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E-Commerce and Magazines: Programs and Ideas that Work presented by: David Strom Port Washington NY USA [email protected], +1 (516) 944-3407 What This Course is Not About Mathematics of Public Key Cryptography

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e commerce and magazines programs and ideas that work

E-Commerce and Magazines: Programs and Ideas that Work

presented by:

David Strom

Port Washington NY USA

[email protected], +1 (516) 944-3407

Strom MPA NY 12/00

what this course is not about
What This Course is Not About
  • Mathematics of Public Key Cryptography
  • In-depth discussion of Visa® and MasterCard® operating regulations for eCommerce
  • Legal advice for eCommerce issues related to operating a web storefront
  • Writing your own storefront systems from scratch

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why this tutorial
Why This Tutorial
  • A successful magazine must incorporate and coordinate print and web editions
  • Any web site will eventually get involved in selling something online
  • Good storefront design and tactics will increase sales
  • Tough to evaluate various payment systems and products
  • Tough to stay on top of current eCommerce technologies and still run your publication!

Strom MPA NY 12/00

for future reference
For Future Reference
  • Copy of this presentation (Powerpoint), links to sites and resources: www.strom.com/pubwork/ecommerce

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course topics
Course Topics
  • Good and bad web storefront design, defining successful and secure eCommerce ventures
  • What are the things a magazine person should know about eCommerce and web publishing?
  • Overview of working Internet payment systems
  • Choosing service providers or suites
  • Installing and operating your own magazine web site

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course approach
Course Approach
  • Overview of major payment systems and storefront products
  • Give real-life examples and online demos
  • Help relate information to your own situation
  • Provide insight into different approaches, technologies
  • Discuss pros and cons of each
  • Multiple Q&A sessions

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recommended books
Recommended Books
  • Magdalena Yesil's Creating the Virtual Store : Taking Your Web Site from Browsing to Buying (1997)
  • Dan and Emma Minoli's Web Commerce Technology Handbook (1998)
  • Phil Greenspun's Database Backed Web Sites

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thanks
Thanks
  • Marshall Rose
  • Stephanie Denny
  • … for their help in preparing this presentation

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my background
My Background
  • I’ve been involved in the Internet for some time
  • Have used most of the products we demonstrate
  • Have consulted to a few of the vendors, but still have strong opinions
  • Founding editor-in-chief of Network Computing magazine
  • Built several hi-tech publishing web sites

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my beliefs
My Beliefs
  • My perspective is from the consumer’s viewpoint, as well as from the publisher’s
  • I believe that coordinating print and web is a natural evolutionary step for magazines
  • Most eCommerce has had accidental success to date
  • The web is a very different animal from print!

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topic 1 introduction to internet marketing
Topic 1: Introduction to Internet Marketing
  • Advantages and disadvantages
  • Speed of adoption is immense!
  • Different kinds of approaches

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internet marketing
Internet Marketing
  • Look good to the public,
    • be on the cutting edge
  • Supplement traditional channels,
    • be real-time
  • Focus on global niches,
    • be high-content
  • Avoid the trailing edge,
    • the competition is already doing it

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advantages
Advantages
  • Direct, one-to-one marketing opportunity
  • Allows you to learn useful information and build subscriber relationships
  • Relatively inexpensive medium compared to advertising, direct mail or telemarketing
  • Capacity to be a major distribution channel
  • Results are measurable, sometimes

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internet is cheapest cost per contact
Internet is Cheapest Cost Per Contact
  • Internet: $.98
  • Direct mail: $1.68
  • Telemarketing: $31.16
  • Tradeshows: $162.00

Penton Research, www.penton.com, 11/97

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obstacles to wide deployment
Obstacles to Wide Deployment
  • Easy forms of payment
  • Trust in the system
  • Perceived benefits and profits
  • Technology and infrastructure still primitive

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what can go wrong on the internet
What can go wrong on the Internet
  • Store is offline
  • Overall lax security with ConEd bills
  • Visitors steal your subscriber lists and other privacy glitches
  • Credit card fraud
  • Shopping cart hacks
  • Stealing your domain name

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general security practices
General security practices
  • Make sure you protect your web site!
  • See “Ten ways” article from Winn Schwartau
  • Limit access, isolate servers, lock down scripts, so forth

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accidental downloads
Accidental downloads
  • Ikea hack
  • Others such as Nissan, DeBeers, Butterball
  • Even Amazon’s affiliate email addresses were briefly exposed!

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other notable privacy mistakes
Other notable privacy mistakes
  • Real Networks collecting user song playlists
  • Amazon.com displaying book buying habits of corporations
  • Infobeat sending email addresses to their advertisers
  • This can happen to you!

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what went wrong
What Went Wrong
  • All collected key information without their customer’s knowledge or approval
  • All were leading edge companies that should have known better
  • All quickly corrected their mistakes and informed the public

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some lessons learned
Some Lessons Learned
  • Consumer control of privacy is essential
    • most folks simply want the choice of opting out
  • The granularity of control must be fine, e.g.,
    • over number and frequency;
    • over categories of interests; and/or
    • over (indirect) dissemination to third-parties
  • If you promise privacy protection, make sure you actually deliver it throughout your site!

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preventing credit card fraud
Preventing Credit Card Fraud
  • Don't accept orders unless full address and phone number present
  • Be wary of different "bill to" and "ship to" addresses
  • Be careful with orders from free email services
  • Be wary of orders that are larger than typical amount
  • Pay extra attention to international orders
  • When in doubt, call the customer to confirm the order
  • Use software or services to fight fraud
  • When you’ve found fraud, contact your merchant bank immediately

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be aware of shopping cart hijacking
Be Aware of Shopping Cart Hijacking
  • Example

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stealing your domain name
Stealing your domain name
  • Typo.net and AmericaOffline.com
  • Both sell ad space for things like:
    • amazom.com
    • www.eartlink.net
  • acivilaction.com vs civil-action.com
  • whitehouse.gov vs. whitehouse.com

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dealing with rogue domains
Dealing With Rogue Domains
  • bestbuys.com vs bestbuy.com
  • United Airlines vs untied.com
  • Use same colors, try to go after same audience
  • Lawyers are standing by to take your call…
  • Use various tools to track down offenders:
    • companysleuth.com
    • dejanews.com
    • whois.userland.com
    • bannerstake.com

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and the new domain suffixes
And The New Domain Suffixes
  • Seven new ones approved to begin this spring:
    • .biz, .pro, .coop, .museum, .aero, .info, .name
  • Others are certainly on their way
  • New registrars and new procedures to make things more complex

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topic 2 what becomes success
Topic 2: What Becomes Success?
  • Overview of eCommerce market
  • Review physical storefront success factors
  • Propose some definitions
  • Define success for the web
  • Draw up eCommerce principles

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let s keep our perspective
Let’s Keep Our Perspective
  • Size of US movie industry -- $7B!
  • Size of adult video rentals - $6B!
  • Total US music sales -- $6B!

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ticketmaster
Ticketmaster
  • Started 11/96
  • US$20 million/month via the web in sales
  • Ten percent of total sales via the web
  • Generating lots of new single ticket buyers, people who don’t like to order via the phone

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then there is disney com
Then there is Disney.com
  • Web site Daily Blast signing up 15k members/month
  • Sales via web are equal to 3x-5x of physical Disney store!

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sad state of today s ecommerce marketplace
Sad State of Today’s eCommerce Marketplace
  • Poor quality tools
  • Hard-to-find stores
  • Limited payment methods
  • Credit card snooping perceptions
  • Older browser versions can’t view latest sites

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case in point buying a bike rack
Case in Point: Buying a Bike Rack
  • Item not carried: outdated catalog
  • Telesales not familiar with web
  • No cross-sell or substitutions online
  • Needed three phone calls to complete purchase

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compare moviefone vs bam
Compare Moviefone vs. BAM
  • BAM web site doesn’t carry event information in real time
  • BAM orders are fulfilled weeks later, and no indication on web site of sold-out events
  • MF: Real time ordering, easy navigation via web and phone
  • MF: no surcharge on tix, no waiting in long ticket lines!

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let s learn from the real world
Let’s Learn From the “Real World”
  • Compare what works for physical stores
  • Try to extend to the web

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critical success factors for physical storefronts
Critical Success Factors for Physical Storefronts
  • Location
  • Branding
  • Good service
  • Good product selection
  • Proper pricing and margins
  • Traffic

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first problem
First Problem:
  • None of these translate on the ‘net!

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now try to agree on definitions for web stores
Now Try to Agree on Definitions for Web Stores
  • What determines a good location?
    • Position on a search page
    • Nearness to popular destination
    • Ad on a popular server
  • What determines branding?
    • Memorable domain name
    • Popular search category destination

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an example of bad location montana meats
An Example of bad location: Montana Meats
  • Link
  • Can’t they afford their own domain name?
  • “/~” is BAD NEWS!

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determining traffic
Determining Traffic
  • Hard to do -- is it hits, page views, registered users?
  • [HITS = How Idiots Track Success]
  • Hard to measure -- do you count gifs? Use log files?
  • No general agreement on any metrics!

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traditional advertising doesn t apply anymore
Traditional Advertising Doesn’t Apply Anymore
  • Can’t measure anything
  • Every site has its own banner sizes
  • The Web is not TV

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one working definition of success
One Working Definition of Success:
  • SURVIVAL!
  • If a site is still running after 12 months, and getting more traffic, it is a success.

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does a site actually have to sell something
Does a site actually have to sell something?
  • Many actual eCommerce sites don’t do the complete transaction
  • Require faxes or telephone calls!
  • Some merely have catalogs

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principles of good ecommerce
Principles of Good eCommerce
  • Easy to find merchandize
  • Good service
  • Individual customization is key
  • Simple navigation
  • Make payments easy
  • Make buyer feel transaction is secure
  • Communicate effectively and frequently

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danish eshopper survey 2 99
Danish eShopper Survey (2/99)
  • Why people shop on the web
  • Convenience and ease of use are the main reasons people buy
  • After you have deliberately looked for information about a product or service, how often do you buy it? Almost always, only 2%!
  • Only 5% of their visits to eCommerce sites are to buy!

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first principle of ecommerce
First Principle of eCommerce:
  • Make it easy to buy!

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amazon com
Amazon.com
  • Services frequent readers with a variety of programs
    • Editorial comments
    • If you liked this book, you’ll like...
    • Notification of new books by author, topic
    • Simplified “1-Click” ordering
  • Uses simple pages and email
  • Associates program for commission kickbacks
  • Gift certificates via email
  • And ... lots of books, toys, electronics, etc. to choose from

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use affiliates programs wisely
Use Affiliates Programs Wisely
  • They bring traffic to your doorstep
  • Nice revenue sharing model
  • Lots of them to choose from to model your own on:
    • AssociatePrograms.com
    • Refer-it.com

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a different take on affiliates clickrewards
A Different Take on Affiliates: ClickRewards
  • Pays you in airline miles for your patronage
  • Accrue miles on many sites
  • You redeem benefits on their site

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amazon vs borders
Amazon vs Borders
  • Borders link
  • Cookies vs logins
  • Who makes it easier to buy books?

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update your directories
Update your directories!
  • This one is two plus years old

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another side of service repeat business
Another Side of Service: Repeat Business
  • Make the shopper feel part of the family
  • Shopping as entertainment (online auctions)
  • “Do what I mean” search function (Amazon again looks at common misspellings made in the previous 24 hours for book searches)
  • Periodic targeted email updates and reminders

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second principle
Second principle:
  • Deliver solid service!

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mymp3 com
MyMP3.com
  • Customize your music tastes

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third principle
Third principle:
  • Individual customization is key

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consumer reports
Consumer Reports
  • Finding out what you get when you buy their new car pricing service
  • Just a few clicks from the home page!

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fourth principle
Fourth principle:
  • Make navigation simple

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how not to design a payment screen
How NOT to Design a Payment Screen
  • Too confusing
  • Still have to enter credit card numbers, just in an unfamiliar way

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common mistakes with payments
Common mistakes with payments
  • Provide too few or too many order confirmation pages
  • Confusing methods and misplaced buttons on order page
  • Make it hard for customers to buy things
  • Don’t make your customers read error screens

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here is a good example hearst s publications
Here is a good example: Hearst’s publications
  • Let’s use Cosmo
  • Notice how the discount is highlighted
  • Simple navigation and online ordering

Strom MPA NY 12/00

fifth principle
Fifth principle:
  • Make payments easy!

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making the buyer feel secure the six components of ecommerce trust
Making the Buyer Feel Secure: the Six Components of eCommerce Trust
  • Seals of approval, logos of credit card companies
  • Identifiable brand name
  • Ease of navigation
  • Order fulfillment easy to understand
  • Clear purpose and site presentation
  • Fast and simple technology

(Cheskin Research)

Strom MPA NY 12/00

perceptions of credit card snooping still exist
Perceptions of Credit Card Snooping Still Exist
  • But are largely popularized by media, not consumers!
  • Internet fraud stories are still common from both buyer and seller sides
  • Just starting to see authentication services (such as Cybersource) ramp up
  • Trust will take a long time

Strom MPA NY 12/00

sixth principle
Sixth principle:
  • Make the buyer feel secure!

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how should you use email
How Should You Use Email?
  • When to communicate?
  • What to communicate?
  • When is email helpful and when is it spam and annoying?

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email uses in ecommerce
Email Uses in eCommerce
  • Sending order acknowledgement
  • Sending shipping notification
  • Purchase receipt
  • Telling customer when item is in stock or on sale
  • Responding to specific queries about service issues

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email receipts should contain the following items
Email Receipts Should Contain the Following Items
  • Total price, including shipping
  • Your address and the store’s
  • Items ordered
  • Whether they are in stock or not
  • When they shipped
  • Bonus: order number and URL to view this info online, link to UPS/Fedex tracking system

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when to send a customer email
When to Send a Customer Email?
  • To acknowledge the order was placed
  • To say items shipped (or not ) and money changes hands

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seventh principle
Seventh principle:
  • Communicate effectively and frequently!

Strom MPA NY 12/00

communicate effectively and frequently
Communicate Effectively and Frequently
  • Get your response systems in place
  • Tie in your storefront with any existing customer relationship management tools and call centers
  • Send replies within an hour of initial order, within 24 hours of any query

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topic 3 ecommerce for magazine publishers and editors
Topic 3: eCommerce for Magazine Publishers and Editors
  • Using email effectively
  • Coordinating web and print content
  • Charging for content
  • Handling subscriptions online
  • Advertising choices
  • Marketing partnerships
  • Staffing considerations

Strom MPA NY 12/00

using email effectively
Using email effectively
  • Newsletters as subscription builders
  • Sending out notification of new issues or specials

Strom MPA NY 12/00

bad newsletter example network world
Bad newsletter example: Network World
  • Too many, too confusing
  • Opt-out message confusing as well: Should read Please check here if you WANT to receive these messages

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good newsletter example tidbits
Good newsletter example: TidBITS
  • Easily searchable and complete archives
  • Coordinated email/web publishing schedule
  • Sponsors clearly delineated in both email and web pubs
  • Multiple languages

Strom MPA NY 12/00

coordinating web and print content
Coordinating web and print content
  • Mistakes I’ve made in the past
  • The web is not a book
  • Contests and interactive gee-gaws
  • Hire the right ME
  • Issues to consider

Strom MPA NY 12/00

mistakes on ics www intranet build com
Mistakes on ICS (www.intranet-build.com)
  • Had different graphic artists for print and web, ended up doing graphics twice
  • Had web team inexperienced in publishing industry
  • Lack of overall coordination, no one really in charge
  • Print deadlines drove web content, rather than the other way around

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ics design flaws
ICS design flaws
  • Print was 4 serial editions, web static
  • Articles mainly reference works and too long for the web
  • Lame email newsletter to drive repeat traffic
  • Too many ad spots cluttered the page

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some wit and wisdom from norm
Some wit and wisdom from Norm
  • “We still haven't found a way to put a magazine on the Web.” Norman Pearlstine, editor in chief, Time magazine.
  • CNNSI has taken off, yet “I'm not convinced that charging subscriptions wouldn't result in the site falling apart.”

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the web is not a book
The web is not a book
  • People don’t like to read from a screen
  • People are more impatient over 28.8 modems
  • Navigating online is still harder than turning pages

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don t get too attracted to technology
Don’t get too attracted to technology
  • Frames suck
  • The fewer graphics the better
  • The more complex your pages, the more limited your audience
  • The more dynamic your site, the less can be indexed by a search engine

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interactive is a dirty word
Interactive is a dirty word
  • Visitors aren’t interested in video games
  • They take too much time and technology to do right
  • Develop simple contests that play off registrations

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understand your audience
Understand your audience
  • What pages are popular?
  • What inbound links produce visitors?
  • How long are they at your site and where do they go?
  • What browsers do they use and where do they come from?

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complement your print publication
Complement your print publication
  • Don’t worry about “giving away the store”
  • Match content delivery with newsstand availability
  • Have search button right up front and on top
  • Put lots of navigation aids everywhere

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issues
Issues
  • Does your audience first see something on the web or in print?
    • how do you display URLs and cross-reference?
  • Should the web edition be a reference work or stand on its own?
    • reading from the screen is slower than from the printed page!
  • How easy is it to update your own content?
    • keep archives of the past, even if out of date?
  • Are web and print editions enemies or bedfellows?

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content management tools
Content management tools
  • Vignette, Broadvision, Allaire Spectra, RunTime, Fatwire
  • All are complex software tools that enable you to stage, edit, approve, and manage your web content
  • Need many skills to develop and operate properly
  • Six-figures fees common
  • First understand overall eCommerce picture before purchasing

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charging for content
Charging for content
  • Subscribers vs. visitors?
  • Free vs. paid portions of the site
  • Require registrations on portions of the site
  • How not to do it: Infoworld, which had two separate servers (free and paid)

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think carefully about advertising
Think carefully about advertising
  • What you promise may not be what you deliver
  • Who really clicks on ad banners anyway?
  • Sell sponsorships like Forbes ($275,000 each)

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handling subscriptions online
Handling subscriptions online
  • Can you sub provider work with online additions/changes?
  • Do you have the infrastructure to do this well?
  • Do you already have an Internet payment mechanism in place?

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advertising presentation choices
Advertising presentation choices
  • Zdnet – sliding advertising window
  • Geocities’ annoying logo at the bottom of screen
  • TheStreet.com online ad kit

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another bad ad idea cue cat
Another bad ad idea: Cue Cat
  • Wired magazine, others
  • Special device that is connected to a PC
  • Scans ads so users don’t have to type in URLs
  • Why would anyone want to use this?

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marketing partnerships
Marketing partnerships
  • How to separate edit from sales cleanly
  • What are you selling and how do you sell it online?
  • Who’s idea is this, anyway?
  • Hearst is queen here

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staffing considerations the new help wanted ads
Staffing considerations – the new help wanted ads
  • Wanted: Webmaster
  • Required skills: High proficiency in various web based programming, development tools, CGI, cookies, DNS, eCommerce, FTP, HTML 2.0 through 3.02, IIS Server admin, Javascript, Java, MS SQL, Netscape server admin, NT Server admin, perl, Unix admin, web security

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you need to be a superhero
You Need to be a Superhero:
  • Part web designer
  • Internet technologist
  • SQL database admin
  • Payment system maven

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hire the right web me
Hire the right web ME
  • Who can make the trains run
  • Who knows enough HTML to be dangerous
  • Who comes from publishing
  • Who can coordinate with print counterparts

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things you ll need to discover
Things You’ll Need to Discover
  • Are your sales and marketing staff web-savvy?
  • Is your accounting system adaptable to web purchases?
  • How do you reconcile web accounts with your existing financial systems?
  • Does your business owner understand Internet culture?
  • Can anyone find you on the Internet?

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software requirements can get odious
Software requirements can get odious
  • Content management server
  • Ad banner server (incl. with Website Pro, MS Commerce)
  • Audio/video content servers (Real Server, Enliven ads, etc.)
  • Clickstream analysis software
  • Ad networks (DoubleClick)
  • Affiliate networks

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the most under rated skill
The Most Under-rated Skill:
  • PATIENCE!

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topic 4 how to get paid over the internet
Topic 4: How to get paid over the Internet
  • Different devices
    • Credit Cards
    • Electronic Wallets
    • 1-Click and other technologies
  • Setting up a merchant account
  • Privacy and security issues

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payment basics
Payment Basics

Issuer

Acquirer

Consumer

Access Point

Merchant

Access Point

BANK

• deposit & withdrawal

• transaction status inquiry

• authentication

• problem resolution

Consumer

Merchant

• purchase & refund

• transaction status inquiry

• authentication

• problem resolution

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hierarchy
Hierarchy
  • Payment System (clearing house)
    • Clearing house between acquirers and issuers
  • Acquirer (third-party processor)
    • Authorizes, processes and settles for merchant bank
  • Merchant Bank
    • Accepts merchant deposit
  • Merchant
    • Accepts authorized cardholder transaction

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difference payment pieces
Difference Payment Pieces
  • System: provides processing and settlement of transactions
  • Gateway: software/services to support eCommerce merchants, acquirers
  • Device: initiates transaction from credit/debit card

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attributes of superior payment systems
Attributes of Superior Payment Systems
  • Universal, world-wide acceptance
  • Recognized value
  • Reliability of transactions
  • Ease of use to customer
  • Capacity for quick settlement and collection

Strom MPA NY 12/00

requirements
Requirements
  • Mass appeal
  • Easy payment by the customer
  • Have acceptable risk to bank and merchant
  • Accommodate changes, cancellations and returns

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let s consider the customer
Let’s Consider the Customer
  • Changes the order
  • Doesn’t fill out all fields even when asked
  • Mistype credit card and other data
  • Cancels order entirely or never finishes order process

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objectives in offering payment choices
Objectives in Offering Payment Choices
  • Customers like choices, but remember: they are here to buy stuff!
  • Make it safe for everyone involved: customer, merchant, and banks
  • Consider how easy it is for your customer to use, not just how easy it is for you to manage
  • Payments in a virtual world should imitate those in the real world

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properties of payment technologies
Properties of payment technologies
  • How much software does the buyer need to install?
    • Does it come with the desktop operating system?
    • Does it come with the browser or other software?
  • What third-party clearinghouse is used?
    • Provide trusted relationships
    • Reduce risk, complexity in processing

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the way things are on the web today
The Way Things are on the Web Today
  • Some payments are authorized off-line, through traditional POS terminals
    • E-mail message to customer later (hopefully), confirming order and shipping information
  • Many merchant servers connect with payment authorization systems
    • Authorization is real-time during the web session, and the sale is completed with secure server and browser software

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the way things are on the web today secure and un secure
The Way Things are on the Web Today: Secure and Un-Secure
  • Secure transactions via secure browsers and servers with SSL
  • Un-secure transactions with lack of proper encryption (account numbers sent “in the clear”) via e-mail messages
  • Un-secure transactions due to “export” versions of browser and/or server software

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the way things are on the web today108
The Way Things are on the Web Today
  • Secure transactions do not guarantee the validity of the customer account information
    • A high percentage of credit charge-backs for MO/TO transactions are for “merchandise not received”
    • Address verification services can help protect you, and in some cases are required

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different ways to capture customer
Online

Post-authorization

Batch

Different Ways to Capture Customer

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online capture
Online Capture
  • Happens simultaneously with authorization of transaction
  • Fastest method of capture for online merchants who can guarantee same-day shipment of goods

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post authorization capture
Post-Authorization Capture
  • Capture is a separate step from authorization of transaction; post-auth message instructs bank to capture transaction
  • Example of use is for delayed shipping of merchandise

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batch capture
Batch Capture
  • Transactions are captured in a batch mode after authorization (like post-auth capture)
  • Multiple authorizations are submitted at one time for capture
  • The batch is transmitted through gateway (CyberCash) to the bank for funds transfer and merchant account reconciliation

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first remember the old payment providers
First, Remember the Old Payment Providers?
  • Digicash
  • Cybercash (first generation)
  • First Virtual
  • Mondex
  • GlobeID

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why didn t they work
Too complex to implement

Too much cumbersome infrastructure

Not too many stores took their kind of money

Too many other technical challenges

Solved the wrong problem first (credit card snooping)

Why Didn’t They Work?

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so what payment instrument to use
SSL Credit cards

eWallets/SET

Cybercash and other payment gateways

1-Click service providers

Monthly bill delivery add-ons

Peer-to-peer payments

One-time credit cards

So What Payment Instrument to Use?

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credit cards debit cards
Credit cards, debit cards
  • JCB, Visa, MasterCard, Discover, American Express
  • Buyer gets card from issuing bank
  • Merchant is sponsored by acquiring bank
  • Merchant knows buyer and authorizes payment

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how credit cards work
How Credit Cards Work
  • Transactions authorized against customer’s line of credit at issuer (promise to pay)
  • At point of settlement, cardholder’s account is charged and merchant’s account is credited
  • Transactions subject to chargeback to merchant under certain conditions
    • Lack of proper authorization
    • Lack of proper identification / address verification

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s http ssl features
S-HTTP/SSL Features
  • Supply 16+4 in encrypted form
  • Require merchant to have a cert signed by a trusted third-party
  • Requirement of client-side cert is a trade-off:
    • yes: buyer must “register” before making purchase (S-HTTP, SSLv3); or,
    • no: no assurance as to buyer’s identity (SSL)
  • Merchant site becomes a credit card repository

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what about ewallets and set
What About eWallets and SET?
  • IBM Consumer Wallet (both SET and ECML, $50,000!)
  • GlobeSET (SET now, server-side non-SET later)
  • Transactor/Citibank Wallet (Jscript bookmark, gone)
  • eWallet.com (only SSL, now Entrypoint/Infogate)
  • Microsoft Wallet (in Win98, IE 4.01) (both SSL and SET, evolved into Passport)
  • Brodia/ECML

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what s in an ewallet
What’s in an eWallet?
  • Credit card accounts
  • Debit card accounts
  • Checking accounts

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all of these have in common
All of These Have in Common
  • Access to your accounts
  • Credit card and other account numbers are stored by the service provider in a database, or on your hard disk
  • These numbers are not transmitted to the merchant
  • Consumer must initiate account set-up in advance of making any purchases

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how electronic wallets work today
How Electronic Wallets Work Today
  • Consumer must initiate request for electronic “wallet” software
  • Credit card or other account numbers are given to provider one time before any purchases are made
  • Closed system: only available to participating merchants and cardholders who have signed up in advance

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how electronic wallets will work in the future
How Electronic Wallets Will Work in the Future
  • With SET protocol, will contain digital IDs with encrypted account information
  • Since digital IDs will be tied to specific accounts, wallets will keep track of all that information
  • At that point, wallets will be widely distributed and universally accepted

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interoperability is the key
Interoperability is the Key
  • Wallets will become widely used when the following events occur:
    • Mass distribution of wallets to consumers is easily made
    • Will be accepted by all merchants, regardless of wallet brand or payment brand

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ewallet demonstration
eWallet Demonstration
  • Entrypoint

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some problems with ewallets
Some Problems with eWallets
  • Not transferable to other wallets
  • Tied to a single PC
  • Not available for use at many web storefronts
  • Just solve a small part of the overall payment process

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trends
Trends
  • eWallets will eventually go away
  • SET becomes a server-side issue
  • SSL still dominates eCommerce transactions for many years

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1 click service providers
1-Click Service Providers
  • 1Clickcharge.com, qPass.com, InstaBuy.com
  • Mainly for digital content delivery
  • Per day pass (WSJ)
  • Charge 8- 12% per transaction
  • Universal membership
  • Don’t leave site while completing purchase

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1 click advantages
1-Click Advantages
  • Ease of use
  • No credit card transmission over the Internet

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1 click disadvantages
1-Click Disadvantages
  • Need to reach critical mass of users almost at launch
  • Still rely on username/password combination which can be cumbersome
  • Small companies without a lot of depth – still!

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setting up merchant account
Setting up Merchant Account
  • Providers to consider
  • How to compare services
  • Choices in setting up account, fees

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all merchant providers are not the same
All Merchant Providers Are Not the Same
  • Compare services
    • Which cards do they authorize?
    • Do they provide electronic check services?
    • Do they provide check guarantee services?
  • Compare prices
    • Start-up fees
    • Monthly discount fees
    • Other service fees (per transaction)
    • Statement generation fees

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range of credit card fees
Your Bank

Discount Rate: 1.5% - 5.0%

CSP

Application Fee: $100 - $300

Discount Rate: 1.5% - 5.0%

Per Transaction: .20 - .30

Monthly Fee: $10 - $25

(service / statement fee)

Chargeback Fee: Up to $25

Chargeback Reserves: Up to 10% of sales, for up to six months

Range of Credit Card Fees

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new developments one time credit cards
New developments: one-time credit cards
  • “Private payments” introduced recently by AmEx
  • The number is used only once
  • Requires software download

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peer to peer payment providers
Peer-to-peer payment providers
  • PayPal/X.com (claims 3 MM users!)
  • Billpoint (Wells Fargo/eBay)
  • Ecount (claims 400,000 users!)
  • Yahoo PayDirect
  • ProPay.com

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issues with p2p payments
Issues With p2p Payments
  • Transaction limits (usually $1000/day)
  • Tied to particular credit card accounts
  • Skimpy fraud provisions (tied to credit card issuer)
  • Some have huge transaction fees (ProPay charges sellers 3.5% plus 35 cents)
  • One benefit: payees don’t have to be part of the system to collect funds

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alternative providers to phone isp or other monthly bills
Alternative providers (to phone, ISP, or other monthly bills)
  • iPin
  • Trivnet
  • eCharge

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rent buy or build
Rent, Buy or Build?
  • Delusions: “I could do that myself”
  • Not invented here
  • Justification example: corporate procurement
  • Forrester research survey showed 30% spent over $500,000

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rent buy or build140
Rent, Buy, or Build
  • Rent: outsource to a CSP
  • Buy suite of software
  • Build it yourself

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types of outsourcing
Types of Outsourcing
  • Web server hosting
  • Payment processing
  • Storefront creation
  • Email and customer management
  • Shopping carts
  • Catalog and inventory fulfillment
  • Ad banner, one-click networks

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find an csp
Find an CSP

More ISPs are offering eCommerce solutions

Have to use their software standards and payment schemes

Could be pricey

Just catching on in USA

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evaluating ecommerce isps
Evaluating eCommerce ISPs
  • Do they offer storefront design?
  • Have in-house programmers?
  • Hosting of your own web server machine?
  • How many payment systems do they support?
  • What kinds of accounting reports do they offer?
  • What prices and packages offered?

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the catch 22 of csps
The Catch-22 of CSPs:
  • To be successful, a provider has to promote his products via the Internet and have detailed descriptions on their own web sites!
  • But try to find this information isn’t easy.

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some csp examples
www.psi.net/web/ecommerce.shtml

www.Best.com/bizcomm.html

www.Brainlink.com/html/saleslink.htm

www.Earthlink.net

IBM: mypage.ihost.com

www.Netcom.com

business.Mindspring.com/prod-svc/smbiz/

www.Mindrush.com/

www.outer.net/ONCommerce (OuterNet)

Some CSP Examples

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price comparison assumptions
10 Mb disk storage

Single email account

Registrar $35 fee included for domain name

Price Comparison assumptions

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earthlink pricing explained
Earthlink pricing explained

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csp approaches
CSP Approaches

GeoShop/Yahoo

ViaWeb/Yahoo

iCat/Intel

Encanto

Others entering a very crowded field

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geoshop yahoo
GeoShop/Yahoo

Builds on GeoCities “communities” but for merchants (www.geocities.com/join/geoshops)

$25/month for just commercial listings

$180/month (or more!) for actual transactions

working with Internet Commerce Services Corp. who uses Open Market Transact servers (www.icoms.com/pp.htm)

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shopsite demo
ShopSite demo
  • Can now handle two concurrent currencies

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the suite approach
The Suite Approach
  • Leading contenders
  • What is part of the suite and what isn’t
  • Prices and platforms

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popular ecommerce suites
Popular eCommerce Suites

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four typical elements
Four Typical Elements
  • Catalog
  • Storefront designer
  • Ordering/inventory system
  • Shopping cart/check out system

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the cold hard reality of suites
The Cold Hard Reality of Suites
  • Suites are nothing more than collection of products
  • Lack integration among various elements
  • Difficult to setup, customize, and use
  • Require you to live “inside” their structure
  • Limited payment options
  • Sounds like early MS Office

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payment systems included in each suite
Payment Systems Included in Each Suite
  • Microsoft: Verifone, Buy Now
  • IBM: Verifone, SET/eTill
  • OpenMarket: Verifone
  • WebSite Pro: IC Verify, PC Authorize, CyberCash, others
  • Intershop: CyberCash, ICVerify, others

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sample stores included in each suite
Sample Stores Included in Each Suite
  • Microsoft: 4 stores
  • IBM: eMall, simple and advanced sample stores
  • OpenMarket: none
  • WebSite Pro: 1 bookstore
  • Intershop: 3 stores

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database support
Database Support

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dealing with odbc
Dealing With ODBC
  • Have to understand how to set up data sources
  • Intimate knowledge of your data structure
  • Re-install ODBC drivers at least once!
  • Best to start with built-in database

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store wizards included in each suite
Store Wizards Included in Each Suite
  • Websphere (the best)
  • WebSite Pro (but doesn’t do much)
  • Intershop (various wizards)
  • MS Commerce (although you’ll really need to know COM!)

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slide162
Tips
  • Don’t install anything before making sure you have everything!
  • Downloads for free, but they expire
  • Can you export existing files to these systems?

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website professional website ora com
WebSite Professional website.ora.com
  • Version 2, shipping since 9/97
  • US$799!
  • NT (or 95)
  • Supports seven different payment processors: SSL, CyberCash
  • One sample store (bookstore)

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sample storefront
Sample storefront

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website configuration sheet
WebSite Configuration Sheet

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store properties
Store Properties
  • Only can operate a single payment system
  • Run on a series of Access databases
  • Built-in tax table, but for N.Americans!
  • Well documented data structures in typical O’Reilly fashion

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recommendations
Recommendations
  • Lowest priced suite by far!
  • iHTML is robust, but will take some learning
  • Nice store setup and organization of catalog
  • Good low-end solution
  • Other alternatives: ShopZone (www.btsw.com), Alpha Merchant (www.alphasoftware.com)

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intershop
Intershop
  • Sample screens showing different “managers”
  • Includes Sybase SQL 11
  • US$5000, includes 3 mos. support

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seven different managers
Seven Different Managers
  • Catalog
  • Products
  • Store
  • Purchases
  • Inventory
  • Customers
  • Admin

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characteristics
Characteristics
  • Everything managed via browser, which can get tedious
  • But you already have a database behind it

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payment options galore
Payment Options galore

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recommendations172
Recommendations
  • Most flexible payment options of any suite
  • Better at processing orders than site creation
  • Not good for large catalogs

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ibm websphere
IBM Websphere
  • IBM’s Go Web Server
  • DB2 database
  • Shopping cart system
  • Credit card verifier

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several ways to setup your store
Several ways to setup your store
  • Use nine-step wizard with populated catalog
  • Use wizard with empty catalog
  • Start from scratch
  • Import existing databases

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recommendations175
Recommendations
  • Great if you already use DB2 for inventories
  • Most security-conscious suite
  • Start with all IBM defaults to save time

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websphere specifics
Websphere Specifics
  • NT, fast Pentium with 256 M of RAM
  • AIX, 390, OS/400, Solaris
  • US$5000 Start, $20,000 Pro

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latest features
Latest features
  • “Intelligent Catalog”
  • Java-based wizards to setup and manage store
  • Recognizes shopping preferences and upsells
  • Improved SET payment server, ad tracking partnerships
  • “Smooth Start” packaged consulting services

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openmarket
OpenMarket
  • High end solution
  • Worldnet offers hosting of OM servers
  • Still needs customization!

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recommendations179
Recommendations
  • If you can afford it ....
  • Really the price covers lots of consulting time
  • High transactions and throughput needs
  • Use with Icoms.com front end service ($1000 + $100/month)

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isn t somebody missing from the suite party
Isn’t somebody missing from the suite party?
  • Netscape
  • Oracle

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topic 6 installing and operating your own storefront
Topic 6: Installing and Operating Your Own Storefront
  • What you need to know
  • What you need to buy

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one diy solution
One DIY solution
  • IIS
  • PerlShop shopping cart
  • ClearCommerce CSP
  • First American Payment Systems
  • Verisign certificates
  • Fees: $800 setup, $500/yr, $50/month
  • What took longest to work: perl scripts to make credit card payments!

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components needed to operate a web storefront
Components Needed to Operate a Web Storefront
  • Database of items to sell and current inventories
  • Secure web server
  • Searchable catalog server
  • Connections to backend payments and financial servers
  • Shopping cart system
  • Checkout/payment system
  • Don’t forget about security!

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which database server
Which Database Server?
  • Pick before anything else
  • Core of your store revolves around the database:
    • inventory system
    • accounting system
    • catalog system

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database server recommendations
Database Server Recommendations
  • Use existing client/server db if possible
  • SQL Server: best with MS tools
  • Oracle: if you know pSQL already
  • Informix: all other situations

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database web tools
Database/web Tools
  • Develop your own forms
  • Query your database
  • Develop your own catalog

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why is a catalog important
Why is a Catalog Important?
  • Your customers view of your store
  • Current with your own inventory and offerings
  • Don’t want to sell what you don’t have
  • See catalog resources page

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tool recommendations
Tool Recommendations
  • Cold Fusion, www.allaire.com
  • Sapphire/Web, www.bluestone.com

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which web server
Which Web Server?
  • Hundreds to choose from
  • Must support SSL and/or SHTTP
  • Platform isn’t important, really
  • Choose:
    • NT/IIS
    • Solaris/Netscape Enterprise
    • Linux/Apache

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what can a shopping cart do
What can a Shopping cart do?
  • Simplify ordering process
  • Track multiple purchases for a single visitor
  • Display items purchased
  • Calculate total prices, tax, shipping charges
  • Track item attributes (colors, styles, sizes)

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different shopping cart methods
Different Shopping cart Methods
  • Account-based
  • Cookie-based; see www.cookiecentral.com
  • Encoded URLs

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payment choices
Payment Choices
  • Use gateway (CyberCash) or service provider?
  • Do you need support for multiple currencies?
  • Do you have to host your store elsewhere?
  • Do you understand the fee structure?

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steps towards coding your own payment service
Steps Towards Coding Your Own Payment Service
  • Present user with a CGI form with shopping items info
  • Connect this to the service provider site
  • Provider displays his form to collect credit card info
  • After approval, you record info to your site
  • See WebTechniques article by Lincoln Stein, 8/98

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again service providers differ
Again, Service Providers Differ
  • Compare services
    • Which cards do they authorize?
    • Do they provide electronic check services?
    • Do they provide check guarantee services?
  • Compare prices
    • Start-up fees
    • Monthly discount fees
    • Other service fees (per transaction)
    • Statement generation fees

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prices of typical products
Prices of Typical Products

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putting together your own solution
Putting Together Your Own Solution
  • SQL Server database
  • CyberCash payment system
  • WebCatalog 3.0 (supports CCash)
  • IIS web server
  • Total price:

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thanks197
Thanks!

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