Social-Cultural Expectations� Social and cultural expectations are changing in

rapid and transformative ways

� Organizations are now integrated with society

� Expanded set of stakeholders

Slide 1-21

Unique Features of E-commerce Technology

� Is ubiquitous (available everywhere, all the time)

� Offers global reach (across cultural/national boundaries)

� Operates according to universal standards (lowers market entry for merchants and search costs for consumers)

� Provides information richness (more powerful selling environment)

� Is interactive (can simulate face-to-face experience, but on global scale)

� Increases information density (amount and quality of information available to all market participants)

� Permits personalization/customization

� Social technology

Slide 1-22

Web 2.0

� Applications, technologies that allow users to: � Create and share content, preferences, bookmarks, and

online personas

Participate in virtual lives� Participate in virtual lives

� Build online communities

� Examples� YouTube, Photobucket, Flickr, Google, iPhone

� MySpace, Facebook, LinkedIn

� Second Life

� Wikipedia

Slide 1-23

Types of E-commerce

� Classified by market relationship

� Business-to-Consumer (B2C)

� Business-to-Business (B2B)

� Consumer-to-Consumer (C2C)

� Classified by technology used

� Peer-to-Peer (P2P)

� Mobile commerce (M-commerce)

Slide 1-24

B2C

� Involves online businesses attempting to reach

individual consumers

� Many types of business models within this category

including online retailers, content providers, including online retailers, content providers,

portals, transaction brokers, service providers,

market creators and community providers

� E.g. BarnesandNoble.com, 1800Flowers.com,

Godiva.com, REI.com

Slide 1-25

The Growth of B2C E-commerce

Slide 1-26

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

B2B

� Involves businesses focusing on selling to other businesses

� Two primary business models within B2B:

� Net marketplaces (includes e-distributors, e-procurement � Net marketplaces (includes e-distributors, e-procurement companies, exchanges and industry consortia)

� Private industrial networks (includes single firm networks and industry-wide networks)

� E.g.Direct email marketing company(mail chimp),

online CRM application (salesforce.com),

grainger.com, techdata.com, alibaba.com, etc

Slide 1-27

The Growth of B2B E-commerceFigure 1.5, Page 28

Slide 1-28

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

C2C

� Provides a way for consumers to sell to each other,

with the help of an online market maker

� eBay, half.com, craigslist, etc

Slide 1-29

P2P

� Uses peer-to-peer technology, which enables

Internet users to share files and computer

resources without having to go through a central

Web serverWeb server

� E.g: Torrents, limewire, etc

Slide 1-30

M-commerce

� Use of wireless digital devices such as cell phones

and handheld devices to enable transactions on the

Web

E.g Mobile banking, Mobile ticketing, etc� E.g Mobile banking, Mobile ticketing, etc

Slide 1-31

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 1-32

Origins & Growth of E-commerce

� Precursors to e-commerce include

� Baxter Healthcare (in 1970s, used telephone-based modems to reorder supplies; in 1980s, became a PC-based remote order entry system)

� Electronic Data Interchange (EDI) standards developed in 1980s; permitted firms to exchange commercial Electronic Data Interchange (EDI) standards developed in 1980s; permitted firms to exchange commercial documents and conduct digital commercial transactions across private networks

� French Minitel (1980s videotext system; still in use today)

� None of these precursor system had functionality of Internet

Slide 1-33

E-commerce: A Brief History

� 1995–2000: Innovation� Key concepts developed

� Dot-coms; heavy venture capital investment

� First Banner Ad in 1994� First Banner Ad in 1994

� 2001–2006: Consolidation� Emphasis on business-driven approach

� 2006–Present: Reinvention� Extension of technologies

� New models based on user-generated content, social

networking, services Slide 1-34

Early Visions of E-commerce

� Computer scientists: � Inexpensive, universal communications and computing

environment accessible by all

� Economists: � 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

Slide 1-35

Ecommerce I & IIRollercoaster Ride

� E-commerce I: A period of explosive growth and extraordinary innovation; key concepts developed and explored

� Begins in 1995, ends in March 2000 when stock market valuations for dot.com companies begin to collapse

� Thousands of dot.com companies formed, backed by over $125 billion in financial capital

� E-commerce II: Characterized by a reassessment of e-commerce companies and their value

� Begins in January 2001; ongoing

Slide 1-36

Dot com IPOS

� 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?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?

Slide 1-37

Assessing E-commerce

� Many early visions not fulfilled

�Friction-free commerce

� Consumers less price sensitive

� Considerable price dispersion� Considerable price dispersion

�Perfect competition

� Information asymmetries persist

�Disintermediation

�First mover advantage

� Fast-followers often overtake first movers

Slide 1-38

Predictions for the Future

� Technology 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 change� Cast of players will change

� Traditional Fortune 500 companies will play dominant role

� New 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

Slide 1-39

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

Slide 1-40

The Internet and the Evolution of Corporate Computing

Slide 1-41

Academic Disciplines Concerned with E-commerce

� Technical approach� Computer science

� Management science

� Behavioral approach� Information systems

� Economics� Management science

� Information systems

� Economics

� Marketing

� Management

� Finance/accounting

� Sociology

Slide 1-42

Chapter Review

� What are some of the unique features of e-

commerce technology?

� Ubiquity, Universal standards, Richness, Interactivity,

Information density, Personalizaiton/customization, Information density, Personalizaiton/customization,

social technology

� Name three of the business consequences that can

result from growth in information density

� Price and cost transparency, Price discrimination

(market segment)

Slide 1-43

Chapter Review (contd)

� What is Web 2.0?

� Web 2.0 is a set of applications and technologies that

allows users to create, edit, and distribute content;

share preferences, bookmarks, and online personas; share preferences, bookmarks, and online personas;

participate in virtual lives; and build online communities

� What are the major limitations on the growth of e-

commerce? Which is potentially the toughest to

overcome?

� Price of PCs, sophisticated skill set, social and cultural

experience

Slide 1-44

Chapter Review (contd)

� Describe the three different stages in the evolution

of e-commerce.

� The three stages in the evolution of e-commerce are

innovation, consolidation, and reinventioninnovation, consolidation, and reinvention

� What are some of the major advantages and

disadvantages of being a first mover?

� Major advantage is the ability to build a brand name

and loyalty. Disadvantage, in e-commerce world most

of the first movers are replaced by fast followers

Slide 1-45

Case Questions

1. How can P2P file-sharing networks make money if they do not sell music?

2. Into which category or categories of e-commerce do P2P file-sharing networks

fall?

3. What social issues are raised by P2P file-sharing protocols and programs such as

BitTorrent? Is the record industry justified in attempting to shut them down? BitTorrent? Is the record industry justified in attempting to shut them down?

Why or why not?

4. Will the Supreme Court’s decision inhibit the development of P2P technology or

the Internet itself, as proponents of P2P services have claimed?

5. Why do people older than 21 tend to use legitimate downloading sites whereas

younger people tend to use illegal sites?

6. What difference would it make if the existing music labels disappeared for lack

of revenue? What legitimate function do the music labels perform in the

creation and distribution of original music

Slide 1-46

Case Grading Guideline

� 6-8 slides with notes

� At least 4 of the 6 questions are answered

� Presentation delivery

� Response to the questions

� Questions prepared for the other teams� Questions prepared for the other teams

Slide 1-47