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