E-Commerce

Dual signature

A dual signature is a digital signature technique used in SET (Secure Electronic Transaction) that links two messages intended for two different recipients, so that each recipient can read only its own message, but the two are cryptographically bound together. In SET, the customer sends the order information (OI) to the merchant and the payment information (PI) to the bank, without letting the merchant see the card details or the bank see the order details. It proves that the order and the payment belong together.

Generation of dual signature

1. Compute the hash of the payment information: $PIMD = H(PI)$.
2. Compute the hash of the order information: $OIMD = H(OI)$.
3. Concatenate the two digests and hash them: $POMD = H(PIMD \,\|\, OIMD)$.
4. Encrypt $POMD$ with the customer's private key:

$DS = E_{KR_c}\big[H(PIMD \,\|\, OIMD)\big]$

Verification: the merchant has $OI$, $DS$ and $PIMD$. It computes $H(PIMD \,\|\, H(OI))$ and compares it with the value obtained by decrypting $DS$ with the customer's public key. The bank has $PI$, $DS$, $OIMD$ and does the same.

Payment authorization in SET

1. The customer sends the purchase request to the merchant: the OI, the dual signature, the OIMD, and the PI encrypted for the bank (with a digital envelope) with the customer certificate.
2. The merchant verifies the customer's certificate and the dual signature, and processes the order.
3. The merchant sends an authorization request to the payment gateway through the acquirer, containing the encrypted PI, the dual signature, the OIMD and the merchant's certificates and details of the transaction.
4. The payment gateway decrypts and verifies the certificates and the dual signature, and checks that the PI matches the order. It then requests authorization from the card issuer through the existing financial network.
5. The issuer approves or rejects the transaction. The gateway returns an authorization response (digitally signed and encrypted) to the merchant.
6. The merchant sends the purchase response to the customer, ships the goods, and later requests payment capture, after which funds are transferred to the merchant's account.

E-commerce is the use of the internet, the web and mobile apps to carry out commercial transactions, i.e. the buying and selling of goods and services and the transfer of funds and data over digital networks, between organisations and individuals.

Key elements of an e-commerce business model

1. Value proposition: why a customer should buy from the firm, e.g. convenience, personalisation, wide selection, lower price, and reduced search costs.
2. Revenue model: how the firm earns money: advertising, subscription, transaction fee, sales, and affiliate revenue.
3. Market opportunity: the market space the firm intends to serve and the realistic revenue potential in it.
4. Competitive environment: other firms selling similar products in the same space, and their strengths.
5. Competitive advantage: the unique strengths (first-mover advantage, better technology, brand, lower cost) that let it do better than rivals.
6. Market strategy: the plan to promote the product and attract customers.
7. Organisational development: the structure and the plan for roles and the staff needed to carry out the business plan.
8. Management team: the experience and skills of the people leading the venture.

Social marketing is the use of social networks (Facebook, Instagram, Twitter, etc.) to build brand awareness and engage consumers, using content, sharing, and social advertising, where customers themselves help spread the message.

Mobile marketing is marketing through mobile devices, using mobile ads, SMS, apps and mobile-optimised websites to reach customers anywhere, at any time, often using the device's features.

Local marketing is targeting customers by their geographic location, using GPS and location-based services (e.g. offers sent to people near a store, local search ads).

Completion rate and skip rate in video ads

• Completion rate is the percentage of the video ad views in which viewers watched the ad to the end:

$\text{Completion rate} = \frac{\text{views watched to completion}}{\text{total views}} \times 100\%$

A high rate shows that the content is engaging and holds attention, so it is a measure of the quality of the ad and of the audience targeting.

• Skip rate is the percentage of the viewers who skip the ad when the skip option is offered:

$\text{Skip rate} = \frac{\text{skips}}{\text{total impressions}} \times 100\%$

A high skip rate shows that the ad is irrelevant or boring or is aimed at the wrong audience.

Advertisers use both to judge the effectiveness of a campaign, to improve the first seconds of the ad, to optimise targeting, and to decide payments (e.g. cost per completed view).

The history of e-commerce (since 1995) is divided into three periods.

1. Innovation (1995-2000): the first commercial transactions on the web. Entrepreneurs and venture capitalists created many new "dot-com" companies (Amazon, eBay, Yahoo, Netscape). Business models were new and based on the vision of low-cost, global markets, and many firms focused on gaining traffic and market share and not on profit. Stock markets valued these firms very highly. The period ended with the dot-com crash in 2000-2001.

2. Consolidation (2001-2006): many failed firms disappeared. The survivors, mostly established brick-and-mortar companies, adopted e-commerce. Companies concentrated on profitable business models, branding, and integration of online and offline operations. Broadband spread and large firms acquired smaller ones.

3. Reinvention (2006-present): the rise of Web 2.0, social networks, user-generated content, mobile devices and apps, cloud computing and big data. New models such as social, mobile and local (SoLoMo) commerce, streaming and the sharing economy appeared, and e-commerce grew into most industries.

A business needs capital for starting up and growing. It can be raised from the following sources.

1. Personal funds and family/friends: the owners' savings and loans from relatives, often the first source.
2. Angel investors: wealthy individuals who give money in return for equity in the early stage.
3. Venture capital: firms that invest in high-growth start-ups in exchange for equity and some control, in several rounds.
4. Bank loans and credit: borrowing, which must be repaid with interest, often needing collateral.
5. Government grants and incubators/accelerators: funds, mentoring and space for start-ups.
6. Crowdfunding: collecting small amounts from many people through online platforms.
7. Strategic partners and corporate investors.
8. Initial public offering (IPO): selling shares to the public through the stock market, usually in a later stage.
9. Reinvesting retained earnings from the business itself.

The choice depends on the stage of the business, the amount needed, the cost, and how much control the owners will give up.

Integrity means that information is not altered, in transit or in storage, by unauthorised parties. In e-commerce it ensures that an order or a payment message received is exactly what was sent (for example, the price or quantity has not been changed). It is achieved with hash functions, message digests, and digital signatures.

Nonrepudiation means that a party cannot later deny having sent a message or having taken part in a transaction. For example, a customer cannot deny placing an order, and a merchant cannot deny receiving payment. It is provided by digital signatures, certificates issued by a trusted certification authority, and transaction logs.

Confidentiality means that information is disclosed only to authorised persons, and kept secret from eavesdroppers. In e-commerce, card numbers and personal data must not be read in transit. It is achieved by encryption (SSL/TLS, symmetric and public key cryptography) and access controls.

Main security threats in e-commerce are the following.

1. Malicious code: viruses, worms, Trojan horses, ransomware, bots, which damage data or steal information.
2. Phishing and social engineering: fake emails or sites trick users into giving passwords or card numbers.
3. Hacking and cyber-vandalism: unauthorised access, defacing websites, data breaches.
4. Credit card fraud and identity theft: stolen card data used to make purchases.
5. Spoofing, pharming and spam sites: false identity or redirected traffic to fake sites.
6. Denial of service (DoS/DDoS) attacks: flooding the server to make the site unavailable.
7. Sniffing and eavesdropping: capturing data on the network, especially on public Wi-Fi.
8. Man-in-the-middle attacks: an attacker intercepts and modifies communication.
9. Insider threats: employees misusing access.
10. Poor security of mobile devices and apps, and of third-party services or the cloud.

Countermeasures include encryption (SSL/TLS), firewalls, antivirus, authentication, digital certificates, intrusion detection and user awareness.

In online credit card transactions, the payment is made through a payment gateway and the card network. The process is as follows.

1. Checkout: the customer selects the goods, enters the shipping details and card information on the merchant's secure (SSL/TLS) page.
2. Transmission: the merchant's server sends the details to the payment gateway (or payment processor), which sends the data in encrypted form to the merchant's bank (the acquirer).
3. Authorization request: the acquirer forwards the request through the card network (Visa, MasterCard) to the issuing bank of the customer.
4. Verification: the issuer checks the card validity, the available credit and signs of fraud (and possibly asks for an OTP / 3-D Secure authentication).
5. Response: the issuer approves or declines, and the answer returns along the same path to the merchant, which shows the result to the customer.
6. Fulfilment: the merchant delivers the goods or service.
7. Settlement: the merchant submits the approved transactions for capture; the issuer transfers the money (minus fees) via the card network to the acquirer, which credits the merchant's account. The customer is billed on the monthly statement.

Open source CMS platforms such as WordPress (with WooCommerce), Drupal (with Drupal Commerce), Joomla (with VirtueMart), Magento Open Source and PrestaShop can be used as the base of an E-commerce application, so that only customisation is needed rather than building everything from scratch.

Steps and uses

1. Select the CMS and commerce extension. Choose according to catalogue size, traffic and developer skills, for example WordPress + WooCommerce for small shops, Magento or Drupal Commerce for large catalogues.
2. Install and configure. Set up hosting, database, SSL certificate, currency (Rs), tax and shipping rules.
3. Catalogue management. The CMS admin panel is used to add products, categories, attributes, images, prices and stock.
4. Themes and templates. Ready-made themes give a responsive storefront which can be modified with HTML, CSS and PHP.
5. Plugins/modules. Shopping cart, checkout, coupons, reviews, SEO, analytics, multi-language and social sharing are added as extensions.
6. Payment and shipping integration. Gateways (eSewa, Khalti, IME Pay, card gateways, PayPal) and courier APIs are connected through plugins.
7. Customisation. Because the source code is open, developers can write custom modules, change workflows and integrate ERP, CRM or inventory systems.
8. Security and maintenance. Apply community updates and patches, use backups, strong authentication and firewalls.

Advantages: no licence cost, large community support, fast development, flexibility and no vendor lock-in. Limitations: need for regular updates, plugin compatibility and security problems if poorly maintained, and performance tuning for high traffic.

Pinterest is a visual discovery platform where users save "pins" (images/videos) to "boards". It drives traffic to E-commerce sites, and its marketing tools include:

• Business account and profile. A free business account gives analytics, ads access and a verified, claimed website.
• Rich Pins. Pins that automatically pull metadata from the website. Product pins show live price, availability and a buy link; article and recipe pins show title and description.
• Promoted Pins (Pinterest Ads). Paid pins shown in search and home feeds, targeted by keywords, interests, demographics, location and device. Campaign types include awareness, consideration, conversions and shopping.
• Shopping/Catalogs. Product catalogue upload turns products into shoppable pins.
• Pinterest Analytics. Shows impressions, saves, clicks, audience insights and top performing pins and boards.
• Pinterest Tag. A code snippet on the website that tracks conversions and builds retargeting audiences.
• Save/Pin It button and widgets. Let visitors pin website content, which spreads the brand.
• Idea Pins, Trends and Boards. Short video/story pins, a trends tool for seasonal keywords, and themed boards for organising content and SEO.
• Audience tools. Actalike (lookalike) audiences and customer list targeting.

Recommendation system

A recommendation system (recommender) is an information filtering system that predicts the rating or preference a user would give to an item and suggests the most relevant products, movies, news or friends. Examples are Amazon's "customers who bought this also bought" and Netflix suggestions. It increases sales, engagement and customer satisfaction.

Collaborative filtering vs content based filtering

Hybrid systems combine both.

Page rank

PageRank is the link analysis algorithm developed by Larry Page and Sergey Brin for Google. It assigns each web page a numerical importance score based on the number and quality of pages linking to it. A link from page A to B is treated as a vote, and a vote from a high-ranked page counts more. The simplified formula is:

$PR(A) = (1-d) + d\sum_{i=1}^{n}\frac{PR(T_i)}{C(T_i)}$

where $T_i$ are pages linking to A, $C(T_i)$ is the number of outbound links of $T_i$, and $d$ is the damping factor (about 0.85).

Improving page rank through SEO

• Quality backlinks. Earn links from authoritative, relevant sites through guest posts, press releases, directories, partnerships and shareable content.
• Quality content. Original, useful, regularly updated content with proper keywords in the title, headings, meta description and URL.
• On-page optimisation. Title tags, meta tags, ALT text for images, clean URLs, header tags and keyword placement.
• Internal linking. Link important pages with descriptive anchor text and use a clear site structure and sitemap.
• Technical SEO. Fast loading, mobile-friendly design, HTTPS, XML sitemap, robots.txt, and fixing broken links.
• Social signals and user experience. Social sharing, low bounce rate and good navigation.
• Avoid black-hat practices. Link farms, keyword stuffing and hidden text lead to penalties.

Business model

A business model is the plan describing how an organisation creates, delivers and captures value, that is, how it earns revenue and profit. In E-business it covers the target customers, value proposition, products/services, revenue sources (sales, advertising, subscription, commission, transaction fees), cost structure, partners, and competitive strategy. Examples are brokerage, advertising, merchant, infomediary, subscription and community models.

Ways of raising capital for a business model

1. Bootstrapping / personal funds. The founders use their own savings, or money from family and friends. Control is retained but the amount is limited.
2. Angel investors. Wealthy individuals invest in early stage ventures in return for equity, and often provide mentoring and contacts.
3. Venture capital (VC). Professional funds invest large sums in high-growth start-ups in stages (seed, Series A, B, C) for equity and a say in management, expecting an exit by IPO or acquisition.
4. Bank loans and debt financing. Term loans, overdrafts and credit lines from banks and financial institutions. Interest has to be paid but ownership is not diluted.
5. Crowdfunding. Many small contributors fund through platforms (reward, donation, equity or debt based).
6. Incubators and accelerators. Provide seed money, workspace and training in exchange for a small equity stake.
7. Grants and government schemes. Funding from governments, donors or competitions that need not be repaid.
8. Strategic partners / joint ventures. A larger firm invests for strategic benefit.
9. Initial Public Offering (IPO) and share issue. A mature firm sells shares to the public through the stock exchange.
10. Retained earnings and revenue-based financing. Reinvesting profits or sharing a percentage of future revenue.

The choice depends on the stage of the business, the amount needed, willingness to give up control, the cost of capital and the risk.

Multi-channel marketing

Multi-channel marketing means interacting with customers through multiple channels, such as a physical store, website, mobile app, email, social media, call centre, catalogues and marketplaces, so that customers can choose their preferred way to browse and buy. Each channel may run somewhat independently, whereas omni-channel integrates them into one seamless experience. Its benefits are wider reach, more touch points, higher sales and better customer data.

Importance of viral marketing in E-business

Viral marketing encourages users to pass a marketing message to others, like a virus, usually by email, social media, videos, referral offers or "share" buttons.

• Very low cost, since customers do the distribution.
• Exponential and fast reach in a short time.
• Credible, because recommendations come from friends.
• Builds brand awareness and traffic, and generates leads and customer acquisition.
• Examples include referral bonuses, shareable videos and memes, and Hotmail's signature link.
• Risks: loss of control over the message, and negative content can also spread.

Social marketing process

1. Set goals such as brand awareness, traffic, leads or sales, and define measurable KPIs.
2. Identify the target audience and study their behaviour and preferred platforms.
3. Choose platforms (Facebook, Instagram, LinkedIn, YouTube, TikTok, X) and set up business profiles.
4. Plan the content strategy: posts, images, videos, stories, contests, influencer collaborations and a content calendar.
5. Create and publish engaging content, and use paid social ads where required.
6. Engage the community by replying to comments and messages, running polls, and providing customer service.
7. Monitor and measure reach, likes, shares, comments, click-through, conversions and sentiment with analytics tools.
8. Optimise the strategy using the results, and repeat the cycle.

SET participants

Secure Electronic Transaction (SET) is a protocol developed by Visa and MasterCard to secure credit card payments over the internet using cryptography and digital certificates. Participants are:

1. Cardholder. The customer who uses a payment card issued by an issuer to make purchases.
2. Merchant. The seller who offers goods or services and accepts card payments; the merchant holds certificates but does not see the card number.
3. Issuer. The financial institution (bank) that issues the card to the cardholder and is responsible for the payment of authorised transactions.
4. Acquirer. The financial institution that establishes an account with the merchant and processes card authorisations and payments.
5. Payment gateway. A function operated by the acquirer or a third party that processes merchant payment messages and interfaces with the banking network.
6. Certification authority (CA). A trusted body that issues X.509v3 digital certificates to cardholders, merchants and payment gateways.

Status of E-payment in Nepal

• Nepal Rastra Bank (NRB) regulates payments under the Payment and Settlement Act 2075 and licenses Payment Service Providers (PSP) and Payment System Operators (PSO).
• Wallets and gateways such as eSewa, Khalti, IME Pay, Prabhu Pay, and Fonepay are widely used for bill payment, recharge, ticketing and shopping.
• Banks offer mobile banking, internet banking, ATM and debit/credit cards; Nepal Clearing House (NCHL) provides connectIPS and NCHL-IPS for interbank transfers, and NepalPay QR enables QR-based payment across banks and wallets.
• Card networks (Visa, MasterCard, UnionPay, NPN) are accepted at POS terminals, and international payments remain restricted.
• Usage has grown strongly since COVID-19, especially QR payments and mobile wallets.
• Challenges: limited internet access in rural areas, low digital literacy, security and fraud concerns, restrictions on international online payment for foreign services, limited interoperability in some cases, and dependence on cash.
• The Electronic Transactions Act 2063 provides the legal basis, with improving trends in digital adoption.

Many purchases are both, for example buying on Instagram using a phone.

Significance of EDI in E-business

Electronic Data Interchange (EDI) is the computer-to-computer exchange of structured business documents (purchase orders, invoices, shipping notices, payments) between organisations in a standard format, without paper or human re-entry.

• Reduces paper work, data entry errors and processing time.
• Cuts cost of printing, postage and storage.
• Speeds up the order-to-cash cycle and supports just-in-time inventory.
• Improves accuracy, security and traceability of transactions.
• Strengthens relationships with trading partners and supports supply chain automation.
• Standards such as ANSI X12 and UN/EDIFACT enable global trade.

EDI layers

1. Semantic (application) layer. Business application that creates or consumes data (such as the purchase order in the ERP or accounting system) and decides what is to be sent.
2. Standards translation layer. Converts the internal data format into a standard EDI format such as X12 or EDIFACT, and the reverse on receipt.
3. Packing (transport) layer. Puts the EDI document in an "envelope" with headers and addresses, and may encrypt and compress it, using e-mail, MIME or other message formats.
4. Physical network infrastructure layer. The actual network that carries the message, such as a VAN (value added network), the internet, FTP, AS2 or leased lines.

Non-repudiation

Non-repudiation is the security property that prevents a party from denying that it sent a message or carried out a transaction (or denying receipt). In E-commerce it means a buyer cannot later claim "I never placed this order" and a seller cannot deny accepting it. It is achieved through digital signatures, digital certificates, timestamps, and audit logs.

Harm from sniffing

Sniffing is capturing network packets with a packet analyser (such as Wireshark) to read the data in transit.

• Attackers can read credit card numbers, passwords, session cookies and personal data sent unencrypted.
• Stolen credentials lead to account takeover and fraud, and loss of customer trust.
• It is difficult to detect since it is passive.
• Countermeasures: HTTPS/SSL/TLS, VPN, strong encryption, and switched networks.

Harm from spoofing

Spoofing is impersonating a legitimate user, website, IP address or email address (IP spoofing, DNS spoofing, phishing sites, email spoofing).

• Customers are deceived into entering card or login details on a fake shop site.
• Orders and payments can be sent with a false identity, and the legitimate merchant's brand is damaged.
• Man-in-the-middle attacks can alter transactions.
• Countermeasures: digital certificates, authentication, SSL, firewalls, ingress filtering, DNSSEC and user awareness.

The Electronic Transactions Act, 2063 (2008) of Nepal gives legal recognition to electronic records and digital signatures and regulates cyber activities. It is organised in chapters (sections) as follows.

• Preliminary (Sections 1-2). Short title, commencement and definitions (electronic record, digital signature, certifying authority, subscriber, computer, etc.).
• Electronic record and digital signature (Sections 3-12). Legal recognition of electronic records and digital signatures, their authentication, legal validity of electronic documents, retention, originals and copies, and secure records.
• Dispatch, receipt and acknowledgement of electronic records (Sections 13-15). Attribution, acknowledgement of receipt, and time and place of dispatch and receipt.
• Control of digital signature, certifying authorities and certificates (Sections 16-39). Controller of Certification Authority, licences for certifying authorities, issuing, suspension and revocation of certificates, duties of subscribers.
• Government use of digital signature (Sections 40-42). Acceptance of electronic records and digital signatures in government offices.
• Network service (Sections 43-44). Liability of network service providers.
• Computer-related offences and punishment (Sections 44-47). Pirating, destruction or alteration of computer source code, unauthorised access, damaging computer systems, publication of illegal material, confidentiality breaches and fraudulent use of digital signature, with fines and imprisonment.
• Provisions on the IT Tribunal and appeals (Sections 48-60). Formation of the Information Technology Tribunal and Appellate Tribunal, procedures, powers, appeals and jurisdiction.
• Miscellaneous. Power to frame rules, delegation, and treatment of foreign certifying authorities.

(The section numbers are approximate; the general structure is what matters.)

An online credit card transaction involves the cardholder, merchant, payment gateway, acquiring bank, card network (Visa/MasterCard) and issuing bank.

Steps

1. Order. The customer selects products and proceeds to checkout, entering card number, expiry date, CVV and billing details on a secure (HTTPS/SSL) page.
2. Transmission. The details are encrypted and sent to the merchant's server or directly to the payment gateway.
3. Authorisation request. The payment gateway passes the request to the acquiring bank, which routes it through the card network to the issuing bank.
4. Verification. The issuer checks the card validity, available credit limit, fraud rules and, often, an extra authentication such as 3-D Secure or OTP.
5. Response. The issuer approves or declines; the response returns via the network and the gateway to the merchant, and the customer is shown the result.
6. Order fulfilment. On approval, the merchant confirms the order and ships the goods. The amount is reserved on the customer's credit line.
7. Settlement (capture). Periodically, the merchant submits approved transactions as a batch to the acquirer. The issuer transfers funds to the acquirer through the card network, and the acquirer credits the merchant's account after deducting the fees.
8. Billing. The issuer includes the charge in the cardholder's monthly statement for payment.

Security is provided by SSL/TLS, tokenisation, CVV and 3-D Secure.

Building an E-commerce website follows these steps.

1. Planning and requirement analysis. Define the business goals, target customers, products, competitors, budget and features required.
2. Choose the business model and platform. Decide B2C, B2B, or C2C and select a platform: custom development, or a CMS/e-commerce platform (WooCommerce, Magento, Shopify).
3. Domain name and hosting. Register a domain and select a reliable web host with SSL certificate.
4. Design the site architecture and UI/UX. Plan navigation, categories, product pages, cart and checkout, and create wireframes and a responsive design.
5. Develop the catalogue and database. Product catalogue, customer, order and inventory databases.
6. Implement core functions. Search, shopping cart, user registration, wish list, order management, reviews and admin panel.
7. Integrate payment and shipping. Payment gateways (eSewa, Khalti, cards, cash on delivery), tax calculation, courier and delivery tracking.
8. Security. HTTPS, secure authentication, input validation, data encryption, backups, and compliance with the law.
9. Testing. Functional, usability, performance, security, compatibility and payment testing.
10. SEO and marketing preparation. Keywords, meta tags, analytics, social media and email marketing set-up.
11. Launch (deployment). Deploy to production and monitor.
12. Maintenance and improvement. Updates, customer support, backups and using analytics to improve conversions.

Location based marketing sends relevant promotions to customers according to their geographic position. For meroghar.com the following tools can be used.

1. Google Business Profile (Google My Business) and Google Maps listing. Show store, warehouse or showroom addresses, hours, reviews and photos in local search results.
2. Local SEO. Use location keywords (for example "furniture in Kathmandu"), local directories and citations.
3. Geo-targeted ads. Google Ads, Facebook and Instagram ads targeted by city, district or radius, and location extensions in search ads.
4. Geofencing. Send push notifications or SMS when a mobile user with the app enters a virtual boundary around a store or competitor.
5. Beacons / proximity marketing. Bluetooth beacons in stores that deliver offers to nearby phones.
6. Location-based mobile app services. GPS in the meroghar app for nearest store finder, delivery availability and area specific offers.
7. Check-in and social tools. Facebook Places, Instagram location tags and Foursquare-style check-in rewards.
8. Geo-targeted email/SMS. Regional campaigns, festival offers (Dashain, Tihar) by region and local delivery promotions.
9. Analytics tools. Google Analytics geographic reports and heat maps to decide where to focus campaigns.

On-page SEO means optimising the elements within the website itself to rank higher for target keywords.

1. Keyword research. Use Google Keyword Planner and similar tools to find high-intent product and category keywords (including long tail), and map one main keyword to each page.
2. Title tags. Unique, descriptive titles of about 60 characters with the main keyword near the front.
3. Meta descriptions. Persuasive summaries of about 150-160 characters with a call to action.
4. URL structure. Short, readable, keyword-containing URLs (for example /mens-shoes/running-shoes) and canonical tags to avoid duplicate content.
5. Heading tags. One H1 per page and logical H2/H3 headings.
6. Product content. Original, detailed product descriptions (avoid manufacturer copy), specifications, FAQs and customer reviews.
7. Image optimisation. Compressed images, descriptive file names and ALT text.
8. Internal linking and breadcrumbs. Link related products, categories and blog posts with meaningful anchor text.
9. Structured data (schema markup). Product, price, availability, rating and breadcrumb markup for rich results.
10. Site speed and mobile friendliness. Responsive design, caching, minified files, and HTTPS.
11. Navigation and sitemaps. XML sitemap, robots.txt, fixing broken links and 404 pages.
12. Content marketing. Buying guides and blogs that target informational keywords.

Cross selling means suggesting related or complementary products (a phone case with a phone). Upselling means persuading the customer to buy a higher-priced or upgraded version (a model with more storage). Recommender systems support both by predicting what a customer is likely to want.

Cross-selling support

• Association rule mining or market-basket analysis finds items bought together ("frequently bought together", "customers who bought this also bought").
• Item-based collaborative filtering recommends complementary products on the product page, in the cart and at checkout.
• Email campaigns recommend accessories based on past purchases.

Upselling support

• Content-based filtering finds similar but better products (higher quality, bigger size, premium brand) and displays them as "compare with similar items" or "upgrade".
• Personalised bundles and discounts show the extra value for a small additional price.
• User profile and purchase history reveal the customer's price range and willingness to pay.

Benefits

• Higher average order value and revenue per customer.
• Better customer experience and loyalty through relevant suggestions.
• Reduced search effort and improved conversion rate.
• Recommendations should stay relevant, since aggressive or irrelevant suggestions annoy customers.

Business model

A business model is the method by which a company creates, delivers and captures value, that is, how it generates revenue and profit. It describes the customer segments, value proposition, channels, revenue streams, cost structure, key resources and activities, and partners. In E-commerce, common models are brokerage, merchant (direct sales), advertising, subscription, affiliate, community and infomediary models.

Approaches for raising capital

1. Bootstrapping and personal funds. Founder savings, and loans or gifts from family and friends. The founders keep full control, but the amount is small.
2. Angel investors. Individual wealthy investors who provide early stage funds and guidance for an equity share.
3. Venture capital. Funds invest large amounts in stages (seed, Series A, B, C) in high-growth businesses for equity and board influence, and aim to exit through acquisition or IPO.
4. Bank loans and debt financing. Term loans, overdrafts and credit lines from banks and financial institutions, repaid with interest. Ownership is not diluted but collateral may be needed.
5. Crowdfunding. Collecting small amounts from many people through online platforms (donation, reward, equity or lending based).
6. Incubators and accelerators. Provide seed funding, mentoring, space and networks in exchange for equity.
7. Grants, competitions and government schemes. Non-repayable funding from governments, donors or business plan competitions.
8. Strategic investors and joint ventures. A larger company invests for strategic reasons.
9. Public issue of shares (IPO). A mature company raises large funds by listing on the stock exchange.
10. Retained earnings. Reinvesting profits into the business.

The best mix depends on the stage of the business, the amount required, the cost, the risk and the founders' desire to retain control.

Why non-repudiation matters

Non-repudiation ensures a party cannot deny having sent a message, placed an order or made a payment, and that a receiver cannot deny receipt. It matters in e-commerce because:

• Transactions occur between parties who never meet, so disputes (for example "I did not order this") must be resolvable.
• It gives legally admissible evidence of orders, contracts and payments, which reduces fraud and chargebacks.
• It builds trust between buyers and sellers, and supports legal compliance (the Electronic Transactions Act recognises digital signatures).

How it can be enforced

• Digital signatures. The sender signs a message hash with a private key; anyone can verify it with the sender's public key, which proves origin and integrity.
• Digital certificates and a PKI. A certification authority binds the public key to a verified identity.
• Timestamping. A trusted time-stamping authority proves when a transaction occurred.
• Audit trails and secure logs. Records of transactions and access that cannot be altered.
• Delivery and receipt confirmations. Signed acknowledgements, order confirmation e-mails and OTP-based approval.
• Trusted third parties such as payment gateways and escrow services.

Security mechanisms for an e-commerce system

1. Encryption. Symmetric (AES) and asymmetric (RSA) cryptography to protect confidentiality.
2. SSL/TLS (HTTPS). Secure channel between browser and server.
3. Authentication. Passwords, two-factor authentication or OTP, biometrics and digital certificates.
4. Access control and authorisation. Role-based permissions.
5. Firewalls and intrusion detection/prevention systems. Filter traffic and detect attacks.
6. Digital signatures and hashing. Provide integrity and non-repudiation.
7. Secure payment protocols. SET, 3-D Secure and PCI DSS compliance, tokenisation.
8. Antivirus, patching, backups and secure coding. Defend against malware, SQL injection and cross-site scripting.
9. Security policies, monitoring and user training.

SET participants

SET (Secure Electronic Transaction) was developed by Visa and MasterCard for secure card payments over the internet. Participants:

1. Cardholder. The customer who uses an issued payment card.
2. Merchant. Sells goods or services and accepts card payments, without seeing the card number.
3. Issuer. The bank that issues the card and guarantees payment of authorised transactions.
4. Acquirer. The bank that holds the merchant's account and processes card authorisation and payment.
5. Payment gateway. Processes the merchant's payment messages and links with the banking network.
6. Certification authority (CA). Issues X.509 certificates to cardholders, merchants and gateways.

Dual signature

The dual signature links two messages meant for different recipients, the order information (OI) for the merchant and the payment information (PI) for the bank, so that each recipient reads only its part, yet both can verify the link between them.

1. Compute hashes: $PIMD = H(PI)$ and $OIMD = H(OI)$.
2. Concatenate and hash: $POMD = H(PIMD \parallel OIMD)$.
3. Encrypt $POMD$ with the customer's private key: $DS = E_{KR_c}(POMD)$.

The merchant receives OI, DS and $PIMD$; it computes $H(PIMD \parallel H(OI))$ and compares it to $D_{KU_c}(DS)$. The bank receives PI, DS and $OIMD$ and checks in the same way. Thus the merchant cannot see the card details, the bank cannot see the order details, and the customer cannot later claim that the payment was for a different order.

Purchase request operation

1. The cardholder browses, selects items and the merchant sends an Initiate Response (with the merchant's and gateway's certificates) after an Initiate Request.
2. The cardholder generates OI and PI, creates the dual signature, and encrypts PI with a random symmetric key, which is itself encrypted with the gateway's public key (digital envelope).
3. The Purchase Request message containing OI, the dual signature, $PIMD$, the encrypted PI and the cardholder's certificate is sent to the merchant.
4. The merchant verifies the cardholder certificate and the dual signature, then forwards the encrypted PI to the payment gateway as an Authorisation Request.
5. The gateway decrypts PI, verifies the signature and obtains authorisation from the issuer through the banking network.
6. The merchant receives the authorisation and sends the Purchase Response to the cardholder, then fulfils the order and later requests payment capture.

E-commerce is classified by who the transacting parties are.

1. B2C (Business to Consumer). Businesses sell to individual consumers online, for example Daraz and Amazon retail.
2. B2B (Business to Business). Transactions between businesses such as manufacturers, wholesalers and suppliers, usually with larger volumes and EDI or procurement portals. Example: Alibaba.
3. C2C (Consumer to Consumer). Consumers sell to one another via a third-party platform, such as eBay, Hamrobazar and Facebook Marketplace.
4. C2B (Consumer to Business). Individuals offer products or services to businesses, such as freelancers on Upwork, stock photo contributors, and influencers.
5. B2G (Business to Government). Businesses sell to government bodies, for example e-tendering and e-procurement (the Public Procurement Monitoring Office portal in Nepal).
6. G2C (Government to Citizen). Government services to citizens such as online tax filing, bill payment, passport and licence applications.
7. G2B / G2G. Government services to businesses such as company registration, and exchange between government agencies.
8. Others. P2P (peer to peer) and mobile (m-commerce) variants.

Consumer behaviour models

Consumer behaviour models are theoretical frameworks that explain how consumers recognise needs, search for information, evaluate alternatives, decide to buy and behave after purchase, and which factors influence them. Examples are:

• Black box (stimulus-response) model. Marketing stimuli (product, price, place, promotion) and environmental stimuli enter the buyer's "black box" (characteristics and decision process) and produce a response (choice, brand, timing, amount).
• Five-stage decision model. Need recognition, information search, evaluation of alternatives, purchase, post-purchase behaviour.
• AIDA model. Attention, interest, desire, action.
• Howard-Sheth, Engel-Kollat-Blackwell and Nicosia models.
• Technology Acceptance Model (TAM) for online shopping, based on perceived usefulness and ease of use.

Why they are essential in e-commerce marketing

• Help understand why customers browse, abandon carts or buy, and what influences trust, price sensitivity, reviews and social proof.
• Allow segmentation and targeting of the right customers with personalised content and offers.
• Guide website design (easy navigation, product information, secure checkout) at each stage of the buying process.
• Improve conversion, customer retention and loyalty by addressing post-purchase satisfaction.
• Help predict behaviour through web analytics and thus plan advertising, pricing and promotions more effectively.

EDI (Electronic Data Interchange) is the standardised computer-to-computer exchange of business documents between trading partners. Its layered architecture has four layers.

1. EDI semantic (application) layer. Business applications (ordering, accounting, inventory, ERP) where the data originates and is consumed. It produces the information, such as a purchase order or invoice, to be sent.
2. EDI standards (translation) layer. Translates the application data into a standard EDI format such as ANSI X12 or UN/EDIFACT using mapping software, and translates incoming EDI documents back into the internal format.
3. EDI transport (packing) layer. Wraps the EDI document into an envelope with sender and receiver identification, may encrypt, sign and compress it, and prepares it for transmission using e-mail/MIME, X.400, FTP or AS2.
4. Physical network layer. The communication medium that carries the messages, such as value added networks (VANs), the internet, dial-up or leased lines.

Data passes down these layers at the sender and up at the receiver, so applications of different partners can interoperate without human intervention.

The Electronic Transactions Act, 2063 of Nepal is arranged in chapters addressing the following issues.

1. Preliminary. Title, commencement and definitions of key terms (electronic record, digital signature, certificate, subscriber, computer system).
2. Electronic records and digital signature. Legal recognition of electronic records and digital signatures, authentication, retention, originals, and the legal validity of electronic documents.
3. Dispatch, receipt and acknowledgement. Attribution of electronic records, acknowledgement of receipt, and the time and place of dispatch and receipt.
4. Controller and certifying authority. Appointment and functions of the Controller, licensing of certifying authorities, issuing, suspension and revocation of digital signature certificates, and duties of subscribers.
5. Government use of electronic records. Acceptance of electronic forms, payments and records in government agencies.
6. Network service provider liability. Limits on liability of intermediaries.
7. Computer-related offences and penalties. Unauthorised access, damage to computer systems, tampering with source code, publishing illegal material in electronic form, breach of confidentiality and fraud by digital signature, with fines and imprisonment.
8. Information Technology Tribunal. Formation, jurisdiction and procedure of the tribunal and the appellate tribunal, and the appeal process.
9. Miscellaneous. Power to make rules, application of the Act to offences committed outside Nepal and recognition of foreign certificates.

An electronic payment system allows payment for goods and services through electronic means. The main types are:

1. Credit cards. The issuer lends money up to a limit; the customer pays later (Visa, MasterCard). Widely used online with 3-D Secure.
2. Debit cards. Money is withdrawn directly from the bank account at payment (Visa Debit, NPN cards).
3. Smart cards (stored value cards). Cards with an embedded chip that stores money or credentials and can be used for transit, tolls and small payments.
4. Electronic cash (e-cash/digital cash). Digital tokens of value withdrawn from a bank and spent anonymously, for example DigiCash.
5. Electronic wallets (e-wallets). Prepaid accounts on mobile or web used for transfers, bills and shopping, such as eSewa, Khalti and IME Pay.
6. Electronic cheques (e-cheque). Digital version of the paper cheque, with digital signatures and clearing through the banking network.
7. Internet and mobile banking, and fund transfer. Direct transfers using ConnectIPS, NEFT-like systems and QR code payments (Fonepay, NepalPay QR).
8. Micropayments. Small value payments for content or services.
9. Payment gateways and third-party processors such as PayPal, which route transactions between customer, merchant and banks.
10. Cash on delivery is not electronic, but is commonly offered alongside.

A catalogue lists the products and services of an e-commerce store with descriptions, images, prices and stock details.

Static catalogue

A static catalogue is a plain set of HTML pages created and updated manually by the developer. Each product page is a fixed file.

• Built with HTML/CSS pages (hyperlinked lists of products and images), or exported as PDF.
• Simple, cheap and fast, with no database needed.
• Suitable for small numbers of rarely changing products.
• Difficult to update, with no search, no personalisation and no real-time prices or stock.

Dynamic catalogue

A dynamic catalogue is generated on demand from a database.

1. Store product data (ID, name, description, category, price, stock, images) in a database (MySQL, PostgreSQL).
2. Use server-side technology (PHP, Node.js, Java, ASP.NET) or a CMS/e-commerce platform to query the database and build the page from templates.
3. Add search, filtering, sorting, categories and pagination.
4. Provide an admin interface to add, edit and remove products, so that changes are reflected immediately.
5. Include real-time inventory and price updates, personalisation and recommendations, and integrate with the shopping cart, ERP and supplier feeds.
6. Optimise with caching, indexes and SEO-friendly URLs for performance.

Dynamic catalogues suit large and frequently changing inventories and are the norm in modern e-commerce.

Search engine marketing (SEM)

SEM is the promotion of a website by increasing its visibility in search engine results pages through paid advertising (pay-per-click advertising such as Google Ads, where advertisers bid on keywords and pay when users click) and often SEO. It brings targeted traffic quickly, with measurable results and a controllable budget.

Affiliate marketing vs viral marketing

Off-page SEO covers actions taken outside the website to increase its authority, trust and ranking. Ways for an e-commerce website include:

1. Link building. Earn quality backlinks from relevant, authoritative sites through guest posting, partnerships, suppliers, manufacturers and directories.
2. Content marketing. Publish shareable guides, infographics, videos and research that naturally attract links.
3. Social media marketing. Active profiles and sharing on Facebook, Instagram, Pinterest and YouTube to increase brand signals and traffic.
4. Influencer and blogger outreach. Product reviews, collaborations and sponsored posts that link to the shop.
5. Online reviews and reputation management. Encourage genuine reviews on Google Business Profile and review sites, and respond to feedback.
6. Local citations and directory listings. Consistent name, address and phone details across directories and business listings.
7. Forum and community participation. Quora, Reddit and Q&A sites with useful answers that link back.
8. Press releases and PR. News mentions and media coverage.
9. Marketplaces and comparison sites. Listing products on Daraz, price comparison engines and affiliate partners.
10. Brand mentions and email outreach. Reclaim unlinked mentions and fix broken links by offering replacements.

Avoid paid link schemes, link farms and spam, since these attract search engine penalties.

Collaborative filtering (CF) recommends products based on the preferences of similar users or the similarity between items, using a user-item rating (or purchase) matrix.

Implementation steps

1. Collect data. Explicit ratings and reviews, or implicit data such as purchases, clicks, views and time spent. Build a matrix $R$ with users as rows and items as columns.
2. Pre-process. Clean the data, handle missing values and normalise ratings (for example by subtracting each user's mean).
3. Compute similarity. For example cosine similarity or Pearson correlation:

$sim(u,v)=\frac{\sum_i r_{ui}\,r_{vi}}{\sqrt{\sum_i r_{ui}^2}\sqrt{\sum_i r_{vi}^2}}$

4. User-based CF. Find the $k$ nearest neighbours of the target user, and predict the rating for an unseen item $i$:

$\hat r_{ui}=\bar r_u+\frac{\sum_{v\in N}sim(u,v)(r_{vi}-\bar r_v)}{\sum_{v\in N}|sim(u,v)|}$

5. Item-based CF. Compute similarity between items (users who bought A also bought B) and recommend items similar to those the user liked. This is more stable and scalable for large shops.
6. Model-based CF. Use matrix factorisation (SVD, ALS) to learn latent factors for users and items, and predict ratings as their dot product.
7. Generate recommendations. Rank unseen items by predicted rating and show the top N on the home page, product pages, cart and emails.
8. Evaluate and improve. Measure RMSE/MAE, precision and recall, and click-through or conversion by A/B testing.
9. Handle problems. Cold start (use popular items or content-based and hybrid methods), sparsity and scalability (use caching, dimensionality reduction and precomputation).