Ecommerce business technology society Ecommerce business technology society

Chapter 1: The Revolution Is Just Beginning Chapter 1 The Revolution Is Just Beginning

Facebook: The New Face of E-Commerce? Class Discussion n Do you use Facebook, and if so, how often? What has the experience been like? n Have you purchased anything based on an advertisement on Facebook or by using a link provided by a friend? n Are you concerned about the privacy of the information you have posted on Facebook? Copyright © 2011 Pearson Education, Inc. Slide 1 -3

What is E-commerce? n Use of Internet and Web to transact business n More formally: v. Digitally enabled commercial transactions between and among organizations and individuals Copyright © 2011 Pearson Education, Inc. Slide 1 -4

What is E-business n E-business: v Digital enablement of transactions and processes within a firm, involving information systems under firm’s control v Does not include commercial transactions involving an exchange of value across organizational boundaries Copyright © 2011 Pearson Education, Inc. Slide 1 -5

E-commerce n Any transaction completed over a computer-mediated network that involves the transfer of ownership or rights to use goods or services. Copyright © 2011 Pearson Education, Inc. E-business n Any process that an organization conducts over a computermediated network Slide 1 -6

Unique Features of E-commerce Technology 1. 2. 3. 4. 5. 6. 7. 8. Ubiquity Global reach Universal standards Information richness Interactivity Information density Personalization/customization Social technology Copyright © 2011 Pearson Education, Inc. Slide 1 -7

Ubiquity Available just about everywhere, at any time n Marketplace Physical space you visit in order to transact n Marketspace It extended beyond traditional boundaries and removed from geographic location Ubiquity reduce Transaction cost and Cognitive Energy Copyright © 2011 Pearson Education, Inc. Slide 1 -8

Global reach n Reach The total number of users an e-commerce business can obtain Older Commerce technologies do not easily cross national boundaries to a global audience Copyright © 2011 Pearson Education, Inc. Slide 1 -9

Universal standards Standards that are shared by all nations around the world Universal Standards reduces q Market Entry Cost q Search Cost q. Price discovery becomes simpler, faster and more accurate Copyright © 2011 Pearson Education, Inc. Slide 1 -10

Information richness n Richness The complexity and content of a message Video, audio and

Interactivity Two way communication between merchant and consumer Interactivity allows an online merchant to engage a consumer in ways similar to a face-to-face experience. Not possible with Traditional Television viewers Copyright © 2011 Pearson Education, Inc. Slide 1 -12

Information density The total amount and quality of information available to all market participants(consumer/merchant)` n Price Transparency Consumer can fine variety of prices in a market n Price Discrimination Selling the same goods, to different group at different prices Copyright © 2011 Pearson Education, Inc. Slide 1 -13

Personalization/customization n Personalization Target the marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases n Customization Change the delivered product or service based on a user’s preferences of prior behavior Copyright © 2011 Pearson Education, Inc. Slide 1 -14

Social technology n It allow users to create and share content in the form of text, videos, music or photos with a worldwide community. n Mass Media n One to One (e. g Telephone) n One to Many (e. g Printing Press) n Many to Many (e. g Internet, facebook) Copyright © 2011 Pearson Education, Inc. Slide 1 -15

Quiz and Assignment n Quiz 1 There will be a Quiz in next class from the lecture today MCQs and Short Qs Marks: 10 Copyright © 2011 Pearson Education, Inc. Assignment 1 You are supposed to submit handwritten assignment of 4 pages in next class Topic: Why we study ECommerce? n Marks: 10 Slide 1 -16

Types of E-commerce n Classified by market relationship v Business-to-Consumer (B 2 C) v Business-to-Business (B 2 B) v Consumer-to-Consumer (C 2 C) n Classified by technology used v Peer-to-Peer (P 2 P) v Mobile commerce (M-commerce) Copyright © 2011 Pearson Education, Inc. Slide 1 -17

Business-to-Consumer (B 2 C) n Business-to-Consumer (B 2 C) e-commerce, in which businesses focus on selling to the consumer n It is most common type of e-commerce n Example v. Amazon. com Copyright © 2011 Pearson Education, Inc. Slide 1 -18

Business-to-Business (B 2 B) n Business-to-Business (B 2 B) e-commerce, in which businesses focus on selling to other businesses n It is the largest form of e-commerce n Example v. Foodtraders. com Copyright © 2011 Pearson Education, Inc. Slide 1 -19

Consumer-to-Consumer (C 2 C) n Consumer-to-Consumer (C 2 C) e-commerce provides a way for consumers to sell to each other, with the help of an online market maker n Example v. Ebay. com Copyright © 2011 Pearson Education, Inc. Slide 1 -20

Peer-to-Peer (P 2 P) n Peer-to-peer technology enables Internet users to share files and computer resources directly without having to go through a central Web server. n Example v. Bit. Torent Copyright © 2011 Pearson Education, Inc. Slide 1 -21

Mobile commerce (M-commerce) n Mobile commerce, or m-commerce, refers to the use of wireless digital devices to enable transactions on the Web. n Example v. PDAs v. Cell Phones Copyright © 2011 Pearson Education, Inc. Slide 1 -22

The Internet n Worldwide network of computer networks built on common standards n Created in late 1960 s n Services include the Web, e-mail, file transfers, news, shopping, research, instant messaging, music, videos etc. n Can measure growth by looking at number of Internet hosts with domain names Copyright © 2011 Pearson Education, Inc. Slide 1 -23

The Growth of the Internet, Measured by Number of Internet Hosts with Domain Names

The Web n Most popular Internet service n Developed in early 1990 s n Provides access to Web pages v. HTML documents that may include text, graphics, animations, music, videos n Web content has grown exponentially v. Google indexes between 75 – 100 billion pages Copyright © 2011 Pearson Education, Inc. Slide 1 -25

What was the use of Internet before web? n Text Communication n File Transfers n Remote Computing v. The Web added color, voice, video to the internet and storage system. v. That rivals television, radio, magazines and even libraries. Copyright © 2011 Pearson Education, Inc. Slide 1 -26

Origins & Growth of E-commerce n Precursors There are several precursors to e-commerce v Baxter Healthcare n In 1970 Used telephone to reorder supplies n In 1980 it expanded into a PC based remote order v Electronic Data Interchange (EDI) n Conduct digital commercial transactions across private network v French Minitel (videotext system-1981) n Combined a telephone with an 8 inch screen None of these had functionality of Internet E-commerce started in 1995, fastest growing form of commerce in United state Copyright © 2011 Pearson Education, Inc. Slide 1 -27

The Growth of B 2 C E-commerce Figure 1. 4, Page 25 SOURCES: Based

The Growth of B 2 B E-commerce Figure 1. 5, Page 28 SOURCES: Based

Technology and E-commerce in Perspective n The Internet and Web: Just two of a long list of technologies that have greatly changed commerce v Automobiles n In 1915 there were 250 automobile manufacturers in US n In 1940 there were five. v Radio n In 1925 there were over 2000 radio stations in US n In 1990 there were 500 radio stations n E-commerce growth will eventually cap as it confronts its own fundamental limitations. Copyright © 2011 Pearson Education, Inc. Slide 1 -30

Potential Limitations on the Growth of B 2 C E-commerce n Expensive technology n Sophisticated skill set n Attraction of physical markets and traditional shopping experiences n Limiting access to telephones and computers n Saturation and ceiling effects Copyright © 2011 Pearson Education, Inc. Slide 1 -31

E-commerce: A Brief History n 1995 -2000: Innovation v Key concepts developed n Disintermediation n Friction free commerce n First mover n Network effect n 2001 -2006: Consolidation v Emphasis on business-driven approach rather than technology driven n 2006 -Present: Reinvention v Extension of technologies v New models based on user-generated content, social networks, services Copyright © 2011 Pearson Education, Inc. Slide 1 -32

Early Visions of E-commerce n Computer scientists: v Inexpensive, universal communications and computing environment accessible by all n Economists: v Nearly perfect competitive market and friction-free commerce v Lower search costs, disintermediation, price transparency, elimination of unfair competitive advantage n Entrepreneurs: v Extraordinary opportunity to earn far above normal returns on investment – first mover advantage Copyright © 2011 Pearson Education, Inc. Slide 1 -33

Assessing E-commerce n Many early visions not fulfilled v Friction-free commerce n Consumers less price sensitive n Considerable price dispersion v Perfect competition n Information asymmetries persist v Disintermediation n Yahoo, MSN, Google, Amazon etc v First mover advantage n Fast-followers often overtake first movers Copyright © 2011 Pearson Education, Inc. Slide 1 -34

Predictions for the Future n Technology will propagate through all commercial activity. n Prices will rise to cover the real cost of doing business. n E-commerce margins and profits will rise to levels more typical of all retailers. n Cast of players will change. Traditional Fortune 500 companies will play dominant role. v New startup ventures will emerge with new products, services. v n Number of successful pure online stores will remain smaller than integrated offline/online stores. n Regulatory activity worldwide will grow. n Cost of energy will have an influence. Copyright © 2011 Pearson Education, Inc. Slide 1 -35

Understanding E-commerce: Organizing Themes n Technology: v Development and mastery of digital computing and communications technology n Business: v New technologies present businesses with new ways of organizing production and transacting business n Society: v Individual privacy, public welfare policy Copyright © 2011 Pearson Education, Inc. Slide 1 -36

Technology n Technology Provide Infrastructure v Personal Computer v Handheld Computer/Cell Phone v Networks v Relational Database v Client/Server Computing v Protocol TCP/IP v Web Servers v HTML Copyright © 2011 Pearson Education, Inc. Slide 1 -37

Business n It is business Application v. It has potential for extraordinary returns v. It create interest and excitement in e-commerce v. Provide new ways of transacting business v. Is changes the ways of doing business v. Introduce new products or services v. Introduce new digital markets Copyright © 2011 Pearson Education, Inc. Slide 1 -38

Society n Individual Privacy n Public welfare policy n Distribution cost n Tracing customer

The Internet and the Evolution of Corporate Computing Figure 1. 9, Page 44 Copyright

Academic Disciplines Concerned with E-commerce n Technical approach n Behavioral approach v Computer science v Information systems v Management science v Economics v Information systems v Marketing v Management v Finance/accounting v Sociology Copyright © 2011 Pearson Education, Inc. Slide 1 -41