e-commerce
business. technology. society.
Kenneth C. Laudon
Carol Guercio Traver
Introduction to E-commerceeighth edition
...
Class Discussion
Facebook: The New Face of E-commerce?
E-commerce Trends 2011–2012
n
n
n
n
n
n
n
n
n
Do you use Facebook, ...
The First 30 Seconds
First 16 years of e-commerce
Technologies continue to evolve at
exponential rates
What Is E-commerce?...
E-commerce vs. E-business
E-business:
Why Study E-commerce?
E-commerce technology is different, more
powerful than previou...
Unique Features of E-commerce
Technology
1. Ubiquitous – Internet available everywhere, and anytime
2. Global reach – the ...
The Changing Trade-Off Between
Richness and Reach
Web 2.0
User-centered applications and social
media technologies
Copyrig...
Types of E-commerce
Classified by market relationship
Classified by technology used
The Internet
Worldwide network of comp...
The Growth of the
Internet, Measured
by Number of
Internet Hosts withInternet Hosts with
Domain Names
Figure 1.2, Page 23
...
The Growth of Web Content
Origins and Growth of E-commerce
Precursors:
1995: Beginning of e-commerce
E-commerce fastest gr...
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v
v
v
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n
Precursors:
Origins & Growth of E-commerce
None of these precursor systems had
functionality of Internet
...
The Growth of B2C E-commerce
Figure 1.3, Page 25
The Growth of B2B E-commerce
Figure 1.4, Page 28
Copyright © 2012 Pearson...
Technology and E-commerce
in Perspective
The Internet and Web: Just two of a long list
of technologies that have greatly c...
Potential Limitations on the Growth of B2C E-
commerce
Copyright © 2012 Pearson Education
Copyright © 2012 Pearson Educati...
E-commerce: A Brief History
1995–2000: Innovation
2001–2006: Consolidation
2006–Present: Reinvention
Early Visions of E-co...
Amounts Raised by Internet-Related
Venture-Backed Firms
Assessing E-commerce
Many early visions not fulfilled
Copyright © ...
Predictions for the Future
E-commerce technology (Internet, Web, and wireless Internet
devices) will propagate through all...
Understanding E-commerce:
Organizing Themes
Technology: Infrastructure
Business: Basic concepts
Society: Taming the jugger...
Academic Disciplines
Concerned with E-commerce
Technical approach Behavioral approachn n
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Copyright © 201...
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01 Introduction to E-commerce slides

  1. 1. e-commerce business. technology. society. Kenneth C. Laudon Carol Guercio Traver Introduction to E-commerceeighth edition eighth edition Copyright © 2012 Pearson Education Chapter 1 1
  2. 2. Class Discussion Facebook: The New Face of E-commerce? E-commerce Trends 2011–2012 n n n n n n n n n Do you use Facebook, and if so, how often? What has the experience been like?What has the experience been like? Have you purchased anything based on an advertisement on Facebook or by using a link provided by a friend? Are you concerned about the privacy of the information you have posted on Facebook? Social networking continues to grow Expansion of social e-commerce platform Mobile platform begins to rival PC platform Localization of e-commerce (Groupon)Localization of e-commerce (Groupon) Explosive growth in online video viewing Continued privacy and security concerns Slide 1-3 Slide 1-4 2 Copyright © 2012 Pearson Education
  3. 3. The First 30 Seconds First 16 years of e-commerce Technologies continue to evolve at exponential rates What Is E-commerce? Use of Internet and Web to transact business More formally: n v v n v v n n v v Just the beginning Rapid growth and change Disruptive business change New opportunities Digitally enabled commercial transactions between and among organizations and individualsindividuals Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-5 Slide 1-6 3
  4. 4. E-commerce vs. E-business E-business: Why Study E-commerce? E-commerce technology is different, more powerful than previous technologies (TV Commerce, Radio Commerce, Direct Mail Commerce) E-commerce brings fundamental changes to commerce Traditional commerce: n v v v n n n v v v v Digital enabling of transactions and processes a firm, involving information systems undera firm, involving information systems under firm’s control include commercial transactions involving an exchange of value across organizational boundaries However, a firm’s e-business infrastructure provides support for on-line e-commerce exchanges Consumer as passive targets Sales-force driven Fixed prices Information asymmetry withinwithin Does not Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-7 Slide 1-8 4
  5. 5. Unique Features of E-commerce Technology 1. Ubiquitous – Internet available everywhere, and anytime 2. Global reach – the technology reaches across national boundaries, around the Earthboundaries, around the Earth 3. Universal standards – one set of technology standards, namely Internet standards 4. Information richness – video, audio, text messages 5. Interactivity – technology works through interaction with user 6. Information density – storage, communication costs drop, while concurrency, accuracy, and timeliness improve greatly 7. Personalization/customization – allows personalized messages delivery to individuals and groups 8. Social technology – user content generation and social networking Unique Features of E-commerce Technology Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-9 Slide 1-10 5
  6. 6. The Changing Trade-Off Between Richness and Reach Web 2.0 User-centered applications and social media technologies Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-11 Slide 1-12 n v v v v User-generated content and communication Highly interactive, social communities Large audiences; yet mostly unproven business models e.g., Twitter, YouTube, Facebook, Second Life, Wikipedia, Digg 6
  7. 7. Types of E-commerce Classified by market relationship Classified by technology used The Internet Worldwide network of computer networks built on common standards Created in late 1960s to connect small number of mainframe computers and their users Services include the Web, e-mail, file transfers,Services include the Web, e-mail, file transfers, newsgroups, shopping, research, IM, music, video, news, etc. Can measure growth by looking at number of Internet hosts with domain names n v v v n v v n n nn n Business-to-Consumer (B2C), e.g., Amazon Business-to-Business (B2B) Consumer-to-Consumer (C2C), e.g. eBay, Craigslist Peer-to-Peer (P2P), e.g., BitTorrent Mobile commerce (M-commerce) Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-13 Slide 1-14 7
  8. 8. The Growth of the Internet, Measured by Number of Internet Hosts withInternet Hosts with Domain Names Figure 1.2, Page 23 The Web Most popular Internet service Developed in early 1990s Provides access to Web pages Web content has grown exponentially Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-15 Slide 1-16 SOURCE: Internet Systems Consortium, Inc., 2011. n n n v n v HTMLdocuments that may include text, graphics, animations, music, videosgraphics, animations, music, videos Google reports 1 trillion unique URLs; 120 billion pages indexed 8
  9. 9. The Growth of Web Content Origins and Growth of E-commerce Precursors: 1995: Beginning of e-commerce E-commerce fastest growing form of commerce in United States Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-17 Slide 1-19 Figure 1.4, Page 24 SOURCE: Google Inc., 2008; authors’ estimates n v v v n v n Baxter Healthcare Electronic Data Interchange (EDI) French Minitel (1980s videotex system) First sales of banner advertisements 9
  10. 10. n v v v n n nn n Precursors: Origins & Growth of E-commerce None of these precursor systems had functionality of Internet Origins and Growth of E-commerce 1995 the beginning of e-commerce, following the appearance of first banner ad placed by AT&T, Volvo, Sprint, and others on Hotwired in late October 1994, and The first sales of banner ad space byThe first sales of banner ad space by Netscape and Infoseek in early 1995 Since then, e-commerce has been fastest growing form of commerce in the U.S. (see next figure) In late 1970s, pharmaceutical firm, Baxter Healthcare, initiated primitive B2B e-commerce form using modem that lets hospitals to reorder supplies from itlets hospitals to reorder supplies from it During 1980s, Electronic Data Interchange (EDI) standards were developed to let firm exchange commercial documents and conduct digital commercial transactions across private networks In 1981, French Minitel, videotext system that combines phone with 8” screen, was deployed to provide >13,000 different services, including ticket agencies, travel services, retail products, online banking B2BB2B B2C 10 Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-20 Slide 1-21
  11. 11. The Growth of B2C E-commerce Figure 1.3, Page 25 The Growth of B2B E-commerce Figure 1.4, Page 28 Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-22 Slide 1-23 SOURCES: Based on data from eMarketer, Inc., 2011a; authors’ estimates. SOURCES: Based on data from U.S. Census Bureau, 2011b; authors’ estimates. 11
  12. 12. Technology and E-commerce in Perspective The Internet and Web: Just two of a long list of technologies that have greatly changedof technologies that have greatly changed commerce. Others: E-commerce growth will eventually cap as it confronts its own fundamental limitations. Potential Limitations on the Growth of B2C E-commerce Expensive technology Sophisticated skill set Persistent cultural attraction of physical markets and traditional shopping experiencesand traditional shopping experiences Persistent global inequality limiting access to telephones and computers Saturation and ceiling effects n v v n n n n n n Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-24 Slide 1-25 Automobiles Radio 12
  13. 13. Potential Limitations on the Growth of B2C E- commerce Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-26 Slide 1-27 However, wireless Web technology is the most significant technology that can reduce barriers to Internet access 13
  14. 14. E-commerce: A Brief History 1995–2000: Innovation 2001–2006: Consolidation 2006–Present: Reinvention Early Visions of E-commerce Computer scientists: Economists: Entrepreneurs: n v vv n v n v v n v n v v n v Key concepts developed Dot-coms; heavy venture capital investmentDot-coms; heavy venture capital investment Emphasis on business-driven approach Extension of technologies New models based on user-generated content, social networks,services Inexpensive, universal communications and computing environment accessible by all Nearly perfect competitive market (price, cost, and quality info equally distributed); friction-free commerce (low transaction costs, dynamicallyadjusting prices based on actual demand, declined intermediaries,eliminated unfair competitive advantage)intermediaries,eliminated unfair competitive advantage) Lowered search costs, disintermediation,price transparency, elimination of unfair competitive advantage Extraordinary opportunity to earn far above normal returns on investment—first mover advantage Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-28 Slide 1-30 14
  15. 15. Amounts Raised by Internet-Related Venture-Backed Firms Assessing E-commerce Many early visions not fulfilled Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-31 Slide 1-32 n v n n v n v v n Friction-free commerce Consumers less price sensitive than expected Considerable price dispersion (from 8% in 2000 to 10% in 2009) remains Perfect competitionPerfect competition Information asymmetries persist Intermediaries have not disappeared First mover advantage Established fast-followers often overtake first movers 15
  16. 16. Predictions for the Future E-commerce technology (Internet, Web, and wireless Internet devices) 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 ofE-commerce margins and profits will rise to levels more typical of all retailers Cast of players will change Number of successful pure online stores will remain smaller than integrated offline/online stores Regulatory activity worldwide will grow Cost of energy, e.g., gasoline and diesel will have an influence n n nn n v v n n n Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-33 Slide 1-34 TraditionalFortune 500 companies will play dominant role (see next table) New startup ventures will emerge with new products,services 16
  17. 17. Understanding E-commerce: Organizing Themes Technology: Infrastructure Business: Basic concepts Society: Taming the juggernaut The Internet and the Evolution of Corporate Computing Figure 1.8, Page 82 n vv n v n v Development and mastery of digital computing andDevelopment and mastery of digital computing and communications technology New technologies present businesses with new ways of organizing production and transacting business Intellectual property,individual privacy, public welfare policy Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-35 Slide 1-36 17
  18. 18. Academic Disciplines Concerned with E-commerce Technical approach Behavioral approachn n v v v v v v v v v Copyright © 2012 Pearson Education Copyright © 2012 Pearson Education Slide 1-38 Slide 1-39 Computer science Management science Information systems Information systems Economics Marketing Management Finance/accounting Sociology 18

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