The Changing Face of eCommerce

Ling Chen

lingchensh@126.com

Overview

A Brief Introduction A Definition of eCommerce The Beginnings 1st Generation of eCommerce

Dot Coms 2nd Generation of eCommerce

Main Stream eBusiness The Future of eCommerce

An Early Definition Of eCommerce

From a communications perspective, EC is the delivery of goods, services, information, or payments over computer networks or by any other electronic means

From a business process perspective, EC is the application of technology towards the automation of business transactions and work flow

From a service perspective, EC is a tool that address the desire of firms, consumers, and management to cut services costs while improving the quality of customer service and increasing the speed of service delivery

From a online perspective, EC provides the capability of buying and selling products and information over the Internet and other online services

From Electronic Commerce: A Managers’ Guide, Kalakota and Whinston, Addison Wesley, 1997

A Broader Definition

An attempt to increase transactional efficiency and effectiveness in all aspects of the design, production, marketing and sales of products or services for existing and developing marketplaces through the utilization of current and emerging electronic technologies

Source: eCommerce faculty at UMFK

The beginnings of eCommerce

The Real Beginning EFT, electronic finds transfer (1970’s) EDI, electronic data Interchange (1980’s)

The Visible Beginning April 1995, the Internet moved from the Federal Sector to the

commercial sector when NSF decommissioned NSFNET and moved assets to vBNS (very-High-Speed Backbone Network Service) which allowed for ISPs (Internet Service Providers) to develop.

February 1996, The Telecommunications Act Deregulation (move to industry self-regulation)

1st Generation eCommerce (1995-2000)

Explosive Growth … mostly in “Dot Coms”All about taking ideas to market FASTThe funding required for growth was investors

not consumersThe goal was IPO Talent left the major firms and joined start-ups

Traded security for the instant millionaire promise of stock options

Millions Raised by Dot Coms

1996 1997 1998 1999 2000

Business Services

780.42 1270.03 3409.02 14749.78 295536.22

Content 233.72 276.05 455.02 1977.78 2301.25

Retail 108.25 159.51 540.66 4209.14 1941.79

Infrastructure 466.67 879.88 1388.81 4589.29 13860.46

ISPs 369.41 561.27 1030.25 3499.10 7577.11

Software 1132.67 1634.05 2459.00 7132.39 2069.48

Totals 3102.54 4794.95 9361.86 36697.33 72411.02

Data Source: PriceWaterhouse Coopers Moneytree Survey 2001

Reality Check (from Thomson Financial)

1986-1995 1% of IPOs traded below $1 per share one year after

going public Between 1998-2000

12% of IPOs traded below $1 per share on April 1, 2001

Some of these IPOs with their stock highs IVillage.com $130.00 Ask Jeeves.com $190.50 NetZero $40.00 Drkoop.com $45.75

The End of the Beginning

Only 10% of dot coms formed since 1995 still survive An even smaller percentage generate a profit

Some projections (E-Commerce, Lauden and Traver, Addison

Welsey,2002) B2C revenues in 2001 are growing at 45% to 55% per

year By 2005 eCommerce revenue should grow to $647

billion (about 20% of total retail)

Table 4.     Estimated Quarterly U.S. Retail Sales (Not Adjusted1): Total and E-commerce2

(Estimates are based on data from the Monthly Retail Trade Survey and administrative records.)

                                                                                                                       

Source: http://www.census.gov/mrts/www/data/html/05Q3table4.html

Anonymous e-Mail Joke

Three beggars were begging in New York City, each with a small cup in his hand. The first one wrote “beg” on his broken steel cup and he received 10 bucks after one day.

The second one wrote “beg.com” on his cup and after one day he received hundreds of thousand dollars. Someone even wanted to take him to NASDAQ.

The third one wrote “e-beg” on his cup. Both IBM and HP sent vice presidents to talk to him about a strategic alliance and offered him free hardware and professional consulting while Larry Ellison claimed on CNBC that e-beg uses 95% Oracle technology and i2 announced e-beg Trade Matrix, a B2B industry portal to offer supply chain integration in the beggar community.

The 2nd Generation 2001-2005

eCommerce become eBusiness 5 major components all geared to any firm’s desire to gain

competitive advantage in their marketplace eCommerce

buying & selling using the Internet Business Intelligence

gathering and processing of information internal and external to firm in order gain strategic advantage

Customer relationship management solidify and expand relationships across all stakeholders

Supply Chain Management unified operations for transferring of goods from suppliers to manufactures

and ultimately to the consumers Enterprise Resource Management

the digital streamlining of an company’s processes

2nd Generation Business Involvement with eCommerce

Activity

Business Process

Enterprise

PurePlayBusiness transformation

(competitive advantage,industry redefinition)

Effectiveness(Incremental sales,customer retention)

Efficiency(Cost

reduction)

Pure dot-com(E*Trade)

Click and Mortar(eSchwab)

Customerrelationshipmanagement

Brochureware,Order processing

Leve

l of

busi

ness

impa

ct

Source: adapted from www.mohanbirsawhney.com

eCommerce Models

B2B Business to Business

B2C Business to Consumer

C2C Consumer to Consumer

G2C Government to Constituent

C2G Constituent to Government

G2B Government to Business

B2G Business to Government

1st and 2nd Generations Compared

1st Generation Technology-driven Revenue growth emphasis Venture capital financing Ungoverned Entrepreneurial Disintermediation Perfect Markets Pure Online strategies First Mover advantage

2nd Generation Business-driven Earnings and profits emphasis Traditional financing Stronger regulation and

governance Larger traditional firms Strengthening intermediaries Imperfect markets, brands,

and network effects Mixed “clicks and Bricks”

Strategies Strategic follower strength

An eCommerce Timeline

SOURCE: the Gartner Group

High Visibility

The future of eCommerce

Continued integration of technology into business and organizational entities until at some point there will be no distinct line of demarcation Business become eCommerce and

eCommerce becomes businessBusiness continues to be the driver of

technology

The future of eCommerce

The creation of a discontinuous marketplace economy in which firms will compete in one of only two possible marketplaces Commodity based products and services

Major differentiation between competing products is cost eCommerce adds to increased efficiency and effectiveness

Boutiques Major differentiation between competing products is

perceived quality or higher service eCommerce adds increased distribution possibilities and

increased marketing potential

Future of eCommerce

7 features of eCommerce (E-Commerce: The Revolution is Just Beginning, Lauden and Traver, 2002)

Ubiquity Global Reach Universal Standards Information richness Interactivity Information density Personalization/Customization