Hoorah Learn presents

INTRODUCTION TO E-COMMERCE Introduction to the history, pioneers and building blocks of e-commerce

Inside this booklet

Index • History and origin of e-commerce.

• Fourth Industrial Revolution context.

• Pioneers and giants of e-commerce.

• Types of e-commerce.

• Building blocks - protocols and technology.

• E-commerce requirements and ICT.

• New age retail - online/offline merge.

Memorable quotes by Jack Ma, Founder of Alibaba.com:

On having a larger mission: “It does not matter if I failed. At least I passed the concept on to others. Even if I don’t succeed, someone else will succeed.”

On competition: “You should learn from your competitor, but never copy. Copy and you die.”

On teamwork: “If we are a good team and know what we want to do, one of us can defeat ten of them.”

On starting a company: “If you want to grow, find a good opportunity. Today, if you want to be a great company, think about which social problem you can solve.”

On not giving up: “Today is cruel, tomorrow is crueller. But the day after tomorrow is beautiful.”

On perseverance: “We will make it because we are young and we will never, never give up”

On growth: “In carrying out e-commerce, the most important thing is to keep doing what you are doing with passion right now and keep it up.”

History and origin of e-commerce

One of the most popular activities on the Web is shopping. It has much allure in it — you can shop at your leisure, anytime, and in your pajamas. Literally anyone can have their pages built to display their specific goods and services. History of e-commerce dates back to the invention of the very old notion of "sell and buy", electricity, cables, computers, modems, and the Internet. Ecommerce became possible in 1991 when the Internet was opened to commercial use. Since that date thousands of businesses have taken up residence at web sites. At first, the term e-commerce meant the process of execution of commercial transactions electronically with the help of the leading technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for users to exchange business information and do electronic transactions. The ability to use these technologies appeared in the late 1970s and allowed business companies and organizations to send commercial documentation electronically. Although the Internet began to advance in popularity among the general public in 1994, it took approximately four years to develop the security protocols (for example, HTTP) and DSL which allowed rapid access and a persistent connection to the Internet. In 2000 a great number of business companies in the United States and Western Europe represented their services in the World Wide Web. At this time the meaning of the word e-commerce was changed. People began to define the term e-commerce as the process of purchasing of available goods and services over the Internet using secure connections and electronic payment services. Although the dot-com collapse in 2000 led to unfortunate results and many of e-commerce companies disappeared, the "brick and mortar" retailers recognised the advantages of electronic commerce and began to add such capabilities to their web sites.

Fourth Industrial RevolutionAre the technologies that surround us tools that we can identify, grasp and consciously use to improve our lives? Or are they more than that: powerful objects and enablers that influence our perception of the world, change our behaviour and affect what it means to be human?Technologies are emerging and affecting our lives in ways that indicate we are at the beginning of a Fourth Industrial Revolution, a new era that builds and extends the impact of digitisation in new and unanticipated ways. It is

therefore worthwhile taking some time to consider exactly what kind of shifts we are experiencing and how we might, collectively and individually, ensure that it creates benefits for the many, rather than the few.

When were the other industrial revolutions?The First Industrial Revolution is widely taken to be the shift from our reliance on animals, human effort and biomass as primary sources of energy to the use of fossil fuels and the mechanical power this enabled. The Second Industrial

Revolution occurred between the end of the 19th century and the first two decades of the 20th century, and brought major breakthroughs in the form of electricity distribution, both wireless and wired communication, the synthesis of ammonia and new forms of power generation. The Third Industrial Revolution began in the 1950s with the development of digital systems, communication and rapid advances in computing power, which have enabled new ways of generating, processing and sharing information.

The Fourth Industrial Revolution can be described as the advent of “cyber-physical systems” involving entirely new capabilities for people and machines. While these capabilities are reliant on the technologies and infrastructure of the Third Industrial Revolution, the Fourth Industrial Revolution represents entirely new ways in which technology becomes embedded within societies and even our human bodies. Examples include genome editing, new forms of machine intelligence, breakthrough materials and approaches to governance that rely on cryptographic methods such as the blockchain.

Why should entrepreneurs and aspiring young professionals consider the context of the Fourth Industrial Revolution?

History has proven that industrial revolutions have similar patterns. They start with new means of communication, disruptive discoveries and technological improvements that ultimately advances the entire human race. However, it is true that the full effect of the industrial revolutions are yet to be seen in many countries, as the famous novelist William Gibson said: “The future is already here - it’s just not very evenly distributed.”

The opportunity lies in this uneven distribution, especially as Africans. The Western parts of the world are considered to have large sums of investment funds, Asia stereotypically have the technology and manufacturing plants, however - Africa has the market. In terms of advancements, Africa is considered to be lacking behind, but also the most prone to leapfrog to the most optimised solutions. Leapfrogging is the occurrence where industry leaders continually make marginal improvements, while previously dispositioned jump to the most optimised solutions. An example of this is in Nigeria, where the electricity grid was previously underdeveloped and can only supply electricity to about half of the population - this offers great opportunity for the emergence of renewable energy.

Unfortunately, many technologies emerging from the Fourth Industrial Revolution are focussed on enhancing human capabilities (augmented reality, virtual reality, machine learning) and in some cases replacing humans with machines (Artificial intelligence). It is crucial to take this into consideration when choosing a career direction as some careers are more prone to change than others. See the Future of jobs report for more detailed information on how future jobs will increasingly require complex problem-solving, social and systems skills.

As millennials we have the advantage of growing up with technologies that familiarise us with the context that we find ourselves in. Even more, if the youth act pro-actively and consider themselves pioneers as opposed to users of these technologies, then we will see great impact by our generation.

This brings us to the opportunity of e-commerce. E-commerce has already influenced the way that people shop. People shop online from home, at work or even when commuting. This saves a lot of time and very often good deals can be found online.The opportunity of e-commerce stretches far beyond the luxury of shopping from home. E-commerce removes all geographical restrictions allowing someone to buy and sell globally to a much larger market. The purpose of this course is to enlighten students of additional opportunities that the Fourth Industrial Revolution offers in all its magnitude of unevenness and opportunities - especially for African millennials. The window of opportunity to position ourselves for greatness is upon our generation.

Pioneers and giants of e-commerce

Excluding China, there is an estimate of about 3 million e-commerce companies in the world. These range from single online stores, online services, marketplaces and full ecosystems that are built on the web.

Some of the very first companies to successfully engage in e-commerce still exist today. eBay, Amazon and Alibaba are examples of first-movers whom had the advantage of monopolising the e-commerce industry through having longterm, sustainable goals. It comes at no surprise that the founders of these

platforms are in the top 5 wealthiest people on the Forbes top 100 list.

AMAZON

Amazon is a multinational technology company focusing in e-commerce, cloud computing and artificial intelligence in Seattle, Washington. Amazon is the worlds most valuable company in the world ahead of Apple and Alphabet.

Amazon.com was founded by Jeff Bezos in 1994, and originally started off as an online book store (because no physical store could keep all the books in the world in one place).

2017 Annual turnover: 178 Billion US Dollars 2017 profit: 3,1 Billion US Dollars

Read more about Amazon here.

ALIBABA Alibaba is a multi-industry e-commerce company specialising in retail, internet and technology based in Hangzhou, China. Alibaba has operations in more than 200 countries in the world, and is the world’s largest e-commerce retailer. in 2017, Alibaba’s combined turnover exceeded that of the whole German economy!

Jack ma founded Alibaba in 1999 after realising that the internet could revolutionise the manufacturing industry in China through exporting to consuming countries such as America.

After the success of alibaba.com, that connected businesses and suppliers, Alibaba branched out and currently have over 27 different platforms.

2017 Annual turnover: 39,9 Billion US Dollars 2017 profit: 4,9 Billion US Dollars

Interesting facts

Types of e-commerce Marketplace

A platform facilitating transactions between independent buyers and

sellers. Key points:

Cross selling, free traffic, strategies, access to markets, low fees, quick

and convenient, trust in the platform.

3 Types of basic e-commerce

- Business-to-Business (B2B): Electronic transactions of goods or services conducted between companies. Eg. Wholesalers and producers.

- Business-to-Consumer (B2C): Electronic business relations between businesses and consumers. Eg. Retail marketplaces

- Consumer-to-Consumer (C2C): Electronic business relations between consumers and other consumers. Eg. Classified websites.Online Shop

A website for retail by a single seller.

Key points: Expensive development, reliant on paid marketing, trust often an issue,

limited to strategies, own brand identity. Often part of a blog to

drive traffic.

3 other types to consider: Consumer-to-Business (C2B) Business-to-Administration (B2A) Consumer-to-Administration (C2A)

Building blocks of e-commerce

“Fortune favours the prepared mind” - Louis Pasteur

In e-commerce, planning ahead is the most important thing to consider when starting your business. As an entrepreneur, you’ll need to consider the rapid growth, trust issues and immaturity of the industry when starting your business. Here are ten building blocks to consider when planning to start an e-commerce business:

1) Design: Customers need to easily find products they are looking for. It should

be fast and responsive and should load quickly across all major devices (desktop, laptop, tablet and mobile).

2) User experience: Create an immersive, guided user experience with rich media to engage better with your customers.

3) Information: Your website should contain crucial pages such as frequently asked questions, T&C’s, About Us and Privacy Policies to encourage trust.

4) SEO: Search Engine Optimisation customers to easily find you on platforms such as Google. This increases organic traffic.

5) Curation: Using data, you can target certain customers and advertise products according to their geographic, interests, age and gender.

6) Scalability: Successful companies grow and change. Planning ahead and choosing a scalable solution that expands with you will save a great amount of time and work down the road.

7) Automation: Automation is the real key to scalable e-commerce. Processes, feedback and customer communications that are automated can save you a lot of time and salaries if integrated well.

8) Logistics: Considerations like regional sales taxes, warehouses, shipping methods, and language support for the countries where you do business are essential when choosing an eCommerce solution.

9) Social media: Social media opens your business to millions of potential customers. Create content relevant to your target market and refer them to your business.

10) Value: Building relationships with your customers are more important than a quick sale. Provide value by having excellent response rates, good quality products, reviews and always put the customer first.

Basic E-commerce requirements

To sell • E-commerce platform or shop - Choose between having your own store or being a marketplace seller. • Products or services - Will you sell your own products or someone else’s? • Payments solution provider - EFT, credit card, Cash on Delivery, QR codes • Logistics partner - Last mile (local) and international deliveries • Marketing platforms and strategies - Social media, Google and re-marketing with data • Collection address or warehouse

To shop • Internet access • Delivery address • Means of payment

Always consider that new technology (or stack as we call it) will always

be more relevant in the future if use-cases can be substantial. Protocols such as blockchain might change

the way that e-commerce payments, platforms and logistics are operated. Blockchain eliminates the “middleman”

and may disrupt your business if you’re not able to rapidly adapt to concepts present in the

Fourth Industrial Revolution.

New age retailMerging online and offline

E-commerce is all about improving customer experience and eliminating “friction of selling”. What happens when you use e-commerce technology in existing malls and shopping methods?

Have a look at how Alibaba is transforming the way people shop by creating unique shopping experiences here. No till-points

QR code recipes

Home grocery deliveries Car vending machines

Peak hour pricing differences

Shared economy

Cashless society

Shared bicycles

30 min delivery time

Robot warehousesShared vehicles

Live pricing

Value chain trackingPeer-to-peer produce