The document discusses the growth of e-commerce and various e-commerce business models. It describes the origins and growth of e-commerce from the 1970s to today. E-commerce evolved from EDI and EFT technologies in the 1970s to the dot-com boom and bust in the late 1990s. Major e-commerce companies like Amazon and eBay emerged in the mid-1990s and helped popularize online shopping. The document also outlines different types of e-commerce models including business-to-consumer, business-to-business, consumer-to-consumer, and others; and describes common revenue models and key elements of successful e-commerce business models.

1. Entrepreneurship &
Commerce in IT
08
Sachintha Gunasena MBCS
http://lk.linkedin.com/in/sachinthadtg

2. Recap so far…

3. E-Commerce
• e-commerce
• e-business
• features of e-commerce
• types of e-businesses
• types of e-commerce
• examples of e-commerce

4. Today

5. Today’s Discussion
• Growth of the Internet and the Web
• Origins and Growth of E-commerce
• E-commerce I and E-commerce II eras
• Organizing themes of e-commerce
• Elements of a business model
• Business-to-consumer (B2C) business models
• Business-to-business (B2B) business models
• Business models in other emerging e-commerce areas
• How the Internet and Web change business, strategy, structure,
and process

6. Growth of the Internet
& Web

7. Growth of Internet & Web
• http://www.evolutionoftheweb.com
• http://www.21stcenturychallenges.org/60-seconds/the-
exponential-growth-of-the-internet/
• http://www.whoishostingthis.com/blog/2013/08/21/incredibl
e-growth-web-usage-infographic/
• https://en.wikipedia.org/wiki/Internet
• https://en.wikipedia.org/wiki/World_Wide_Web
• https://www.youtube.com/watch?v=8E56QitzsoU

8. Growth of Internet and Web
Cont.d
• 1960 - ARPANET - US Defence Department
• 1970s - wide usage of ARPANET in universities
• 1989 - Tim Berners Lee proposes WWW (CERN)
• text based global hypertext system
• 1992 - first text based browser
• 1990s - wide usage adaptation of computers
• 1992 - Mosaic - GUI Web Browser - Marc Andreessen
• 1993 - 130 sites estimated
• 1994 - first paid advertisement - two lawyers in Arizona - was met with hate
• 1997 - 650,000 sites
• 2000 - worldwide users 369,400,000

9. Growth of E-
Commerce

10. Origins & Growth of E-
Commerce
• The term e-commerce was originally conceived to describe
the process of conducting business transactions
electronically using technology from the Electronic Data
Interchange (EDI) and Electronic Funds Transfer (EFT).
• first appeared in the late 1970’s, allowed for the exchange
of information and the execution of electronic transactions
between businesses, typically in the form of electronic
purchase orders and invoices.
• EDI and EFT were the enabling technologies that laid the
groundwork for what we now know as e-commerce.

11. Origins & Growth of E-
Commerce
• The Boston Computer Exchange, a marketplace for
used computer equipment started in 1982, was one of
the first known examples of e-commerce.
• Throughout the 1980’s, the proliferation of credit cards,
ATM machines and telephone banking was the next
step in the evolution of electronic commerce.
• Starting in the early 90’s, e-commerce would also
include things such as enterprise resource planning
(ERP), data warehousing and data mining.

12. Origins & Growth of E-
Commerce
• It wasn’t until 1994 that e-commerce (as we know
it today) really began to accelerate with the
introduction of security protocols and high speed
internet connections such as DSL, allowing for
much faster connection speeds and faster online
transaction capability.
• Industry “experts” predicted explosive growth in
e-commerce related businesses.

13. Origins & Growth of E-
Commerce
• In response to these expert opinions, between 1998 and 2000, a
substantial number of businesses in Western Europe and the United
States built out their first rudimentary e-commerce websites.
• The definition of e-commerce began to change in 2000 though, the year of
the dot-com collapse when thousands of internet businesses folded.
• Despite the epic collapse, many of the worlds’ most established traditional
brick-and-mortar businesses were emboldened with the promise of e-
commerce and the prospect of serving a global customer base
electronically.
• The very next year, business to business transactions online became one
of the largest forms of e-commerce with over $700 billion dollars in sales.

14. Origins & Growth of E-
Commerce
• Many of the dot-com collapses “first-mover” failures
served their offline competitors very well, providing
evidence of what not to do in building a viable
online business.
• For example, Webvan, which was one of the more
infamous dot-com failures, trail blazed the path for
Albertsons and Safeway, two of the largest national
supermarket chains, who each have developed
their own successful online grocery delivery
businesses.

15. Origins & Growth of E-
Commerce
• The birth of companies such as eBay and
Amazon (launched in 1994) really began to lead
the way in e-commerce.
• Both eBay and Amazon were among the first to
establish prominent e-commerce brands.
• The most prominent e-commerce categories
today are computers, books, office supplies,
music, and a variety of electronics.

16. Origins & Growth of E-
Commerce
• Amazon.com, Inc., founded by Jeff Bezos, was the
original e-commerce pioneer and certainly the most
recognizable.
• In the beginning, Amazon’s business model required
massive investment in warehousing, delivery and
fulfillment capability and took years for Amazon to gain
profitability.
• But finally in 2003, almost 10 years after launching the
company, Amazon.com realized its first annual profit.

17. Origins & Growth of E-
Commerce
• Amazon began as just an online bookstore but over the years has extended its offering to a
wide variety of product categories, including electronics, software, music, DVD’s, CD’s, video
games, MP3’s, clothing, shoes, health and beauty products and even household goods.
• Bezos, was responsible for naming the company “Amazon” after the world’s largest river and it
enjoys a truly global presence with stand alone websites in six other countries, including the
United Kingdom, Canada, France, Germany, Japan and China.
• Amazon.com was also the original pioneer in affiliate marketing, allowing other websites to earn
sales commissions for referring Amazon products to their customers.
• Today, Amazon generates anywhere between 30 to 40% of its total sales revenue from
affiliates or third party merchants who list and sell their products on Amazon’s web site.
• Today, the Amazon moniker certainly applies as it is one of the most recognized and most
profitable e-commerce businesses on the planet.
• In 1999, Jeff Bezos was honored with Time Magazine’s “Person of the Year” award,
immortalizing him forever as probably the single most recognizable figure in the entire e-
commerce community.

18. Origins & Growth of E-
Commerce
• Amazon and fellow e-commerce industry giant Dell remain two of the largest
internet retailers in the world, among other offline industry giants such as
Staples, Office Depot, and Hewlett Packard.
• Dell.com is another one of the most recognizable e-commerce brands online.
• Dell.com’s website was launched in 1994 with a single static web page and their
online presence quickly grew.
• In 1997, Dell announced a single-day sales record of a million dollars on its
website.
• In fact, roughly half of Dell’s total profits come directly from their website alone.
• With no offline retail outlets to speak of, Dell is another e-commerce pioneer
that many businesses have tried to model themselves after by selling products
almost exclusively online.

19. E-Commerce Era I & II

20. E-Commerce I & II Eras
• E-Commerce I (1995-2000)
• Explosive growth starting in 1995
• Widespread of Web to advertise products
• Ended in 2000 when dot.com began to collapse
• E-Commerce II (2001-2006)
• Began in January 2001
• Reassessment of e-commerce companies

21. E-Commerce I & II Eras
Cont.d
• 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

22. E-Commerce I & II Eras
Cont.d
• 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 technology companies had risen so high supporters were
questioning whether earnings could justify the prices of the shares.

23. Ecommerce Eras Compared

24. Organising Themes of
E-Commerce

25. E-commerce: Organizing
Themes
• Technology
• Development and mastery of digital computing and
communications technology
• Business
• New technologies present businesses and entrepreneurs with
new ways of organizing production and transacting business
• Society
• Intellectual property, individual privacy, and public policy

26. Unique Features of E-
Commerce

27. Features of E-Commerce

28. Types of E-Commerce

29. 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)

30. B2C
• Most commonly discussed type
• Online businesses attempt to reach individual
consumers

31. B2B
• Businesses focus on sell to other businesses
• Largest form of e-commerce
• Primarily involved inter-business exchanges at first
• Other models have developed
• e-distributors
• infomediaries
• B2B service providers

32. C2C
• 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

33. P2P
• Enables Internet users to share files and
computer resources
• Napster (early example)
• Skype (more modern and successful example)

34. M-Commerce
• Wireless digital devices enable transactions on
the Web
• Uses personal digital assistants (PDAs) to
connect
• Used most widely in Japan and Europe

35. E-Commerce Business
Models & Concepts

36. E-Commerce Business
Models

37. Business Models
• Business model
• a set of planned activities designed to result in
a profit in a marketplace
• E-commerce business model
• a business model that aims to use and
leverage the unique qualities of the Internet and
the World Wide Web.

38. Key Ingredients of a
Business Model

39. Value Proposition
• Defines how a company’s product or service
fulfils the needs of customers.
• Questions
• Why will customers choose to do business with
your firm instead of another company?
• What will your firm provide that other firms do
not and cannot?

40. Revenue Model
• Describes how the firm will earn revenue, produce profits, and
produce a superior return on invested capital.
• E-commerce revenue models include:
• advertising model
• subscription model
• transaction fee model
• sales model
• affiliate model

41. Revenue Model Cont.d
• Advertising revenue model
• a company provides a forum for advertisements
and receives fees from advertisers (Yahoo)
• Subscription revenue model
• a company offers it users content or services and
charges a subscription fee for access to some or
all of it offerings (Consumer Reports or Wall
Street Journal)

42. Revenue Model Cont.d
• Transaction fee revenue model
• a company receives a fee for enabling or executing a transaction
(eBay or E-Trade)
• Sales revenue model
• a company derives revenue by selling goods, information, or
services (Amazon or DoubleClick)
• Affiliate revenue model
• a company steers business to an affiliate and receives a referral
fee or percentage of the revenue from any resulting sales
(MyPoints)

43. Primary Revenue Models

44. Market Opportunity
• Market opportunity
• refers to the company’s intended marketspace and the
overall potential financial opportunities available to the
firm in that market space
• defined by the revenue potential in each of the market
niches where you hope to compete
• Marketspace
• the area of actual or potential commercial value in which
a company intends to operate

45. Competitive Environment
• Refers to the other companies operating in the same
marketplace selling similar products
• Influenced by:
• how many competitors are active
• how large are their operations
• the market share of each competitor
• how profitable these firms are
• how they price their products

46. Competitive Advantage
Cont.d
• Achieved by a firm when it can produce a
superior product and/or bring the product to
market at a lower price than most, or all, of its
competitors
• Achieved because a firm has been able to obtain
differential access to the factors of production that
are denied their competitors -- at least in the short
term

47. Competitive Advantage
Cont.d
• Asymmetry
• exists whenever one participant in a market has
more resources than other participants
• First mover advantage
• a competitive market advantage for a firm that
results from being the first into a marketplace
with a serviceable product or service

48. Competitive Advantage
Cont.d
• Unfair competitive advantage
• occurs when one firm develops an advantage based on a factor
that other firms cannot purchase
• Perfect Market
• a market in which there are no competitive advantages or
asymmetries because all firms have equal access to all the factors
of production
• Leverage
• when a company uses its competitive advantage to achieve more
advantage in surrounding markets

49. Market Strategy
• The plan you put together that details exactly how
you intend to enter a new market and attract new
customers
• Best business concepts will fail if not properly
marketed to potential customers

50. Organisational Development
• Describes how the company will organize the
work that needs to be accomplished
• Work is typically divided into functional
departments
• Move from generalists to specialists as the
company grows

51. Management Team
• Employees of the company responsible for making
the business model work
• Strong management team gives instant credibility
to outside investors
• A strong management team may not be able to
salvage a weak business model
• Should be able to change the model and redefine
the business as it becomes necessary

52. Major B2C Business
Models

53. Major B2C Business Models

54. Major B2C Business Models
Cont.d

55. Portal
• offers powerful search tools plus an integrated
package of content and services
• typically utilizes a combines
subscription/advertising revenues/transaction fee
model
• may be general or specialize (vortal)

56. E-tailor
• online version of traditional retailer
• includes
• virtual merchants (online retail store only)
• clicks and mortar e-tailers (online distribution channel for a
company that also has physical stores)
• catalog merchants (online version of direct mail catalog)
• online malls (online version of mall)
• Manufacturers selling directly over the Web

57. Content Provider
• information and entertainment companies that
provide digital content over the Web
• typically utilizes an advertising, subscription, or
affiliate referral fee revenue model

58. Transaction Broker
• processes online sales transactions
• typically utilizes a transactions fee revenue model

59. Market Creator
• uses Internet technology to create markets that
bring buyers and sellers together
• typically utilizes a transaction fee revenue model

60. Service Provider
• offers services online

61. Community Provider
• provides an online community of like-minded
individuals for networking and information sharing
• revenue is generated by referral fee, advertising,
and subscription

62. Major B2B Business
Models

63. Major B2B Business Models

64. B2B Hub
• also known as marketplace/exchange
• electronic marketplace where suppliers and
commercial purchasers can conduct transactions
• may be a general (horizontal marketplace) or
specialized (vertical marketplace)

65. E-distributor
• supplies products directly to individual
businesses

66. B2B Service Provider
• sells business services to other firms

67. Matchmaker
• links businesses together
• charges transaction or usage fees

68. Infomediary
• gather information and sells it to businesses

69. Business models in other
emerging e-commerce areas

70. Business Models in Other
Emerging E-Commerce Areas

71. C2C Business Models
• connect consumers with other consumers
• most successful has been the market creator
business model

72. P2P Business Models
• enable consumers to share file and services via
the Web without common servers
• a challenge to find a revenue model that work
• Skype !!!

73. M-commerce Business
Models
• traditional e-commerce business models
leveraged for emerging wireless technologies
to permit mobile access to the Web

74. E-commerce Enablers’
Business Models
• focus on providing infrastructure necessary for
e-commerce companies to exist, grow, and
prosper

75. E-Commerce Enablers

76. How the Internet and Web change business,
strategy, structure,
and process
• ideas?

77. References
• http://www.twinisles.com/dev/research/report/c2.htm
• https://en.wikibooks.org/wiki/E-Commerce_and_E-
Business/Concepts_and_Definitions
• http://www.ecommerce-land.com/history_ecommerce.html
• http://money.howstuffworks.com/history-e-commerce.htm
• http://www.spirecast.com/history-of-e-commerce/
• http://www.evolutionoftheweb.com/?hl=en
• http://www.intelligenthq.com/latest-news/guide-e-commerce-mobile-era-part-
one/
• http://www.intelligenthq.com/business/guide-e-commerce-mobile-era-part-two/

78. Next Up…
• The Internet and World Wide Web

79. Thank you.
Sachintha Gunasena MBCS
http://lk.linkedin.com/in/sachinthadtg