20.1 An introduction to e-commerce

20.1 An introduction to e-commerce

20.1.1 What is e-commerce and why?

A company that performs any online activity is generally considered an e-commerce company. Online activity means any business operation conducted over a network 24 hours a day and 7 days a week all year round. Under this definition, all kinds of business activities on the Web such as

• buying, selling, and trading

• service provision

• banking

• entertainment

are characterized as e-commerce or e-business. Although e-commerce is a relatively new term even from our computer dictionary, it was widely used by many big corporations decades ago. In particular, the banking industry used Electronic Funds Transfer (EFT) to transfer money between accounts and/or banks long before the creation of the Internet. Also, many big companies and government organizations use the so-called Electronic Data Interchange (EDI) sharing information among divisions and/or departments. Business over a small network environment has become very active only since the easy availability of databases and computers.

Before the advent of the Internet, e-commerce or any online business was expensive. Usually some dedicated underground wiring or channels using microwave technologies were involved to provide a direct link among the dedicated organizations. The physical link and data transmission format were usually proprietary and therefore established an essential secure environment for the business activity. These kinds of business still exist and are active today. In fact, many people consider this kind of e-commerce as business over a secure channel or network.

The Internet opened the flood gates for affordable networking. Twenty-four hours a day and 7 days a week, connecting people all over the globe is no longer a problem. All of a sudden, we have a global economy reaching every corner of the world. For example, a luxury home or house auction in South Africa can instantly attract hundreds of buyers from Europe and North America. All buying, selling, and other transactions can be completed within minutes. It is believed that total Internet money transactions will be more than a trillion dollas by the time this book is published. This is the power of bringing people and business together.

On the other hand, with the same network type and data transmission protocol, e-commerce on the Internet operates in an insecure environment. In general, from a security point of view, the Internet is a place where anybody can be everybody. Again, all of a sudden, online fraud occurs everywhere.

For example, if someone has ordered some goods from your Web site on the Internet, do you trust his or her identity? Do you trust his or her credit card number? Even if you can get the money from the credit card company, how do you know you are not charging someone else illegally? In fact, online security is a big issue for us all, not just businesses.

This chapter discusses e-commerce and related security concerns. It is not intended to cover all topics. From a practical point of view, the first half of this chapter is dedicated to how e-commerce models are characterized and implemented depending on their business nature. The core technologies for successful implementations are also discussed. As an example, an e-commerce activity known as online bargain hunting is demonstrated with database techniques.

In the second half of the chapter, online security is our main concern. In order to provide a secure business transaction in an insecure network or environment, a number of technologies are introduced. In particular the Public-Key Infrastructure (PKI) with digital keys, certificates, the Certification Authority (CA), and the Secure Sockets Layer (SSL) are introduced in some detail. A quick tour of the SSL software package OpenSSL is also presented. At the end, we will use all you have learned to build a secure Web site to provide secure communications to Web users.

For a successful implementation of e-commerce, the nature of the business is essential. Different businesses may have different structures, requirements, and hence business models. A general discussion of some popular e-commerce models and requirements is presented in the next section.

20.1.2 Some common e-commerce models

Since no one knows exactly how many different types of business there are on the Internet, it is impossible to provide a full account of all e-commerce. Also, only the owner of the business fully understands the operations and nature of his or her business. Even a full account of one e-commerce model may not be easy. For some small or medium-sized businesses based on some popular implementations on the Web, we have the following business models for e-commerce that target individuals:

• Online shopping-cart model

• Online auction model

• Online personal services model

• Online finance model

• Online entertainment model

If your business belongs to one of these categories, chances are that you may already have set up or very much want to set up your business on the Web.

For individual customers, the models above may cover a substantial number of services a customer may want or need on the Web. For example, if you want to buy something, you may want to go to a site with a shopping cart. An auction site is the place if you want to hunt for a bargain. Whether accepting payment or not, any business providing services to individuals on the Internet belongs to the personal services model. One well-known business of this type is your ISP. It provides Internet access and charges for it. Other popular service provider examples are:

• Personal dating services

• Recruitment services

• Travel services

• Products and services hunting

Almost all banking and online financial activities belong to the finance model. Apart from Internet banks, most ordinary banks offer online banking facilities to their customers as well. Many companies and financial institutes are also providing online loans to customers. Watching a movie, listening to online music, playing a game, or other enjoyable activities on the Internet are all characterized as online entertainment.

Each model targets different kinds of clients and may require different technologies to support it. Almost all of them require database knowledge and techniques. This is because they need to handle customers on a reasonable (if not large) scale if they want their businesses to be successful. For example, almost all service providers (ISPs or entertainment) on the Web require good accounting practices so that charges can be made. Unless your business is very small and customer records and concerns are not essential, chances are that you need database applications.

We have already implemented an elementary online shopping cart in Chapter 7. This shopping cart will be visited again by adding database management and security in this chapter. An online bargain hunting shop is implemented in section 20.3 with a database. Using database management and an online product catalog, updates or changes can be made easily to target bargain hunters. Although still quite simple when compared to commercial standards, it is a first step toward practical e-commerce.

If you want to charge your customer for online services or shopping, a mechanism to get payment information is vital. Usually this can be implemented as a login page or checkout facility using a password and a payment form.