E Commerce Ch01

Copyright © 2010 Pearson Education, Inc.

E-commerce

Kenneth C. Laudon

Carol Guercio Traver

business. technology. society.Sixth Edition

Copyright © 2010 Pearson Education, Inc.Copyright © 2007 Pearson Education, Inc. Slide 1-2

Chapter 1The Revolution Is Just Beginning


Facebook and MySpace: It’s All About You

Class Discussion

How is Facebook different from MySpace?

Have you used Facebook or MySpace, and if so, how often? What was your experience?

Why do you think Facebook has overtaken MySpace as the most popular social networking site?

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E-commerce Trends 2009–2010New business models based on social technologies, consumer‐generated content, and services

2009 a flat year, but growth expected to resume in 2010

Broadband and wireless access continue to grow

Mobile e‐commerce begins to take off

Traditional media losing subscribers

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The First 30 Seconds

First 15 years of e‐commerceJust the beginning

Rapid growth and change

Technologies continue to evolve at exponential ratesDisruptive business change

New opportunities

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What is E-commerce?

Use of Internet and Web to transact business

More formally:

Digitally enabled commercial transactions between and among organizations and individuals

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E-commerce vs. E-business

E‐business:

Digital enablement of transactions and processes within a firm, involving information systems under firm’s control

Does not include commercial transactions involving an exchange of value across organizational boundaries

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Why Study E-commerce?

E‐commerce technology is different, more powerful than previous technologies

E‐commerce bringing fundamental changes to commerce

Traditional commerce:Passive consumer

Sales‐force driven

Fixed prices

Information asymmetry

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Unique Features of E-commerce Technology

1. Ubiquity

2. Global reach

3. Universal standards

4. Information richness

5. Interactivity

6. Information density

7. Personalization/customization

8. Social technology

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Web 2.0

Applications, technologies that allow users to:

Create and share content, preferences, bookmarks, and online personasParticipate in virtual livesBuild online communities

ExamplesYouTube, Photobucket, Flickr, Google, iPhoneMySpace, Facebook, LinkedInSecond LifeWikipedia

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Types of E-commerce

Classified by market relationshipBusiness‐to‐Consumer (B2C)

Business‐to‐Business (B2B)

Consumer‐to‐Consumer (C2C)

Classified by technology usedPeer‐to‐Peer (P2P)

Mobile commerce (M‐commerce)

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The Internet

Worldwide network of computer networks built on common standards

Created in late 1960s

Services include the Web, e‐mail, file transfers, etc.

Can measure growth by looking at number of Internet hosts with domain names

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

Figure 1.3, Page 23

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SOURCE: Internet Systems Consortium, Inc., 2009.


The Web

Most popular Internet service

Developed in early 1990s

Provides access to Web pages HTML documents that may include text, graphics, animations, music, videos

Web content has grown exponentially2 billion Web pages in 2000

At least 40–50 billion pages todaySlide 1-14


Insight on Technology:

Spider Webs, Bow Ties, Scale-Free Networks, and the Deep Web

Class Discussion

What is the “small world” theory of the Web?

What is the significance of the “bow‐tie” form of the Web?

Why does Barabasi call the Web a “scale‐free network” with “very connected super nodes”?

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Origins & Growth of E-commercePrecursors:

Baxter Healthcare

Electronic Data Interchange (EDI)

French Minitel (1980s videotext system)

None had functionality of Internet

1995: Beginning of e‐commerceFirst sales of banner advertisements

Since then, e‐commerce fastest growing form of commerce in the United States

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The Growth of B2C E-commerceFigure 1.4, Page 25

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SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors’ estimates.


The Growth of B2B E-commerceFigure 1.5, Page 28

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SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.


Technology and E-commerce in Perspective

The Internet and Web: Just two of a long list of technologies that have greatly changed commerce

Automobiles

Radio

E‐commerce growth will eventually cap as it confronts its own fundamental limitations.

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Potential Limitations on the Growth of B2C E-commerce

Expensive technology

Sophisticated skill set

Persistent cultural attraction of physical markets and traditional shopping experiences

Persistent global inequality limiting access to telephones and computers

Saturation and ceiling effectsSlide 1-20


E-commerce: A Brief History

1995–2000: InnovationKey concepts developed

Dot‐coms; heavy venture capital investment

2001–2006: ConsolidationEmphasis on business‐driven approach

2006–Present: ReinventionExtension of technologies

New models based on user‐generated content, social networking, services

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Early Visions of E-commerce

Computer scientists: Inexpensive, universal communications and computing environment accessible by all

Economists: Nearly perfect competitive market and friction‐free commerce

Lowered search costs, disintermediation, price transparency, elimination of unfair competitive advantage

Entrepreneurs: Extraordinary opportunity to earn far above normal returns on investment—first mover advantage

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Insight on Business

The Internet Investment RollercoasterClass Discussion

What explains the rapid growth in private investment in e‐commerce firms in the period 1998–2000? Was this investment irrational?

What was the effect of the big bust of March 2000 on e‐commerce investment?

What is the value to investors of a company such as YouTube which has yet to show profitability?

Why do you think investors today would be interested in investing in or purchasing e‐commerce companies? Would you invest in an e‐commerce company today?

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Assessing E-commerce

Many early visions not fulfilledFriction‐free commerce

Consumers less price sensitive

Considerable price dispersion

Perfect competitionInformation asymmetries persist

DisintermediationFirst mover advantage

Fast‐followers often overtake first movers

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Predictions for the FutureTechnology will propagate through all commercial activity

Prices will rise to cover the real cost of doing business

E‐commerce margins and profits will rise to levels more typical of all retailers

Cast of players will changeTraditional Fortune 500 companies will play dominant roleNew startup ventures will emerge with new products, services

Number of successful pure online stores will remain smaller than integrated offline/online stores

Growth of regulatory activity worldwide

Influence of cost of energy

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Understanding E-commerce: Organizing Themes

Technology: Development and mastery of digital computing and communications technology

Business: New technologies present businesses with new ways of organizing production and transacting business

Society: Intellectual property, individual privacy, public welfare policy

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The Internet and the Evolution of Corporate Computing

Figure 1.9, Page 44

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Insight on Society

Privacy Online: Does Anybody Care?Class Discussion

What techniques of privacy invasion are described in the case?

Which of these techniques is the most privacy‐invading? Why?

Is e‐commerce any different than traditional markets with respect to privacy? Don’t merchants always want to know their customer?

How do you protect your privacy on the Web?

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Academic Disciplines Concerned with E-commerce

Technical approachComputer science

Management science

Information systems

Behavioral approachInformation systems

Economics

Marketing

Management

Finance/accounting

Sociology

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E Commerce Ch01

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