E-commerce & Indian history

EBusiness (e-Business), or Electronic Business, is the administration of conducting business via

the Internet. This would include the buying and selling of goods and services, along with
providing technical or customer support through the Internet. e-Business is a term often used in
conjunction with e-commerce, but includes services in addition to the sale of goods.
Electronic business, or e-business, is the application of information and communication
technologies (ICT) in support of all the activities of business.
Circa 1991: Introduction of E-Commerce
The year 1991 noted a new chapter in the history of the online world where e-commerce became
a hot choice amongst the commercial use of the internet. At that time nobody would have even
thought that the buying and selling online or say the online trading will become a trend in the
world and India will also share a good proportion of this success.
Circa 2002: IRCTC teaches India to Book ticket online
India first came into interaction with the online E-Commerce via the IRCTC. The government of
India experimented this online strategy to make it convenient for its public to book the train
tickets. Hence, the government came forward with the IRCTC Online Passenger Reservation
System, which for the first time encountered the online ticket booking from anywhere at any
time. This was a boon to the common man as now they dont have to wait for long in line, no
issues for wastage of time during unavailability of the trains, no burden on the ticket bookers and
many more. The advancements in the technology as the years passed on have been also seen in
the IRCTC Online system as now one can book tickets (tatkal, normal, etc.) on one go, easy
payments, can check the status of the ticket and availability of the train as well. This is a big
achievement in the history of India in the field of online E-Commerce.

Circa 2007: The Deep Discounted model of Flipkart

The acceptance of the ecommerce on a large scale by the Indian people influenced other business
players also to try this technique for their E-businesses and gain high profits. Though online
shopping has been present since the 2000 but it gained popularity only with deep discount model
of Flipkart. In a way it re-launched online shopping in India. Soon other portals like Amazon,
Flipkart, Jabong, etc. started hunting India for their businesses.
Circa 2014: Current Scenario
Online shopping in its early stage was a simple medium for shopping with fewer options. The
users can just place an order and pay cash on delivery. But, in last few years this field has been

renovated to a high extent and hence fascinated many customers. Today, the online shopping has
become a trend in India and the reason behind the adoption of this technique lies in the attractive
online websites, user friendly interface, bulky online stores with new fashion, easy payment
methods (i.e. secure pay online via gateways like paypal or cash-on-delivery), no bound on
quantity & quality, one can choose the items based on size, color, price, etc.
Despite being a developing country, India has shown a commendable increase in the ecommerce
industry in the last couple of years, thereby hitting the market with a boom. Though the Indian
online market is far behind the US and the UK, it has been growing at a fast page.
Further, the addition of discounts, coupons, offers, referral systems, 30days return guarantee, 1-7
days delivery time, etc. to the online shopping and the E-Market have added new flavors to the
industry.
The Key drivers of in Indian ecommerce have been:

Increasing broadband Internet and 3G penetration.

Growing Living standards
Availability of much wider product range
Busy lifestyles and lack of time for offline shopping
Increased usage of online categorized sites
Evolution of the online marketplace model with websites like eBay, Flipkart, Snapdeal,
etc.
Feature

Ubiquity- The traditional business market is a physical place, access to treatment by

means of document circulation. For example, clothes and shoes are usually directed to
encourage customers to go somewhere to buy. E-commerce is ubiquitous meaning that it
can be everywhere. E-commerce is the worlds reduce cognitive energy required to
complete the task.

Global Reach- E-commerce allows business transactions on the cross country bound can
be more convenient and more effective as compared with the traditional commerce. On
the e-commerce businesses potential market scale is roughly equivalent to the network
the size of the world's population.

Universal Standards- E-commerce technologies is an unusual feature, is the technical

standard of the Internet, so to carry out the technical standard of e-commerce is shared by
all countries around the world standard. Standard can greatly affect the market entry cost
and considering the cost of the goods on the market. The standard can make technology
business existing become more easily, which can reduce the cost, technique of indirect
costs in addition can set the electronic commerce website 10$ / month.

Richness- Advertising and branding are an important part of commerce. E-commerce can
deliver video, audio, animation, billboards, signs and etc. However, its about as rich as
television technology.

Interactivity- Twentieth Century electronic commerce business technology is called

interactive, so they allow for two-way communication between businesses and
consumers.

Information Density- The density of information the Internet has greatly improved, as
long as the total amount and all markets, consumers and businesses quality information.
The electronic commerce technology, reduce the information collection, storage,
communication and processing cost. At the same time, accuracy and timeliness of the
information technology increases greatly, information is more useful, more important
than ever.

Personalization- E-commerce technology allows for personalization. Business can be

adjusted for a name, a person's interests and past purchase message objects and marketing
message to a specific individual. The technology also allows for custom. Merchants can
change the product or service based on user preferences, or previous behavior.

Types

B2B e-commerce is simply defined as e-commerce between companies. This is the type of ecommerce that deals with relationships between and among businesses. About 80% of ecommerce is of this type, and most experts predict that B2B e-commerce will continue to grow
faster than the B2C segment. The B2B market has two primary components: e-frastructure and emarkets. E-frastructure is the architecture of B2B, primarily consisting of the following:

logistics - transportation, warehousing and distribution (e.g., Procter and Gamble);

application service providers - deployment, hosting and management of packaged

software from a central facility (e.g., Oracle and Linkshare);

outsourcing of functions in the process of e-commerce, such as Web-hosting, security and

customer care solutions (e.g., outsourcing providers such as eShare, NetSales, iXL
Enterprises and Universal Access);

auction solutions software for the operation and maintenance of real-time auctions in the
Internet (e.g., Moai Technologies and OpenSite Technologies);

content management software for the facilitation of Web site content management and
delivery (e.g., Interwoven and ProcureNet); and

Web-based commerce enablers (e.g., Commerce One, a browser-based, XML-enabled

purchasing automation software).

E-markets are simply defined as Web sites where buyers and sellers interact with each other and
conduct transactions.
The more common B2B examples and best practice models are IBM, Hewlett Packard (HP),
Cisco and Dell. Cisco, for instance, receives over 90% of its product orders over the Internet.
Most B2B applications are in the areas of supplier management (especially purchase order
processing), inventory management (i.e., managing order-ship-bill cycles), distribution
management (especially in the transmission of shipping documents), channel management (i.e.,
information dissemination on changes in operational conditions), and payment management
(e.g., electronic payment systems or EPS).11
eMarketer projects an increase in the share of B2B e-commerce in total global e-commerce from
79.2% in 2000 to 87% in 2004 and a consequent decrease in the share of B2C e-commerce from
20.8% in 2000 to only 13% in 2004
business-to-consumer e-commerce, or commerce between companies and consumers, involves
customers gathering information; purchasing physical goods (i.e., tangibles such as books or
consumer products) or information goods (or goods of electronic material or digitized content,
such as software, or e-books); and, for information goods, receiving products over an electronic
network.
It is the second largest and the earliest form of e-commerce. Its origins can be traced to
online retailing (or e-tailing). Thus, the more common B2C business models are the online
retailing companies such as Amazon.com, Drugstore.com, Beyond.com, Barnes and Noble and
ToysRus. Other B2C examples involving information goods are E-Trade and Travelocity.
The more common applications of this type of e-commerce are in the areas of purchasing
products and information, and personal finance management, which pertains to the management
of personal investments and finances with the use of online banking tools
B2C e-commerce reduces transactions costs (particularly search costs) by increasing consumer
access to information and allowing consumers to find the most competitive price for a product or
service. B2C e-commerce also reduces market entry barriers since the cost of putting up and
maintaining a Web site is much cheaper than installing a brick-and-mortar structure for a firm.
In the case of information goods, B2C e-commerce is even more attractive because it saves firms
from factoring in the additional cost of a physical distribution network. Moreover, for countries
with a growing and robust Internet population, delivering information goods becomes
increasingly feasible.
1. Business-to-government e-commerce or B2G is generally defined as commerce between
companies and the public sector. It refers to the use of the Internet for public

procurement, licensing procedures, and other government-related operations. This kind of

e-commerce has two features: first, the public sector assumes a pilot/leading role in
establishing e-commerce; and second, it is assumed that the public sector has the greatest
need for making its procurement system more effective.
Web-based purchasing policies increase the transparency of the procurement process (and
reduces the risk of irregularities). To date, however, the size of the B2G e-commerce
market as a component of total e-commerce is insignificant, as government eprocurement systems remain undeveloped.
Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals
or consumers.
This type of e-commerce is characterized by the growth of electronic marketplaces and online
auctions, particularly in vertical industries where firms/businesses can bid for what they want
from among multiple suppliers.16 It perhaps has the greatest potential for developing new
markets
Consumer-to-Consumer (C2C) type e-commerce encompasses all electronic transactions of
goods or services conducted between consumers. Generally, these transactions are conducted
through a third party, which provides the online platform where the transactions are actually
carried out..
In C2B there is a complete reversal of the traditional sense of exchanging goods. This type of ecommerce is very common in crowdsourcing based projects. A large number of individuals make
their services or products available for purchase for companies seeking precisely these types of
services or products.
Examples of such practices are the sites where designers present several proposals for a company
logo and where only one of them is selected and effectively purchased. Another platform that is
very common in this type of commerce are the markets that sell royalty-free photographs,
images, media and design elements, such as iStockphoto.
peer-to-peer applications allow users to control many parameters of operation: how many
member connections to seek or allow at one time; whose systems to connect to or avoid; what
services to offer; and how many system resources to devote to the network. Some simply connect
to some subset of active nodes in the network with little user control,While P2P systems had
previously been used in many application domains,[3] the concept was popularized by file sharing
systems such as the music-sharing application Napster(originally released in 1999). The peer-topeer movement allowed millions of Internet users to connect "directly, forming groups and
collaborating to become user-created search engines, virtual supercomputers, and filesystems."

The Advantages
#1. Cost Effective
The entire financial transactions will eventually become electronic, so sooner conversion is
going to be lower on cost. It makes every transaction through e-commerce payment a lot cheaper.
#2. Higher Margin
E-commerce also enables us to move better with higher margin for more business safety. Higher
margin also means business with more control as well as flexibility. You can also save time from
the e-commerce.
#3. Better Productivity
Productivity here means productivity for both companies and customers. People like to find
answers online because it is faster and cheaper, and it costs a lot cheaper expense as well for the
company.
#4. Quick Comparison

E-commerce also enables you to compare price among several providers. In the end, it leads you
to smart shopping. People can save more money while they shop.
#5. Economy Benefit
E-commerce allows us to make transaction without any needs on stores, infrastructure
investment, and other common things we find. Companies only need well built website and
customer service.
The Disadvantages
#1. Security
Customers need to be confident and trust the provider of payment method. Sometimes, we can be
tricked. Examine on integrity and reputation of the web stores before you decide to buy.
#2. Scalability of System
A company definitely needs a well developed website to support numbers of customers at a time.
If your web destination is not well enough, you better forget it.
#3. Integrity on Data and System
Customers need secure access all the time. In addition to it, protection to data is also essential.
Unless the transaction can provide it, we should refuse for e-commerce.
#4. Products People
People who prefer and focus on product will not buy online. They will want to feel, try, and sit
on their new couch and bed.
#5. Customer Service and Relation Problem
They sometimes forget how essential to build loyal relationship with customers. Without loyalty
from customers, they will not survive the business.
Technical Disadvantag es
T here can be lack of system security, reliability or standards owing to poor
implementation of e-Commerce.
Software development industry is still evolving and keeps chang ing rapidly.
In many countries, network bandwidth mig ht cause an issue as there is insufficient
telecommunication bandwidth available.

Special types of web server or other software mig ht be required by the vendor setting the
e commerce environment apart from network servers.
Sometimes, it becomes difficult to integ rate E-Commerce software or website with the
existing application or databases.
T here could be software/hardware compatibility issue as some E-Commerce software
may be incompatible with some operating system or any other component.
Non-Technical Disadvantag es
Initial cost: T he cost of creating / building E-Commerce application in-house may be
very hig h. T here could be delay in launching the E-Commerce application due to
mistakes, lack of experience.
User resistance: User may not trust the site being unknown faceless seller. Such mistrust
makes it difficult to make user switch from physical stores to online/virtual stores.
Security/ Privacy: Difficult to ensure security or privacy on online transactions.
Lack of touch or feel of products during online shopping .
E-Commerce applications are still evolving and chang ing rapidly.
Internet access is still not cheaper and is inconvenient to use for many potential
customers like one living in remote villag es.

ECommerce
EBusiness
Ecommerce
involves Ebusiness is conduct of business processeson
commercialtransactions done over internet.
the internet.
Ecommerce is subset of Ebusiness.

Ebusiness is superset of Ecommerce.

Ecommerce is use of electronic transmission

medium that caters for buying and sellingof
products and services.

In addition, Ebusiness also includes the

exchange of information directly related to
buying and selling of products.

Thus, Those activities which essentially involve

monetary transactions are termed as ecommerce.

In addition it includes activities like procurement

of raw materials or goods, customer education,
looking for suppliers etc.

Ecommerce usually requires the use of just

aWebsite.
Ecommerce
covers outward
facing
processes that touch customers,suppliers and
external partners.

Ebusiness involves the use of CRMs, ERPs

that connect different business processes.
E-business covers internal processes such as
production, inventory management, product
development, risk management, finance etc.

Ecommerce just involves Buying and selling of

products and services.

Ebusiness includes all kinds of pre-sale and postsale efforts.

Ecommerce is narrower concept and restricted to

buying and selling.

It is a broader concept that involves market

surveying, supply chain and logistic management
and using Datamining.

It is more appropriate in B2C context.

It is used in the context of B2B transactions.

Ecommerce involves the mandatory use

ofinternet.
Example- Buying
of
pendrive
from
Amazon.com is considered Ecommerce.

Ebusiness can involve the use of internet,

intranet or extranet.
Example- Using of Internet by Dell, Amazon for
maintaing business processes like Online
customer support, email marketing, suplly chain
management.

Application of extarnet

Application of internet
Intranet Application

supply
chain
management

Download
and files

customer
communication

E-Mail

Voice
and
Conferencing

E-Commerce

online
training/education

File Sharing

customer service

Information browsing

Sharing of information of
common interest

order status inquiry

warrantry
registration

Search
the
web
addresses for access
through search engine

Launching
personal/departmental
home pages

Chatting
more

Submission of reports

distribution
promotion

claims

Internet
It is a Global
interconnected
network.

programs

and

Video

Sharing
of
company
policies/rules & regulations
Access employee database
Distribution
circulars/Office Orders

of

Access product & customer

data

many

Corporate
directories

of

telephone

Intranet
It is a Private networkspecific
to an organisation.

Extranet
It is a Private network that uses public
network to share information with suppliers
and vendors.

Not regulated by any authority.

It
is
regulated
organization.

It is regulated by multiple organization.

Thus content in the network

is accessible
to
everyone connected.

Thus content in the network is

accessibleonly to members of
organization.

The content in the network is accessible to

members of organization & external
memberswith access to network.

It is largest in terms of number

It

The number of devices connected is

system of
computer

is

small

by

network

an

with

of connected devices.

minimal number of connected

devices.

comparable with Intranet.

It is owned by no one.

It is owned
organization.

It is owned by single/multiple organization.

It
is
means
of sharing
information throughout
the
world.

It is means of sharing sensitive

informationthroughout
organization.

It is means of sharing informationbetween

members and externalmembers.

Security is dependent of the user

of device connected to network.

Security is enforced via a

firewall.

Security is enforced via a firewall that

separates internet & extranet.

Example: What
we
normally using is internet.

are

Example: TCS using internal

network for its business
operations.

Example: HP and Intel using network for

business related operations.

Internet

Users should have valid

username/password to access
Intranet.

Users should have valid username/password

to access Extranet.

But Intranet is regulated by

the organization policies.

Extranet
is
also regulated
by
contractual agreements
between
organizations.

Users can access

anonymously.

Internet is unregulated
uncensored.

and

by

single

EDI stands for Electronic Data Exchang e. EDI is an electronic way of transferring business
documents in an org anization internally between its various departments or externally with
suppliers, customers or any subsidiaries etc. In EDI, paper documents are replaced with
electronic documents like word documents, spreadsheets etc.
EDI Documents
Following are few important documents used in EDI:
Invoices
Purchase orders
Shipping Requests
Acknowledg ement
Business Correspondence letters
Financial information letters

A buyer prepares an order in his or her purchasing system and has it approved.
Next, the EDI order is translated into an EDI document format called an 850
purchase order.
The 850 purchase order is then securely transmitted to the supplier either via the internet or through a
VAN (Value Added Network).
If the purchase order is sent using a VAN, then the buyers VAN interconnects with the suppliers VAN.
The VANs make sure that EDI transactions are sent securely and reliably. The suppliers VAN ensures
that the supplier receives the order.
The suppliers computer system then processes the order. In the case of CovalentWorks clients, we
provide VAN transportation and our servers provide all of the software and hardware required to process
EDI documents. Only internet access and email are needed.
Data security and control are maintained throughout the transmission process using passwords, user
identification and encryption. Both the buyers and the suppliers EDI applications edit and check the
documents for accuracy.

Advantages of an EDI System

Following are the advantages of an EDI System.
Reduction in data entry errors. - Chances of errors are much less being use of
computer in data entry.
Shorter processing life cycle - As orders can be processed as soon as they are
entered into the system. T his reduced the processing time of the transfer documents.

Electronic form of data - It is quite easy to transfer or share data being in

electronic format.
Reduction in paperwork - As lot of paper documents are replaced with electronic
documents there is hug e reduction in paperwork.
Cost Effective - As time is saved and orders are processed very effectively, EDI
proves to be higly cost effective.
Standard Means of communication - EDI enforces standards on the content of
data and its format which leads to clearer communication.

value chain
the process or activities by which a company adds value to an article, including production,
marketing, and the provision of after-sales service.
A value chain is the whole series of activities that create and build value at every step. The total
value delivered by the company is the sum total of the value built up all throughout the company.
Michael Porter developed this concept in his 1980 book 'Competitive Advantage'.
What is the value chain made of?
Porter defines the value chain as made of primary activities and support activities. Primary
involves inbound logistics (getting the material in for adding value by processing it), operations
(which are all the processes within the manufacturing), outbound (which involves distribution to
the points of sale), marketing and sales (which go sell it, brand it and promote it) and service
(which maintains the functionality of the product, post sales).

The support functions which feed into all the primary functions are the firm infrastructure, like
MIS which allows managers to monitor the environment well; Human Resource, which develops
the skills needed to steer the company well; procurement to buy/ source goods at the right price,
which increasingly takes importance because of difficult economic conditions and technology,
which could give the firm speed, accuracy and quality. Both these allow the firm to charge a
margin, which partly comes from the value addition of the primary and support functions and
partly from the advantage that the company gains due to communication of the value addition to
the consumer (brand image, faith, trust and so on).

The supply chain is the network created amongst different companies producing, handling and/or
distributing a specific product. Specifically, the supply chain encompasses the steps it takes to
get a good or service from the supplier to the customer. Supply chain management is a crucial
process for many companies, and many companies strive to have the most optimized supply
chain because it usually translates to lower costs for the company. Quite often, many people
confuse the term logistics with supply chain. In general, logistics refers to the distribution
process within the company whereas the supply chain includes multiple companies such as
suppliers, manufacturers, and the retailers.

Malicious code: These term used to describe any code in any part of a software system or
script that is intended to cause undesired effects, security breaches or damage to a
system. Malicious code is an application security threat that cannot be efficiently
controlled by conventional antivirus software alone. Malicious code describes a broad
category of system security terms that includes attack scripts, viruses, worms, Trojan
horses, backdoors and malicious active content. A computer virus is a program or piece
of code that is loaded onto your computer without your knowledge and runs against your
wishes. Viruses can also replicate themselves. All computer viruses are man-made. A
simple virus that can make a copy of itself over and over again is relatively easy to
produce. Even such a simple virus is dangerous because it will quickly use all available
memory and bring the system to a halt. An even more dangerous type of virus is one
capable of transmitting itself across networks and bypassing security systems.
In computing, Trojan horse, or Trojan, is any malicious computer program which is used
to hack into a computer by misleading users of its true intent.
Unwanted program: These are that program which are install without the users
knowledge. Such program are increasingly being found on social networking & usergenerated content sizes where the user are fooled to downloaded them. Once they are
installed these are difficult to uninstalled from your computer. A browser parasites are the
example of unwanted program these are that program which can change your browser
setting for instance change your browser home page, sending information for your site
visited to your host system.for example websearch is adware component that modigied
your internet explorer home page. Spyware are the another example of unwanted
programe Spyware is any technology that aids in gathering information about a person or
organization without their knowledge. On the Internet (where it is sometimes called
aspybot or tracking software), spyware is programming that is put in someone's computer

to secretly gather information about the user and relay it to advertisers or other interested
parties. Spyware can get in a computer as a software virus or as the result of installing a
new program.
Phishing is the attempt to acquire sensitive information such as usernames, passwords,
and credit card details (and sometimes, indirectly, money), often for malicious reasons,
by masquerading as a trustworthy entity in an electronic communication. Phishing emails
may contain links to websites that are infected with malware.[3] Phishing is typically
carried out by email spoofing[4] or instant messaging,[5] and it often directs users to enter
details at a fake website whose look and feel are almost identical to the legitimate one.
Phishing is an example of social engineering techniques used to deceive users, and
exploits the poor usability of current web security technologies.
Hacking:
Spoofing:
Sniffing:
Insider attack:

Cryptography is an essential information security tool. It provides the four most basic services
of information security

Confidentiality Encryption technique can guard the information and communication

from unauthorized revelation and access of information.

Authentication The cryptographic techniques such as MAC and digital signatures can
protect information against spoofing and forgeries.

Data Integrity The cryptographic hash functions are playing vital role in assuring the
users about the data integrity.

Non-repudiation The digital signature provides the non-repudiation service to guard

against the dispute that may arise due to denial of passing message by the sender.

All these fundamental services offered by cryptography has enabled the conduct of business
over the networks using the computer systems in extremely efficient and effective manner.
Cryptography Drawbacks
Apart from the four fundamental elements of information security, there are other issues that
affect the effective use of information

A strongly encrypted, authentic, and digitally signed information can bedifficult to

access even for a legitimate user at a crucial time of decision-making. The network or
the computer system can be attacked and rendered non-functional by an intruder.

High availability, one of the fundamental aspects of information security, cannot be

ensured through the use of cryptography. Other methods are needed to guard against the
threats such as denial of service or complete breakdown of information system.

Another fundamental need of information security of selective access control also

cannot be realized through the use of cryptography. Administrative controls and
procedures are required to be exercised for the same.

Cryptography does not guard against the vulnerabilities and threats that emerge from
the poor design of systems, protocols, and procedures. These need to be fixed through
proper design and setting up of a defensive infrastructure.

Cryptography comes at cost. The cost is in terms of time and money

Addition of cryptographic techniques in the information processing leads to

delay.

The use of public key cryptography requires setting up and maintenance of public
key infrastructure requiring the handsome financial budget.

The security of cryptographic technique is based on the computational difficulty of

mathematical problems. Any breakthrough in solving such mathematical problems or
increasing the computing power can render a cryptographic technique vulnerable.
Encryption
Encryption is the process of encoding messages or information in such a way that only
authorized parties can read it. The translation of data into a secret code. Encryption is the
most effective way to achieve data security. To read an encrypted file, you must have
access to a secret key or password that enables you to decrypt it. Unencrypted data is
called plain text ; encrypted data is referred to as cipher text. The purpose of encryption is
to ensure that only somebody who is authorized to access data (e.g. a text message or a
file), will be able to read it, using the decryption key. Somebody who is not authorized
can be excluded, because he or she does not have the required key, without which it is
impossible to read the encrypted information.
Types of encryption
Symmetric key encryption
In symmetric-key schemes,[1] the encryption and decryption keys are the same.
Communicating parties must have the same key before they can achieve secure
communication.
Public key encryption

Public-key cryptography, or asymmetric cryptography, is any cryptographic system

that uses two kinds of keys: public keys that may be disseminated widely, while private
keys are known only to the owner. In a public-key encryption system, any person can
encrypt a message using the public key of the receiver, but such a message can be
decrypted only with the receiver's private key
Public-key cryptography, or asymmetric cryptography, is any cryptographic system that uses
two kinds of keys: public keys that may be disseminated widely, while private keys are known
only to the owner. In a public-key encryption system, any person can encrypt a message using
the public key of the receiver, but such a message can be decrypted only with the receiver's
private key.
The most important properties of public key encryption scheme are

Different keys are used for encryption and decryption. This is a property which set this
scheme different than symmetric encryption scheme.

Each receiver possesses a unique decryption key, generally referred to as his private key.

Receiver needs to publish an encryption key, referred to as his public key.

Some assurance of the authenticity of a public key is needed in this scheme to avoid
spoofing by adversary as the receiver. Generally, this type of cryptosystem involves
trusted third party which certifies that a particular public key belongs to a specific person
or entity only.

Encryption algorithm is complex enough to prohibit attacker from deducing the plaintext
from the ciphertext and the encryption (public) key.

Though private and public keys are related mathematically, it is not be feasible to
calculate the private key from the public key. In fact, intelligent part of any public-key
cryptosystem is in designing a relationship between two keys.

SSL (Secure Sockets Layer) provides a secure connection between internet browsers
and websites, allowing you to transmit private data online. Sites secured with SSL display
a padlock in the browsers URL and possibly a green address bar if secured by an EV
Certificate.
The SSL protocol is used by millions of e-Business providers to protect their customers,
ensuring their online transactions remain confidential. All web pages that expect their
visitors to submit confidential data, including credit card details, passwords or any
personal information should use encryption. Web browsers can safely interact with
secured sites as long as the site's certificate is from a recognized Certificate Authority,

In computing, a firewall is a network security system that monitors and controls the incoming
and outgoing network traffic based on predetermined security rules. [1] A firewall typically
establishes a barrier between a trusted, secure internal network and another outside network,
such as the Internet, that is assumed not to be secure or trusted.

Several types of firewalls exist:

Packet filtering: The system examines each packet entering or leaving the network and
accepts or rejects it based on user-defined rules. Packet filtering is fairly effective and
transparent to users, but it is difficult to configure. In addition, it is susceptible to IP
spoofing.

Circuit-level gateway implementation: This process applies security mechanisms when

a TCP or UDP connection is established. Once the connection has been made, packets
can flow between the hosts without further checking.

Acting as a proxy server: A proxy server is a type of gateway that hides the true
network address of the computer(s) connecting through it. A proxy server connects to the
Internet, makes the requests for pages, connections to servers, etc., and receives the data
on behalf of the computer(s) behind it. The firewall capabilities lie in the fact that a proxy
can be configured to allow only certain types of traffic to pass (e.g.,HTTP files, or web
pages). A proxy server has the potential drawback of slowing network performance, since
it has to actively analyze and manipulate traffic passing through it.

Web application firewall: A web application firewall is a hardware appliance, server

plug-in, or some other software filter that applies a set of rules to a HTTP conversation.
Such rules are generally customized to the application so that many attacks can be
identified and blocked.

A personal firewall (sometimes called a desktop firewall) is a software application used to

protect a single Internet-connected computer from intruders. Personal firewall protection is
especially useful for users with "always-on" connections such as DSL orcable modem. Such
connections use a static IP address that makes them especially vulnerable to potential hackers.
Often compared to anti-virus applications, personal firewalls work in the background at the
device (link layer) level to protect the integrity of the system from malicious computer code by
controlling Internet connections to and from a user's computer, filtering inbound and outbound
traffic, and alerting the user to attempted intrusions.

A proxy server is a computer that offers a computer network service to allow clients
to make indirect network connections to other network services. A client connects
to the proxy server, then requests a connection, file, or other resource available
on a different server. The proxy provides the resource either by connecting to the
specified server or by serving it from a cache. In some cases, the proxy may alter
the client's request or the server's response for various purposes.

Intrusion Detection System

An Intrusion Detection System (IDS) is a device or an Application Software that monitors
network or system activities for malicious activities or policy violations and produces electronic
reports to the management. IDS come in a variety of "flavors" and approach the goal of detecting
suspicious traffic in different ways.
There are two types of IDSs:

Network based IDS (NIDS):- It is a network security system focusing on the attacks that
come from the inside of the network (authorized users). Some systems may attempt to
stop an intrusion attempt but this is neither required nor expected of a monitoring system.
Network Intrusion Detection Systems (NIDS) are placed at a strategic point or points
within the network to monitor traffic to and from all devices on the network. It performs
an analysis of passing traffic on the entire subnet, and matches the traffic that is passed on
the subnets to the library of known attacks. Once an attack is identified, or abnormal
behavior is sensed, the alert can be sent to the administrator. An example of an NIDS
would be installing it on the subnet where firewalls are located in order to see if someone
is trying to break into the firewall. Ideally one would scan all inbound and outbound
traffic, however doing so might create a bottleneck that would impair the overall speed of
the network

Host based IDS (HIDS) : Host Intrusion Detection Systems (HIDS) run on individual
hosts or devices on the network. A HIDS monitors the inbound and outbound packets
from the device only and will alert the user or administrator if suspicious activity is
detected. It takes a snapshot of existing system files and matches it to the previous
snapshot. If the critical system files were modified or deleted, an alert is sent to the
administrator to investigate. An example of HIDS usage can be seen on mission critical
machines, which are not expected to change their configurations.

Intrusion detection and prevention systems (IDPS) are primarily focused on identifying
possible incidents, logging information about them, and reporting attempts. In addition,
organizations use IDPS for other purposes, such as identifying problems with security
policies, documenting existing threats and deterring individuals from violating security
policies. IDPS have become a necessary addition to the security infrastructure of nearly every
organization. IDPS typically record information related to observed events, notify security
administrators of important observed events and produce reports. Many IDPS can also
respond to a detected threat by attempting to prevent it from succeeding. They use several
response techniques, which involve the IDPS stopping the attack itself, changing the security
environment (e.g. reconfiguring a firewall) or changing the attack's content.
Comparison with Firewall:- Though they both relate to network security, an intrusion detection
system (IDS) differs from a firewall in that a firewall looks outwardly for intrusions in order to
stop them from happening. Firewalls limit access between networks to prevent intrusion and do
not signal an attack from inside the network. An IDS evaluates a suspected intrusion once it has
taken place and signals an alarm. An IDS also watches for attacks that originate from within a
system. This is traditionally achieved by examining network communications, identifying
heuristics and patterns (often known as signatures) of common computer attacks, and taking
action to alert operators. A system that terminates connections is called an intrusion prevention
system, and is another form of an application layer firewall.

A public key infrastructure (PKI) is a set of roles, policies, and procedures needed to create,
manage, distribute, use, store, and revoke digital certificates[1] and manage public-key
encryption. The purpose of a PKI is to facilitate the secure electronic transfer of information for a
range of network activities such as e-commerce, internet banking and confidential email

A public key infrastructure (PKI) supports the distribution and identification of public
encryption keys, enabling users and computers to both securely exchange data
overnetworks such as the Internet and verify the identity of the other party
A typical PKI includes the following key elements:

A trusted party, called a certificate authority (CA), acts as the root of trust and provides
services that authenticate the identity of individuals, computers and other entities

A registration authority, often called a subordinate CA, certified by a root CA to issue

certificates for specific uses permitted by the root

A certificate database, which stores certificate requests and issues and revokes certificates

A certificate store, which resides on a local computer as a place to store issued certificates
and private keys

A CA issues digital certificates to entities and individuals after verifying their identity. It signs
these certificates using its private key; its public key is made available to all interested parties in
a self-signed CA certificate. CAs use this trusted root certificate to create a "chain of trust" -many root certificates are embedded in Web browsers so they have built-in trust of those CAs.
Web servers, email clients, smartphones and many other types of hardware and software also
support PKI and contain trusted root certificates from the major CAs.
Along with an entitys or individuals public key, digital certificates contain information about
the algorithm used to create the signature, the person or entity identified, the digital signature of
the CA that verified the subject data and issued the certificate, the purpose of the public key
encryption, signature and certificate signing, as well as a date range during which the certificate
can be considered valid.
A virtual private network (VPN) extends a private network across a public network,
such as the Internet. It enables users to send and receive data across shared or public
networks as if their computing devices were directly connected to the private network,
and thus benefit from the functionality, security and management policies of the private
network.[1] A VPN is created by establishing a virtual point-to-point connection through
the use of dedicated connections, virtualtunnelling protocols, or traffic encryption.
Key design objectives when selecting VPN features must include the following:

Secure remote access for users anywhere, anytime.

Easy setup, configuration, use and maintenance.

Affordability for widespread corporate use.

Ease of use: There should be no obvious performanceproblems, no major usage hoops to

jump through, no "gotchas" or other downsides to regular frequent use.

1.

Enhanced security. When you connect to the network through a VPN, the data is kept
secured and encrypted. In this way the information is away from hackers eyes.

2.

Remote control. In case of a company, the great advantage of having a VPN is that the
information can be accessed remotely even from home or from any other place. Thats why a
VPN can increase productivity within a company.

3.

Share files. A VPN service can be used if you have a group that needs to share files for a
long period of time.

4.

Online anonymity. Through a VPN you can browse the web in complete anonymity.
Compared to hide IP software or web proxies, the advantage of a VPN service is that it
allows you to access both web applications and websites in complete anonymity.

5.

Unblock websites & bypass filters. VPNs are great for accessing blocked websites or
for bypassing Internet filters. This is why there is an increased number of VPN services used
in countries where Internet censorship is applied.

6.

Change IP address. If you need an IP address from another country, then a VPN can
provide you this.

7.

Better performance. Bandwidth and efficiency of the network can be generally

increased once a VPN solution is implemented.

8.

Reduce costs. Once a VPN network is created, the maintenance cost is very low. More
than that, if you opt for a service provider, the network setup and surveillance is no more a
concern.
Electronic money, or e-money, is the money balance recorded electronically on a storedvalue card. These cards have microprocessors embedded which can be loaded with a
monetary value. Another form of electronic money is network money, software that allows
the transfer of value on computer networks, particularly the internet. Electronic money is a
floating claim on a private bank or other financial institution that is not linked to any particular
account.[1] Examples of electronic money are bank deposits, electronic funds transfer, direct
deposit, payment processors, and digital currencies.

Electronic Cash
Primary advantage is with purchase of items less than $10

Credit card transaction fees make small purchases unprofitable

Micropayments
Payments for items costing less than $1

Consumer buys e-cash from Bank

Bank sends e-cash bits to consumer (after charging that amount plus fee)
Consumer sends e-cash to merchant
4. Merchant checks with Bank that e-cash is valid (check for forgery or fraud)
Bank verifies that e-cash is valid
Parties complete transaction: e.g., merchant present e-cash to issuing back for deposit
once goods or services are delivered

Advantages

More efficient, eventually meaning lower prices

Lower transaction costs
Anybody can use it, unlike credit cards, and does not require special authorization

Disadvantages

Susceptible to forgery

Electronic Wallets
Makes shopping easier and more efficient

Eliminates need to repeatedly enter identifying information into forms

to purchase
Works in many different stores to speed checkout

Amazon.com one of the first online merchants to eliminate repeat form-filling for purchases
Smart Cards

Plastic card containing an embedded microchip

Available for over 10 years
So far not successful in U.S., but popular in Europe, Australia, and Japan

Smart cards gradually reappearing in U.S.; success depends on:

Critical mass of smart cards that support applications

Compatibility between smart cards, card-reader devices, and applications

Magnetic stripe

140 bytes, cost $0.20-0.75

1-4 KB memory, no processor, cost $1.00-2.50

Memory cards

Optical memory cards

4 megabytes read-only (CD-like), cost $7.00-12.00

Microprocessor cards
Embedded microprocessor

(OLD) 8-bit processor, 16 KB ROM, 512 bytes RAM

Equivalent power to IBM XT PC, cost $7.00-15.00
32-bit processors now available

Advantages:

Atomic, debt-free transactions

Feasible for very small transactions (information commerce)
(Potentially) anonymous
Security of physical storage
(Potentially) currency-neutral

Disadvantages:

Low maximum transaction limit (not suitable for B2B or most B2C)
High Infrastructure costs (not suitable for C2C)
Not (yet) widely used

Credit card

Used for the majority of Internet purchases

Has a preset spending limit
Currently most convenient method
Most expensive e-payment mechanism
MasterCard: $0.29 + 2% of transaction value
Disadvantages

Does not work for small amount (too expensive)

debit card

A debit card is a plastic card which provides an alternative payment method to cash
when making purchases. Physically the card is an ISO 7810 card like a credit card;
Depending on the store or merchant, the customer may swipe or insert their card into the
terminal, or they may hand it to the merchant who will do so. The transaction is
authorized and processed and the customer verifies the transaction either by entering a
PIN or, occasionally, by signing a sales receipt.

electronic funds transfer

It is a very popular electronic payment method to transfer money from one bank account to
another bank account. Accounts can be in same bank or different bank. Fund transfer can be done
using ATM (Automated T eller Machine) or using computer.
Now a day, internet based EFT is g etting popularity. In this case, customer uses website
provided by the bank. Customer log ins to the bank's website and reg isters another bank
account. He/she then places a request to transfer certain amount to that account. Customer's bank
transfers amount to other account if it is in same bank otherwise transfer request is forwarded to
ACH (Automated Clearing House) to transfer amount to other account and amount is deducted
from customer's account. Once amount is transferred to other account, customer is notified of the
fund transfer by the bank
Types of electronic funds transfer?
NEFT or National Electronics Funds Transfer
RTGS or Real Time Gross Settlement
IMPS or Immediate Payment Service.
NEFT
The National Electronic Funds Transfer is a nation-wide money transfer system which
allows customers with the facility to electronically transfer funds from their respective bank
accounts to any other account of the same bank or of any other bank network. Not just
individuals but also firms and corporate organizations may use the NEFT system to transfer
funds to and fro.
Funds transfer through NEFT requires a transferring bank and a destination bank. With
the RBI organizing the records of all the bank branches at a centralized database, almost
all the banks are enabled to carry out an NEFT transaction. Before transferring funds via
NEFT you register the beneficiary, receiving funds. For this you must possess
information such as name of the recipient, recipients bank name, a valid account number
belonging to the recipient and his respective banks IFSC code. These fields are
mandatory for a funds transfer to be authorized and processed.
Any sum of money can be transferred using the NEFT system with a maximum cap of
Rs. 10, 00, 000.
NEFT transactions can be ordered anytime you want, even on holidays except for
Sundays which are designated bank holidays. However, the transactions are settled in
batches defined by the Reserve Bank of India depending upon specific time slots. There
are 12 settlement batches operating at present between the time slot of 8am to 7 pm on
weekdays and from 8 am to 1pm on Saturdays with 6 settlement batches.
REFT
Real Time Gross Settlement as the name suggests is a real time funds transfer system
which facilitates you to transfer funds from one bank to another in real time or on a gross
basis. The transaction isnt put on a waiting list and cleared out instantly. RTGS payment
gateway, maintained by the Reserve Bank of India makes transactions between banks

electronically. The transferred amount is instantly deducted from the account of one
banks and credited to the other banks account.
Users such as individuals, companies or firms can transfer large sums using the RTGS
system. The minimum value that can be transferred using RTGS is Rs. 2 Lakhs and
above. However there is no upper cap on the amount that can be transacted.
The remitting customer needs to add the beneficiary and his bank account details prior to
transacting funds via RTGS. A beneficiary can be registered through your internet
banking portal. The details required while transferring funds would be the beneficiarys
name; his/her account number, receivers bank address and the IFSC code of the
respective bank.
On successful transfer the Reserve Bank of India acknowledges the receiver bank and
based on this the both the remitting bank as well as the receiving bank may/ may not
notify the customers.

IMPS
Majority of the funds transferred using electronic channels are processed via NEFT or
RTGS. But as the funds could only be cleared in batches using these transfer gateways,
the National Payments Corporation of India introduced a pilot mobile payment project
also known as the Immediate Payment Service (IMPS). Available to Indian public, IMPS
offers instant electronic transfer service using mobile phones. IMPS interbank transfer
service is available 24X7 and allows you to use your mobile phones to access your
account and to authorize transfer of funds between accounts and banks. The IMPS service
also features a secure transfer gateway and an immediate confirmation on fulfilled orders.
IMPS is offered on all the cellular devices via Mobile Banking or through SMS facility.
To be able to transfer money via IMPS route you must first register for the immediate
payment services with your bank. On obtaining the Mobile Money Identifier (MMID)
and MPIN from the bank you can login or make a request via SMS to transfer a certain
amount to a beneficiary. Meanwhile the beneficiary must link his/her mobile number with
his/her respective account and obtain the MMID from the bank to be able to receive
money.
To initiate a transfer you must enter the beneficiarys mobile number, beneficiary MMID,
the transfer amount and your MPIN while requesting the fund transfer. As soon as the
transaction is cleared, you receive a confirmation SMS on deduction from your account
and the money credited into the beneficiarys account. The transaction reference number
can be noted for future reference.
Thus IMPS enables customers to use mobile instruments as an instant money transfer
gateway, facilitating user convenience and saving time and effort involved in other modes
of transfer.

Ethical Issues
In general, many ethical and global issues of Information Technology apply to e-business. So,
what are the issues particularly related to e-commerce? Lets list some of the ethical issues
spawned with the growing field of e-commerce.

Web tracking
E-businesses draw information on how visitors use a site through log files. Analysis of log file
means turning log data into application service or installing software that can pluck relevant
information from files in-house. Companies track individuals movement through tracking
software and cookie analysis. Programs such as cookies raise a batch of privacy concerns. The
tracking history is stored on your PCs hard disk, and any time you revisit a website, the
computer knows it. Many smart end users install programs such as Cookie cutters, Spam
Butcher, etc which can provide users some control over the cookies.
The battle between computer end users and web trackers is always going on with a range of
application programs. For example, software such as Privacy Guardian, My Privacy, etc can
protect users online privacy by erasing browsers cache, surfing history and cookies. To detect
and remove spyware specially designed programs like Ad-Aware are present. A data miner
application, SahAgent collects and combines Internet browsing history of users and sends it to
servers. The battle goes on!
Privacy
Most Electronic Payment Systems knows the identity of the buyer. So it is necessary to protect
the identity of a buyer who uses Electronic Payment System.
A privacy issue related to the employees of company is tracking. Monitoring systems are
installed in many companies to monitor e-mail and other web activities in order to identify
employees who extensively use business hours for non-business activities. The e-commerce
activities performed by a buyer can be tracked by organizations. For example, reserving railway
tickets for their personal journey purpose can be tracked. Many employees dont want to be
under the monitoring system even while at work.
As far as brokers and some of the company employees are concerned, E-Commerce puts them in
danger zone and results in elimination from their jobs. The manner in which employees are
treated may raise ethical issues, such as how to handle displacement and whether to offer
retraining programs.
Disintermediation and Reintermediation
Intermediation is one of the most important and interesting e-commerce issue related to loss of
jobs. The services provided by intermediaries are
(i) Matching and providing information.
(ii) Value added services such as consulting.

The first type of service (matching and providing information) can be fully automated, and this
service is likely to be in e-marketplaces and portals that provide free services. The value added
service requires expertise and this can only be partially automated. The phenomenon by which
Intermediaries, who provide mainly matching and providing information services are eliminated
is called Disintermediation.
The brokers who provide value added services or who manage electronic intermediation (also
known as infomediation), are not only surviving but may actually prosper, this phenomenon is
called Reintermediation.
The traditional sales channel will be negatively affected by disintermediation. The services
required to support or complement e-commerce are provided by the web as new opportunities for
reintermediation. The factors that should be considered here are the enormous number of
participants, extensive information processing, delicate negotiations, etc. They need a computer
mediator to be more predictable.
Legal Issues
Where are the headlines about consumers defrauding merchants? What about fraud e-commerce
websites? Internet fraud and its sophistication have grown even faster than the Internet itself.
There is a chance of a crime over the internet when buyers and sellers do not know each other
and cannot even see each other. During the first few years of e-commerce, the public witnessed
many frauds committed over the internet. Lets discuss the legal issues specific to e-commerce.
Fraud on the Internet
E-commerce fraud popped out with the rapid increase in popularity of websites. It is a hot issue
for both cyber and click-and-mortar merchants. The swindlers are active mainly in the area of
stocks. The small investors are lured by the promise of false profits by the stock promoters.
Auctions are also conductive to fraud, by both sellers and buyers. The availability of e-mails and
pop up ads has paved the way for financial criminals to have access to many people. Other areas
of potential fraud include phantom business opportunities and bogus investments.
Copyright
The copyright laws protect Intellectual property in its various forms, and cannot be used freely.
It is very difficult to protect Intellectual property in E-Commerce. For example, if you buy
software you have the right to use it and not the right to distribute it. The distribution rights are
with the copyright holder. Also, copying contents from the website also violates copy right laws.
Domain Names

The competition over domain names is another legal issue. Internet addresses are known as
domain names and they appear in levels. A top level name is qburst.com or microsoft.com. A
second level name will beqburst.com/blog. Top level domain names are assigned by a central
non-profit organization which also checks for conflicts or possible infringement of trademarks.
Problems arise when several companies having similar names competing over the same domain
name. The problem of domain names was alleviated somewhat in 2001 after several upper level
names were added to com.
Another issue to look out for is Cybersquatting, which refers to the practice of registering
domain names with the desire of selling it at higher prices.
Security features such as authentication, non-repudiation and escrow services can protect the
sellers in e-commerce.
One needs to be careful while doing e-commerce activities. The need to educate the public about
the ethical and legal issues related to e-commerce is highly important from a buyer as well as
seller perspective.
Scope of E-Governance
Governance is all about flow of information between the Government and Citizens, Government
and Businesses and Government and Government. E-Governance also covers all these
relationships as follows:
A. Government to Citizen (G2C)
B. Citizen to Government (C2G)
C. Government to Government (G2G)
D. Government to Business (G2B)
A. Government to Citizen
The G2C relation will include the services provided by the Government to the Citizens. These
services include the public utility services i.e. Telecommunication, Transportation, Post, Medical
facilities, Electricity, Education, Certification, Registration, Licensing, Taxation, Passports,
ID Cards, birth registration, marriage registration, divorce or death registration.
1. E-Citizenship - It involves online transactions relating to issue and renewal of documents like
Ration Cards, Passports, Election Cards, Identity Cards, etc. It will require the Government to
create a virtual identity of every citizen so as to enable them to access the Government services
online. For the same, Government would need to create a Citizen Database which is a huge task.

2. E-Registration - It covers the online registration of various contracts and transactions that
may require registration for giving it legality and enforceability. E-registration will help to
reduce a significant amount of paperwork.
3. E-Transportation - E-Transportation services would include services of Government relating
to Transport by Road, Rail, Water or Air. This may involve online
1

booking and cancellation of tickets,

status of vehicles, railways, boats and flights,

issue and renewal of Driving Licences,

registration and renewal of vehicles,

payment of the fees of licences,

payment of fees and taxes for vehicle registration,

4. E-Health - Under this interconnection of all hospitals may take place. A patient database may
be created. A local pharmacy database may also be created.
5. E-Education - Imparting of education and conducting of Courses online through internet. It
can reduce the communication time required in Distance education.
6. E-Help It refers to Facilitation of disaster and crisis management using ICT. It includes the
use of technologies like internet, SMS, etc. for the purpose of reducing the response time of the
Government agencies to the disasters that may speed up the rescue work.
7. E-Taxation - E-Taxation will facilitate the taxing process by implementing ICT in the taxing
process. Online tax due alerts and online payment of taxes would help transact faster.
B. Citizen to Government
Citizen to Government relationship will include the communication of citizens with the
Government arising in the Democratic process like voting, campaigning, feedback, etc.
1. E-Democracy - Democracy means participation of the citizens in the governing process.
The ICT can help enable the true democratic process including voting, public opinion.
2. E-Feedback - E-Feedback includes the use of ICT for the purpose of giving feedback to the
Government. It may help in pursuing the Government to take a certain decision. Use of ICT can
enable online feedback and online debates to the Government.

C. Government to Government
G2G relationship would include the relationships between Central and State Government and
also the relationship between two or more Government departments.
1. E-administration - It can reduce the communication time between the Government
Departments and Governments. It can substantially reduce paper work, bring morality and
transparency to the administration of Government Departments.
2. E-police It facilitates the work of the Police department in investigation and administration.
It includes databases of Police Officers, their performances, Criminal databases wanted as well
as in custody, the trends in crimes and much more. It can help reduce the response time & reduce
cost by reducing paperwork.
3. E-courts - The concept of E-Court will include the ICT enablement of the judicial process.
Technology may help distant hearing, online summons, warrants and online publication of
Judgments and Rule/Order.
D. Government to Business
1. E-Taxation - Corporate sector pays many taxes, duties and dues to the Government. Payment
of these taxes and duties will be made easier by E-Taxation. It can help reduce cost and time. It
can also help to crosscheck the frauds and deficiencies in payment, further bringing accuracy and
revenue to the Government.
2. E-Licencing - Companies have to acquire various licences from the Government, similarly the
companies have to acquire various registrations. ICT enablement of the licensing and registration
can reduce time and cost.
3. E-Tendering - E-Tendering will include the facilities of online tendering and procurement. It
will send online alerts as to new opportunities of business with the Government and also online
submission of tenders and online allotment of work. It will reduce time and cost involved in the
physical tendering system.
The basic categories of business models over internet include:

Brokerage

Advertising

Infomediary

Merchant

Manufacturer (Direct)

Affiliate

Community

Subscription

Utility
-:Brokerage Model:-

Brokers are market-makers: they bring buyers and sellers together and facilitate transactions.
Brokers play a frequent role in business-to-business (B2B), business-to-consumer (B2C), or
consumer-to-consumer (C2C) markets. Usually a broker charges a fee or commission for each
transaction it enables. The formula for fees can vary. Brokerage models include:
Marketplace Exchange: It offers a full range of services covering the transaction process, from
market assessment to negotiation and fulfillment. Exchanges operate independently or are
backed by an industry consortium.
[Orbitz, ChemConnect]
Buy/Sell Fulfillment -- takes customer orders to buy or sell a product or service, including terms
like price and delivery. [CarsDirect, Respond.com]
Demand Collection System -- the patented "name-your-price" model pioneered by
Priceline.com. Prospective buyer makes a final (binding) bid for a specified good or service, and
the broker arranges fulfillment. [Priceline.com]
Auction Broker -- conducts auctions for sellers (individuals or merchants). Broker charges the
seller a listing fee and commission scaled with the value of the transaction. Auctions vary widely
in terms of the offering and bidding rules. [eBay]
Transaction Broker -- provides a third-party payment mechanism for buyers and sellers to settle
a transaction. [PayPal, Escrow.com]
Distributor -- is a catalog operation that connects a large number of product manufacturers with
volume and retail buyers. Broker facilitates business transactions between franchised distributors
and their trading partners.
Search Agent -- a software agent or "robot" used to search-out the price and availability for a
good or service specified by the buyer, or to locate hard to find information.
Virtual Marketplace -- or virtual mall, a hosting service for online merchants that charges
setup, monthly listing, and/or transaction fees. May also provide automated transaction and
relationship marketing services.
Merchant Services at Amazon.com]

-:Advertising Model:The web advertising model is an extension of the traditional media broadcast model. The
broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and
services (like email, IM, blogs) mixed with advertising messages in the form of banner ads. The
banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may
be a content creator or a distributor of content created elsewhere. The advertising model works
best when the volume of viewer traffic is large or highly specialized.
Portal -- usually a search engine that may include varied content or services. A high volume of
user traffic makes advertising profitable and permits further diversification of site services. A
portal allows customization of the interface and content to the user. A niche portal cultivates a
well-defined user demographic. [Yahoo!]
Classifieds -- list items for sale or wanted for purchase. Listing fees are common, but there also
may be a membership fee. [Monster.com]
Contextual Advertising / Behavioral Marketing -- Advertising links or pop-ups as the user
surfs the web. Contextual advertisers can sell targeted advertising based on an individual user's
surfing activity.
Content-Targeted Advertising -- pioneered by Google, it extends the precision of search
advertising to the rest of the web. Google identifies the meaning of a web page and then
automatically delivers relevant ads when a user visits that page. [Google]

-:Infomediary Model:Data about consumers and their consumption habits are valuable, especially when that
information is carefully analyzed and used to target marketing campaigns. Independently
collected data about producers and their products are useful to consumers when considering a
purchase. Some firms function as infomediaries (information intermediaries) assisting buyers
and/or sellers understand a given market.
Advertising Networks -- feed banner ads to a network of member sites, thereby enabling
advertisers to deploy large marketing campaigns. Ad networks collect data about web users that
can be used to analyze marketing effectiveness. [DoubleClick]
Audience Measurement
[Nielsen//Netratings]

Services

--

online

audience

market

research

agencies.

Incentive Marketing -- customer loyalty program that provides incentives to customers such as
redeemable points or coupons for making purchases from associated retailers. Data collected
about users is sold for targeted advertising. [Coolsavings]
-:Merchant Model:Wholesalers and retailers of goods and services. Sales may be made based on list prices or
through auction.
Virtual Merchant --or e-tailer, is a retail merchant that operates solely over the web.
[Amazon.com]
Catalog Merchant -- mail-order business with a web-based catalog. Combines mail, telephone
and online ordering. [Lands' End]
Click and Mortar -- traditional brick-and-mortar retail establishment with web storefront.
[Barnes & Noble]
Bit Vendor -- a merchant that deals strictly in digital products and services and, in its purest
form, conducts both sales and distribution over the web. [Apple iTunes Music Store]
-:Manufacturer (Direct) Model:The manufacturer or "direct model", it is predicated on the power of the web to allow a
manufacturer (i.e., a company that creates a product or service) to reach buyers directly and
thereby compress the distribution channel. The manufacturer model can be based on efficiency,
improved customer service, and a better understanding of customer preferences. [Dell
Computer]
Purchase -- the sale of a product in which the right of ownership is transferred to the buyer.
Lease -- in exchange for a rental fee, the buyer receives the right to use the product under a
terms of use agreement. The product is returned to the seller upon expiration or default of the
lease agreement. One type of agreement may include a right of purchase upon expiration of the
lease.
License -- the sale of a product that involves only the transfer of usage rights to the buyer, in
accordance with a terms of use agreement. Ownership rights remain with the manufacturer
(e.g., with software licensing).
Brand Integrated Content -- in contrast to the sponsored-content approach (i.e., the advertising
model), brand-integrated content is created by the manufacturer itself for the sole basis of
product placement.
-:Affiliate Model:-

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the
affiliate model, provides purchase opportunities wherever people may be surfing. It does this by
offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites.
The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance
model -- if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate
model is inherently well-suited to the web, which explains its popularity. Variations include,
banner exchange, pay-per-click, and revenue sharing programs. [Barnes & Noble, Amazon.com]
Banner Exchange -- trades banner placement among a network of affiliated sites.
Pay-per-click -- site that pays affiliates for a user click-through.
Revenue Sharing -- offers a percent-of-sale commission based on a user click-through in which
the user subsequently purchases a product.
-:Community Model:The viability of the community model is based on user loyalty. Users have a high investment in
both time and emotion. Revenue can be based on the sale of ancillary products and services or
voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for
premium services. The Internet is inherently suited to community business models and today this
is one of the more fertile areas of development, as seen in rise of social networking.
Open Source -- software developed collaboratively by a global community of programmers who
share code openly. Instead of licensing code for a fee, open source relies on revenue generated
from related services like systems integration, product support, tutorials and user documentation.
[Red Hat]
Open Content -- openly accessible content developed collaboratively by a global community of
contributors who work voluntarily. [Wikipedia]
Public Broadcasting -- user-supported model used by not-for-profit radio and television
broadcasting extended to the web. A community of users support the site through voluntary
donations. [The Classical Station (WCPE.org)]
Social Networking Services -- sites that provide individuals with the ability to connect to other
individuals along a defined common interest (professional, hobby, romance). Social networking
services can provide opportunities for contextual advertising and subscriptions for premium
services. [Flickr, Friendster, Orkut]

-:Subscription Model:Users are charged a periodic -- daily, monthly or annual -- fee to subscribe to a service. It is not
uncommon for sites to combine free content with "premium" (i.e., subscriber- or member-only)

content. Subscription fees are incurred irrespective of actual usage rates. Subscription and
advertising models are frequently combined.
Content Services -- provide text, audio, or video content to users who subscribe for a fee to gain
access to the service. [Listen.com, Netflix]
Person-to-Person Networking Services -- are conduits for the distribution of user-submitted
information, such as individuals searching for former schoolmates. [Classmates]
Trust Services -- come in the form of membership associations that abide by an explicit code of
conduct, and in which members pay a subscription fee. [Truste]
Internet Services Providers -- offer network connectivity and related services on a monthly
subscription. [America Online]
-:Utility Model:The utility or "on-demand" model is based on metering usage, or a "pay as you go" approach.
Unlike subscriber services, metered services are based on actual usage rates. Traditionally,
metering has been used for essential services (e.g., electricity water, long-distance telephone
services). Internet service providers (ISPs) in some parts of the world operate as utilities,
charging customers for connection minutes, as opposed to the subscriber model common in the
U.S.
Metered Usage -- measures and bills users based on actual usage of a service.
Metered Subscriptions -- allows subscribers to purchase access to content in metered portions
(e.g., numbers of pages viewed). [Slashdot]
The Revenue Models over Internet
There are eight types of revenue model for e-business over internet.

1. Revenue from Subscription access to content

A range of documents can be accessed for a period of a month or typically a year.
For example, I subscribed to FT.com for access to the digital technology section for around 80
GBP per year a few years ago. Smart Insights Expert members have an annual subscription in
this form.
2. Revenue from Pay Per View access to document

Here payment occurs for single access to a document, video or music clip which can be
downloaded. It may or may not be protected with a password or Digital Rights Management.
Digital rights management (DRM) uses different technologies to protect the distribution of
digital services or content such as software, music, movies, or other digital data.
3. Revenue from CPM display advertising on site
CPM stands for "cost per thousand" where M denotes "Mille". The site owner such as FT.com
charges advertisers a rate card price according to the number of its ads shown to site visitors. Ads
may be served by the site owners own ad server or more commonly through a third-party ad
network service such as Google AdSense..
4. Revenue from CPC advertising on site (pay per click text ads)
CPC stands for "Cost Per Click". Advertisers are charged not simply for the number of times
their ads are displayed, but according to the number of times they are clicked. These are typically
text ads similar to sponsored links within a search engine but delivered over a network of thirdparty sites by on a search engine such as the Google Adsense Network.
Google Network Revenues through Ads generate around one third of Google's revenue. Google
is the innovator and offers options for different formats of ad units including text ads, display
ads, streamed videos and now even cost per action as part of its pay per action scheme.
5. Revenue from Sponsorship of site sections or content types (typically fixed fee for a
period)
A company can pay to advertise a site channel or section. For example, bank HSBC could
sponsors the Money section on a media site. This type of deal is often struck for a fixed amount
per year. It may also be part of a reciprocal arrangement, sometimes known as a "contra-deal"
where neither party pays.
6. Affiliate revenue (CPA, but could be CPC)
Affiliate revenue is commission based, for example I display Amazon books on my personal blog
site DaveChaffey.com and receive around 5% of the cover price as a fee from Amazon. Such an
arrangement is sometimes known as Cost Per Acquisition (CPA ).
Increasingly this approach is replacing CPM or CPC approaches where the advertiser has more
negotiating power. However, it depends on the power of the publisher who will often receive
more revenue overall for CPM deals.
7. Subscriber data access for e-mail marketing
The data a site owner has about its customers is also potentially valuable since it can said
different forms of e-mail to its customers if they have given their permission that they are happy

to receive e-mail either from the publisher or third parties. The site owner can charge for adverts
placed in its newsletter or can deliver a separate message on behalf of the advertiser (sometimes
known as list rental). A related approach is to conduct market research with the site customers.
8. Access to customers for online research
Considering all of these approaches to revenue generation together, the site owner will seek to
use the best combination of these techniques to maximize the revenue. To assess how effective
different pages or sites in their portfolio are at generating revenue, they will use two approaches.
The first is eCPM, or effective Cost Per Thousand.
This looks at the total they can charge (or cost to advertisers) for each page or site. Through
increasing the number of ad units on each page this value will increase. This is why you will see
some sites which are cluttered with ads. The other alternative to assess page or site revenue
generating effectiveness is Revenue per click (RPC).
This is particularly important for affiliate marketers who make money through commission when
their visitors click through to third party retail sites such as Amazon, and then purchase there.
Digital commerce (D-commerce) is a type of e-commerce used by an organization that delivers
and sells products online. D-commerce is used by companies that sell news, subscriptions,
documents or any form of electronic content, and the digital commerce company collects
payments, handles customer refunds and billing and manages other accounting functions for
online publisher clients.
D-commerce is considered a form of e-commerce because it deals with the exchange of
electronic goods.
The pay-as-you-go model is applied to digital commerce. Customers start an account with a
digital commerce company and can purchase text and content from publishers, but they only
have to relay their financial information once. This makes for a more secure online environment.
Publishers of books, news, magazines, white papers and academic research papers are big users
of digital commerce. Some digital commerce companies resell publishers' content. This form of
business can be very profitable for publishers and digital commerce companies alike and,
depending on the business contract, the d-commerce company may get a cut of the publishing
company's profit.
M-commerce (mobile commerce) is the buying and selling of goods and services through
wireless handheld devices such as cellular telephone and personal digital assistants (PDAs).
Known as next-generation e-commerce, m-commerce enables users to access the Internet
without needing to find a place to plug in.

Business & Personal Aims - what is your business's mission? What value are you
seeking to provide?

Business Objectives - what do you want to achieve?

Business Model - how will you achieve those objectives?

Tactical Deployment - what do you need to do to achieve those goals?

Marketing Requirements and Goals - how will you reach your target customers?

Content Gathering and Management - Who will do this and how?

Fulfilment and Logistics - Managing your inventory and getting it to customers

Financial Management and Payments - including security managment

Social Media - strategies to connect with your customers

Platform & Technology - what requirements does your business have to achieve the
goals above?

Mobile Commerce

Maintenance & Management