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    Chapter1 Chapter1 Presentation Transcript

    • CHAPTER 1 The Revolution Is Just Beginning
    • 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
    • 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
    • Amazon.com: Before and After Amazon.com: Before and After
    • 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)
    • 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
    • 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
    • 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
    • The Difference Between E-commerce and E-Business Page 8, Figure 1.1
    • 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
    • Seven Unique Features of E-commerce Technology and Their Business Significance Page 9, Table 1.1
    • Changing Trade-Off Between Richness and Reach Page 11, Figure 1.2
    • 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)
    • Major Types of E-Commerce Page 14, Table 1.2
    • Business-to-Consumer E-commerce
      • Most commonly discussed type
      • Online businesses attempt to reach individual consumers
      • Consumers will spend $65 billion in 2001.
    • 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
    • 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
    • Peer-to-Peer E-commerce
      • Enables Internet users to share files and computer resources
      • Napster
    • 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
    • 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
    • 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)
    • The Growth of the Internet Page 16, Figure 1.3
    • The Growth of Web Content Page 17, Figure 1.4
    • The Growth of B2C E-Commerce Page 20, Figure 1.5
    • The Growth of B2B E-Commerce Page 21, Figure 1.6
    • 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)
    • 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
    • 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
    • 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
    • Limitations of the Growth of B2C E-Commerce Page 23, Table 1.3
    • Web Access Via Wireless Devices in the United States Page 24, Figure 1.7
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • Amounts Raised by Venture-Backed Internet Companies in 1996-2000 Page 25, Table 1.4
    • 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
    • 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.
    • 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
    • E-Commerce I and E-Commerce II Compared Page 32, Table 1.5
    • April 2001 NRF/Forrester Online Retail Index Page 33, Table 1.6
    • Top 25 Properties of March 2001 (Combined Home and Work) Page 34, Table 1.7
    • Top 20 Web Retailers Among U.S. Home Users (January, 2001) Page 35, Table 1.8
    • 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
    • The Internet and the Evolution of Corporate Computing Page 37, Figure 1.8
    • Disciplines Concerned with E-Commerce Page 39, Figure 1.9