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E-Commerce

Web Hosting Options

Jerry PostWestgate Management Development Center

Eberhardt School of Business

University of the Pacific

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Retail Business Basics

Create business

Government

Accounting

Taxes

Registration

Purchases

Sales

Payments

Receipts

Shipping

Marketing

Analysis

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Issuing Bank

Customer

Retail Store/Site

Card NumberAnd Expiration

Merchant BankAcquiring Bank

Card InformationAmountRetail Account

Settlement Processor

CardValidation

TransactionsTransactions

Credit Card Processing

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Credit Card Processing Fees

Transaction fee Usually less than $0.50 Percent of charges From 2 to 5 percent Monthly minimum $25 to $35 per month Setup fees Variable depending on bank and

technologies used

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Web Site Basics

Consumer

Server

URL/page request

PageProgram

Code

Log file

Database

HTMLPage

Images

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Browser Cookies

ConsumerServer

First page/login

Display pageSave cookie file

New page requestSend cookie

Validate userCreate cookie (ID)Generate page

Use cookie ID to identify userGenerate new page

Note: cookies can only be returned to one site/domain.Companies Never even see cookies generated by other sites.

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Internet Connections

Individual

Internetserviceprovider (ISP)

Phonecompany

Networkserviceprovider (NSP)

Backbonenetwork

Phonecompany

CompanyWeb site

Dial-up: 33.3 - 56 KbpsISDN: 128 KbpsDSL: 256 Kbps - 6 MbpsCable: 1 to 10 Mbps

Cablecompany

T1: 1.544 MbpsT3: 44.736 Mbps

OC3: 155.52 MbpsOC12: 655 Mbps

T1: 1.544 MbpsT3: 44.736 Mbps

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Capacity Calculations

monthBytesGmonth

days

day

onds

bits

Bytes

ond

bits/500

30*

sec400,86*

8*

sec

000,544,1

T1 1.544 mbps $1600/month $1000/mbpsT3 45 mbps $10,000/month $222/mbps

Connectionbps 50kB file # dial-up userscost cost/mbps GB/month cost/GB/monthDial-up 33k 12.121 1 $20 $606 11 $1.82T1 1.544m 0.259 47 $1,600 $1,036 500 $3.20T3 45m 0.009 1364 $10,000 $222 14580 $0.69

T1: 1.544 mbps T3:45 mbps OC-12:655 mbps

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Bandwidth

Web Server

Business connection bandwidthsets number of users.

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Economies of Scale

Internet Bandwidth Economies of Scale

0

200

400

600

800

1000

1200

1400

1600

1800

0 10 20 30 40 50

mbps

$/m

bp

s

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Internet Connections Backbone providers

AT&T GTE Worldcom/MCI Sprint Qwest

Network service providers 1998: 39 AGIS AT&T Cable & Wireless IBM MCI/Worldcom Qwest Sprint UUNet

Phone companies Regional Bell operating

companies (RBOCs) (6) Competitive local exchange

carriers (CLECs) (new)

Cable companies Intermedia TCI/AT&T Regional.

Satellite Direct Satellite

Internet service providers 1998: over 5000

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Frequency Spectrum

ELF VLF LF MF HF VHF UHF Microwave Optical

100 30K 300K 3M 30M 300M 3G 10G Hertz

Navy/s

ubm

arine

s

TV: 22

0M -

500

MHz

AM:

550K

- 16

50 K

Hz

Public

Saf

ety:

150

M -

160

MHz

Public

Saf

ety:

460

M -

500

MHz

Cellula

r pho

nes:

800

MHz

Cordle

ss p

hone

s (s

ome)

: 90

0 M

Hz

Pers.

Com

. Sys

(PCS):

1.8

5 G -

2.2

GHz

PCS E

T: 2

GHz

TV: 54

M -

216

MHz

FM:

88M

- 10

8 M

Hz

http://www.fcc.gov/oet/info/database/spectrum/Welcome.html

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Simple HTML Pages

Main Web Page

Categories…

Category 1

Product photo… …

Category 2

Product photo… …

Category 3

Product photo… …

Product 1DescriptionPricePhoto

Product 2DescriptionPricePhoto

Product nDescriptionPricePhoto

Product 3DescriptionPricePhoto

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Merchant Web site

Buy-Me Button

ProductDescriptionPrice

Buy Me

Shopping CartItem Price… …

TotalCheck Out

Credit Card DataName

AddressPhone

Card NumberSubmit

Card Processor Site

CustomerNotification(Accept/Reject)

Notify merchant

http://www.goemerchant.com/buymebutton.htm

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Auctions

Uncertain price Can set reserve price Good for unique items Efficiency depends on

Full information Adequate number of participants

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Amazon.com zShops

zShop ProductsCameras, Digital, Brand

Vendor 1

Vendor 2

Vendor 3Vendor TransferDescriptionPriceScanned imageContact info

ConsumerProduct searchChoose vendorPay for item

Transaction ProcessingAmazon.com handles creditSends order info to merchantMerchant ships item to consumer

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Virtual Malls

Essentially a marketing agreement The “mall” provides a directory to merchants The merchant site runs on a different server

Directory of Shops

Product categoryVendor 1Vendor 2 Merchant Site

ProductsSales

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Web Commerce Servers

Your Web siteProducts

Shopping cartSales

Web servers

Database

Commerce Server Shell

Web/Commerce Hosting Company

CustomersMerchants

Load database

Images

Descriptions

Prices

Customize site

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Application Service Provider

Business Applicatione.g., Accounting

Store dataAnalyze dataFacilitate companyinteraction

Businesses that lease the use of the application

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Web Server Platforms

Linux/UNIX clone Microsoft Windows NT/2000 Sun Microsystems + Oracle 8i IBM WebSphere

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Web Server Criteria

Database support Crucial for e-commerce Integration with Web server

Microsoft ODBC and ASP PERL Database connector Java database connector

Database system choices Microsoft Access Microsoft SQL Server Oracle 8, 8i IBM DB2

Scalability Increase speed and capacity

without rewriting the Web application.

Two primary methods Faster server Distributed processing

Transaction processing Crucial for integrated online

systems to prevent loss of data.

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Database Management System (DBMS)

Store data Support queries (SQL) Provide backup and recovery Support multi-user access and prevent concurrency

problems Share data across servers

Microsoft Open Database connectivity (ODBC) Oracle network

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Scalability

Increase usage rates without rewriting the application. Run on bigger, faster servers

Requires wide range of hardware platforms

Support distributed processing on multiple servers Easy to expand Requires advanced software support Application must be designed carefully Handles failures easily through redundancy

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Transactions and Message Queues

Transactions are a set of changes that must succeed or fail together.

Example: transfer money from savings to checking account.

Advanced systems and databases handle transactions almost automatically (just specify start and end points).

Message queues are used in distributed systems to store messages (e.g., transactions) in case a machine or a link goes down.

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Platform Comparison

Platform Database Scalability Scripting

Linux Limited Limited PERL

Windows 2000

Good, ODBC integrates most DBMSs

Distributed, transactions, message queuing

ASP

Sun/Oracle Good within Oracle

Server size Java, PERL

IBM WebSphere

Good, IBM, Oracle

Distributed, transactions, message queuing

Java

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Windows 2000

Enterprise Web Server clusterWeb pagerequest

Requests handled by available server

Database Server cluster

Web page built from

HTML

Images

Data

ODBC + ASP

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Sun/Oracle 8i

Web pagerequest

DataImagesHTML pages

Java code to link together

Sun Server

Oracle DBMS Software

Transactions andconnectivityhandled by Oracle

Scalability provided mostly with bigger server.

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IBM WebSphere

Web pagerequest

WebSphere software

Hardware can be IBM,Sun, or Intel.

IBM S/390

Traditional IBM machine• Database• Transactions• Message Queue• Scalability

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Hosting on Shared Servers

ISP Server Your customer

Hundreds of customers for other businesses

You design the site.

Transfer to ISP

•Server is shared by other firms

•Performance outside your control

•Capacity is limited

•Data transfer is limited

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Server Co-Location

ISP location

Customer

Development

•You purchase or lease a server solely for your use that is installed at the ISP location.

•You usually have physical access.

•Pay space and data transfer charges to ISP

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Run Your Own Server

Customer

Development and Web site management

ISP

T1: monthly lease

router

router

• You have total control

• You pay monthly lease to phone company and ISP

• You can connect to internal computers

Connect to your other computers.

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Summary: Costs

Costs Simple HTML Single Unit Commerce Site

Shared Server

Co-Location

Your Own Server

Setup $0 $0-$10 $300 $200 $3000 $8000

Monthly $0-$20 3-5% per sale

$200 + 3-5% per sale

$40-$500 $400-$1000

$800-$2000

Manage-ment

Minimal site updates

Site/product updates

Product/catalog updates

Site updates

Pay, or manage server

Complete server management