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Chapter1 Presentation Transcript

  • 1. CHAPTER 1 The Revolution Is Just Beginning
  • 2. 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
  • 3. 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
  • 4. Amazon.com: Before and After Amazon.com: Before and After
  • 5. Amazon.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)
  • 6. Amazon.com: Before and After ($1.4 Billion) $2.7 Billion 2000 ($720 Million) $1.6 Billion 1999 ($125 Million) $610 Million 1998 ($31 Million) $148 Million 1997 ($6.24 Million) $15.6 Million 1996 Earnings Revenues Revenues and Earnings
  • 7. E-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
  • 8. 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
  • 9. The Difference Between E-commerce and E-Business Page 8, Figure 1.1
  • 10. Unique of E-commerce Technology and 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
  • 11. Seven Unique Features of E-commerce Technology and Their Business Significance Page 9, Table 1.1
  • 12. Changing Trade-Off Between Richness and Reach Page 11, Figure 1.2
  • 13. 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)
  • 14. Major Types of E-Commerce Page 14, Table 1.2
  • 15. Business-to-Consumer E-commerce
    • Most commonly discussed type
    • Online businesses attempt to reach individual consumers
    • Consumers will spend $65 billion in 2001.
  • 16. 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
  • 17. 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
  • 18. Peer-to-Peer E-commerce
    • Enables Internet users to share files and computer resources
    • Napster
  • 19. 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
  • 20. Growth 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
  • 21. 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)
  • 22. The Growth of the Internet Page 16, Figure 1.3
  • 23. The Growth of Web Content Page 17, Figure 1.4
  • 24. The Growth of B2C E-Commerce Page 20, Figure 1.5
  • 25. The Growth of B2B E-Commerce Page 21, Figure 1.6
  • 26. Origins and Growth of E-Commerce
    • 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)
  • 27. Origins 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
  • 28. 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
  • 29. 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
  • 30. Limitations of the Growth of B2C E-Commerce Page 23, Table 1.3
  • 31. Web Access Via Wireless Devices in the United States Page 24, Figure 1.7
  • 32. 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
  • 33. 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
  • 34. E-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
  • 35. E-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
  • 36. E-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
  • 37. E-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
  • 38. Amounts Raised by Venture-Backed Internet Companies in 1996-2000 Page 25, Table 1.4
  • 39. 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
  • 40. 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.
  • 41. Insight on Business: A 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
  • 42. E-Commerce I and E-Commerce II Compared Page 32, Table 1.5
  • 43. April 2001 NRF/Forrester Online Retail Index Page 33, Table 1.6
  • 44. Top 25 Properties of March 2001 (Combined Home and Work) Page 34, Table 1.7
  • 45. Top 20 Web Retailers Among U.S. Home Users (January, 2001) Page 35, Table 1.8
  • 46. 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
  • 47. The Internet and the Evolution of Corporate Computing Page 37, Figure 1.8
  • 48. Disciplines Concerned with E-Commerce Page 39, Figure 1.9