Learning Objectives Learning Objectives: The Revolution Is Just Beginning

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Copyright 2002PearsonEducation, Inc. Slide 1-1 Copyright 2002PearsonEducation, Inc. Slide 1-2
CHAPTER 1
Created by, David Zolzer, Northwestern State UniversityLouisiana
The Revolution Is J ust
Beginning
Copyright 2002PearsonEducation, Inc. Slide 1-3
Learning Objectives
Define e-commerce and describe how it
differs from e-business
Identify the unique features of e-commerce
technology and their business significance
Describe the major types of e-commerce
Understand the visions and forces behind
the E-Commerce I era
Learning Objectives
Understand the successes and failures of
E-Commerce I
Identify several factors that will define the
E-commerce II era
Describe the major themes underlying the
study of e-commerce
Identify the major academic disciplines
contributing to e-commerce research
Amazon.com:
Before and After
Amazon.com: Before and After
Most well-known e-commerce company
Conceived by Jeff Bezos in 1994
Opened in July 1995
Four compelling reasons to shop
Selection (1.1 million titles)
Convenience (anytime, anywhere)
Price (high discounts on bestsellers)
Service (automated order confirmation,
tracking, and shipping information)
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Amazon.com: Before and After
($1.4 Billion) $2.7 Billion 2000
($720 Million) $1.6 Billion 1999
($125 Million) $610 Million 1998
($31 Million) $148 Million 1997
($6.24 Million) $15.6 Million 1996
Earnings Revenues
Revenues and Earnings
E-commerce vs. E-business
E-commerce involves
Digitally enabled commercial transactions
between organizations and individuals.
Digitally enabled transactions include all
transactions mediated by digital
technology
Commercial transactions involve the
exchange of value across organizational or
individual boundaries in return for
products or services
E-commerce vs. E-business
E-business involves
Digital enablement of transactions
and processes within a firm, involving
information systems under the
control of the firm
E-business does not involve
commercial transactions across
organizational boundaries where
value is exchanged
The Difference Between E-
commerce and E-Business
Page 8, Figure 1.1
Unique of E-commerce Technology
and Their Business Significance
E-commerce:
is ubiquitous
has global reach
operates according to universal
standards
provides information richness
is interactive
increases information density
permits personalization
Seven Unique Features of E-commerce
Technology and Their Business
Significance
Page 9, Table 1.1
3
Page 11, Figure 1.2
Changing Trade-Off Between
Richness and Reach
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)
Major Types of E-Commerce
Page 14, Table 1.2
Business-to-Consumer E-
commerce
Most commonly discussed type
Online businesses attempt to
reach individual consumers
Consumers will spend $65 billion
in 2001.
Business-to-Business E-commerce
Businesses focus on sell to other
businesses
Largest form of e-commerce
$700 billion in transactions in 2001
Primarily involved inter-business
exchanges at first
Other models have developed
e-distributors
infomediaries
B2B service providers
Consumer-to-Consumer E-
commerce
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
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Peer-to-Peer E-commerce
Enables Internet users to share
files and computer resources
Napster
Mobile E-commerce
Wireless digital devices enable
transactions on the Web
Uses personal digital assistants
(PDAs) to connect
Used most widely in Japan and
Europe
Growth of the Internet and the Web
Created in the late 1960s
About 350 million computers
worldwide to date
Links businesses, educational
institutions, government agencies,
and individuals
Provides services such as e-mail,
document transfer, newsgroups,
shopping, research, instant
messaging, music, video, and news
Growth of the Internet and the Web
Internet hosts are growing at a
rate of 45% per year
Extraordinary growth -- time to
reach 30% US households
Radio - 38 years
Television - 17 years
Internet/Web - 8 years (1993)
The Growth of the Internet
Page 16, Figure 1.3
The Growth of Web Content
Page 17, Figure 1.4
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The Growth of B2C E-Commerce
Page 20, Figure 1.5
The Growth of B2B E-Commerce
Page 21, Figure 1.6
Origins and Growth of E-Commerce
Baxter Healthcare
Primitive form of B2B using telephone-based
modem to permit hospitals to reorder supplies
(early 1970s)
PC-based remote order entry system (1980s)
Electronic Data Interchange (EDI)
standards developed that permitted firms
to exchange commercial documents and
conduct digital commercial transactions
across private networks (1980s)
Origins and Growth of E-Commerce
French Minitel videotext system
First B2C arena (1981)
15 million in use throughout France
World Wide Web
1993 first browsers
1995 first banner ads
Technology and E-Commerce in
Perspective
Internet and the Web are just two of
a long list of technologies that have
greatly change commerce
Other technologies spawned
business models and strategies
Explosive early growth followed
by retrenchment and then long-
term successful exploitation of the
technology
Technology and E-Commerce in
Perspective
Although e-commerce has grown
explosively, there is no guarantee it
will continue to grow
Confront own fundamental
limitations
B2C only about 1% of overall retail
market
With current growth rates, B2C will
roughly equal the annual revenue
of Wal-Mart in 2005
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Limitations of the Growth of B2C
E-Commerce
Page 23, Table 1.3
Web Access Via Wireless Devices
in the United States
Page 24, Figure 1.7
E-Commerce I and II
E-Commerce I
Explosive growth starting in 1995
Widespread of Web to advertise
products
Ended in 2000 when dot.com began to
collapse
E-Commerce II
Began in January 2001
Reassessment of e-commerce
companies
E-Commerce I 1995-2000
For computer scientist and
information technologists
Vindication of a set of information
technologies developed over 40
years
Extending from the early Internet to
the PC and local area networks
The vision of universal
communications
For economists
Raised realistic prospect of perfect
Bertrand Market
where price, cost, and quality information is
equally distributed
where a nearly infinite set of suppliers
compete against one another
where customers have access to all revelant
market information worldwide
Merchants have equal direct access to
hundreds of millions of customers
Disintermediation
displacement of market
middlemen who traditionally are
intermediaries between
producers and consumers by a
new direct relationship between
manufacturers and content
originators with their customers
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Friction-free commerce
a vision of commerce in which
information is equally distributed
transaction costs are low
prices can be dynamically adjusted to
reflect actual demand
intermediaries decline
unfair competitive advantages are
eliminated
First mover
a firm that is first to market in a
particular area and that moves
quickly to gather market share
Network effect
occurs where users receive value
from the fact that everyone else
uses the same tool or product
Amounts Raised by Venture-Backed
Internet Companies in 1996-2000
Page 25, Table 1.4
E-Commerce II 2001-2006
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
E-Commerce II 2001-2006
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 dot.com and technology companies had
risen so high supporters were questioning whether
earnings could justify the prices of the shares.
Insight on Business:
A Short History of dot.com IPOS
Between 1998 and 2000 venture capitalists
poured an estimated $120 billion into
approximately 12,450 dot.com start-up
ventures
Investment bankers took 1,262 of these
companies public in IPOS
IPO shares were targeted to open around
$15 per share, and it was not uncommon
for them to be trading at $45 a share or
more later the same trading day
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E-Commerce I and E-Commerce II
Compared
Page 32, Table 1.5
April 2001 NRF/Forrester Online
Retail Index
Page 33, Table 1.6
Top 25 Properties of March 2001
(Combined Home and Work)
Page 34, Table 1.7
Top 20 Web Retailers Among U.S.
Home Users (January, 2001)
Page 35, Table 1.8
Understanding E-Commerce:
Organizing Themes
Technology: Infrastructure
development and mastery of digital computing
and communications technology
Business: Basic Concepts
new technologies present businesses and
entrepreneurs with new ways of organizing
production and transacting business
Society: Taming the Juggernaught
global nature of e-commerce poses public
policy issues of equity, equal access, content
regulation, and taxation
The Internet and the Evolution of
Corporate Computing
Page 37,
Figure 1.8
9
Disciplines Concerned with E-
Commerce
Page 39, Figure 1.9

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