Lecture1 is441-(intro toe-commerce)

Abdisalam Issa-Salwe

Taibah University

College of Computer Science & EngineeringInformation Systems Department

Introduction to e-Commerce

(e-Commerce IS441)

Lecture 1

Kenneth C. Lauden and Carol Guercio Traver, 2002 E-Commerce: Business, Technology and Society. Pearson Education, Inc.

2Abdisalam Issa-Salwe, College of Computer Science & Engineering, Taibah University

Learning Objectives

� Define e-commerce and describe how it differs from e-business

� Identify the unique features of e-commerce technology and their business significance

� Describe the major types of e-commerce

� Understand the visions and forces behind the E-Commerce I era


Learning Objectives

� Understand the successes and failures of E-Commerce I

� Identify several factors that will define the E-commerce II era

� Describe the major themes underlying the study of e-commerce

� Identify the major academic disciplines contributing to e-commerce research


Amazon.com: Before and After


E-commerce vs. E-business

E-business involves

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

� E-business does not involve commercial transactions across organizational boundaries where value is exchanged


The Difference Between E-commerce and E-Business

Page 8, Figure 1.1


Seven Unique Features of E-commerce Technology and Their Business Significance

Page 9, Table 1.1


Page 11, Figure 1.2

Changing Trade-Off Between Richness and Reach


Major Types of E-Commerce

� Market relationships

� Business-to-Consumers (B2C)

� Business-to-Business (B2B)

� Consumer-to-Consumer (C2C)

� Technology-based

� Peer-to-Peer (P2P)

� Mobile Commerce (M-commerce)


Major Types of E-Commerce

Page 14, Table 1.2


Business-to-Consumer E-commerce

� Most commonly discussed type

� Online businesses attempt to reach individual consumers

� Consumers will spend $65 billion in 2001.


Business-to-Business E-commerce

� Businesses focus on sell to other businesses

� Largest form of e-commerce

� $700 billion in transactions in 2001

� Primarily involved inter-business exchanges at first

� Other models have developed

� e-distributors

� infomediaries

� B2B service providers


Consumer-to-Consumer E-commerce

� Provide a way for consumers to sell to each other

� Estimated $5 billion market

� 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 capabilities


Peer-to-Peer E-commerce

� Enables Internet users to share files and computer resources

� Napster


Mobile E-commerce

� Wireless digital devices enable transactions on the Web

� Uses personal digital assistants (PDAs) to connect

� Used most widely in Japan and Europe


Growth of the Internet and the Web

� Created in the late 1960s

� After 1990s, About 350 million computers worldwide to date

� Links businesses, educational institutions, government agencies, and individuals

� Provides services such as e-mail, document transfer, newsgroups, shopping, research, instant messaging, music, video, and news


Growth of the Internet and the Web

� Internet hosts are growing at a rate of 45% per year

� Extraordinary growth -- time to reach 30% US households

� Radio - 38 years

� Television - 17 years

� Internet/Web - 8 years (1993)


The Growth of the Internet

Page 16, Figure 1.3


The Growth of Web Content

Page 17, Figure 1.4


The Growth of B2C E-Commerce

Page 20, Figure 1.5


The Growth of B2B E-Commerce

Page 21, Figure 1.6


Origins and Growth of E-Commerce

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


Technology and E-Commerce in Perspective

Internet and the Web are just two of a long list of technologies that have greatly change commerce

� Other technologies spawned business models and strategies

� Explosive early growth followed by retrenchment and then long-term successful exploitation of the technology


Technology and E-Commerce in Perspective

Although e-commerce has grown explosively, there is no guarantee it will continue to grow

� Confront own fundamental limitations

� B2C only about 1% of overall retail market

� With current growth rates, B2C will roughly equal the annual revenue of Wal-Mart in 2005


Limitations of the Growth of B2C E-CommercePage 23, Table 1.3


E-Commerce I and II

� E-Commerce I

� Explosive growth starting in 1995

� Widespread of Web to advertise products

� Ended in 2000 when dot.com began to collapse

� E-Commerce II

� Began in January 2001

� Reassessment of e-commerce companies


E-Commerce I 1995-2000

� For computer scientist and information technologists

� Vindication of a set of information technologies developed over 40 years

� Extending from the early Internet to the PC and local area networks

� The vision of universal communications



� For economists

� Raised realistic prospect of perfect Bertrand Market

� where price, cost, and quality information is equally distributed

� where a nearly infinite set of suppliers compete against one another

� where customers have access to allrevelant market information worldwide

� Merchants have equal direct access to hundreds of millions of customers



Disintermediation

� displacement of market middlemen who traditionally are intermediaries between producers and consumers by a new direct relationship between manufacturers and content originators with their customers



Friction-free commerce

� a vision of commerce in which

� information is equally distributed

� transaction costs are low

� prices can be dynamically adjusted to reflect actual demand

� intermediaries decline

� unfair competitive advantages are eliminated



� First mover

� a firm that is first to market in a particular area and that moves quickly to gather market share

� Network effect

� occurs where users receive value from the fact that everyone else uses the same tool or product


Amounts Raised by Venture-Backed Internet Companies in 1996-2000

Page 25, Table 1.4


E-Commerce II 2001-2006

� Crash in stock market values of E-commerce I companies throughout 2000 is an end to E-commerce I

� Led to a sobering reassessment of the prospects of e-commerce and the methods of achieving business success.

� E-commerce II begins in 2001 and ends five year later -- the limit for making technology and business projections


E-Commerce II 2001-2006

� Reasons for the end of E-Commerce I

� run-up in technology stocks due to enormous information technology capital expenditure of firms rebuilding their internal business systems to withstand Y2K

� telecommunications industry had built excess capacity in high-speed fiber optic networks

� 1999 e-commerce Christmas season provided less sales growth that anticipated and demonstrated e-commerce was not easy (eToys.com)

� valuations of dot.com and technology companies had risen so high supporters were questioning whether earnings could justify the prices of the shares.


E-Commerce I and E-Commerce II Compared

Page 32, Table 1.5


April 2001 NRF/Forrester Online Retail Index

Page 33, Table 1.6


Understanding E-Commerce: Organizing Themes

� Technology: Infrastructure

� development and mastery of digital computing and communications technology

� Business: Basic Concepts

� new technologies present businesses and entrepreneurs with new ways of organizing production and transacting business

� Society: Taming the Juggernaught

� global nature of e-commerce poses public policy issues of equity, equal access, content regulation, and taxation


The Internet and the Evolution of Corporate Computing

Page 37,

Figure 1.8


Disciplines Concerned with E-Commerce

Page 39, Figure 1.9

References

� Kenneth C. Lauden and Carol Guercio Traver, E-Commerce: Business, Technology and Society. Pearson Education, Inc. 2002.

� Abdisalam Issa-Salwe, Lecture Notes: E-Business and E-Commerce, Arab Open Univeristy Notes, 2012.

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