PART ONE
Introduction to E-commerce
Chapter 1: The evolution of E-commerce
Chapter 2: E-commerce business models
and concepts
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Chapter 1:
The evolution of E-commerce
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Learning Objectives
- Define E-commerce and describe how it differs from
E-business.
- Identify and describe the unique features of
E-commerce technology and discuss their business significance.
- Describe the major types of E-commerce.
- Discuss the origins and growth of E-commerce.
- Understand the evolution of E-commerce from its early
years to today.
- Identify the factor that will define the future of
E-commerce.
- Describe the major themes underlying the study of
E-commerce.
- Identify the major academic disciplines contributing to
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E-commerce.
WHAT IS E-COMMERCE?
The use of the internet and
the Web to transact business.
More formally, digitally
enabled commercial
transactions between and
among organizations and
individuals.
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WHAT IS E-BUSINESS?
The digital enabling of
transactions and processes
within a firm, involving
information systems
under the control of the
firm.
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THE DIFFERENCE BETWEEN
E-COMMERCE AND E-BUSINESS
E-commerce
System
E-business
System
Technology
Infrastructur
e The firm
Suppliers
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Customers
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THE DIFFERENCE BETWEEN
E-COMMERCE AND E-BUSINESS (Cont.)
E-commerce primarily involves transactions that
cross firm boundaries.
E-business primarily involves the application of
digital technologies to business processes within
the firm.
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WHY STUDY E-COMMERCE?
* To understand the differentiation of technology
which more powerful than any of the other
technologies we have seen in the past century.
* To understand the digital markets,
fundamental, unprecedented shifts in commerce.
* To understand the Information Asymmetry.
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WHY STUDY E-COMMERCE? (Cont.)
Information Asymmetry refers to
any disparity in relevant market
information among parties in a
transaction.
(Prices, Costs, Fees
and Profitable)
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Eight Unique Features of E-commerce
Technology
1- Ubiquity: Available just about everywhere, at all times,
making it possible to shop from your desktop, at home, at work,
or even from your car.
2- Global reach: Permit commercial transactions to cross
cultural and national boundaries far more conveniently and costeffectively that is true in traditional commerce.
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Eight Unique Features of E-commerce
Technology (Cont.)
3- Universal standards: Shard by all nations around the
world. In contrast, most traditional commerce technologies
differ from one nation to the next.
4- Richness: Refers to the complexity and content of a
message. It enables an online merchant to deliver marketing
message with text, video, and audio to an audience of millions,
in a way not possible with traditional commerce technologies
such as radio, television, or magazines.
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Eight Unique Features of E-commerce
Technology (Cont.)
5- Interactivity: Allows for two-way communication between
merchant and consumer and enabling the merchant to engage a
consumer in ways similar to a face-to-face experience, but on a
much more massive, global scale.
6- Information density: Is the total amount and quality of
information available to all market participants. The internet
reduces information collection, storage, processing, and
communication cost while increasing the currency, accuracy and
timeliness of information.
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Eight Unique Features of E-commerce
Technology (Cont.)
7- Personalization and Customization: Merchant can
target their marketing messages to specific individuals by
adjusting the message to a person’s name, interest, and past
purchase. The result is a level of personalization and
customization unthinkable with existing commerce technologies.
8- Social technology: Provides a many-to-many model of
mass communications. Millions of users are able to generate
content consumed by millions of other users. The result is the
formation of social networks on a wide scale and the
aggregation of large audiences on social network platforms.
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Major Types of Ecommerce
B2C: Business-to-Consumer
B2B: Business-to-Business
C2C: Consumer-to-Consumer
P2P: Peer-to-Peer
M-commerce: Mobile commerce
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Major Types of E-commerce (Cont.)
Business-to-Consumer (B2C) E-commerce:
Online business selling to individual consumers.
Ex. eBay is a general merchandiser that sells consumer products
to retail consumers.
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Major Types of E-commerce (Cont.)
Business-to-Business
(B2B) E-commerce:
Online business selling to
other business.
Ex. Food-trader is an
independent third-party
commodity exchange, auctions
provider, and market
information source that serves
the food and agricultural
industry.
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Major Types of E-commerce (Cont.)
Consumer-to-Consumer (C2C) E-commerce:
Consumer selling to other consumers.
Ex. On a large number of Web auction sites such as eBay, and
listing sites such as Craigslist, consumer can auction or sell goods
directly to other consumers.
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Major Types of E-commerce (Cont.)
Peer-to-Peer (P2P) E-commerce:
Use of peer-to-peer technology, which enables internet users to
share files and computer resources directly without having to go
through a central Web server, in E-commerce.
Ex. Bit-Torrent is a software
application that permits
consumers to share video and
other high bandwidth content
with one other directly, without
the intervention of a market
maker as in C2C E-commerce.
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Major Types of E-commerce (Cont.)
Mobile commerce (M-commerce) :
Use of wireless digital devices to enable transactions on
the Web.
Ex. Wireless mobile devices
such as PDAs (Personal Digital
Assistants) and cell phones can
be used to conduct commercial
transactions.
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A BRIEF HISTORY OF E-COMMERCE
The history of E-commerce can be usefully divided
into three periods.
1995 - 2000: INNOVATION
- Key E-commerce concepts were developed and explored.
- Thousands of dot-com companies were formed.
2001 - 2006: CONSOLIDATION
- Emphasis shifted to a more business driven approach rather
than technology driven.
- Large traditional firms learned how to use the Web to
strengthen their market position.
- Brand extension and strengthening
2006 - Present: REINVENTION
- Extension of internet technologies.
- Discovery of new business models.
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EVOLUTION OF E-COMMERCE
1995 - 2000
2001 - 2006
2006 - Future
INNOVATION
CONSOLIDATION
RE-INVENTION
Audience, customer, and
community driven.
Audience and social network
growth emphasis.
Technology driven
Business driven
Revenue growth emphasis
Earnings and profits emphasis
Venture capital financing
Traditional financing
Smaller VC investments; early
small firm buyouts by large
online players.
Ungoverned
Stronger regulation and
governance
Extensive government
surveillance
Entrepreneurial
Large traditional firms
Large pure Web-based firms.
Disintermediation
Strengthening intermediaries
Proliferation of small online
intermediaries renting business
processes of larger firms.
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EVOLUTION OF E-COMMERCE (Cont.)
1995 - 2000
2001 - 2006
2006 - Future
INNOVATION
CONSOLIDATION
RE-INVENTION
Perfect markets
Imperfect markets, brands, and
network effects.
Continuation of online market
imperfections; commodity
competition in select markets.
Pure online strategies
Mixed “bricks and clicks”
strategies
Return of pure online market
imperfections; commodity
competition in select markets.
First-move advantages
Strategic follower strength;
complimentary assets.
First-mover advantages return
in new markets as traditional
Web players catch up.
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SHARE OF RETAIL ONLINE SALES BY TYPE OF COMPANY
Virtual (Web only),
30.80%
Consumer Brand
Manufacturer, 13.70%
Retail Chain, 41.10%
Catalog/Call Center,
14.40%
Source: Internet Retailer, 2007.
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ONLINE RETAIL SALES BY CATEGORY, 2007
Source: Based on data from e-marketer, 2007.
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UNDERSTANDING E-COMMERCE
ORGANIZING THEMES
E-commerce involving with three broad interrelated themes:
- Technology: Infrastructure
- Business: Basic concepts
- Society: Taming the juggernaut
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UNDERSTANDING E-COMMERCE
ORGANIZING THEMES (Cont.)
1- Technology: Infrastructure
- Relies on a host of information technologies as well as fundamental
concepts from computer science developed over a 50-year period.
- These technologies lie at the heart of sophisticated business
computing applications such as enterprise-wide computing system,
supply chain management systems, manufacturing resource
planning systems, and customer relationship management systems.
- The internet – while representing a sharp break from prior
corporate computing and communications technologies – is
nevertheless just the latest development in the evolution of corporate
computing and part of the continuing chain of computer-based
innovations in business.
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UNDERSTANDING E-COMMERCE
ORGANIZING THEMES (Cont.)
2- Business: Basic concepts
- New technologies present businesses and entrepreneurs with new
ways of organizing production and transacting business.
- New technologies change the strategies and plans of existing firms.
- New technologies are the birthing grounds where thousands of
new companies spring up with new products and services.
- New technologies are the graveyard of many traditional firms, like
record stores.
- Some key business concepts, such as the nature of digital electronic
market, digital goods, business models, firm and industry value
chains, value webs, industry structure, and consumer behavior in
digital markets.
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UNDERSTANDING E-COMMERCE
ORGANIZING THEMES (Cont.)
3- Society: Taming the juggernaut
People around the world are using internet. Many of
them using for E-commerce purposes.
The primary societal issues are intellectual property,
individual privacy, and public welfare policy.
The global nature of E-commerce also poses public
policy issues of equity, equal access, content regulation,
and taxation.
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ACADEMIC DISCIPLINES CONCERNED
WITH E-COMMERCE
Many disciplines are directly involved in the study and
understanding of E-commerce.
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Technical and Behavioral Approaches
Technical Approaches refer to computer scientists are interested
in E-commerce as an exemplary application of internet technology.
They are concerned with the development of computer hardware,
software, and telecommunications system, as well as standards,
encryption, and database design and operation.
Behavioral Approaches refer to information systems researchers
are primarily interested in E-commerce because of its implications
for firm and industry value chains, industry structure, and corporate
strategy.
No one perspective dominates research about E-commerce. The
challenge is to learn enough about a variety of academic disciplines
so that you can grasp the significance of E-commerce in its entirety.
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QUESTIONS
1- What is E-commerce? How does it differ from E-business? Where
does it intersect with E-business?
2- What are some of the unique features of E-commerce technology?
3- What is B2C, B2B, C2C, and P2P? Give example of each.
4- How are the internet and the Web similar to or different from other
technologies that have changed commerce in the past?
5- Why is a multidisciplinary approach necessary if one hopes to
understand E-commerce?
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