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E-commerce 2013
Kenneth C. Laudon
Carol Guercio Traver
business. technology. society.
ninth edition
Copyright © 2013 Pearson Education
Chapter 1
Introduction to E-Commerce
Copyright © 2013 Pearson Education
Class Discussion
Pinterest: Attracts Global Interest
 Have you used Pinterest or any other content
curation sites? What are your main interests?
 Have you purchased anything based on a pin
or board on Pinterest or any other curation
site?
 Why do Pinterest links drive more purchasing
than Facebook links?
Copyright © 2013 Pearson Education Slide 1-3
E-commerce Trends 2012–2013
 Mobile platform solidifies
 Mobile e-commerce explodes
 Continued growth of social networks
 Expansion of social and local
e-commerce
 Explosive growth in “Big Data”
 E-books gain wide acceptance
Copyright © 2013 Pearson Education Slide 1-4
The First 30 Seconds
 First 17 years of e-commerce
Just the beginning
Rapid growth and change
 Technologies continue to evolve at
exponential rates
Disruptive business change
New opportunities
Copyright © 2013 Pearson Education Slide 1-5
What Is E-commerce?
 Use of Internet and Web to transact
business
 More formally:
Digitally enabled commercial transactions
between and among organizations and
individuals
Copyright © 2013 Pearson Education Slide 1-6
E-commerce vs. E-business
 E-business:
Digital enabling of transactions and
processes within a firm, involving
information systems under firm’s control
Does not include commercial transactions
involving an exchange of value across
organizational boundaries
Copyright © 2013 Pearson Education Slide 1-7
Why Study E-commerce?
 E-commerce technology is different, more
powerful than previous technologies
 E-commerce brings fundamental changes to
commerce
 Traditional commerce:
 Consumer as passive targets
 Sales-force driven
 Fixed prices
 Information asymmetry
Copyright © 2013 Pearson Education Slide 1-8
Eight Unique Features of
E-commerce Technology
1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology
Copyright © 2013 Pearson Education Slide 1-9
Web 2.0
 User-centered applications and social
media technologies
User-generated content and communication
Highly interactive, social communities
Large audiences; yet mostly unproven business
models
e.g.: Twitter, YouTube, Facebook, Instagram,
Wikipedia, StumbleUpon, Tumblr, Pinterest
Copyright © 2013 Pearson Education Slide 1-10
Types of E-commerce
 May be classified by market relationship or technology
 Business-to-Consumer (B2C)
 Business-to-Business (B2B)
 Consumer-to-Consumer (C2C)
 Social e-commerce
 Mobile e-commerce (M-commerce)
 Local e-commerce
Copyright © 2013 Pearson Education Slide 1-11
The Internet
 Worldwide network of computer
networks built on common standards
 Created in late 1960s
 Services include the Web, e-mail, file
transfers, etc.
 Can measure growth by looking at
number of Internet hosts with domain
names
Copyright © 2013 Pearson Education Slide 1-12
The Web
 Most popular Internet service
 Developed in early 1990s
 Provides access to Web pages
HTML documents that may include text,
graphics, animations, music, videos
 Web content has grown exponentially
 Google reports 1 trillion unique URLs; 120
billion Web pages indexed
Copyright © 2013 Pearson Education Slide 1-13
Insight on Technology: Class Discussion
Spider Webs, Bow Ties, Scale-Free
Networks, and the Deep Web
 What is the “small world” theory of the
Web?
 What is the significance of the “bow-
tie” form of the Web?
 Why does Barabasi call the Web a
“scale-free network” with “very
connected super nodes”?
Copyright © 2013 Pearson Education Slide 1-14
Origins and Growth of E-commerce
 Precursors:
Baxter Healthcare
Electronic Data Interchange (EDI)
French Minitel (1980s videotex system)
None had functionality of Internet
 1995: Beginning of e-commerce
First sales of banner advertisements
 E-commerce fastest growing form of
commerce in United States
Copyright © 2013 Pearson Education Slide 1-15
The Growth of B2C E-commerce
Figure 1.2, Page 27
Copyright © 2013 Pearson Education Slide 1-16
SOURCE: Based on data from eMarketer, Inc., 2012; authors’ estimates.
The Growth of B2B E-commerce
Figure 1.3, Page 28
Copyright © 2013 Pearson Education Slide 1-17
SOURCE: Based on data from U.S. Census Bureau, 2012b; authors’ estimates.
Technology and E-commerce
in Perspective
 The Internet and Web: Just two of a
long list of technologies that have
greatly changed commerce
Automobiles
Radio
 E-commerce growth will eventually cap
as it confronts its own fundamental
limitations
Copyright © 2013 Pearson Education Slide 1-18
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 effects
Copyright © 2013 Pearson Education Slide 1-19
E-commerce: A Brief History
 1995–2000: Innovation
Key concepts developed
Dot-coms; heavy venture capital investment
 2001–2006: Consolidation
Emphasis on business-driven approach
 2006–Present: Reinvention
Extension of technologies
New models based on user-generated content,
social networks, services
Copyright © 2013 Pearson Education Slide 1-20
Early Visions of E-commerce
 Computer scientists:
 Inexpensive, universal communications and computing
environment accessible by all
 Economists:
 Nearly perfect competitive market;
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
Copyright © 2013 Pearson Education Slide 1-21
Insight on Business: Class Discussion
Is the Party Already Over?
 What explains the rapid growth in private investment in
e-commerce firms in the period 2011 to early 2012? Was
this investment irrational?
 Despite the ubiquitous popularity of Facebook, its IPO
was a failure—why?
 Why do you think investors today are interested in
investing in or purchasing social network companies?
 What other types of e-commerce companies, if any,
would you be interested in purchasing or investing in, and
why?
Copyright © 2013 Pearson Education Slide 1-22
Assessing E-commerce
 Many early visions not fulfilled
Friction-free commerce
 Consumers less price sensitive
 Considerable price dispersion
Perfect competition
 Information asymmetries persist
Intermediaries have not disappeared
First mover advantage
 Fast-followers often overtake first movers
Copyright © 2013 Pearson Education Slide 1-23
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
Copyright © 2013 Pearson Education Slide 1-24
Predictions for the Future (cont.)
 Cast of players will change radically
 Number of successful pure online stores will
remain smaller than integrated offline/online
stores
 Regulatory activity worldwide will grow
 Cost of energy will have an influence
Copyright © 2013 Pearson Education Slide 1-25
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
Copyright © 2013 Pearson Education Slide 1-26
The Internet and
the Evolution
of Corporate
Computing
Figure 1.7, Page 45
Copyright © 2013 Pearson Education Slide 1-27
Insight on Society: Class Discussion
Facebook and the Age of Privacy
 Why are social network sites interested in collecting
user information?
 What types of privacy invasion are described in the
case? Which is the most privacy-invading, and why?
 Is e-commerce any different than traditional
markets with respect to privacy? Don’t merchants
always want to know their customer?
 How do you protect your privacy on the Web?
Copyright © 2013 Pearson Education Slide 1-28
Academic Disciplines
Concerned with E-commerce
 Technical approach
 Computer science
 Management science
 Information systems
 Behavioral approach
 Information systems
 Economics
 Marketing
 Management
 Finance/accounting
 Sociology
Copyright © 2013 Pearson Education Slide 1-29
Copyright © 2013 Pearson Education Slide 1-30

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Pp 1_ge

  • 1. E-commerce 2013 Kenneth C. Laudon Carol Guercio Traver business. technology. society. ninth edition Copyright © 2013 Pearson Education
  • 2. Chapter 1 Introduction to E-Commerce Copyright © 2013 Pearson Education
  • 3. Class Discussion Pinterest: Attracts Global Interest  Have you used Pinterest or any other content curation sites? What are your main interests?  Have you purchased anything based on a pin or board on Pinterest or any other curation site?  Why do Pinterest links drive more purchasing than Facebook links? Copyright © 2013 Pearson Education Slide 1-3
  • 4. E-commerce Trends 2012–2013  Mobile platform solidifies  Mobile e-commerce explodes  Continued growth of social networks  Expansion of social and local e-commerce  Explosive growth in “Big Data”  E-books gain wide acceptance Copyright © 2013 Pearson Education Slide 1-4
  • 5. The First 30 Seconds  First 17 years of e-commerce Just the beginning Rapid growth and change  Technologies continue to evolve at exponential rates Disruptive business change New opportunities Copyright © 2013 Pearson Education Slide 1-5
  • 6. What Is E-commerce?  Use of Internet and Web to transact business  More formally: Digitally enabled commercial transactions between and among organizations and individuals Copyright © 2013 Pearson Education Slide 1-6
  • 7. E-commerce vs. E-business  E-business: Digital enabling of transactions and processes within a firm, involving information systems under firm’s control Does not include commercial transactions involving an exchange of value across organizational boundaries Copyright © 2013 Pearson Education Slide 1-7
  • 8. Why Study E-commerce?  E-commerce technology is different, more powerful than previous technologies  E-commerce brings fundamental changes to commerce  Traditional commerce:  Consumer as passive targets  Sales-force driven  Fixed prices  Information asymmetry Copyright © 2013 Pearson Education Slide 1-8
  • 9. Eight Unique Features of E-commerce Technology 1. Ubiquity 2. Global reach 3. Universal standards 4. Information richness 5. Interactivity 6. Information density 7. Personalization/customization 8. Social technology Copyright © 2013 Pearson Education Slide 1-9
  • 10. Web 2.0  User-centered applications and social media technologies User-generated content and communication Highly interactive, social communities Large audiences; yet mostly unproven business models e.g.: Twitter, YouTube, Facebook, Instagram, Wikipedia, StumbleUpon, Tumblr, Pinterest Copyright © 2013 Pearson Education Slide 1-10
  • 11. Types of E-commerce  May be classified by market relationship or technology  Business-to-Consumer (B2C)  Business-to-Business (B2B)  Consumer-to-Consumer (C2C)  Social e-commerce  Mobile e-commerce (M-commerce)  Local e-commerce Copyright © 2013 Pearson Education Slide 1-11
  • 12. The Internet  Worldwide network of computer networks built on common standards  Created in late 1960s  Services include the Web, e-mail, file transfers, etc.  Can measure growth by looking at number of Internet hosts with domain names Copyright © 2013 Pearson Education Slide 1-12
  • 13. The Web  Most popular Internet service  Developed in early 1990s  Provides access to Web pages HTML documents that may include text, graphics, animations, music, videos  Web content has grown exponentially  Google reports 1 trillion unique URLs; 120 billion Web pages indexed Copyright © 2013 Pearson Education Slide 1-13
  • 14. Insight on Technology: Class Discussion Spider Webs, Bow Ties, Scale-Free Networks, and the Deep Web  What is the “small world” theory of the Web?  What is the significance of the “bow- tie” form of the Web?  Why does Barabasi call the Web a “scale-free network” with “very connected super nodes”? Copyright © 2013 Pearson Education Slide 1-14
  • 15. Origins and Growth of E-commerce  Precursors: Baxter Healthcare Electronic Data Interchange (EDI) French Minitel (1980s videotex system) None had functionality of Internet  1995: Beginning of e-commerce First sales of banner advertisements  E-commerce fastest growing form of commerce in United States Copyright © 2013 Pearson Education Slide 1-15
  • 16. The Growth of B2C E-commerce Figure 1.2, Page 27 Copyright © 2013 Pearson Education Slide 1-16 SOURCE: Based on data from eMarketer, Inc., 2012; authors’ estimates.
  • 17. The Growth of B2B E-commerce Figure 1.3, Page 28 Copyright © 2013 Pearson Education Slide 1-17 SOURCE: Based on data from U.S. Census Bureau, 2012b; authors’ estimates.
  • 18. Technology and E-commerce in Perspective  The Internet and Web: Just two of a long list of technologies that have greatly changed commerce Automobiles Radio  E-commerce growth will eventually cap as it confronts its own fundamental limitations Copyright © 2013 Pearson Education Slide 1-18
  • 19. 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 effects Copyright © 2013 Pearson Education Slide 1-19
  • 20. E-commerce: A Brief History  1995–2000: Innovation Key concepts developed Dot-coms; heavy venture capital investment  2001–2006: Consolidation Emphasis on business-driven approach  2006–Present: Reinvention Extension of technologies New models based on user-generated content, social networks, services Copyright © 2013 Pearson Education Slide 1-20
  • 21. Early Visions of E-commerce  Computer scientists:  Inexpensive, universal communications and computing environment accessible by all  Economists:  Nearly perfect competitive market; 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 Copyright © 2013 Pearson Education Slide 1-21
  • 22. Insight on Business: Class Discussion Is the Party Already Over?  What explains the rapid growth in private investment in e-commerce firms in the period 2011 to early 2012? Was this investment irrational?  Despite the ubiquitous popularity of Facebook, its IPO was a failure—why?  Why do you think investors today are interested in investing in or purchasing social network companies?  What other types of e-commerce companies, if any, would you be interested in purchasing or investing in, and why? Copyright © 2013 Pearson Education Slide 1-22
  • 23. Assessing E-commerce  Many early visions not fulfilled Friction-free commerce  Consumers less price sensitive  Considerable price dispersion Perfect competition  Information asymmetries persist Intermediaries have not disappeared First mover advantage  Fast-followers often overtake first movers Copyright © 2013 Pearson Education Slide 1-23
  • 24. 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 Copyright © 2013 Pearson Education Slide 1-24
  • 25. Predictions for the Future (cont.)  Cast of players will change radically  Number of successful pure online stores will remain smaller than integrated offline/online stores  Regulatory activity worldwide will grow  Cost of energy will have an influence Copyright © 2013 Pearson Education Slide 1-25
  • 26. 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 Copyright © 2013 Pearson Education Slide 1-26
  • 27. The Internet and the Evolution of Corporate Computing Figure 1.7, Page 45 Copyright © 2013 Pearson Education Slide 1-27
  • 28. Insight on Society: Class Discussion Facebook and the Age of Privacy  Why are social network sites interested in collecting user information?  What types of privacy invasion are described in the case? Which is the most privacy-invading, and why?  Is e-commerce any different than traditional markets with respect to privacy? Don’t merchants always want to know their customer?  How do you protect your privacy on the Web? Copyright © 2013 Pearson Education Slide 1-28
  • 29. Academic Disciplines Concerned with E-commerce  Technical approach  Computer science  Management science  Information systems  Behavioral approach  Information systems  Economics  Marketing  Management  Finance/accounting  Sociology Copyright © 2013 Pearson Education Slide 1-29
  • 30. Copyright © 2013 Pearson Education Slide 1-30