E-Commerce Security

COEN 351

Thomas Schwarz, S.J.

Amazon.com
1994: Bezos founds amazon.com
1995: Amazon opens for business; competes on prize,
selection, convenience, service. Business model
promises low overhead.
1999: Bezos is man of the year for Time magazine.
2000: 2.7 B$ revenue, 1.4 B$ loss starts search for
profitability.
2002: First ever profits. 4B$ revenue
2005: First quarter net revenue 1.9B$, net income
78M$
E-Commerce
 E-commerce
 Use of the internet to transact business.

 E-commerce I
 1995 – 2000: explosive growth,
extraordinary innovation
 March 2000: dot.bust
 2001 – today: solid growth, less hype
E-Commerce I
 Disintermediation
 Friction-free commerce
 Information equally distributed
 Transaction costs are low
 Prices are dynamically adjusted
 Goal of “First Mover”
 Successful first mover becomes new intermediary

$120 B$ capitalization for 12,450 dot start-ups

10% survival rate, very few profitable
E-Commerce II
 Earning and profits emphasis
 Traditional Financing
 Stronger regulation and governance
 Strengthening intermediaries
 Imperfect markets
 Mixed “click and brick” strategies
E-Commerce Business Model
 Value proposition (Why buy from you?)
 Revenue model (How will you make money?)
 Market opportunity
 Competitive environment
 Market strategy
 Organizational development
 Management team
E-Commerce Business Model
 Revenue Model
 Advertising revenue model
 Subscription revenue model
 Transaction fee revenue model
 Sales revenue model
 Affiliate revenue model
E-Commerce Business Model
B2C
 Portals
 E-tailers
 Competitive market because barrier to entry is low
 Content provider
 Transaction broker
 Market creator
 Brings buyers and sellers together
 Service Provider
 Community Provider
E-Commerce Business Model
B2B
 E-Distributor (Sales of goods)
 E-Procurement (Fees, supply chain
management, fulfillment services)
 Exchanges (Fees, commissions on
transactions)
 Industry Consortia
Emerging E-Commerce
Business Models
 C2C: eBay
 P2P: Kazaa
 M-commerce (mobile commerce), uses
wireless
 E-commerce enablers
Internet Fraud Complaints
2003
 Auction fraud 46.1%
 Non-delivery 31.3%
 Credit / Debit card fraud 11.6%
 Investment fraud 1.5%
 Business fraud 1.3%
 Confidence fraud 1.1%
 Identity theft 1.0%
 Check fraud 0.5%
 Nigerian letter fraud 0.4%
 Communications fraud 0.1%
 Internet Fraud Statistics
First Half 2005
 Instance % compl. Average Loss
 Auctions 44% $999
 General Merch. 30% $4,389
 Nigerian Scam 7% $11,370
 Fake Checks 5% $4,733
 Phishing 4% $298
 Lotteries 3% $3,953
 Info / Adult services 2% $277
 Work-at-Home Plans 1% $726
 Computer Equip. / Software 1% $608

Source: National Internet Fraud Watch Information Center

Data is on complaints by consumers.
E-Commerce Security
 Integrity
 Non-repudiation
 Authenticity
 Confidentiality
 Privacy
 Availability
E-Commerce Security
 Threats:
 Malicious Code
 Hacking, Cybervandalism
 Credit Card Fraud
 Spoofing
 DoS, DDoS
 Sniffing
 Insider Jobs