EC Chapter 1

E-Commerce SystemsBIC3513*Learning objectivesDefine eCommerce and describe how it differs from eBusiness.Identify and describe the unique features of eCommerce technology and discuss their business significance.Recognize and describe Web 2.0 applications.Describe the major types of eCommerce .Discuss the origins and growth of eCommerce .Explain the evolution of eCommerce from its early years to today.Identify the factors that will define the next five years of eCommerce .Describe the major themes underlying the study of eCommerce .Identify the major academic disciplines contributing to eCommerce .

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Facebook: The New Face of E-commerce?Do you use Facebook, and if so, how often? What has the experience been like?Have you purchased anything based on an advertisement on Facebook or by using a link provided by a friend?Are you concerned about the privacy of the information you have posted on Facebook?E-Commerce SystemsBIC3513*

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E-Commerce SystemsBIC3513*First Things First Welcome to the new world of electronic commerce (eCommerce or EC) The industry of the twenty-first century Do business electronically from virtually anywhere in the world that has a computer. In 2011 alone, US eCommerce generated well over $310 billion in retail business and over $3.36 trillion business-to-business traffic. The Internet - an international network of independent computer systemsprecipitated the revolution. Security Privacy Other problems Has permeated virtually every phrase of society

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E-commerce Trends 20112014Social networking continues to grow Expansion of social e-commerce platform Mobile platform begins to rival PC platform Localization of e-commerce (Groupon) Explosive growth in online video viewing Continued privacy and security concernsE-Commerce SystemsBIC3513*

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Myths about eCommerceSetting up a Web site is easy. eCommerce means no more mass marketing. eCommerce means a new economy. eCommerce is revolutionary. eCommerce is a commercial fad that crashed in 2000. All products can be sold online using identical business models. Build it and they will come. The middleman is out.E-Commerce SystemsBIC3513*

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E-Commerce SystemsBIC3513*The Drivers for eCommerce Digital Convergence - digital devices communicating with one another Anytime, anywhere, anyone - eCommerce is available to anyone (24/7) Changes in Organizations - todays businesses empower frontline workers to do the kind of work once performed by junior management Increasing pressure on operating costs and profit margins - global competition and the proliferation of products and services worldwide have added pressure on operating costs and profit margins Demand for customized products and services - mass customization puts pressure on firms to handle customized requests on a mass-market scale

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Changes in Organizational MakeupE-Commerce SystemsBIC3513*

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eCommerce Versus eBusiness eCommerce Selling goods and services on the retail level with anyone, anywhere, via the Internet Greater efficiency and effective exchange of goods and services Exchange based upon transaction A block of information exchange between the merchant and its customers via the corporate Web site www.amazon.com eBusiness Connecting critical business systems and constituencies directly via the InternetE-Commerce SystemsBIC3513*

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eCommerce Versus eBusinessE-Commerce SystemsBIC3513*

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eCommerce Versus eBusiness eBusiness:

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

Does not include commercial transactions involving an exchange of value across organizational boundariesE-Commerce SystemsBIC3513*

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eCommerce Is Not eBusinesseBusiness - the conduct of business on the Internet, in supply-chain planning, tracking, fulfillment, invoicement, and payment.

Includes buying and selling as well as servicing customer and collaborating with business partners

Electronic information is used to boost performance and create value by forming new relationships between and among businesses and customers.

One example of eBusiness is SAP ( www.sap.com) E-Commerce SystemsBIC3513*

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Why Study eCommerce ?eCommerce technology is different, more powerful than previous technologies

eCommerce bringing fundamental changes to commerce

Traditional commerce: Passive consumer Sales-force driven Fixed prices Information asymmetryE-Commerce SystemsBIC3513*

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E-Commerce SystemsBIC3513*Unique Features of eCommerce Technology1. Ubiquity (available everywhere, all the time) 2. Global reach (across cultural/national boundaries)3. Universal standards (lowers market entry for merchants and search costs for consumers)4. Information richness (more powerful selling environment)5. Interactivity (can simulate face-to-face experience, but on a global scale)6. Information density (amount and quality of information available to all market participants)7. Personalization/customization8. Social technology

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E-Commerce SystemsBIC3513*Web 2.0 Applications, technologies that allow users to: Create and share content, preferences, bookmarks, and online personas Participate in virtual lives Build online communities Examples YouTube, Photobucket, Flickr, Google, iPhone MySpace, Facebook, LinkedIn Second Life Wikipedia

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E-Commerce SystemsBIC3513*Web 2.0 User-centered applications and social media technologies User-generated content and communication Highly interactive, social communities Large audiences; yet mostly unproven business models e.g., Twitter, YouTube, Facebook, Second Life, Wikipedia, Digg.

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E-Commerce SystemsBIC3513*Types of eCommerce Classified by market relationship Business-to-Consumer (B2C) Business-to-Business (B2B) Consumer-to-Consumer (C2C) Classified by technology used Peer-to-Peer (P2P) Enables Internet users to share files and computer resources Mobile commerce (M-commerce)

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Types of eCommerce ExamplesE-Commerce SystemsBIC3513*

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eCommerce Applications Business-to-Consumer (Internet)

Business-to-Business (Internet and Extranet)

Supply-Chain Management

Business-within-Business (Intranet)

Business-to-Government (B2G)E-Commerce SystemsBIC3513*

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Business-to-Consumer (Internet) The consumers use of a merchants Web storefront or Web site

Modeled on the traditional shopping experience

Shopping cart is used to hold goods until the customer is ready to check out Online order form supported by the appropriate software

Checkout is order and payment processingE-Commerce SystemsBIC3513*

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Business-to-Business (Internet and Extranet) Business-to-Business eCommerce is industrial marketing among the processes it handles are fulfillment and procurement

Companies can conveniently and quickly check their suppliers inventories or make instant purchases

Competing online should also force prices for materials and supplies to drop dramatically

B2B often use an extranet: a shared intranet vendors,contractors, suppliers, and key customersE-Commerce SystemsBIC3513*

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Consumer-to-Consumer eCommerce Provide a way for consumers to sell to each other Consumer: prepares the product for market places the product for auction or sale relies on market maker to provide catalog, search engine, and transaction clearing capabilitiesE-Commerce SystemsBIC3513*

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Business-within-Business (Intranet) Strictly a within company type of information exchange Restricted to internal employees and customers Firewalls to keep out non employees

E-mail replaces paper for the communication of messages order acknowledgement and approvals, and other forms or correspondence

The intranet becomes a facilitator for the exchange of information and services among the departments or divisions of a company

Different departments with different PCs or local area networks can interact on an intranetE-Commerce SystemsBIC3513*

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Benefits of an Intranet Low development and maintenance costs

Environmentally friendly because it is company-specific

Availability and sharing of information

Timely, current information

Quick and easy dissemination of informationE-Commerce SystemsBIC3513*

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Business-to-Government (B2G) The government market is strikingly similar to B2B.

Huge potential for savings in $1.8 trillion federal and $1 trillion state and local expenditures

Changing the status quo in government is not so easy Changes to employee tasks and job restructuring often create resistance Tax savings potential is not easily recognized Committing to technology means constant need for upgrades and additional costsE-Commerce SystemsBIC3513*

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Key Elements of Internet, Extranet, and Intranet eCommerceE-Commerce SystemsBIC3513*

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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 namesE-Commerce SystemsBIC3513*

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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 exponentially Google reports 1 trillion unique URLs; 120 billion pages indexedE-Commerce SystemsBIC3513*

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INTERNET USAGE STATISTICSThe Internet Big PictureWorld Internet Users and Population StatsE-Commerce SystemsBIC3513*

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E-Commerce SystemsBIC3513*

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Origins & Growth of eCommerce Precursors: Baxter Healthcare (1970, pharmaceutical firm, B2B, telephone-based modem, hospital reorder supplies) Electronic Data Interchange (EDI) standards (exchange commercial documents and transactions) French Minitel (1980s videotext system, B2C, 13,000 services: ticket agencies, travel services, retail products, online banking) None had functionality of Internet 1995: Beginning of eCommerce First sales of banner advertisements by AT&T, Volvo, Sprint Since then, eCommerce fastest growing form of commerce in the United States E-Commerce SystemsBIC3513*

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Share of retail online sales by type of companyE-Commerce SystemsBIC3513*

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E-Commerce SystemsBIC3513*

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Documents

EC Chapter 1