E-COMMERCE

LOGISTICS
Based on Kenneth C. Laudon, Carol Guercio Traver. “E-
Commerce -- Business, Technology, Society”. Pearson.
Learning Methods
 Lecturing
 Quiz
 Case learning & discussion
 Assignment & Presentation
 Multimedia
 Project
 Practical hands-on (additional)
What will you learn?
Unique
Define e-
Features of e- Web 2.0
commerce
commerce tech

Future of e- E-commerce Types of e-

commerce evolution commerce

E-commerce Academic
themes Disciplines
Learning Objectives
After reading this chapter, you will be able to:
 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.
 Recognize and describe Web 2.0 applications.
 Describe the major types of e-commerce.

 Understand the evolution of e-commerce from its early years to today.

 Identify the factors 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 e-commerce.
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?
Amazon.com:Tuned-Up and
Profitable
 Story of Amazon in many ways mirrors story of e-
commerce itself
 Amazon offers consumers four compelling reasons to
shop: selection, convenience, price and service
 Founded in 1995, went public in 1997
 From 1997-2000, revenues increased from $148
million to $2.7 billion but so did losses, to $1.4 billion
 In 2001-2002, new focus on cost-cutting and achieving
profitability leads to first quarterly profits ever in 2002

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EVERYTHING ON DEMAND : THE
“UBERIZATION” E-COMMERCE
 Uber, headqurtered in San Francisco
 Founded in 2009 by Travis Kalanick and Garrett Camp
 Grown explosively since then to over 600 cities in 65
countries
 Uber’s business model differs from traditional retail e-
commerce. Uber doesn’t sell goods, often called
“sharing economy” company.
 “Digital disruption”

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1-7
What is E-Commerce?
What is E-commerce?
 The use of the internet and the web to transact business.

 Involves digitally enabled commercial transactions between and

among 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

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E-commerce trends
 Expansion of social, local, and mobile
e-commerce
 Mobile platform begins to rival PC platform
 Continued growth of cloud computing
 Explosive growth in “Big Data”
 E-books gain wide acceptance
 Continued growth of user-generated content
THE DIFFERENCE
BETWEEN E-
COMMERCE AND
E-BUSINESS?

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1-11
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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The Difference between
E-commerce and E-business
Figure 1.1, Page 11

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1-13
Why Study E-commerce?
 Has challenged much traditional business thinking

 Has a number of unique features that help explain why we have so

much interest in 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

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1-14
Unique Features of E-
Commerce Technology
Unique Features of E-
Commerce Technology
Ubiquity

• Available just about everywhere, at all times

• Making it possible to shop from your desktop/laptop, home, work, car

Global Reach

• Permits commercial transaction to cross cultural & national boundaries

• More convenient & cost effective

Universal Standards

• There is one set of technology standard, namely Internet Standards

• Shared by all nation
• Benefit: lower market entry cost, reduce search cost, network externalities

Richness

• Refers to complexity & content of a message

• Video, audio, and text messages are possible
Unique Features of E-
Commerce Technology
Interactivity

• The technology works through interaction with the user.

• Allows for 2-way communication between merchant & consumer
• Enable merchant to engage consumer like face2face globally

Information Density

• The technology reduces information costs & raises quality

• Reduce cost of info collection, storage, processing & communication
• Increase currency, accuracy, timeliness of info
• Business Consequences: Price transparency, cost transparency, price discrimination

Personalization & Customization

• The technology allows personalized messages to be delivered to individuals as well as groups

• Merchants can target their marketing messages to specific individuals.
• Customer’s past purchase & behavior

Social Technology

• User content generation and social networking

• Provide many2many model of mass communication.
Web 2.0
 The “new” Web
 Applications and technologies that allow users to:
 create, edit, and distribute content
 share preferences, bookmarks, and online personas
 participate in virtual lives
 Build online communities
 User-centered applications and social media technologies
 User-generated content and communication
 Highly interactive, social communities
 Large audiences; yet mostly unproven business models
 Examples: Twitter, YouTube, Instagram, Wikipedia, Tumblr

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Types of E-Commerce
B2C (Amazon)
• Business selling to consumers.
• Most likely encountered by consumers

B2B (Go2Paper)
• Business selling to other business.
• Largestform of e-commerce

• Consumers to sell to each other.

C2C (e-bay) • Consumer prepares product, places for auction/sale
• Relies on the market maker to provide catalogue, search engine & transaction.

M-Commerce • Involves the use of mobile device to conduct commercial transactions

Social e-commerce • Leading social network and social e-commerce site

(Facebook)
Local e-commerce • Offers subscribers daily deals from local businesses
(Groupon)
Business-to-Consumer (B2C)
E-commerce
 Involves online businesses attempting to
reach individual consumers
 In 2016, total B2C revenues were about
$600 billion
 Many types of business models within this
category including online retailers, content
providers, portals, transaction brokers,
service providers, market creators and
community providers
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1-20
The Growth of B2C E-commerce
Figure 1.3, Page 20

SOURCE: Based on data fromEducation,

eMarketer,Inc.
Inc.,Publishing
2013a; authors’ estimates. Slid
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Business-to-Business (B2B)
E-commerce
 Involves businesses focusing on selling to
other businesses
 Largest form of e-commerce ($6.7 trillion in
2016)
 Two primary business models within B2B:
 Net marketplaces (includes e-distributors, e-
procurement companies, exchanges and industry
consortia)
 Private industrial networks (includes single firm
networks and industry-wide networks)
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The Growth of B2B E-commerce
Figure 1.4, Page 21

SOURCE: Based on data fromEducation,

U.S. Census Slid
Copyright © 2014 Pearson Inc.Bureau, 2013;
Publishing authors’ estimates.
as Prentice
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Consumer-to-Consumer
(C2C) E-commerce
 Provides a way for consumers to sell to
each other, with the help of an online
market maker
 eBay most well-known example

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1-24
M-commerce
 Use of mobile devices to enable online
transactions
 Expected to reach over $180 billion in 2016 an
to grow rapidly in the US over the next five
year

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1-25
SOCIAL E-commerce
 E-commerce enabled by social networks and online
social relationship
 The growth of social e-commerce is being driven by a
number of factors, including the increasing popularity
of social sign-on, network notification, online
collaborative, shopping tools, social search, etc.
 Social e-commerce is often intertwined with m-
commerce, particularly as more and more social
network users access those networks via mobile
devices

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1-26
LOCAL E-commerce
 Focus on engaging the consumer based on his or her
current geographic location
 Local merchant use a variety of online marketing
techniques to drive consumers to their stores
 Local e-commerce is the third prong of the mobile,
social, local e-commerce wave and, fueled by an
explosion of interest in local on-demand services such
as Uber, is expected to grow in the United States to
over $40 billion in 2016

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1-27
The Growth of the
internet
 What is the difference between internet & web?
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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1-29
The Web
 Most popular service on the Internet
 Developed in early 1990s
 Provides access to Web pages (HTML documents)
 Can include text, graphics, animations, music, videos
 Web content has grown exponentially, around 30 trillion unique
URLs, 120 billion Web pages indexes

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1-30
The Mobile Platform
 Most recent development in Internet infrastructure
 Enable access to the Internet via wireless networks or cell phone
service
 Mobile device, include tablets, smartphones, ultra-lightweight
laptops

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1-31
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?
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 effects

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1-33
Origins and Growth of E-commerce
 Precursors :
 Baxter Healthcare

 Electronic Data Interchange (EDI)

 French Minitel (1980 videotext system)

 None had fuctionality of Internet

 1995: Beginning of e-commerce

 First sales of banner advertisements

 Since then, e-commerce fastest growing form of commerce in U.S.

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E-commerce : a brief
history
 1995–2000: Invention
 Key concepts developed
 Limited bandwidth and media
 Euphoric visions of
 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
E-Commerce Evolution

Reinvention
(2006)
• Google, social
networking
Consolidation • Web 2.0 application
(2001) • Attract huge audience
• Shift to business driven in a very short time

Innovation (1995)
• Technology success
• Did not fulfill
economist’s vision
• Ending with the collapse
in dot coms’s stock
market
Factors that will Define the
Future of E-Commerce
E-commerce technology  continue to propagate

E-commerce price  rise

E-commerce margins & profit  rise

Traditional & experienced companies  grow & play dominant role

Entrepreneur  social applications

The number of successful pure online companies  decline

Regulation  grow
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

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Understanding E-commerce:
Organizing Themes
 Technology: Development and mastery of digital computing
and communications technology
 Business: New technologies present businesses and
entrepreneurs with new ways of organizing production and
transacting business
 Society: Intellectual property, individual privacy and public
policy

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The Internet
and the
Evolution
of Corporate
Computing
Figure 1.11, Page 41

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CASE READING
 Insight on Society: Holding on to your privacy online
E-Commerce Study –
Themes Needed
• Development and
mastery of digital
Technology computing and
communications
technology

• New technologies
present businesses
with new ways of
Business
organizing production
and transacting
business

• Intellectual Property
Society • Individual privacy
• Public welfare Policy
Major Academic
Disciplines

Technical • Computer Science

• Management Science
approach • Information Systems

• Sociology

Behavioral • Finance & accounting

• Management

approach
• Marketing
• Economics
• Information systems
What have you learned?
Unique
Define e-
Features of e- Web 2.0
commerce
commerce tech

Future of e- E-commerce Types of e-

commerce evolution commerce

E-commerce Academic
themes Disciplines
THANK YOU