Selected Readings on Electronic Commerce Technologies: Contemporary Applications

Electronic commerce or e-commerce can be briefly defined as the buying and selling of goods, information and services and the transfer of funds using digital communications. The term “electronic commerce” is now very familiar and most people are used to performing many of their everyday transactions through electronic commerce. The future of electronic commerce looks even brighter according to the following market research:

• Online Publishers Association (2007) found that about 15% of Internet activities were related to electronic commerce in the first five months of 2007 and the increase in content’s share of time was fairly steady from 2003 to 2007 based on a monthly gauge of the time being spent on e-commerce, communications, content, and search functions.
• More than 85% of the world’s online population, 875 million consumers, have shopped on the World Wide Web, up 40% in the two years since 2005 (Nielsen Company, 2008).
• Electronic commerce sites are the most frequent users of paid search engine marketing. The top ten paid search advertisers, generating 16% of all sponsored links, were all retail or comparison shopping sites. eBay, the number one spot, achieved 802 million sponsored link exposures. (comScore, Inc., 2007).

Companies and research organizations provide a host of software and methodologies for electronic commerce implementations. However, given the wide variety of technologies and methodologies available, IT workers often have difficulty selecting the most suitable technology for a specific electronic commerce application. This book presents a set of first-class articles on contemporary electronic commerce technologies written by renowned scholars, scientists, and industrialists from all over the world. Its aim is to help readers better understand the electronic commerce technologies that are available and how best to apply the technologies to electronic commerce implementations.

Compared to electronic commerce, the term “electronic commerce technologies” is vague and rarely used because it covers so many different disciplines. This prologue discusses electronic commerce technologies, dividing them into two categories for convenience:
A. Technologies for electronic commerce implementations: This refers to technologies such as the languages and software, for example ASP.NET and Adobe Flash, that are used to facilitate the construction of electronic commerce systems and applications.
B. Technologies used by electronic commerce: Here, the technologies include the methods and algorithms such as Web mining and information retrieval that are used by electronic commerce.

The relationships between these two kinds of technologies are shown in Figure 1.

The rest of this prologue is organized as follows. Section 2 introduces a generic structure of electronic commerce systems and explains the four system components: (i) applications, (ii) client computers, (iii) wired networks, and (iv) host computers. A list of electronic commerce applications is given in Section 3. Section 4 discussed two kinds of electronic commerce programming: (i) client-side programming using languages and software like CSS and Adobe Dreamweaver and (ii) server-side programming using software and tools such as the LAMP stack and ASP.NET. Electronic commerce security and payment methods are also discussed in this section. Technologies used by electronic commerce are introduced in Section 5, with two of the technologies, Web mining and Web searching, examined in more detail. The final section gives a summary of this prologue.

ELECTRONIC COMMERCE SYSTEMS

An electronic commerce system is inherently interdisciplinary and there are many different ways to implement it. Figure 2 shows a generic structure of a traditional electronic commerce system and a typical example of such a system. The system structure includes four components (Hu, Yang, Yeh, & Hu, 2008):

• Electronic commerce applications: Typical applications include business transactions and electronic markets. Several popular applications will be discussed in the next section.
• Client computers: Client computers, specifically their browsers, are used to interactively communicate with electronic commerce applications.
• Wired networks: Wired networks are used to transmit data for electronic commerce. There are three major types of wired networks:
  • Local Area Networks (LAN) span a relatively small space of only a few square kilometers or less, such as an office building. They generally offer a throughput of 10 Mbps or 100 Mbps and are usually based on Ethernet technology, which is a network protocol using a bus topology and defining a specific implementation of the Physical and Data Link Layers in the OSI model (IEEE 802.3).
  • Metropolitan Area Networks (MAN) span a geographical area greater than a LAN but less than a WAN, such as few city blocks or a whole city. MANs typically use wireless infrastructure or optical fiber connections to link sites and may connect multiple LANs. Their maximum throughput is no less than 44 Mbps and they use the Distributed Queue Dual Bus technology based on the IEEE 802.6 standard.
  • Wide Area Networks (WAN) span a wide geographic area, such as state or country, and use specialized computers to connect smaller networks, such as LANs. They generally offer a throughput of 1.5 Mbps or more. WANs typically use wide area network services from telecommunications carriers, whose technologies include standard phone lines, ISDN (Integrated Services Digital Network), or other high-speed services.
• Host computers: Most electronic commerce application programs reside in this component, except for client-side programs such as cookies or user interfaces using markup languages. User requests such as checking out or adding items to the shopping cart are actually processed at a host computer, which contains three major kinds of software specifically written for e-commerce transactions:
  • Web servers: These are server-side application programs that manage the Web pages stored in the Web site's databases or files. Three popular Web servers are (i) Apache HTTP Servers, (ii) Microsoft’s Internet Information Services (IIS), and (iii) Sun Java System Web Servers.
  • Databases and database servers: Databases store electronic commerce data such as user and product information; database servers manage databases and provide database access functions, such as locating the actual records being requested or updating the data in databases. Some popular databases include: (i) IBM DB2, (ii) Microsoft’s Office Access and SQL Servers, and (iii) Oracle databases.
  • Application programs and support software: These are responsible for handling server-side processing such as user interface creation and user input processing. The software used to build the application programs will be discussed later.

ELECTRONIC COMMERCE APPLICATIONS

The emergence of electronic commerce has led to countless new business opportunities and applications. Electronic commerce refers to a wide variety of applications, including auctions, banking, marketplaces and exchanges, recruiting, and retailing, to name but a few. One of the major characteristics of e-commerce is that it enables the creation of new business models. This section discusses some of the newly possible business models that have been created by electronic commerce. Other than the “buy-and-sell” model, the following list gives some other common models (Turban, et al, 2004):

• Affiliate marketing: Affiliate marketing is a marketing method that allows websites to receive a commission by selling products or services offered by others. For example, in Amazon.com’s Associates Program the associates drive Internet traffic to Amazon through specially formatted links that allow Amazon to track sales and other activities.
• Banking: Traditional banking requires customers to be present at banks or ATMs to perform tasks such as transferring funds or requesting a loan. With electronic commerce, many banking operations can be done online by clicking a few buttons on a home or office computer.
• Comparing prices: This method presents a list of services or products based on a consumer’s specifications. For example, mySimon.com is a comparison shopping site for apparel, computers, electronics, jewelry, video games, and other merchandise. It gathers prices on millions of products from thousands of stores, so customers can compare products and find the best price before they purchase an item.
• Customization and personalization: Customization or personalization allows the design and creation of content that meets a customer’s specific needs. For example, Dell Inc. sells computer systems directly to the public, with each unit tailor-made to the customer’s specifications. This direct business model eliminates the time and costs involved in purchasing through traditional bricks-and-mortar retailers.
• Electronic marketplaces and exchanges: Electronic marketplaces are Internet websites that act as a meeting point between supply and demand; electronic exchanges serve as central marketplaces with established rules and regulations where buyers and sellers meet to trade futures and options contracts or securities. Electronic marketplaces and exchanges provide benefits to both buyers and sellers because they are more efficient than their traditional counterparts.
• Electronic tendering systems: For large purchases of services or goods potential suppliers bid competitively for a contract, quoting a price to the buyer who then selects the most advantageous. Large buyers usually make their purchases through a tendering (bidding) system, which becomes more effective and efficient with the help of electronic commerce.
• Group purchasing: Items purchased in bulk benefit from quantity discounts; electronic commerce allows a group of customers or organizations to place their orders together and negotiate a better deal. For example, Amerinet members saved more than $300 million in 2003 through group purchasing health care equipments and products.
• Name your price: With this model, the product/service prices are set by customers instead of sellers. Priceline.com was the first company to apply this method. The following example shows how this works. With Priceline.com's “Name Your Own Price” hotel reservation service, customers choose the star level of hotel they want, along with the desired neighborhood, dates and price they want to pay. Priceline.com then searches for a hotel room at the customer's desired price. Priceline.com is able to offer this sale as a result of
  • certain hotel suppliers agreeing to make lower rates available for particular properties through Priceline.com's hotel service and/or
  • the application by Priceline.com of a variable subsidy to certain offers.
• Online auctions: Traditional auctions usually require bidders to attend the auctions in person, and the items offered are limited. Online auctions allow bidders from everywhere to bid products or services provided by various sellers without needing to show up. eBay.com is the world's largest online auction site, offering an online platform where millions of items are traded each day. Several hundred other companies, including Amazon.com and Yahoo.com, also conduct online auctions.
• Recruiting: Electronic commerce makes recruiting easy, fast, and effective. Jobs posted by recruiters can be searched by job seekers from all over the world, while job seekers can post their resumes and requests on the Internet for potential interested recruiters.
• Retailing: In the past, customers had to drive to stores to purchase groceries or appliances and carry them home. Now all kinds of online retail stores are available. Customers can purchase clothes, toys, and even fresh foods from the Internet and have them delivered directly to their homes.
• Virtual communities: A virtual community is a collection of people sharing common interests, ideas, and feelings over the Internet or other collaborative networks. People in a virtual community tend to be more comfortable performing transactions with other members of their community.

TECHNOLOGIES FOR ELECTRONIC COMMERCE IMPLEMENTATIONS

Figure 3 shows another structure of an electronic commerce system or a database-driven web site, which is often implemented using a three-tiered client-server architecture consisting, as the name suggests, of three layers:
1. User interface: This runs on a desktop PC or workstation (the client) and uses a standard graphical user interface. The main function of this tier is to translate tasks and results to something the user can understand.
2. Function modules: This tier coordinates the application, processes commands, makes logical decisions and evaluations, and performs calculations. It also relays data between the other two tiers.
3. Database management system (DBMS) : A DBMS on a host computer stores and manages the data required by the middle tier for further processing. The middle tier then sends the processed data back to the user. The three-tier design has many advantages over traditional two-tier or single-tier designs, the chief one being: The added modularity makes it easier to modify or replace one tier without affecting the other tiers.

Electronic Commerce Programming

Electronic commerce is popular and widely used. A variety of languages and software are available for building electronic commerce systems and applications. Each of the languages or software belongs to one of two kinds of electronic commerce programming:

• Client-side programming uses the software that runs on client computers/devices, in particular the Web interface. Popular languages for Web interfaces include CSS, DOM, (X)HTML, JavaScript, XML, and XSL(T). In addition to the Web interface, this can include client-side applications such as address and schedule books. The tools and languages used for client-side application development depend on the client-side operating systems being used, for example Visual Studio is used for Windows or C/C++ for Linux. Table 1 lists some popular client-side languages and software for electronic commerce implementations.
• Server-side programming involves the software that runs on servers. This normally deals with requests from browsers and sends the results from databases/files/programs back to the browsers for display. Popular server-side languages include C/C++, Java, Perl, and PHP. Server-side programming also implements numerous applications such as instant messaging and emails, but as these types of applications are related to standard network programming tasks such as TCP/IP programming they will not be covered in this book. Table 2 lists some popular server-side software and tools, including integrated development environments (IDEs) and the LAMP stack (Lawton, 2005), that are used for electronic commerce implementations.

Electronic Commerce Security and Payment Methods

Another important issue of electronic commerce technologies is related to security and payment methods. Secure commercial information exchange and safe electronic financial transactions are essential for both content providers and potential customers. A secure electronic commerce system must have the following properties: (i) confidentiality, (ii) authentication, (iii) integrity, (iv) authorization, (v) availability, and (vi) non-repudiation. To achieve these security goals, digital data are encrypted and decrypted based on cryptographic algorithms, which can be divided into two categories (Lee, Kou, & Hu, 2005):

• Symmetric key systems: In this category, the sender and receiver participating in a secure session both own the same digital key. The sender encrypts messages using this key and then sends it to the receiver through the public network. The receiver then decrypts the messages received using the same key.
• Asymmetric key systems: These are also called “public key systems.” Unlike in symmetric key systems, a participating entity in an asymmetric key system uses two keys¯a public key that is accessible to everyone in the world and a private key known only to itself. Applying one or both of these two keys in different orders to data messages provides security services such as authentication and digital signature.

Among the many issues that arise with electronic commerce security, payment methods are probably the most crucial. A typical payment scenario is as follows:
1. A user registers for the services via a PC or notebook computer.
2. The user submits his/her payment for the services he/she has received.
3. The service/content provider deals with the request by authenticating and authorizing the user and then contacting a financial institution.
4. A confirmation of the completed transaction is delivered to the user.

The Secure Sockets Layer (SSL) is one of the most popular techniques used by electronic commerce payment methods. It works as follows (VeriSign, Inc., n.d.). An SSL Certificate, issued by the Certificate Authority (CA), is created for a particular server in a specific domain for a verified business entity. Each SSL Certificate contains unique, authenticated information about the certificate owner. When a Web browser points to a secured domain, an SSL handshake authenticates the server (Web site) and the client (Web browser) and an encryption method is established with a unique session key. The server and client can start a secure session with message privacy and integrity guaranteed. VeriSign at http://www.verisign.com/ is one of the companies providing SSL payment services for electronic commerce.

TECHNOLOGIES USED BY ELECTRONIC COMMERCE

Unlike the technologies used for building electronic commerce systems and applications, the technologies discussed in this section are usually not related to any specific languages or software but are instead methodologies or algorithms. Almost all kinds of information technologies have been used by electronic commerce, but the three most widely used are:

• Artificial intelligence (AI) : Artificial intelligence uses computer programs to mimic human intelligence, such as reasoning, learning, problem solving, and decision making. Many AI methods such as data mining and data warehousing have been applied to electronic commerce.
• Information retrieval (IR) : Information retrieval is the study of indexing, searching, and managing data. IR has been widely used by computer systems such as digital libraries for a long time. Recently, IR methods such as relevance feedback have been adapted for use with electronic commerce.
• Business management: Business management methods such as supply chain management and enterprise resource planning (ERP) have been widely used by traditional commerce. Many of these methods are also used by electronic commerce.

It is not possible to cover all of these technologies in detail in the limited space available here, which instead focuses on providing an extensive list of methods and means. The next two sections discuss two major technologies used by electronic commerce: Web usage mining of artificial intelligence and Web searching of information retrieval.

World Wide Web Usage Mining

World Wide Web Data Mining includes content mining, hyperlink structure mining, and usage mining. All three approaches attempt to extract knowledge from the Web, produce useful results from the knowledge extracted, and apply the results to specific real-world problems. The first two apply data mining techniques to Web page contents and hyperlink structures, respectively. The third approach, Web usage mining, is the application of data mining techniques to the usage logs of large Web data repositories in order to produce results that can be applied to many practical subjects, such as improving Web sites/pages, making additional topic or product recommendations, user/customer behavior studies, and so on. A Web usage mining system such as the one shown in Figure 4 performs five major tasks, discussed in turn below (Hu, Zuo, Wiggen, & Krishna, 2008).

Usage Data Gathering

Web usage data are usually supplied by two sources: trial runs by human operators and Web logs. The first approach is impractical and rarely used because of its intrinsically high time and expense costs and its bias. Most usage mining systems therefore use log data as their data source. A Web log file records activity information when a Web user submits a request to a Web server. A log file can be located in three different places: (i) web servers, (ii) web proxy servers, and (iii) client browsers, as shown in Figure 5.

Usage Data Preparation

The information contained in a raw Web server log does not reliably represent a user session file. The Web usage data preparation phase is thus used to restore users' activities in the Web server log in a reliable and consistent way. This phase should at a minimum achieve the following four major tasks: (i) removing undesirable entries, (ii) distinguishing among users, (iii) building sessions, and (iv) restoring the contents of a session (Cooley, Mobasher, & Srivastava, 1999).

Navigation Pattern Discovery, Analysis, and Visualization

Many data mining algorithms are dedicated to finding navigation patterns. Among these, most algorithms use the method of sequential pattern generation, while the remaining methods tend to be rather ad hoc. Navigation patterns, which show the facts of Web usage, need further analysis and interpretation before application. The analysis is not discussed here because it usually requires human intervention or is distributed to the two other tasks: navigation pattern discovery and pattern applications. Navigation patterns are normally two-dimensional paths that are difficult to perceive if a proper visualization tool is not supported.

Usage Pattern Applications

The results of navigation pattern discovery can be applied to the following major areas, among others: (i) improving site/page design, (ii) making additional topic or product recommendations, and (iii) Web personalization. Learning user/customer behavior (Adomavicius & Tuzhilin, 2001) and Web caching (Lan, Bressan, & Ooi, 1999), as well as other less important applications for navigation patterns, are also worth studying.

• Web site/page improvements: The most important application of discovered navigation patterns is to improve Web sites/pages by (re)organizing them. In addition to manually (re)organizing the Web sites/pages, it is possible to use automatic methods to achieve this. Adaptive Web sites (Chibing & Nordahl, 2005) automatically improve their organization and presentation by learning from visitor access patterns. They mine the data buried in Web server logs to produce easily navigable Web sites.
• Additional topic or product recommendations: Electronic commerce sites use recommender systems or collaborative filtering (Zhou, Hui, & Chang, 2004) to suggest products to their customers or to provide consumers with information to help them decide which products to purchase. For example, each account owner at Amazon.com is presented with a section of Your Recommendations, which suggests additional products based on the owner’s previous purchases and browsing behavior.
• Web personalization: Web personalization (re)organizes Web sites/pages based on the Web experience to fit individual users’ needs (Suryavanshi, Shin, & Mudur, 2005). This is a broad area that includes adaptive Web sites and recommender systems as special cases. The WebPersonalizer system (Mobasher et al., 2002) uses a subset of Web log and session clustering techniques to derive usage profiles, which are then used to generate recommendations.

World Wide Web Searches

One of the most commonly performed tasks on the Web is to search Web pages, and it is also one of the most frustrating and problematic. The situation is getting worse because of the Web's fast growing size and lack of structural style, as well as the inadequacy of existing Web search engine technologies (Lawrence & Giles, 1999). Traditional search techniques are based on users typing in search keywords that the search services can then use to locate the desired Web pages. However, this approach normally retrieves too many documents, of which only a small fraction are relevant to the users' needs. Furthermore, the most relevant documents do not necessarily appear at the top of the query output list.

Search Engine Structure

Two different approaches are applied to Web search services: genuine search engines and directories. The difference lies in how their listings are compiled:

• Search engines, such as Google, create their listings automatically.
• A directory, such as Yahoo!, depends on human operators for its listings.

Some search engines, known as hybrid search engines, maintain an associated directory. Search engines traditionally consist of three components: the crawler, the indexing software, and the search and ranking software:

• Crawlers: A crawler is a program that automatically scans a sequence of Web sites and collects Web documents from them. Crawlers follow the links on a site to find other relevant pages. Two search algorithms, breadth-first searches and depth-first searches, are widely used by crawlers to traverse the Web.
• Indexing software: Automatic indexing is the process of algorithmically examining information items to build a data structure that can be quickly searched. Filtering is one of the most important pre-processes for indexing and is a typical transformation in information retrieval that is often used to reduce the size of a document and/or standardize it to simplify searching.
• Search and ranking software: Query processing is the activity of analyzing a query and comparing it to indexes to find relevant items. A user enters a keyword or keywords, along with Boolean modifiers such as “and,” “or,” or “not,” into a search engine, which then scans indexed Web pages for the keywords. To determine in which order to display pages to the user, the engine uses an algorithm to rank pages that contain the keywords. For example, the engine may count the number of times the keyword appears on a page.

Price Comparison Using Metasearch Engines

One popular electronic commerce application is price comparison, which can be implemented by using a metasearch engine. Metasearch engines (Goldberg, Taksa, & Spink, 2008) conduct a search using several other search engines simultaneously and then present the results in some sort of integrated format. Figure 7 shows the system structure of a metasearch engine, which consists of three major components:

• Dispatch: Determines to which search engines a specific query is sent. The selection is usually based on network and local computational resources, as well as the long-term performance of search engines on specific query terms.
• Interface: Adapts the user's query format to match the format of a particular search engine, which varies from engine to engine.
• Display: Here, raw results from the selected search engines are integrated for display to the user. Each search engine will produce different raw results, with different formats, from other search engines and these must be combined to give a uniform format for ease-of-use.

SUMMARY

The introduction of electronic commerce in the 1990s has had an enormous impact on our daily life, particularly for activities such as shopping, banking, and traveling. This prologue has introduced important issues connected with electronic commerce technologies and applications, including the following themes:

• Electronic commerce systems: An e-commerce system consists of four components: (i) applications, (ii) client computers, (iii) wired networks, and (iv) host computers.
• Electronic commerce applications: The applications cover almost all transactions.
• Technologies for electronic commerce implementations: Electronic commerce programming involves a wide variety of technologies and languages. It consists of two kinds of programming:
  • Client-side programming, which develops the software that runs on client computers or devices. This is mostly related to web interface construction, and popular languages for web interface construction include CSS, DOM, (X)HTML, JavaScript, XML, and XSL(T).
  • Server-side programming, which develops the software that runs on servers. The software normally receives requests from browsers and sends the results from databases/files/programs back to the browsers for display. Popular server-side languages include C/C++, Java, Perl, and PHP.

Cryptography used by electronic commerce security including symmetric and asymmetric key systems and a payment method using Secure Sockets Layer (SSL) are discussed.

• Technologies used by electronic commerce: Three major technologies used by electronic commerce are (i) artificial intelligence, (ii) information retrieval, and (iii) business management. Web mining of artificial intelligence and Web searching of information retrieval have also been discussed in this prologue.

The Selected Readings on Electronic Commerce Technologies: Contemporary Applications presents a set of first-class articles on contemporary electronic commerce technologies written by renowned scholars, scientists, and industrialists from all over the world. Its aim is to provide assorted, seamless, up-to-date high-quality research publications of electronic commerce technologies and applications for class use. Students will smoothly gain valuable knowledge from this book and lecturers will be greatly benefited by its convenience and effectiveness.