isps for e-commerce nizar r. mabroukeh, m.sc., c.s. [email protected] e-commerce short course...

ISPs for E-Commerce

Nizar R. Mabroukeh, M.Sc., C.S.

[email protected]

http://www.geocities.com/mabroukeh

E-Commerce Short Course

19th April, 2000

Nizar Mabroukeh, 2000 2

Topics to be Covered Planning & Requirements

– Market and business study– Requirements for an ISP– Tuning your ISP setup to E-Commerce

Starting the business as an ISP– Advertise– Sell (shopping, checkout, authorization, charge back)– Start your E-Commerce Business– Promote

Surviving the competition Future Developments

Planning and Requirements


Planning

Business Requirements

Technical Requirements

Selection / procurement


Know The Internet Market

The Internet is: Open 24 / 7 Connects people “not computers” Communicate with anybody, anytime,

anywhere Everything is a “click away”

You should be selling on The Internet


The Internet a Threat or an Opportunity ?

“Internet represents a strategic inflection point for business - grab it or lose it”

Intel Co-Founder Andy Grove


The Connected Society


CEO & Executive Quotes

The Internet revolution will have a larger impact than the industrial revolution

Unless you get INTO the Internet you will be replaced

Add value and you will survive To be successful locally you need to be available

globally


Internet Users


Internet Penetration


0

50,000

100,000

150,000

200,000

250,000

UA

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Leb

anon

Egy

pt

KS

A

Kuw

ait

Jord

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Om

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Yem

en

Users April 99

Net Users in Middle East


Middle East Net Demographics

1 million users by 2000 27 % high school certificate 58 % University Degree 14 % Master & PhD 21 - 35 yrs old largest group - 70 % 72 % Connect from Home

IAW Magazine Aug 5, 1999


E-Commerce Revenues


Revenue Estimates


E-Commerce in Europe


US vs World


What about Middle EastE-Commerce ?

Barely exists

Purchased $ 95 million during April 98 - April 99 (IAW magazine)

9 % made purchase compared to 4 % in 97-98


Middle East E-Commerce ?

33 % one purchase 18 % regular purchases What did they buy ?

Software … Books … CD’s … Clothing

Traveling tickets … gifts … flowers ….


However

82 % of purchases from int’l vendors

They are now your competitors


Business ModelInd ep end e nt

S o ftw a reV e nd e r

B u s in e s sC o m m u n ity

N ewP ro d u c ts &

S e rv ic e s fo r theB u s ine s s C o m m u nity

N ewP ro d u c ts &

S e rv ic e s fo r theB u s ine s s C o m m u nity

T ru s te dInte rne t

M a rk e tP la c e

La rgeC o m p a nie s

P ro fe s s io na ls

M e d iu mC o m p a nie s

S m a llC o m p a nie s


Technical RequirementsInfrastructure for regular ISP

A connection to a larger Internet Provider.

Hardware and Software to provide Internet Services.


Connecting To A Larger ISP

ISPs are divided into classes (A, B and C), according to how many sub-networks they can support with unique IP addresses.

Example:

AT&T KACST Commercial ISPs Internet CaféSatellite Leased LineSatellite Leased Line Leased Line Leased Line

or Submarine or Frame Relayor Submarine or Frame Relay Fiber OpticFiber Optic


Connecting To A Larger ISP

Hardware depends on type of connection. You are connecting your LAN to the larger

provider. Generally, you will need:

– An appropriate Router.– A Gateway, if different types of networks.– A Web server, with Secure Socket Layer (SSL).– A Proxy server to cache your link.– A Firewall to protect your LAN from intruders.– May need a leased-line modem or digital modem.


HW & SW to Provide Internet

You will providing for 3 types of customers:– Your local users on your LAN (directly

connected to the servers)– Dial-up users (using Modem)– Corporate accounts (Leased-lines, VPNs,

Frame-Relay…etc.), like Internet Cafès and Intranet solutions to companies.


HW & SW to Provide Internet

For the 3 different types you will need:– A machine for each of the following

applications:• Web Server: Ex. Microsoft Internet Information

Server (MIIS), Apache server (for Linux)…

• Proxy Server: Ex. Netscape Proxy Server

• E-Mail Server: Ex. Microsoft Exchange.

• Firewall: to protect your LAN. Ex.: SQUID, ipchains…


Dial-up Customers HW

For dial-up customers you will need a pool of modems (a modem for every phone line you have).

A customer dials your service using a pilot number which will connect him to the first available line from the pool.

Thus you need a Port Master and a RAS (Remote Access Server).

User Authentication follows the OS on the RAS.


Corporate Accounts HW

Leased-line modem, Frame-Relay switches, VPN routers…etc. depending on connection type.

Most importantly you will need to have a pool of vacant and static IP addresses to provide.


Your Team

Technical Team Customer Support Team Sales Team Marketing and Promotion Team Billing and Accounting Team (Customer

Care) Content and Quality of Service Team


Technical Team Configures, manages and administers your

connection as well as troubleshooting problems on the LAN and the Internet setup.

Supports and provides connection to corporate users.

Responsible for providing a continuous and smooth link with appropriate bandwidth to your ISP (Tune the connection).


Customer Support Team On-site installation and setup of service for

dial-up users. Help-Desk service and troubleshooting. Provides After-Sales service for dial-up

users and small corporate accounts (like Internet Cafés).

Takes customer notes on service. Works side-by-side with Technical team.


Billing and Accounting Team

Must be online with customer database

Always on contact and direct arrangement with Marketing team.

Aware of their limits that might depend on technical matters of the link.Ex.: If server cannot keep track of off-peak hours, we cannot sell off-peak accounts.


Content and Quality of Service Team

They provide content to the users. Design your webpage and keep it up to date. Keep users attracted and entertained:

– Hold newgroups discussions.– Link people together: Chatting Services, small

tutorials, free personal websites for users…– Link your users to the government or people who

interest them.– Provide E-Commerce.


Sales Team First Contact with customer thus first on-ground

impression about company. Must be knowledgeable about The Internet in

general and about the company’s capabilities. Promise only what the company can deliver and

deliver what was promised. Make friends with customers and keep in contact

after closing the deal. You Better have a sub-team for corporate

accounts.


Marketing and Promotion Team

Advertise Sell Market Promote. Marketing is important for continuity of the

company as well as in competition. Hold promotional campaigns taking chances of

special occasions. Must have a clear goal (part of the general mission

of the company) on each campaign. Should be flexible and fluctuant with Competition

(able to compete).


Marketing vs. Selling in Web Sites

In marketing sites there is often a reluctance to give complete information.

With selling, the objective is to close the sale electronically.


Sections of Selling Sites Sites that sell generally have 3 sections:

– Marketing and added value information.– The Catalogue: product specs and prices.– Order processing: Advanced systems may

have a method for the customer to check progress and delivery of the order.

Such sites may be stand-alone, or may form part of a larger site called a “Shopping Mall”


Tuning to E-Commerce

Online Catalogue

Shopping Cart

Secure Servers and SSL

Payment Gateways


Mall Services

Business Owner

Mall BackOfficeMall front

Electronic Mall Administration

Internet

Secure eCommerce Services & Hosting

Browse Mall

Services

Collect Services

(shopping basket)

Order$$$

Service ManagerMall

ManagerBusiness OwnersManager

Mall FrontManager

Reports &

Statistics

Advertisers

Extended Services

Financial InstitutionExtended

Services

Secure accessSecure access

Secure access (DID)

Classified Ads

Customer

Mall OwnerSecure access (DID)

Remote Sales


• Mall infrastructure:• Register/transfer/point Mall DNS• Database design and programming• Automated provisioning and upgrading.• Store ‘test drive’• Central Category directory• Global shopping• Global search capability

• Mall front:• Advanced shopping cart• Static store policy pages• Multiple payment methods

Example on Mall Deliverables



• Mall Backoffice: Service manager

Modify, add and delete services Modify, add and delete templates Modify, add and delete store

Mall manager Fulfill orders Generate invoices E-mail confirmation notices automatically Track open orders Track and manage accounts receivable Generate past due notices Search orders Search unordered baskets Payment processing


Customer (store owner) manager Modify, add or delete customer information Manage customer passwords Track account balances Assign service levels Set credit limits Set credit length Search for customers

Mall front manager Modify, add and delete Mall front text Modify, add and delete Mall front advertisements Modify, add and delete Mall demo



Graphical Reports and Statistics Mall front processes Report on traffic and order analysis by day, week, or year Report on store sales statistics by item number, rank,

time period

Optional VeriSign Server Set-up (to eliminate spoofing) Automated Billing System



Store Services

Internet

PurchaseManager

Business Owner

Electronic Store

Customer

Browse Catalog

Store Manage

r

Collect products (shopping basket)

Order$$$

CustomerManager

Inventory Manager

Supplier

Shipper (UPS)

Extended Services

Secure eCommerce Services & Hosting

Product Manage

r

Catalog Manager

Extended Services

Reports & Statistics

BackOfficeStorefront

Financial Institution

Secure access (DID)


• Each store is “rented” from a “Community” or “Mall” by a business

• Each business selects the services that best meet the online requirements of that business

• Each store may choose among different services like:• Home page for advertisement of a business or classified

with contact information• About page• Order information page• How to shop page• Catalog list pages• Store ‘specials’ page• Reporting and statistics• Advanced reporting and statistics


Central directory search Advanced shopping basket Image uploading Shipping matrix Tax matrix Automated order notification Global ‘specials’ listing Generic invoices Real time payment processing capability Drop ship supplier order notification Customer profiling Storefront management facilities Backoffice administration facilities

You Have All The Gadgets

Fully Equipped and ready….

Let’s Hit The Market


Start Your Business

After you have decided on your company mission, you can advertise on the grounds of this mission.

Sell: – In-door sales: For walk-in customers

– Out-door sales: Target a special class or group of people or industry sector, collect contacts, call them on the phone and visit them.

Market and Promote (again, have clear goals and targets)


Important Points for Sales

Internet Customers are usually interested in:– Price vs. quality of service.

– Customer Support (after-sales service).

– On-call Tech. Service.

– Trial accounts.

– Your Bandwidth and your ISP.

If I am a customer, I would ask you to convince me to buy from you and not other companies. This is when your “content” comes into action.


Building E-Commerce Business

Negotiate links with other websites. Traditional Marketing (include it with your

marketing team). Advertising on search engines and other

high traffic sites. Associate programs where sites that refer

visitors get a commission on sales.


Online Catalogue

Navigation

The shopping cart

Check-out


Navigation

The visitor should be able to get to the product they need with very few clicks.

The Information must be comprehensive once the customer has located the product of interest.

Provide pictures and diagrams to help the customer understand what is being offered.


Shopping Cart

When the catalogue is small (less than 20 items) a simple order form will do.

At any point the customer should be able to review the cart, the cost and so on.

This makes it easy for the customer to browse the site selecting products as they go.


Check out

The customer should be presented with a list of what he purchased and their price.

The customer can then add shipping instructions.

At this stage the site should switch to Secure mode normally using SSL. This means that all communications with the server is encrypted.


Different Type of Payments Offline

– Bank Transfer– Cheque– Escrow– Telephone Order– Fax

Online– Micro-payments: E-Cash, CyberCash…– E-Cheques– Credit Card


What is involved in credit card processing?

– Authorization.

– Capture.

– Charge back.


Authorization

Manual: Download sales details from Web Server and request authorization in normal method.

Automatic: Server software communicates directly with credit card processing company computer and arrange authorization online. (needs secure connection)


Capture

Debiting the credit card

Can happen at the same time as authorization if the merchant guarantees delivery within a certain fixed time.

Otherwise, capture should take place when the goods are shipped.


Charge Back

This is when the customer is dissatisfied and arranges for the transaction to be cancelled.

Note that the fact that a payment has been authorized by the bank does not provide any protection against charge back.


Escrow

An escrow service is an intermediary between buyer and seller, collecting payment from the buyer and holding it until the buyer confirms delivery of the purchased item.

www.iescrow.com www.tradesafe.com


Ability to accept credit card payment

1- Set up Merchant Account

2- Order Form on Web Site (HTML , CGI)

3- Form encrypted using Secure Socket Layer (SSL)

4- Digital Certificate

5- Payment processing software


1- Merchant Account Accounts that accept and hold credit card

transaction monies

Merchant service provider (MSPs) or Independent service Organisations (ISOs)

Process to set up a Web-enabled credit card merchant account


2- Order Form

Set up form using HTML and CGI to– Pass credit card to the payment processing

software, which sends transaction to bank

– Send an email to whoever fulfills orders with order information and customer mailing address

– Create confirmation page to customer and tracking information


On-Line Transaction Cost

Discount Rate (credit Card Company)

Per Transaction Charge

Monthly Statement Fee

Monthly Gateway Fee


3- Secure Server

Only page with the actual order form needs to be placed on secure server

Using a secure Web protocol such as SSL has two main goals – Credit Card Date Encryption– Certify message is coming from where it claims

to be by means of digital certificate– https:// instead of http://


Secure Servers


Security Issues

SSL developed by Netscape encrypts messages passed from customer to web server

Only 40-bit encryption is available world-wide. It is weak, but it is enough to protect against automated message scanning.

Information passed to the credit card processor and the merchant must also be protected.


Security Issues

Information stored on the web server, and before being passed to the merchant is at the risk of someone breaching security on the server and examining the files

Solution: Encrypt the info. stored on the server or, use a firewall, which limits access to the

server to specific types, such as “web traffic only”


4-Digital Certificate

Obtained from digital certificate authority

Submit Certificate Signing Request

Surviving The Competition


Ensure Continuity Try as much as possible to keep your

configuration tuned for best performance.– If you need more bandwidth get more.– If you need more phone lines get more.– You might need to install new modems to keep up with

technology that you’re customers are using, do it. Provide Content and Entertainment as mentioned

before. Make a survey about your service every now and

then by calling customers and asking them (keep up quality of service).


Ensure Continuity

Get rid of nosey customers, naggers, hackers, and hot shots ! HOW?

Make friends with your loyal customers, arrange gatherings.

You can also promote and market for your new services in these gatherings.


Future Development

The Internet is growing dramatically everyday. Thus the emergent need for development to keep up with technology.

It would be good if you had future plans in mind since day one of establishing your company.

Development in hardware and in content.


Development Team

Establish a team for Research and Development (R&D).

Give them resources they need: Money, testing devices, library, research tools…

Usually R&D is the most money and time-consuming department in any company.


R&D Responsibilities

Should follow up on new technologies and services.

Should be able to carry out experimentation and testing on new technologies and provide management with consultation and support in futuristic plans.

Should be able to come out with new ideas and plans to enhance the performance of employees, the network and the system as a whole.


Summary We have seen the basic steps one needs to start his

business as an ISP with E-Commerce added service. To be a successful ISP keep in mind the following

points:– Good planning (the internet provides a lot of services and

there is a lot of technology involved, you might get lost).– Robust connection to your ISP and enough resources.– Quality of service.– A lot of customer care.

The competition is wild !


Conclusion

E-Commerce is a new form of marketing with a predicted explosive growth over the next few years.

The technology underlying the market is quite complex, and will become more so as new payment methods and web technologies come on stream. The marketing approach is also new and different.

The key to success is to find innovative ways to use that technology to attract customers and build business.

Thank You

For more information

Nizar MabroukehKing Fahd University of

Petroleum and Minerals

[email protected]

isps for e-commerce nizar r. mabroukeh, m.sc., c.s. [email protected] e-commerce short course...

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