ELC 200 Day 2 Copyright © 2007 Pearson Education, Inc.

The Revolution Is Just Beginning Assignment 1 posted Agenda Questions? The Revolution Is Just Beginning Assignment 1 posted Due Monday, January 31 @ 9:35 AM assignment1.pdf

E-commerce business. technology. society. Kenneth C. Laudon Sixth Edition Kenneth C. Laudon Carol Guercio Traver Copyright © 2010 Pearson Education, Inc.

The Revolution Is Just Beginning Chapter 1 The Revolution Is Just Beginning Copyright © 2007 Pearson Education, Inc. Copyright © 2010 Pearson Education, Inc.

Objectives 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. Discuss the origins and growth 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.

E-commerce Trends 2010-2011 Social networking continues to grow Social e-commerce platform emerges Online consumer sales return to growth Mobile computing begins to rival PC Explosive growth in online video viewing Continued privacy and security concerns Copyright © 2011 Pearson Education, Inc.

US Census Bereau 2009 e-Stats report Retail E-Commerce (Non-Travel) Growth Rates Excludes Auctions, Autos and Large Corporate Purchases Total U.S. – Home & Work Locations Source: comScore, Inc. Quarter E-Commerce Spending ($ Millions) Y/Y Percent Change Q1 2007 $27,970 17% Q2 2007 $27,176 23% Q3 2007 $28,441 Q4 2007 $39,132 19% Q1 2008 $31,178 11% Q2 2008 $30,581 13% Q3 2008 $30,274 6% Q4 2008 $38,071 -3% Q1 2009 $31,031 0% Q2 2009 $30,169 -1% Q3 2009 $29,552 -2% Q4 2009 $39,045 3% Q1 2010 $33,984 10% Q2 2010 $32,942 9% Q3 2010 $32,133 Q4 2010 $43,432 Q1 2011 $38,002 12% Q2 2011 $37,501 14% US Census Bereau 2009 e-Stats report

First 16 years of e-commerce The First 30 Seconds First 16 years of e-commerce Just the beginning Rapid growth and change Technologies continue to evolve at exponential rates Disruptive business change New opportunities Copyright © 2011 Pearson Education, Inc.

Use of Internet and Web to transact business What is E-commerce? Use of Internet and Web to transact business More formally: Digitally enabled commercial transactions between and among organizations and individuals Copyright © 2011 Pearson Education, Inc.

E-commerce vs. 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 Copyright © 2011 Pearson Education, Inc.

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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 Copyright © 2011 Pearson Education, Inc.

Unique Features of E-commerce Technology Ubiquity Global reach Universal standards Information richness Interactivity Information density Personalization/customization Social technology See table 1.2 on page 14 Copyright © 2011 Pearson Education, Inc.

Technologies that allow users to: Web 2.0 Technologies that allow users to: Create and share content, preferences, bookmarks, and online personas Participate in virtual lives Build online communities E.g. Twitter, YouTube, Facebook, Second Life, Wikipedia, Digg Copyright © 2011 Pearson Education, Inc.

Classified by market relationship 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) Copyright © 2011 Pearson Education, Inc.

The Internet Worldwide network of computer networks built on common standards Created in late 1960s 2002_0918_Internet_History_and_Growth.ppt Services include the Web, e-mail, file transfers, etc. Can measure growth by looking at number of Internet hosts with domain names Copyright © 2011 Pearson Education, Inc.

The Growth of the Internet, Measured by Number of Internet Hosts with Domain Names Figure 1.3, Page 23 SOURCE: Internet Systems Consortium, Inc. , 2010. Copyright © 2011 Pearson Education, Inc.

Most popular Internet service Developed in early 1990s The Web Most popular Internet service Developed in early 1990s http://www.w3.org/History.html Provides access to Web pages HTML documents that may include text, graphics, animations, music, videos Web content has grown exponentially Google indexes between 75 – 100 billion pages Copyright © 2011 Pearson Education, Inc.

Origins & Growth of E-commerce Precursors: Baxter Healthcare Electronic Data Interchange (EDI) French Minitel (1980s videotex system) None had functionality of Internet 1995: Beginning of e-commerce First sales of banner advertisements E-commerce fastest growing form of commerce in United States Copyright © 2011 Pearson Education, Inc.

The Growth of B2C E-commerce Figure 1.4, Page 25 SOURCES: Based on data from eMarketer, Inc., 2010; authors’ estimates. Copyright © 2011 Pearson Education, Inc.

The Growth of B2B E-commerce Figure 1.5, Page 28 SOURCES: Based on data from U.S. Census Bureau, 2010; authors’ estimates. Copyright © 2011 Pearson Education, Inc.

What is the “small world” theory of the Web? 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? six degrees of separation for people 19 clicks for 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”? Copyright © 2010 Pearson Education, Inc.

http://www.estudiolivre.org/tiki-index.php?page=SistemaVizster http://www.eoearth.org/article/Complex_systems http://www.almaden.ibm.com/almaden/webmap_press.html http://www9.org/w9cdrom/160/160.html http://bigpicture.typepad.com/writing/2006/11/what_does_the_i.html Copyright © 2010 Pearson Education, Inc.

Technology and E-commerce in Perspective The Internet and Web: Just two of a long list of technologies that have greatly changed commerce Automobiles Radio E-commerce growth will eventually cap as it confronts its own fundamental limitations. Copyright © 2011 Pearson Education, Inc.

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 Digital Divide Saturation and ceiling effects Copyright © 2011 Pearson Education, Inc.

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 networks, services Copyright © 2011 Pearson Education, Inc.

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 advantage Copyright © 2011 Pearson Education, Inc.

Many early visions not fulfilled Assessing E-commerce Many early visions not fulfilled Friction-free commerce Consumers less price sensitive Considerable price dispersion Perfect competition Information asymmetries persist Disintermediation First mover advantage Fast-followers often overtake first movers Copyright © 2011 Pearson Education, Inc.

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. Regulatory activity worldwide will grow. Cost of energy will have an influence. Copyright © 2011 Pearson Education, Inc.

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 Copyright © 2011 Pearson Education, Inc.

The Internet and the Evolution of Corporate Computing Figure 1 The Internet and the Evolution of Corporate Computing Figure 1.9, Page 44 Copyright © 2011 Pearson Education, Inc.

Academic Disciplines Concerned with E-commerce Technical approach Computer science Management science Information systems Behavioral approach Information systems Economics Marketing Management Finance/accounting Sociology Copyright © 2011 Pearson Education, Inc.

What techniques of privacy invasion are described in the case? Insight on Society Who Really Cares About Online Privacy? 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? Copyright © 2011 Pearson Education, Inc.