Laudon ec6e ch01

Copyright © 2010 Pearson Education, Inc.

E-commerce

Kenneth C. LaudonCarol Guercio Traver

business. technology. society.Sixth Edition

Copyright © 2010 Pearson Education, Inc.Copyright © 2007 Pearson Education, Inc. Slide 1-2

Chapter 1

The Revolution Is Just Beginning


Facebook and MySpace: It’s All About You

Class Discussion

How is Facebook different from MySpace?

Have you used Facebook or MySpace, and if so, how often? What was your experience?

Why do you think Facebook has overtaken MySpace as the most popular social networking site?

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E-commerce Trends 2009–2010

New business models based on social technologies, consumer-generated content, and services

2009 a flat year, but growth expected to resume in 2010

Broadband and wireless access continue to grow

Mobile e-commerce begins to take off

Traditional media losing subscribers

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The First 30 Seconds

First 15 years of e-commerceJust the beginningRapid growth and change

Technologies continue to evolve at exponential ratesDisruptive business changeNew opportunities

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What is E-commerce?

Use of Internet and Web to transact business

More formally:Digitally enabled commercial transactions

between and among organizations and individuals

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E-commerce vs. E-business

E-business:Digital enablement 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

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Why Study E-commerce?

E-commerce technology is different, more powerful than previous technologies

E-commerce bringing fundamental changes to commerce

Traditional commerce: Passive consumer Sales-force driven Fixed prices Information asymmetry

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Unique Features of E-commerce Technology

1. Ubiquity 2. Global reach 3. Universal standards 4. Information richness 5. Interactivity 6. Information density7. Personalization/customization8. Social technology

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Web 2.0

Applications, technologies that allow users to: Create and share content, preferences, bookmarks, and

online personas Participate in virtual lives Build online communities

Examples YouTube, Photobucket, Flickr, Google, iPhone MySpace, Facebook, LinkedIn Second Life Wikipedia

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Types of E-commerce

Classified by market relationship Business-to-Consumer (B2C) Business-to-Business (B2B) Consumer-to-Consumer (C2C)

Classified by technology used Peer-to-Peer (P2P) Mobile commerce (M-commerce)

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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

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The Growth of the Internet, Measured by Number of Internet Hosts with Domain Names

Figure 1.3, Page 23

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SOURCE: Internet Systems Consortium, Inc., 2009.


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 exponentially2 billion Web pages in 2000 At least 40–50 billion pages today

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Insight on Technology:

Spider Webs, Bow Ties, Scale-Free Networks, and the Deep Web

Class Discussion

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”?

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Origins & Growth of E-commerce Precursors:

Baxter Healthcare Electronic Data Interchange (EDI) French Minitel (1980s videotext system) None had functionality of Internet

1995: Beginning of e-commerce First sales of banner advertisements

Since then, e-commerce fastest growing form of commerce in the United States

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The Growth of B2C E-commerceFigure 1.4, Page 25

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SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors’ estimates.


The Growth of B2B E-commerceFigure 1.5, Page 28

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SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.


Technology and E-commerce in Perspective

The Internet and Web: Just two of a long list of technologies that have greatly changed commerceAutomobilesRadio

E-commerce growth will eventually cap as it confronts its own fundamental limitations.

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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 effectsSlide 1-20


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

networking, services

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Early Visions of E-commerce

Computer scientists: Inexpensive, universal communications and computing

environment accessible by all Economists:

Nearly perfect competitive market and 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 advantageSlide 1-22


Insight on Business

The Internet Investment RollercoasterClass Discussion

What explains the rapid growth in private investment in e-commerce firms in the period 1998–2000? Was this investment irrational?

What was the effect of the big bust of March 2000 on e-commerce investment?

What is the value to investors of a company such as YouTube which has yet to show profitability?

Why do you think investors today would be interested in investing in or purchasing e-commerce companies? Would you invest in an e-commerce company today?

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Assessing E-commerce

Many early visions not fulfilledFriction-free commerce

Consumers less price sensitive Considerable price dispersion

Perfect competition Information asymmetries persist

DisintermediationFirst mover advantage

Fast-followers often overtake first movers

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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 Cast of players will change

Traditional Fortune 500 companies will play dominant role New startup ventures will emerge with new products, services

Number of successful pure online stores will remain smaller than integrated offline/online stores

Growth of regulatory activity worldwide Influence of cost of energy

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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

policySlide 1-26


The Internet and the Evolution of Corporate

Computing

Figure 1.9, Page 44

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Insight on Society

Privacy Online: Does Anybody Care?

Class Discussion

What techniques of privacy invasion are described in the case?

Which of these techniques is the most privacy-invading? 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?

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Academic Disciplines Concerned with E-commerce

Technical approach Computer science Management science Information systems

Behavioral approach Information systems Economics Marketing Management Finance/accounting Sociology

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