Transcript What does it take to be an Internet Service Provider

ISPs for E-Commerce
Nizar R. Mabroukeh, M.Sc., C.S.
[email protected]
http://www.geocities.com/mabroukeh
E-Commerce Short Course
19th April, 2000
Topics to be Covered
 Planning & Requirements
– Market and business study
– Requirements for an ISP
– Tuning your ISP setup to E-Commerce
 Starting the business as an ISP
– Advertise
– Sell (shopping, checkout, authorization, charge back)
– Start your E-Commerce Business
– Promote
 Surviving the competition
 Future Developments
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Planning and Requirements
Planning
 Business Requirements
 Technical Requirements
 Selection / procurement
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Know The Internet Market
The Internet is:
 Open 24 / 7
 Connects people “not computers”
 Communicate with anybody, anytime,
anywhere
 Everything is a “click away”
 You should be selling on The Internet
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The Internet a
Threat or an Opportunity ?
“Internet represents a strategic inflection point
for business - grab it or lose it”
Intel Co-Founder Andy Grove
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The Connected Society
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CEO & Executive Quotes
 The Internet revolution will have a larger impact
than the industrial revolution
 Unless you get INTO the Internet you will be
replaced
 Add value and you will survive
 To be successful locally you need to be available
globally
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Internet Users
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Internet Penetration
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Net Users in Middle East
,
,
,
,
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Yemen
Oman
Jordan
Kuwait
KSA
Egypt
Lebanon
UAE
,
Users April
11
Middle East Net Demographics
 1 million users by 2000
 27 % high school certificate
 58 % University Degree
 14 % Master & PhD
 21 - 35 yrs old largest group - 70 %
 72 % Connect from Home
IAW Magazine Aug 5, 1999
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E-Commerce Revenues
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Revenue Estimates
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E-Commerce in Europe
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US vs World
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What about Middle East
E-Commerce ?
 Barely exists
 Purchased $ 95 million during April 98 -
April 99
(IAW magazine)
 9 % made purchase compared to 4 % in 97-
98
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Middle East E-Commerce ?
 33 % one purchase
 18 % regular purchases
 What did they buy ?
Software … Books … CD’s … Clothing
Traveling tickets … gifts … flowers ….
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However
82 % of purchases from int’l vendors
They are now your competitors
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Business Model
Small
Companies
Professionals
Medium
Companies
New
Products &
Services for the
Business Community
Large
Companies
Trusted
Internet
MarketPlace
Independent
Software
Vender
New
Products &
Services for the
Business Community
Business
Community
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Technical Requirements
Infrastructure for regular ISP
 A connection to a larger Internet Provider.
 Hardware and Software to provide Internet
Services.
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Connecting To A Larger ISP
 ISPs are divided into classes (A, B and C),
according to how many sub-networks they
can support with unique IP addresses.
Example:
AT&T  KACST Commercial ISPs Internet Café
Satellite Leased Line
Leased Line
or Submarine
or Frame Relay
Fiber Optic
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Connecting To A Larger ISP
 Hardware depends on type of connection.
 You are connecting your LAN to the larger
provider.
 Generally, you will need:
–
–
–
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–
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An appropriate Router.
A Gateway, if different types of networks.
A Web server, with Secure Socket Layer (SSL).
A Proxy server to cache your link.
A Firewall to protect your LAN from intruders.
May need a leased-line modem or digital modem.
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HW & SW to Provide Internet
 You will providing for 3 types of customers:
– Your local users on your LAN (directly
connected to the servers)
– Dial-up users (using Modem)
– Corporate accounts (Leased-lines, VPNs,
Frame-Relay…etc.), like Internet Cafès and
Intranet solutions to companies.
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HW & SW to Provide Internet
 For the 3 different types you will need:
– A machine for each of the following
applications:
• Web Server: Ex. Microsoft Internet Information
Server (MIIS), Apache server (for Linux)…
• Proxy Server: Ex. Netscape Proxy Server
• E-Mail Server: Ex. Microsoft Exchange.
• Firewall: to protect your LAN. Ex.: SQUID,
ipchains…
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Dial-up Customers HW
 For dial-up customers you will need a pool of
modems (a modem for every phone line you
have).
 A customer dials your service using a pilot number
which will connect him to the first available line
from the pool.
 Thus you need a Port Master and a RAS (Remote
Access Server).
 User Authentication follows the OS on the RAS.
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Corporate Accounts HW
 Leased-line modem, Frame-Relay switches,
VPN routers…etc. depending on connection
type.
 Most importantly you will need to have a
pool of vacant and static IP addresses to
provide.
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Your Team
 Technical Team
 Customer Support Team
 Sales Team
 Marketing and Promotion Team
 Billing and Accounting Team (Customer
Care)
 Content and Quality of Service Team
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Technical Team
 Configures, manages and administers your
connection as well as troubleshooting problems on
the LAN and the Internet setup.
 Supports and provides connection to corporate
users.
 Responsible for providing a continuous and
smooth link with appropriate bandwidth to your
ISP (Tune the connection).
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Customer Support Team
 On-site installation and setup of service for
dial-up users.
 Help-Desk service and troubleshooting.
 Provides After-Sales service for dial-up
users and small corporate accounts (like
Internet Cafés).
 Takes customer notes on service.
 Works side-by-side with Technical team.
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Billing and Accounting Team
 Must be online with customer database
 Always on contact and direct arrangement
with Marketing team.
 Aware of their limits that might depend on
technical matters of the link.
Ex.: If server cannot keep track of off-peak hours,
we cannot sell off-peak accounts.
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Content and Quality of Service Team
 They provide content to the users.
 Design your webpage and keep it up to date.
 Keep users attracted and entertained:
– Hold newgroups discussions.
– Link people together: Chatting Services, small
tutorials, free personal websites for users…
– Link your users to the government or people
who interest them.
– Provide E-Commerce.
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Sales Team
 First Contact with customer thus first on-ground
impression about company.
 Must be knowledgeable about The Internet in
general and about the company’s capabilities.
 Promise only what the company can deliver and
deliver what was promised.
 Make friends with customers and keep in contact
after closing the deal.
 You Better have a sub-team for corporate
accounts.
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Marketing and Promotion Team
 Advertise  Sell  Market  Promote.
 Marketing is important for continuity of the
company as well as in competition.
 Hold promotional campaigns taking chances of
special occasions.
 Must have a clear goal (part of the general mission
of the company) on each campaign.
 Should be flexible and fluctuant with Competition
(able to compete).
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Marketing vs. Selling in Web
Sites
 In marketing sites there is often a reluctance
to give complete information.
 With selling, the objective is to close the
sale electronically.
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Sections of Selling Sites
 Sites that sell generally have 3 sections:
– Marketing and added value information.
– The Catalogue: product specs and prices.
– Order processing: Advanced systems may
have a method for the customer to check
progress and delivery of the order.
Such sites may be stand-alone, or may form part
of a larger site called a “Shopping Mall”
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Tuning to E-Commerce
 Online Catalogue
 Shopping Cart
 Secure Servers and SSL
 Payment Gateways
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Mall Services
Business Owner
Secure access
(DID)
Secure access
(DID)
Mall Owner
Advertisers
Internet
Secure access
Classified
Ads
Customer
Secure access
Mall front
Remote
Sales
Mall BackOffice
Extended
Services
Electronic Mall
Administration
Reports
&
Statistics
Browse
Mall
Services
Mall Front
Manager
Order
$$$
Collect
Services
(shopping
basket)
Extended
Services
Service Manager
Business
Owners
Manager
Financial
Institution
Mall
Manager
Secure eCommerce Services & Hosting
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Example on Mall Deliverables
• Mall infrastructure:
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•
•
•
•
•
•
Register/transfer/point Mall DNS
Database design and programming
Automated provisioning and upgrading.
Store ‘test drive’
Central Category directory
Global shopping
Global search capability
• Mall front:
•
•
•
Advanced shopping cart
Static store policy pages
Multiple payment methods
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Example on Mall Deliverables
• Mall Backoffice:
 Service manager
 Modify, add and delete services
 Modify, add and delete templates
 Modify, add and delete store
 Mall manager









Fulfill orders
Generate invoices
E-mail confirmation notices automatically
Track open orders
Track and manage accounts receivable
Generate past due notices
Search orders
Search unordered baskets
Payment processing
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Example on Mall Deliverables
 Customer (store owner) manager







Modify, add or delete customer information
Manage customer passwords
Track account balances
Assign service levels
Set credit limits
Set credit length
Search for customers
 Mall front manager
 Modify, add and delete Mall front text
 Modify, add and delete Mall front advertisements
 Modify, add and delete Mall demo
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Example on Mall Deliverables
 Graphical Reports and Statistics
 Mall front processes
 Report on traffic and order analysis by day, week, or year
 Report on store sales statistics by item number, rank,
time period
 Optional
 VeriSign Server Set-up (to eliminate spoofing)
 Automated Billing System
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Store Services
Shipper
(UPS)
Internet
Business Owner
Secure access
(DID)
Customer
Storefront
BackOffice
Electronic Store
Reports &
Statistics
Product
Manage
r
Browse
Catalog
Extended
Services
Supplier
Order
$$$
Collect
products
(shoppin
g basket)
Inventory
Manager
Catalog Manager
Store
Manage
r
Customer
Manager
Purchase
Manager
Extended Financial
Services Institution
Secure eCommerce Services & Hosting
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• Each store is “rented” from a “Community” or
•
•
“Mall” by a business
Each business selects the services that best meet
the online requirements of that business
Each store may choose among different services
like:
•
•
•
•
•
•
•
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Home page for advertisement of a business or classified
with contact information
About page
Order information page
How to shop page
Catalog list pages
Store ‘specials’ page
Reporting and statistics
Advanced reporting and statistics
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 Central directory search
 Advanced shopping basket
 Image uploading
 Shipping matrix
 Tax matrix
 Automated order notification
 Global ‘specials’ listing
 Generic invoices
 Real time payment processing capability
 Drop ship supplier order notification
 Customer profiling
 Storefront management facilities
 Backoffice administration facilities
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You Have All The Gadgets
Fully Equipped and ready….
 Let’s Hit The Market
Start Your Business
 After you have decided on your company mission,
you can advertise on the grounds of this mission.
 Sell:
– In-door sales: For walk-in customers
– Out-door sales: Target a special class or group of people
or industry sector, collect contacts, call them on the
phone and visit them.
 Market and Promote (again, have clear goals and
targets)
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Important Points for Sales
 Internet Customers are usually interested in:
– Price vs. quality of service.
– Customer Support (after-sales service).
– On-call Tech. Service.
– Trial accounts.
– Your Bandwidth and your ISP.
 If I am a customer, I would ask you to convince
me to buy from you and not other companies. This
is when your “content” comes into action.
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Building E-Commerce Business
 Negotiate links with other websites.
 Traditional Marketing (include it with your
marketing team).
 Advertising on search engines and other
high traffic sites.
 Associate programs where sites that refer
visitors get a commission on sales.
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Online Catalogue
 Navigation
 The shopping cart
 Check-out
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Navigation
 The visitor should be able to get to the
product they need with very few clicks.
 The Information must be comprehensive
once the customer has located the product
of interest.
 Provide pictures and diagrams to help the
customer understand what is being offered.
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Shopping Cart
 When the catalogue is small (less than 20
items) a simple order form will do.
 At any point the customer should be able to
review the cart, the cost and so on.
 This makes it easy for the customer to
browse the site selecting products as they
go.
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Check out
 The customer should be presented with a
list of what he purchased and their price.
 The customer can then add shipping
instructions.
 At this stage the site should switch to
Secure mode normally using SSL. This
means that all communications with the
server is encrypted.
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Different Type of Payments
 Offline
– Bank Transfer
– Cheque
– Escrow
– Telephone Order
– Fax
 Online
– Micro-payments: E-Cash, CyberCash…
– E-Cheques
– Credit Card
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What is involved in credit card
processing?
– Authorization.
– Capture.
– Charge back.
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Authorization
 Manual: Download sales details from Web
Server and request authorization in normal
method.
 Automatic: Server software communicates
directly with credit card processing
company computer and arrange
authorization online. (needs secure
connection)
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Capture
 Debiting the credit card
 Can happen at the same time as
authorization if the merchant guarantees
delivery within a certain fixed time.
 Otherwise, capture should take place when
the goods are shipped.
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Charge Back
 This is when the customer is dissatisfied
and arranges for the transaction to be
cancelled.
 Note that the fact that a payment has been
authorized by the bank does not provide any
protection against charge back.
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Escrow
An escrow service is an intermediary between
buyer and seller, collecting payment from
the buyer and holding it until the buyer
confirms delivery of the purchased item.
www.iescrow.com www.tradesafe.com
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Ability to accept credit card
payment
1- Set up Merchant Account
2- Order Form on Web Site (HTML , CGI)
3- Form encrypted using Secure Socket Layer
(SSL)
4- Digital Certificate
5- Payment processing software
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1- Merchant Account
 Accounts that accept and hold credit card
transaction monies
 Merchant service provider (MSPs) or
Independent service Organisations (ISOs)
 Process to set up a Web-enabled credit card
merchant account
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2- Order Form
Set up form using HTML and CGI to
– Pass credit card to the payment processing
software, which sends transaction to bank
– Send an email to whoever fulfills orders with
order information and customer mailing address
– Create confirmation page to customer and
tracking information
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On-Line Transaction Cost
 Discount Rate (credit Card Company)
 Per Transaction Charge
 Monthly Statement Fee
 Monthly Gateway Fee
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3- Secure Server
 Only page with the actual order form needs
to be placed on secure server
 Using a secure Web protocol such as SSL
has two main goals
– Credit Card Date Encryption
– Certify message is coming from where it claims
to be by means of digital certificate
– https:// instead of http://
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Secure Servers
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Security Issues
 SSL developed by Netscape encrypts
messages passed from customer to web
server
 Only 40-bit encryption is available worldwide. It is weak, but it is enough to protect
against automated message scanning.
 Information passed to the credit card
processor and the merchant must also be
protected.
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Security Issues
 Information stored on the web server, and
before being passed to the merchant is at the
risk of someone breaching security on the
server and examining the files
Solution:
 Encrypt the info. stored on the server
 or, use a firewall, which limits access to the
server to specific types, such as “web traffic
only”
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4-Digital Certificate
 Obtained from digital certificate authority
 Submit Certificate Signing Request
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Surviving The Competition
Ensure Continuity
 Try as much as possible to keep your
configuration tuned for best performance.
– If you need more bandwidth get more.
– If you need more phone lines get more.
– You might need to install new modems to keep up with
technology that you’re customers are using, do it.
 Provide Content and Entertainment as mentioned
before.
 Make a survey about your service every now and
then by calling customers and asking them (keep
up quality of service).
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Ensure Continuity
 Get rid of nosey customers, naggers,
hackers, and hot shots ! HOW?
 Make friends with your loyal customers,
arrange gatherings.
 You can also promote and market for your
new services in these gatherings.
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Future Development
 The Internet is growing dramatically
everyday. Thus the emergent need for
development to keep up with technology.
 It would be good if you had future plans in
mind since day one of establishing your
company.
 Development in hardware and in content.
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Development Team
 Establish a team for Research and
Development (R&D).
 Give them resources they need: Money,
testing devices, library, research tools…
 Usually R&D is the most money and time-
consuming department in any company.
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R&D Responsibilities
 Should follow up on new technologies and
services.
 Should be able to carry out experimentation and
testing on new technologies and provide
management with consultation and support in
futuristic plans.
 Should be able to come out with new ideas and
plans to enhance the performance of employees,
the network and the system as a whole.
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Summary
 We have seen the basic steps one needs to start his
business as an ISP with E-Commerce added
service.
 To be a successful ISP keep in mind the following
points:
– Good planning (the internet provides a lot of services
and there is a lot of technology involved, you might get
lost).
– Robust connection to your ISP and enough resources.
– Quality of service.
– A lot of customer care.
 The competition is wild !
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Conclusion
E-Commerce is a new form of marketing with a
predicted explosive growth over the next few
years.
The technology underlying the market is quite
complex, and will become more so as new
payment methods and web technologies come on
stream. The marketing approach is also new and
different.
The key to success is to find innovative ways to use
that technology to attract customers and build
business.
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Thank You
For more information
Nizar Mabroukeh
King Fahd University of
Petroleum and Minerals
[email protected]