E-Business Dr. Rogelio Dávila Pérez [email protected].

e-Business

Dr. Rogelio Dávila Pérez

[email protected]

e-Business

Consider the following questions:

How did Amazon.com, an online bookstore that started in 1995 with two employees in a rundown warehouse in Seattle, grow revenues in only three years to more than $600 million in 1998, outmaneuvering the two 800-pound gorillas in the book retail business, Barnes & Noble and Borders Books & Music?

Why does it take only a few minutes to choose a flight, buy an airline ticket, and reserve a hotel room and a car thorough Microsoft Expedia, and integrated online transaction site, but it takes twice that long to speak with an American, United or Delta travel agent?

History

1994 e-commerce did not exist.

e-commerce has been increasing from a start in 1995 grow rates of over 100% per year.

Since 1995, e-commerce has grown in the United States from almost nothing to a: $60 billion retail business, and a $700 billion business-to-business

E-commerce has become the foundation for the first digital electronic market place.

In 2001, business spent about $470 billion purchasing goods and services on the Web from other business.

In the next 5 years, e-commerce is projected to continue growing at double-digit rates, becoming the fastest growing form of commerce in the world.

By 2006, analysts estimate that consumers will be spending around $250 billion and business about $5.4 trillion in online transactions (Dykema, 2000; Jupiter Media Metrix, 2001).

History

Today more than 30 million American costumers are expected to spend about $65 billions purchasing products and services on the Internet´s World Wide Web (Dykema, 2000).

E-commerce of all kinds define business and society in the twenty-first century.

Established firms such as Wal-Mart, JCPenney and General Electric, and the new entrepreneurial firms such as E*Trade, Expedia, and eBay, both led the rapid movement towards an e-commerce economy and society

Students of business and information technology need a thorough grounding in electronic commerce in order to be effective and successful managers in the next decade.

What is e-commerce?

e-Commerce is the use of Internet and the Web to transact business. Its focus is on digitally enabled commercial transactions between and among organizations and individuals. Digitally enabled transactions include all transactions

mediated by digital technology. Commercial transactions involve the exchange of value

(e.g. money) across organizational or individual boundaries in return for products and services.

What is e-business?

e-Business is the complex fusion of business processes, enterprise applications, and organizational structure necessary to create a high-performance business model.

without a transition to an e-business foundation, e-commerce can not be executed effectively.

TechnologyInfraestructure

e-businessSystems

e-commerce Systems

The Internet

The Firm

CostumersSuppliers

Relation between e-commerce and e-business?

Seven unique features of e-commerce technology

e-Commerce Technology Dimension

Business Significance

Ubiquity – Internet/Web technology is available everywhere: at work, and elsewhere via mobile devices, anytime.

The marketplace is extended beyond traditional boundaries and is removed from a temporal and geographic location.

“Marketplace” is created; shopping can take place anywhere. Customer convenience is enhanced, and shopping costs are reduced.

Global Reach – The technology reaches across national boundaries, around the earth.

Commerce is enabled across cultural and national boundaries seamlessly and without modification. “Market space” includes potentially billions of consumers and millions of businesses worldwide.

Universal Standards – There is one set of technology standards, namely Internet standards.

There is one set of technical media standards across de globe.

Richness – Video, audio, and text messages are possible.

Video, audio, and text marketing messages are integrated into a single marketing message and consuming experience.


e-Commerce Technology Dimension (cont.)

Business Significance (cont.)

Interactivity – The technology works through interaction with the user.

Consumers are engaged in a dialog that dynamically adjusts the experience to the individual, and makes the consumer a co-participant in the process of delivering goods to the market.

Information Density – The technology reduces information costs and raises quality.

Information processing, storage, and communication costs drop dramatically, while currency, accuracy, and timeliness improve greatly. Information becomes plentiful, cheap, and accurate.

Personalization/Customization – The technology allows personalized messages to be delivered to individuals as well as groups.

Personalization of marketing messages and customization of products and services are based on individual characteristics.

1. Ubiquity: Internet/Web technology is available everywhere: at work, at home, and elsewhere via mobile devices.In traditional commerce, a market place is a physical place you visit in order to transact. E-commerce is ubiquitous, meaning that is available everywhere, at all times. For the costumer, ubiquity reduces transaction costs.

2. Global Reach: The technology reaches across national boundaries, around the earth.E-commerce permits commercial transactions to cross cultural and national boundaries.

3. Universal Standards: There is one set of technology standards, namely internet standards.The technical standards for conducting e-commerce, are word wide standards – they are shared by all nations around the world. Television and radio standards and regulations differ around the world.


4. Richness: Video, audio, and text messages are possible.Richness refers to the complexity and content of a message. Before Web The larger the audience reached, the less rich the message.

5. Interactivity: The technology works through interaction with the user. E-commerce allows a two-way communication between merchant and costumer.

6. Personalization/Customization: The technology allows personalized messages to be delivered to individuals as well as groups.Personalization: Merchants can target their marketing messages to specific

individuals by adjusting the message to a person's name, interests, and past purchases.

Customization: means changing the delivered product or service based on a user's preferences or prior behaviour.

Given the interactive nature of e-commerce, a great deal of information about the costumer can be gathered in the market place at the moment of purchasing.

Example The Wall Street Journal Online allows you to select the type of news you want

to see first, based in your previous visits.


7. Information Density: is the total amount and quality of information available to all market participants, consumers, and merchants alike.

- EC technologies reduce information collection, storage, processing, and communication costs. - EC technologies increase greatly the currency, accuracy, and timeliness

of information – making information more useful and important than ever.- Information becomes more plentiful, cheaper, and of higher quality.

Consequences of information density: Price transparency: it refers to the ease with which consumers can find out

the variety of prices in a market. Costs transparency: it refers to the ability of consumers to discover the actual

costs merchants pay for products. Price discrimination: selling the same goods, or nearly the same goods, to

different targeted groups at different prices.


Mayor Types of e-commerce

Type of e-Commerce Example

B2C – Business to Consumer Amazon.com Is a general merchandiser that sells consumer products to retail consumers.

B2B – Business to Business eSteel.com is a steel industry exchange that creates an electronic market for steel producers and users.

C2C – Consumer to Consumer eBay.com creates a marketspace where consumers can auction or sell goods directly to other consumers.

P2P – Peer to Peer Gnutella is a software application that permits consumers to share music with one another directly without the intervention of a market maker as in C2C e-commerce.

M-Commerce – Mobile Commerce Wireless mobile devices such as PDAs (personal digital assistants) or cell phones can be used to conduct commercial transactions.


Business-to-consumer (B2C)

Online business attempt to reach individual consumers. This business area is comparatively small (about $65 billion in 2001) but has grown exponentially since 1995.


Business-to-business (B2B)

In which focus on selling other business. It is the largest form of e-commerce (about $700 billions in transactions in 2001).

Consumer-to-consumer (C2C)

Provides a way for consumers to sell to each other, with the help of an online market maker (e.g. eBay.com). The size of this market is estimated to be over $5 billion and growing rapidly. On C2C e-commerce: The consumer prepares the product for the market. The consumer places the product for auction or sale. The market maker is in charge of displaying the product, including in

a catalogue with search facilities, and providing the transaction-clearing capabilities, so the product can be displayed, discovered and paid for.


Peer-to-peer (P2P)

Peer to peer technology enables Internet users to share files and computer resources directly without having to go through a central Web server. In peer-to-peer's purest form, no intermediary is required. Gnutella is a free software application that permits users to directly

exchange musical tracks, typically without charges. Napster.com, was a established to aid Internet users in finding and

sharing online music files known as MP3 files. Its perhaps the most well known example of peer-to-peer commerce.

In 2000, the Recording Industry of America, a trade organization of the largest recording companies, successfully sued Napster for violating copyright law.

Types of e-commerce

M-Commerce

Mobile commerce refers to the use of wireless digital devices to enable transactions on the Web. M-commerce users utilize wireless networks to connect cell phones and

handheld devices such as the PalmVIIx to the Web. Once connected, mobile consumers can conduct many types of

transactions, including stock trades, in-store price comparisons, banking, travel reservations, and more.

M-commerce is used most widely in Japan and Europe (specially Finland), where cell phones are more prevalent than in USA.

Types of e-commerce

From 1995 to 2000 The most euphoric of times in American commercial history. Explosive and entrepreneurial growth period of e-commerce. Beginning in 1995 with the first widespread use of the Web to advertise

products. E-commerce was built using Internet technology, but what made it run

was big money. Between 1998 and 2000, capitalists poured an estimated $120 billion

into approximately 12,450 dot.com start-up ventures. Investment bankers then took 1,262 of these companies public in what is

called an initial public offering (IPO) of stock.

Eras of E-commerce

From 1995 to 2000 (cont.) dot.com IPO shares often skyrocketed within minutes of hitting the

trading floor. Starting from $15 some shares tripled and quadrupled in the first day.

50% “pump” (or increase in value) was considered just a reasonable showing.

The Securities and Exchange Commission made this practice illegal in 1999.

In 2000 the stock market valuations for dot.com companies began to collapse

12% of the companies that went public in that period were trading at $1 or less per share in April 2001.

Eras of E-commerce

From 2000 The crash in stock market values throughout 2000. Causes:

The run-up in technology stocks, specially in NASDAQ market. Rebuilding of the internal business systems to withstand the

challenges of year 2000 (Y2K). 1999 e-commerce Christmas season demostrated that e-

commerce was not easy. Many dot.com retailers, such as eToys.com, could not deliver in a timely fashion.

The valuations of dot.com and technology companies had risen so high that market experts were questioning whether earnings of these companies could ever grow fast enough to justify the prices of the shares.

Some high tech companies had stock values 400 times their earnings, while traditional companies were selling for 10 to 15 times its earnings.

Eras of E-commerce

Eras of E-commerce

E-commerce today It is clear that E-commerce's digital infrastructure is solid enough

to sustain significant growth in e-commerce during the next decade.

Only about 10% of dot.coms formed since 1995 survive as independent companies.

Only a tiny percent of this survivors are profitable. Yet online B2C sales of goods and services are still growing at 45% to 55% per year.

B2C revenues are expected to grow from $65 billion in 2001 (about 1.5% of all retail revenue) to $269 billion in 2005.

E-Business Dr. Rogelio Dávila Pérez [email protected].

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Transcript of E-Business Dr. Rogelio Dávila Pérez [email protected].