Lecture1

E commerce-Introduction

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

 Class Discussion

Pinterest: A Picture Is Worth a

Thousand Words
 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?
 E-commerce Trends 2013–2014
Expansion of social, local, and mobile e-commerce
Mobile computing and communicating platform based on smart phones and
tablet computers begins to rival PC platform
Computing and networking component prices continue to fall dramatically

Continued growth of cloud computing

Explosive growth in “Big Data”, flooding of data as trillions of online data is

being generated on daily basis.
E-books gain wide acceptance

Continued growth of user-generated content

Participation of people of all ages on social networks

 What is E commerce
 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
 What Is E-commerce: Use of Internet and world wide web and mobile
apps to transact business
 More formally:
 Digitally enabled commercial transactions between and among
organizations and individuals
 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
 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
 Mass-marketing driven
 Sales-force driven
 Fixed prices
 Information asymmetry
 Eight Unique Features of
E-commerce Technology
1.Ubiquity :In Traditional commerce, marketplace is a physical device you visit
in order to transact. In Contrast, E commerce is characterized by its ubiquity: it is
available just about everywhere, at all times i.e. a market space- a marketplace
extended beyond traditional boundaries and free from a temporal and
geographic locations.
2.Global reach : E-Comm technology permits commercial transactions to cross
cultural, regional and national boundaries more conveniently and cost
effectively. Total no of users an e-commerce business can obtain is a measure of
its reach.
3.Universal standards :Technical Standards of Internet and technical standards of

conducting e-commerce are universal standards, network externalities.

 Contd..
1.Information richness :refers to the complexity and content of a message

2.Interactivity : E commerce technologies allow for interactivity, meaning they

enable two way communication between merchant and consumer and among
consumers. Interactivity allows an online merchant to engage a consumer in
ways similar to a face to face experience(online conversations).
3.Information density: E-commerce technologies vastly increase information
density-the total amount and quality of information available to all market
participants, consumers, and merchants alike. E commerce reduce information
collection, storage ,processing and communication costs. Price transparency is
also there.
 Contd..
1.Personalization/customization: E-comm technologies permit
personalization: merchants can target their marketing messages to
specific individuals by adjusting the message to a person’s name, interest
and past purchases. Customization- changing the delivered product or
service based on a user’s preferences or prior behavior.
2.Social technology
 Web 2.0
 User-centered applications and social media technologies are
referred to as web 2.0. The internet started out as a simple
network to support mail communications and file transfer among
remote computer. But the web changed the way of doing business.
The features provided by web are:
 User-generated content and communication
 Highly interactive, social communities
 Large audiences; yet mostly unproven business models
 Examples: Twitter, YouTube, Instagram, Wikipedia, Tumblr
 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
 The Growth of B2C E-commerce
Figure 1.3, Page 20

SOURCE: Based on data from eMarketer, Inc., 2013a; authors’ estimates.

The Growth of B2B E-commerce
Figure 1.4, Page 21
 The Internet
Worldwide network of computer networks built on common standards

Created in late 1960s

Services include the Web, e-mail, file transfers, and so on

Can measure growth by number of Internet hosts with domain names

The Web

Developed in early 1990s

Most popular Internet service

Provides access to Web pages

HTML documents that may include text, graphics, animations, music, videos

Web content has grown exponentially

 Google reports 30 trillion unique URLs; 120 billion Web pages indexed
 The Mobile Platform
 Most recent development in Internet infrastructure
 Enables access to the Internet via wireless networks or cell-phone
service
 Mobile devices include
 Tablets
 Smart phones
 Ultra-lightweight laptops
 Insight on Technology: Class Discussion

Will Apps Make the Web Irrelevant?

 What are the advantages and disadvantages of apps, compared with Web
sites, for mobile users?
 What are the benefits of apps for content owners and creators?
 Will apps eventually make the Web irrelevant? Why or why not?
 Origins and Growth of E-commerce
 Precursors:
 Baxter Healthcare (in 1970’s initiated B2B by using telephone based
modem that permitted hospitals to reorder supplies for Baxter )
 In 1980’s Electronic Data Interchange (EDI) for B2B
 French Minitel (1980s videotext system combined with telephone) for
B2C
 None had functionality of Internet
 1995: Beginning of e-commerce
 First sales of banner advertisements from AT&T, volvo, Sprint on
hotwired.com and after that Netscape and info seek
 E-commerce fastest growing form of commerce in United States
 E-commerce: A Brief History
 1995–2000: Invention
 Key concepts developed
 Limited bandwidth and media
 Friction-free commerce
 Lowered search costs, disintermediation, price
transparency, elimination of unfair competitive advantage
 First-mover advantages
 Network profits
 Dot-com crash of 2000
 E-commerce: A Brief History (cont.)
 2001–2006: Consolidation
 Emphasis on business-driven approach
 Traditional large firms expand presence
 Start-up financing shrinks up
 More complex products and services sold
 Growth of search engine advertising
 Business Web presences expand to include e-mail, display and
search advertising, and limited community feedback features
 E-commerce: A Brief History (cont.)
 2007–Present: Reinvention
 Rapid growth of:
 Online social networks
 Mobile platform
 Local commerce

 Entertainment content develops as source of revenues

 Transformation of marketing
 Coordinated marketing on social, mobile, local platforms
 Analytic technologies
 Insight on Business: Class Discussion

Start-up Boot Camp

 Why do you think investors today are still interested in investing in
start-ups?
 What are the benefits of investing in a company that is a graduate of
a Combinatory boot camp?
 Is an incubator the best solution for start-ups to find funding? Why
or why not?
 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 advantages
 Fast-followers often overtake first movers
 Predictions for the Future
 Technology will propagate through all commercial activity
 Large, traditional companies will continue to play dominant role,
consolidating audiences
 Start-up ventures can still attract large audiences in non-
dominated arenas
 Integrated online/offline companies will experience more growth
than purely online companies
 Additional factors:
 Increased regulation and control
 Cost of energy
 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
The Internet
and the
Evolution
of Corporate
Computing
 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?