What is E-commerce And its Types
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Transcript of What is E-commerce And its Types
By: Liaquat Ali Rahoo 1
CHAPTER 1CHAPTER 1
The Revolution Is Just The Revolution Is Just BeginningBeginning
By: Liaquat Ali Rahoo 2
Learning ObjectivesLearning 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
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Learning ObjectivesLearning 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
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Amazon.com: Before and AfterAmazon.com:
Before and After
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Amazon.com: Before and AfterAmazon.com: Before and After
Most well-known e-commerce company Conceived by Jeff Bezos in 1994 Opened in July 1995 Four compelling reasons to shop
Selection (1.1 million titles) Convenience (anytime, anywhere) Price (high discounts on bestsellers) Service (automated order confirmation,
tracking, and shipping information)
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Amazon.com: Before and AfterAmazon.com: Before and After
($1.4 Billion)$2.7 Billion2000
($720 Million)$1.6 Billion1999
($125 Million)$610 Million1998
($31 Million)$148 Million1997
($6.24 Million)$15.6 Million1996
EarningsRevenues
Revenues and Earnings
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E-commerce vs. E-businessE-commerce vs. E-business
E-commerce involves Digitally enabled commercial transactions
between organizations and individuals. Digitally enabled transactions include all
transactions mediated by digital technology
Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services
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E-commerce vs. E-businessE-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
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The Difference Between E-The Difference Between E-commerce and E-Businesscommerce and E-Business
Page 8, Figure 1.1
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Unique of E-commerce Technology Unique of E-commerce Technology and Their Business Significanceand Their Business Significance
E-commerce: is ubiquitous has global reach operates according to universal standards provides information richness is interactive increases information density permits personalization
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Seven Unique Features of E-commerce Seven Unique Features of E-commerce Technology and Their Business SignificanceTechnology and Their Business Significance
Page 9, Table 1.1
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Page 11, Figure 1.2
Changing Trade-Off Between Changing Trade-Off Between Richness and ReachRichness and Reach
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Major Types of E-CommerceMajor 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)
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Major Types of E-CommerceMajor Types of E-CommercePage 14, Table 1.2
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Business-to-Consumer E-Business-to-Consumer E-commercecommerce
Most commonly discussed type Online businesses attempt to reach
individual consumers Consumers will spend $65 billion in 2001.
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Business-to-Business E-Business-to-Business E-commercecommerce
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
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Consumer-to-Consumer E-Consumer-to-Consumer E-commercecommerce
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
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Peer-to-Peer E-commercePeer-to-Peer E-commerce
Enables Internet users to share files and computer resources
Napster
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Mobile E-commerceMobile E-commerce
Wireless digital devices enable transactions on the Web
Uses personal digital assistants (PDAs) to connect
Used most widely in Japan and Europe
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Growth of the Internet and the WebGrowth of the Internet and the Web
Created in the late 1960s 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
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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)
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The Growth of the InternetPage 16, Figure 1.3
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The Growth of Web ContentPage 17, Figure 1.4
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The Growth of B2C E-CommerceThe Growth of B2C E-CommercePage 20, Figure 1.5
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The Growth of B2B E-CommerceThe Growth of B2B E-CommercePage 21, Figure 1.6
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Origins and Growth of E-Origins and Growth of E-CommerceCommerce
Baxter Healthcare Primitive form of B2B using telephone-based modem to
permit hospitals to reorder supplies (early 1970s) PC-based remote order entry system (1980s)
Electronic Data Interchange (EDI) standards developed that permitted firms to exchange commercial documents and conduct digital commercial transactions across private networks (1980s)
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Origins and Growth of E-CommerceOrigins and Growth of E-Commerce
French Minitel videotext system First B2C arena (1981) 15 million in use throughout France
World Wide Web 1993 first browsers 1995 first banner ads
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Technology and E-Commerce in Technology and E-Commerce in PerspectivePerspective
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
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Technology and E-Commerce in Technology and E-Commerce in PerspectivePerspective
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
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Limitations of the Growth of B2CLimitations of the Growth of B2CE-CommerceE-Commerce
Page 23, Table 1.3
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Web Access Via Wireless Devices in Web Access Via Wireless Devices in the United Statesthe United States
Page 24, Figure 1.7
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E-Commerce I and IIE-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
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E-Commerce I 1995-2000E-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
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E-Commerce I 1995-2000E-Commerce I 1995-2000 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 all revelant
market information worldwide
Merchants have equal direct access to hundreds of millions of customers
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E-Commerce I 1995-2000E-Commerce I 1995-2000
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
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E-Commerce I 1995-2000E-Commerce I 1995-2000
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
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E-Commerce I 1995-2000E-Commerce I 1995-2000
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
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Amounts Raised by Venture-Backed Amounts Raised by Venture-Backed Internet Companies in 1996-2000Internet Companies in 1996-2000
Page 25, Table 1.4
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E-Commerce II 2001-2006E-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
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E-Commerce II 2001-2006E-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.
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Insight on Business:Insight on Business:A Short History of dot.com IPOSA Short History of dot.com IPOS
Between 1998 and 2000 venture capitalists poured an estimated $120 billion into approximately 12,450 dot.com start-up ventures
Investment bankers took 1,262 of these companies public in IPOS
IPO shares were targeted to open around $15 per share, and it was not uncommon for them to be trading at $45 a share or more later the same trading day
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E-Commerce I and E-Commerce E-Commerce I and E-Commerce II ComparedII Compared
Page 32, Table 1.5
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April 2001 NRF/Forrester Online April 2001 NRF/Forrester Online Retail IndexRetail Index
Page 33, Table 1.6
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Top 25 Properties of March 2001 Top 25 Properties of March 2001 (Combined Home and Work)(Combined Home and Work)
Page 34, Table 1.7
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Top 20 Web Retailers Among U.S. Home Users Top 20 Web Retailers Among U.S. Home Users (January, 2001)(January, 2001)
Page 35, Table 1.8
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Understanding E-Commerce: Understanding E-Commerce: Organizing ThemesOrganizing 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
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The Internet and the Evolution of Corporate Computing
Page 37,
Figure 1.8
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Disciplines Concerned with E-Disciplines Concerned with E-CommerceCommerce
Page 39, Figure 1.9