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
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
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