
 Can’t
they afford their own domain name?
 “/~” is BAD NEWS!
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Determining Traffic
 Hard
to do -- is it hits, page views, registered
users?
 [HITS = How Idiots Track Success]
 Hard to measure -- do you count gifs? Use log
files?
 No general agreement on any metrics!
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Traditional Advertising Doesn’t Apply
Anymore
 Can’t
measure anything
 Every site has its own banner sizes
 The Web is not TV
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One Working Definition of Success:
 SURVIVAL!
 If
a site is still running after 12 months, and
getting more traffic, it is a success.
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Does a site actually have to sell something?
 Many
actual eCommerce sites don’t do the
complete transaction
 Require faxes or telephone calls!
 Some merely have catalogs
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Principles of Good eCommerce
 Easy
to find merchandize
 Good service
 Individual customization is key
 Simple navigation
 Make payments easy
 Make buyer feel transaction is secure
 Communicate effectively and frequently
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Danish eShopper Survey (2/99)
 Why
people shop on the web
 Convenience and ease of use are the main
reasons people buy
 After you have deliberately looked for
information about a product or service, how
often do you buy it? Almost always, only 2%!
 Only 5% of their visits to eCommerce sites are
to buy!
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First Principle of eCommerce:
 Make
it easy to buy!
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Amazon.com





Services frequent readers with a variety of programs
 Editorial comments
 If you liked this book, you’ll like...
 Notification of new books by author, topic
 Simplified “1-Click” ordering
Uses simple pages and email
Associates program for commission kickbacks
Gift certificates via email
And ... lots of books, toys, electronics, etc. to choose
from
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Use Affiliates Programs Wisely
 They
bring traffic to your doorstep
 Nice revenue sharing model
 Lots of them to choose from to model your own
on:
AssociatePrograms.com
 Refer-it.com

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A Different Take on Affiliates:
ClickRewards
 Pays
you in airline miles for your patronage
 Accrue miles on many sites
 You redeem benefits on their site
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Amazon vs Borders
 Borders
link
 Cookies vs logins
 Who makes it easier to buy books?
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Update your directories!
 This
one is two plus years old
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Another Side of Service: Repeat Business
 Make
the shopper feel part of the family
 Shopping as entertainment (online auctions)
 “Do what I mean” search function (Amazon
again looks at common misspellings made in
the previous 24 hours for book searches)
 Periodic targeted email updates and reminders
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Second principle:
 Deliver
solid service!
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MyMP3.com
 Customize
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your music tastes
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Third principle:
 Individual
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customization is key
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Consumer Reports
 Finding
out what you get when you buy their
new car pricing service
 Just a few clicks from the home page!
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Fourth principle:
 Make
navigation simple
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How NOT to Design a Payment Screen
 Too
confusing
 Still have to enter credit card numbers,
just in an unfamiliar way
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Common mistakes with payments
 Provide
too few or too many order confirmation
pages
 Confusing methods and misplaced buttons on
order page
 Make it hard for customers to buy things
 Don’t make your customers read error screens
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Here is a good example: Hearst’s
publications
 Let’s
use Cosmo
 Notice how the discount is highlighted
 Simple navigation and online ordering
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Fifth principle:
 Make
payments easy!
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Making the Buyer Feel Secure: the Six
Components of eCommerce Trust
 Seals
of approval, logos of credit card
companies
 Identifiable brand name
 Ease of navigation
 Order fulfillment easy to understand
 Clear purpose and site presentation
 Fast and simple technology
(Cheskin Research)
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Perceptions of Credit Card Snooping Still
Exist
 But
are largely popularized by media, not
consumers!
 Internet fraud stories are still common from
both buyer and seller sides
 Just starting to see authentication services (such
as Cybersource) ramp up
 Trust will take a long time
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Sixth principle:
 Make
the buyer feel secure!
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How Should You Use Email?
 When
to communicate?
 What to communicate?
 When is email helpful and when is it spam and
annoying?
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Email Uses in eCommerce
 Sending
order acknowledgement
 Sending shipping notification
 Purchase receipt
 Telling customer when item is in stock or on
sale
 Responding to specific queries about service
issues
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Email Receipts Should Contain the
Following Items
 Total
price, including shipping
 Your address and the store’s
 Items ordered
 Whether they are in stock or not
 When they shipped
 Bonus: order number and URL to view this info
online, link to UPS/Fedex tracking system
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When to Send a Customer Email?
 To
acknowledge the order was placed
 To say items shipped (or not ) and money
changes hands
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Seventh principle:
 Communicate
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effectively and frequently!
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Communicate Effectively and Frequently
 Get
your response systems in place
 Tie in your storefront with any existing
customer relationship management tools and
call centers
 Send replies within an hour of initial order,
within 24 hours of any query
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Topic 3: eCommerce for Magazine
Publishers and Editors
 Using
email effectively
 Coordinating web and print content
 Charging for content
 Handling subscriptions online
 Advertising choices
 Marketing partnerships
 Staffing considerations
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Using email effectively
 Newsletters
as subscription builders
 Sending out notification of new issues or
specials
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Bad newsletter example: Network World
 Too
many, too confusing
 Opt-out message confusing as well: Should read
Please check here if you WANT to receive these
messages
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Good newsletter example: TidBITS
 Easily
searchable and complete archives
 Coordinated email/web publishing schedule
 Sponsors clearly delineated in both email and
web pubs
 Multiple languages
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Coordinating web and print content
 Mistakes
I’ve made in the past
 The web is not a book
 Contests and interactive gee-gaws
 Hire the right ME
 Issues to consider
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Mistakes on ICS (www.intranet-build.com)
 Had
different graphic artists for print and web,
ended up doing graphics twice
 Had web team inexperienced in publishing
industry
 Lack of overall coordination, no one really in
charge
 Print deadlines drove web content, rather than
the other way around
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ICS design flaws
 Print
was 4 serial editions, web static
 Articles mainly reference works and too long
for the web
 Lame email newsletter to drive repeat traffic
 Too many ad spots cluttered the page
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Some wit and wisdom from Norm
 “We
still haven't found a way to put a magazine
on the Web.” Norman Pearlstine, editor in chief,
Time magazine.
 CNNSI has taken off, yet “I'm not convinced
that charging subscriptions wouldn't result in
the site falling apart.”
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The web is not a book
 People
don’t like to read from a screen
 People are more impatient over 28.8 modems
 Navigating online is still harder than turning
pages
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Don’t get too attracted to technology
 Frames
suck
 The fewer graphics the better
 The more complex your pages, the more limited
your audience
 The more dynamic your site, the less can be
indexed by a search engine
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Interactive is a dirty word
 Visitors
aren’t interested in video games
 They take too much time and technology to do
right
 Develop simple contests that play off
registrations
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Understand your audience
 What
pages are popular?
 What inbound links produce visitors?
 How long are they at your site and where do
they go?
 What browsers do they use and where do they
come from?
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Complement your print publication
 Don’t
worry about “giving away the store”
 Match content delivery with newsstand
availability
 Have search button right up front and on top
 Put lots of navigation aids everywhere
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Issues




Does your audience first see something on the web or in
print?
 how do you display URLs and cross-reference?
Should the web edition be a reference work or stand on
its own?
 reading from the screen is slower than from the
printed page!
How easy is it to update your own content?
 keep archives of the past, even if out of date?
Are web and print editions enemies or bedfellows?
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Content management tools
 Vignette,
Broadvision, Allaire Spectra,
RunTime, Fatwire
 All are complex software tools that enable you
to stage, edit, approve, and manage your web
content
 Need many skills to develop and operate
properly
 Six-figures fees common
 First understand overall eCommerce picture
before
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Charging for content
 Subscribers
vs. visitors?
 Free vs. paid portions of the site
 Require registrations on portions of the site
 How not to do it: Infoworld, which had two
separate servers (free and paid)
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Think carefully about advertising
 What
you promise may not be what you deliver
 Who really clicks on ad banners anyway?
 Sell sponsorships like Forbes ($275,000 each)
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Handling subscriptions online
 Can
you sub provider work with online
additions/changes?
 Do you have the infrastructure to do this well?
 Do you already have an Internet payment
mechanism in place?
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Advertising presentation choices
 Zdnet
– sliding advertising window
 Geocities’ annoying logo at the bottom of screen
 TheStreet.com online ad kit
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Another bad ad idea: Cue Cat
 Wired
magazine, others
 Special device that is connected to a PC
 Scans ads so users don’t have to type in URLs
 Why would anyone want to use this?
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Marketing partnerships
 How
to separate edit from sales cleanly
 What are you selling and how do you sell it
online?
 Who’s idea is this, anyway?
 Hearst is queen here
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Staffing considerations – the new help
wanted ads
 Wanted:
Webmaster
 Required skills: High proficiency in various
web based programming, development tools,
CGI, cookies, DNS, eCommerce, FTP, HTML 2.0
through 3.02, IIS Server admin, Javascript, Java,
MS SQL, Netscape server admin, NT Server
admin, perl, Unix admin, web security
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You Need to be a Superhero:
 Part
web designer
 Internet technologist
 SQL database admin
 Payment system maven
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Hire the right web ME
 Who
can make the trains run
 Who knows enough HTML to be dangerous
 Who comes from publishing
 Who can coordinate with print counterparts
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Things You’ll Need to Discover
 Are
your sales and marketing staff web-savvy?
 Is your accounting system adaptable to web
purchases?
 How do you reconcile web accounts with your
existing financial systems?
 Does your business owner understand Internet
culture?
 Can anyone find you on the Internet?
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Software requirements can get odious
 Content
management server
 Ad banner server (incl. with Website Pro, MS
Commerce)
 Audio/video content servers (Real Server,
Enliven ads, etc.)
 Clickstream analysis software
 Ad networks (DoubleClick)
 Affiliate networks
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The Most Under-rated Skill:
 PATIENCE!
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Topic 4: How to get paid over the Internet
 Different
devices
Credit Cards
 Electronic Wallets
 1-Click and other technologies

 Setting
up a merchant account
 Privacy and security issues
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Payment Basics
Issuer
Consumer
Access Point
Acquirer
BANK
Merchant
Access Point
• deposit & withdrawal
• transaction status inquiry
• authentication
• problem resolution
Consumer
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• purchase & refund
• transaction status inquiry
• authentication
• problem resolution
Merchant
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Hierarchy
 Payment

Clearing house between acquirers and issuers
 Acquirer

System (clearing house)
(third-party processor)
Authorizes, processes and settles for merchant bank
 Merchant

Bank
Accepts merchant deposit
 Merchant

Accepts authorized cardholder transaction
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Difference Payment Pieces
 System:
provides processing and settlement of
transactions
 Gateway: software/services to support
eCommerce merchants, acquirers
 Device: initiates transaction from credit/debit
card
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Attributes of Superior Payment Systems
 Universal,
world-wide acceptance
 Recognized value
 Reliability of transactions
 Ease of use to customer
 Capacity for quick settlement and collection
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Requirements
 Mass
appeal
 Easy payment by the customer
 Have acceptable risk to bank and merchant
 Accommodate changes, cancellations and
returns
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Let’s Consider the Customer
 Changes
the order
 Doesn’t fill out all fields even when asked
 Mistype credit card and other data
 Cancels order entirely or never finishes order
process
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Objectives in Offering Payment Choices
 Customers
like choices, but remember: they are
here to buy stuff!
 Make it safe for everyone involved: customer,
merchant, and banks
 Consider how easy it is for your customer to
use, not just how easy it is for you to manage
 Payments in a virtual world should imitate
those in the real world
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Properties of payment technologies
 How
much software does the buyer need to
install?
Does it come with the desktop operating system?
 Does it come with the browser or other software?

 What
third-party clearinghouse is used?
Provide trusted relationships
 Reduce risk, complexity in processing

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The Way Things are on the Web Today
 Some
payments are authorized off-line, through
traditional POS terminals

E-mail message to customer later (hopefully),
confirming order and shipping information
 Many
merchant servers connect with payment
authorization systems

Authorization is real-time during the web session,
and the sale is completed with secure server and
browser software
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The Way Things are on the Web Today:
Secure and Un-Secure
 Secure
transactions via secure browsers and
servers with SSL
 Un-secure transactions with lack of proper
encryption (account numbers sent “in the
clear”) via e-mail messages
 Un-secure transactions due to “export” versions
of browser and/or server software
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The Way Things are on the Web Today
 Secure
transactions do not guarantee the
validity of the customer account information
A high percentage of credit charge-backs for MO/TO
transactions are for “merchandise not received”
 Address verification services can help protect you,
and in some cases are required

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Different Ways to Capture Customer
 Online
 Post-authorization
 Batch
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Online Capture
 Happens
simultaneously with authorization of
transaction
 Fastest method of capture for online merchants
who can guarantee same-day shipment of goods
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Post-Authorization Capture
 Capture
is a separate step from authorization of
transaction; post-auth message instructs bank to
capture transaction
 Example of use is for delayed shipping of
merchandise
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Batch Capture
 Transactions
are captured in a batch mode after
authorization (like post-auth capture)
 Multiple authorizations are submitted at one
time for capture
 The batch is transmitted through gateway
(CyberCash) to the bank for funds transfer and
merchant account reconciliation
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First, Remember the Old Payment
Providers?
 Digicash
 Cybercash
(first generation)
 First Virtual
 Mondex
 GlobeID
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Why Didn’t They Work?
 Too
complex to implement
 Too much cumbersome infrastructure
 Not too many stores took their kind of money
 Too many other technical challenges
 Solved the wrong problem first (credit card
snooping)
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So What Payment Instrument to Use?
 SSL
Credit cards
 eWallets/SET
 Cybercash and other payment gateways
 1-Click service providers
 Monthly bill delivery add-ons
 Peer-to-peer payments
 One-time credit cards
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Credit cards, debit cards
 JCB,
Visa, MasterCard, Discover, American
Express
 Buyer gets card from issuing bank
 Merchant is sponsored by acquiring bank
 Merchant knows buyer and authorizes payment
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How Credit Cards Work
 Transactions
authorized against customer’s line
of credit at issuer (promise to pay)
 At point of settlement, cardholder’s account is
charged and merchant’s account is credited
 Transactions subject to chargeback to merchant
under certain conditions
Lack of proper authorization
 Lack of proper identification / address verification

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S-HTTP/SSL Features
Supply 16+4 in encrypted form
 Require merchant to have a cert signed by a
trusted third-party
 Requirement of client-side cert is a trade-off:

yes: buyer must “register” before making purchase
(S-HTTP, SSLv3); or,
 no: no assurance as to buyer’s identity (SSL)


Merchant site becomes a credit card repository
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What About eWallets and SET?
 IBM
Consumer Wallet (both SET and ECML,
$50,000!)
 GlobeSET (SET now, server-side non-SET later)
 Transactor/Citibank Wallet (Jscript bookmark,
gone)
 eWallet.com (only SSL, now
Entrypoint/Infogate)
 Microsoft Wallet (in Win98, IE 4.01) (both SSL
and SET, evolved into Passport)
 Brodia/ECML
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What’s in an eWallet?
 Credit
card accounts
 Debit card accounts
 Checking accounts
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All of These Have in Common
 Access
to your accounts
 Credit card and other account numbers are
stored by the service provider in a database, or
on your hard disk
 These numbers are not transmitted to the
merchant
 Consumer must initiate account set-up in
advance of making any purchases
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How Electronic Wallets Work Today
 Consumer
must initiate request for electronic
“wallet” software
 Credit card or other account numbers are given
to provider one time before any purchases are
made
 Closed system: only available to participating
merchants and cardholders who have signed up
in advance
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How Electronic Wallets Will Work in the
Future
 With
SET protocol, will contain digital IDs with
encrypted account information
 Since digital IDs will be tied to specific
accounts, wallets will keep track of all that
information
 At that point, wallets will be widely distributed
and universally accepted
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Interoperability is the Key
 Wallets
will become widely used when the
following events occur:
Mass distribution of wallets to consumers is easily
made
 Will be accepted by all merchants, regardless of
wallet brand or payment brand

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eWallet Demonstration
 Entrypoint
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Some Problems with eWallets
 Not
transferable to other wallets
 Tied to a single PC
 Not available for use at many web storefronts
 Just solve a small part of the overall payment
process
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Trends
 eWallets
will eventually go away
 SET becomes a server-side issue
 SSL still dominates eCommerce transactions for
many years
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1-Click Service Providers
 1Clickcharge.com,
qPass.com, InstaBuy.com
 Mainly for digital content delivery
 Per day pass (WSJ)
 Charge 8- 12% per transaction
 Universal membership
 Don’t leave site while completing purchase
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1-Click Advantages
 Ease
of use
 No credit card transmission over the Internet
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1-Click Disadvantages
 Need
to reach critical mass of users almost at
launch
 Still rely on username/password combination
which can be cumbersome
 Small companies without a lot of depth – still!
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Setting up Merchant Account
 Providers
to consider
 How to compare services
 Choices in setting up account, fees
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All Merchant Providers Are Not the Same
 Compare
services
Which cards do they authorize?
 Do they provide electronic check services?
 Do they provide check guarantee services?

 Compare
prices
Start-up fees
 Monthly discount fees
 Other service fees (per transaction)
 Statement generation fees

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Range of Credit Card Fees
Your Bank
CSP
Discount Rate: 1.5% - 5.0%
Application Fee: $100 - $300
Discount Rate: 1.5% - 5.0%
Per Transaction:
.20 - .30
Monthly Fee:
$10 - $25
(service / statement fee)
Chargeback Fee: Up to $25
Chargeback Reserves:
Up to 10% of sales, for up
to six months
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New developments: one-time credit cards
 “Private
payments” introduced recently by
AmEx
 The number is used only once
 Requires software download
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Peer-to-peer payment providers
 PayPal/X.com
(claims 3 MM users!)
 Billpoint (Wells Fargo/eBay)
 Ecount (claims 400,000 users!)
 Yahoo PayDirect
 ProPay.com
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Issues With p2p Payments
 Transaction
limits (usually $1000/day)
 Tied to particular credit card accounts
 Skimpy fraud provisions (tied to credit card
issuer)
 Some have huge transaction fees (ProPay
charges sellers 3.5% plus 35 cents)
 One benefit: payees don’t have to be part of the
system to collect funds
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Alternative providers (to phone, ISP, or
other monthly bills)
 iPin
 Trivnet
 eCharge
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Topic 5: Choosing the Right eCommerce
Path
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Rent, Buy or Build?
 Delusions:
“I could do that myself”
 Not invented here
 Justification example: corporate procurement
 Forrester research survey showed 30% spent
over $500,000
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Rent, Buy, or Build
 Rent:
outsource to a CSP
 Buy suite of software
 Build it yourself
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Types of Outsourcing
 Web
server hosting
 Payment processing
 Storefront creation
 Email and customer management
 Shopping carts
 Catalog and inventory fulfillment
 Ad banner, one-click networks
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Find an CSP
 More
ISPs are offering eCommerce solutions
 Have to use their software standards and
payment schemes
 Could be pricey
 Just catching on in USA
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Evaluating eCommerce ISPs
 Do
they offer storefront design?
 Have in-house programmers?
 Hosting of your own web server machine?
 How many payment systems do they support?
 What kinds of accounting reports do they offer?
 What prices and packages offered?
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The Catch-22 of CSPs:
 To
be successful, a provider has to promote his
products via the Internet and have detailed
descriptions on their own web sites!
 But try to find this information isn’t easy.
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Some CSP Examples









www.psi.net/web/ecommerce.shtml
www.Best.com/bizcomm.html
www.Brainlink.com/html/saleslink.htm
www.Earthlink.net
IBM: mypage.ihost.com
www.Netcom.com
business.Mindspring.com/prod-svc/smbiz/
www.Mindrush.com/
www.outer.net/ONCommerce (OuterNet)
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Price Comparison assumptions
 10
Mb disk storage
 Single email account
 Registrar $35 fee included for domain name
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Price Comparison for CSP hosting
Provider
Setup fee (US$) Monthly fee
(US$)
IBM
260
55
Earthlink
295
100
Netcom
450
300
Mindspring
175
324
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Plan name,
payment
options
Bronze, credit
cards
Starter Site
Commerce Site
credit cards
Commercial
Advantage,
credit cards,
Cybercash
147
Earthlink pricing explained
Program
Monthly fee
Setup fee
Starter Site
20
25
Total Access Acct. 20
(waived)
SSL cert.
10
20
Domain fee
75
Ecommerce
40
175
TOTAL
100
210
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CSP Approaches
 GeoShop/Yahoo
 ViaWeb/Yahoo
 iCat/Intel
 Encanto
 Others
entering a very crowded field
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GeoShop/Yahoo
 Builds
on GeoCities “communities” but for
merchants
(www.geocities.com/join/geoshops)
 $25/month for just commercial listings
 $180/month (or more!) for actual transactions

working with Internet Commerce Services Corp.
who uses Open Market Transact servers
(www.icoms.com/pp.htm)
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ShopSite demo
 Can
now handle two concurrent currencies
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The Suite Approach
 Leading
contenders
 What is part of the suite and what isn’t
 Prices and platforms
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Popular eCommerce Suites
Vendor, Product
Version
Price
Platform
IBM
WebSphere
3.5
$10,000 $40,000
Microsoft
Commerce Server 2000
3.0
Free
download
NT, AIX,
Solaris,
AS/400,
S/390
NT/ W2000
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Popular eCommerce Suites (con’t)
Vendor, Product
Version
Price
Platform
OM Transact
Open Market
5.0
$250,000
Unix
Intershop Online
Intershop
4.0
$5000
NT
Unix
WebSite Pro
O'Reilly
2.5
$800
NT, 95
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Four Typical Elements
 Catalog
 Storefront
designer
 Ordering/inventory system
 Shopping cart/check out system
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The Cold Hard Reality of Suites
 Suites
are nothing more than collection of
products
 Lack integration among various elements
 Difficult to setup, customize, and use
 Require you to live “inside” their structure
 Limited payment options
 Sounds like early MS Office
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Payment Systems Included in Each Suite
 Microsoft:
Verifone, Buy Now
 IBM: Verifone, SET/eTill
 OpenMarket: Verifone
 WebSite Pro: IC Verify, PC Authorize,
CyberCash, others
 Intershop: CyberCash, ICVerify, others
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Sample Stores Included in Each Suite
 Microsoft:
4 stores
 IBM: eMall, simple and advanced sample stores
 OpenMarket: none
 WebSite Pro: 1 bookstore
 Intershop: 3 stores
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Database Support
Product
Databases Supported
Site Server
MS SQL, Oracle
Websphere
DB2, Oracle
iCat
4D, Sybase SQL Anywh
WebSite
MS Access
Intershop
Sybase SQL
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Dealing With ODBC
 Have
to understand how to set up data sources
 Intimate knowledge of your data structure
 Re-install ODBC drivers at least once!
 Best to start with built-in database
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Store Wizards Included in Each Suite
 Websphere
(the best)
 WebSite Pro (but doesn’t do much)
 Intershop (various wizards)
 MS Commerce (although you’ll really need to
know COM!)
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Tips
Don’t install anything before making sure you
have everything!
 Downloads for free, but they expire
 Can you export existing files to these systems?

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WebSite Professional website.ora.com
 Version
2, shipping since 9/97
 US$799!
 NT
(or 95)
 Supports seven different payment processors:
SSL, CyberCash
 One sample store (bookstore)
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Sample storefront
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WebSite Configuration Sheet
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Store Properties
 Only
can operate a single payment system
 Run on a series of Access databases
 Built-in tax table, but for N.Americans!
 Well documented data structures in typical
O’Reilly fashion
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Recommendations
 Lowest
priced suite by far!
 iHTML is robust, but will take some learning
 Nice store setup and organization of catalog
 Good low-end solution
 Other alternatives: ShopZone (www.btsw.com),
Alpha Merchant (www.alphasoftware.com)
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Intershop
 Sample
screens showing different “managers”
 Includes Sybase SQL 11
 US$5000, includes 3 mos. support
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Seven Different Managers
 Catalog
 Products
 Store
 Purchases
 Inventory
 Customers
 Admin
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Characteristics
 Everything
managed via browser, which can get
tedious
 But you already have a database behind it
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Payment Options galore
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Recommendations
 Most
flexible payment options of any suite
 Better at processing orders than site creation
 Not good for large catalogs
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IBM Websphere
 IBM’s
Go Web Server
 DB2 database
 Shopping cart system
 Credit card verifier
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Several ways to setup your store
 Use
nine-step wizard with populated catalog
 Use wizard with empty catalog
 Start from scratch
 Import existing databases
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Recommendations
 Great
if you already use DB2 for inventories
 Most security-conscious suite
 Start with all IBM defaults to save time
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Websphere Specifics
 NT,
fast Pentium with 256 M of RAM
 AIX, 390, OS/400, Solaris
 US$5000 Start, $20,000 Pro
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Latest features
 “Intelligent
Catalog”
 Java-based wizards to setup and manage store
 Recognizes shopping preferences and upsells
 Improved SET payment server, ad tracking
partnerships
 “Smooth Start” packaged consulting services
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OpenMarket
 High
end solution
 Worldnet offers hosting of OM servers
 Still needs customization!
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Recommendations
 If
you can afford it ....
 Really the price covers lots of consulting time
 High transactions and throughput needs
 Use with Icoms.com front end service ($1000 +
$100/month)
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Isn’t somebody missing from the suite
party?
 Netscape
 Oracle
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Topic 6: Installing and Operating Your
Own Storefront
 What
you need to know
 What you need to buy
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One DIY solution
 IIS
 PerlShop
shopping cart
 ClearCommerce CSP
 First American Payment Systems
 Verisign certificates
 Fees: $800 setup, $500/yr, $50/month
 What took longest to work: perl scripts to make
credit card payments!
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Components Needed to Operate a Web
Storefront
 Database
of items to sell and current inventories
 Secure web server
 Searchable catalog server
 Connections to backend payments and financial
servers
 Shopping cart system
 Checkout/payment system
 Don’t forget about security!
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Which Database Server?
 Pick
before anything else
 Core of your store revolves around the database:
inventory system
 accounting system
 catalog system

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Database Server Recommendations
 Use
existing client/server db if possible
 SQL Server: best with MS tools
 Oracle: if you know pSQL already
 Informix: all other situations
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Database/web Tools
 Develop
your own forms
 Query your database
 Develop your own catalog
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Why is a Catalog Important?
 Your
customers view of your store
 Current with your own inventory and offerings
 Don’t want to sell what you don’t have
 See catalog resources page
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Tool Recommendations
 Cold
Fusion, www.allaire.com
 Sapphire/Web, www.bluestone.com
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Which Web Server?
 Hundreds
to choose from
 Must support SSL and/or SHTTP
 Platform isn’t important, really
 Choose:
NT/IIS
 Solaris/Netscape Enterprise
 Linux/Apache

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What can a Shopping cart do?
 Simplify
ordering process
 Track multiple purchases for a single visitor
 Display items purchased
 Calculate total prices, tax, shipping charges
 Track item attributes (colors, styles, sizes)
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Different Shopping cart Methods
 Account-based
 Cookie-based;
 Encoded
see www.cookiecentral.com
URLs
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Payment Choices
 Use
gateway (CyberCash) or service provider?
 Do you need support for multiple currencies?
 Do you have to host your store elsewhere?
 Do you understand the fee structure?
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Steps Towards Coding Your Own Payment
Service
 Present
user with a CGI form with shopping
items info
 Connect this to the service provider site
 Provider displays his form to collect credit card
info
 After approval, you record info to your site
 See WebTechniques article by Lincoln Stein,
8/98
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Again, Service Providers Differ
 Compare
services
Which cards do they authorize?
 Do they provide electronic check services?
 Do they provide check guarantee services?

 Compare
prices
Start-up fees
 Monthly discount fees
 Other service fees (per transaction)
 Statement generation fees

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Prices of Typical Products
Product
Inex
SoftCart
MallManager
WebCatalog
Saqqara
VPOS
WebMate
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Accounting
Shopping Cart
Catalog
Catalog
Search tool
Payment server
Development tool
Price
US$6000
900
2000
1600
700
2500
750
195
Putting Together Your Own Solution
 SQL
Server database
 CyberCash payment system
 WebCatalog 3.0 (supports CCash)
 IIS web server
 Total price: <US$10,000
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Thanks!
 Review,
Q&A
 David
Strom
 +1 516 944 3407
 [email protected]
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