© 2006 by Tony Gauvin, UMFK The Changing Face of eCommerce Tony Gauvin Assistant Professor of eCommerce University of Maine at Fort Kent

© 2006 by Tony Gauvin, UMFK Overview A Brief Introduction A Definition of eCommerce The Beginnings 1 st Generation of eCommerce  Dot Coms 2 nd Generation of eCommerce  Main Stream eBusiness The Future of eCommerce

© 2006 by Tony Gauvin, UMFK 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

© 2006 by Tony Gauvin, UMFK 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

© 2006 by Tony Gauvin, 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)

© 2006 by Tony Gauvin, UMFK 1 st Generation eCommerce ( ) Explosive Growth … mostly in “Dot Coms”  All about taking ideas to market FAST  The funding required for growth was investors not consumers  The goal was IPO  Talent left the major firms and joined start-ups Traded security for the instant millionaire promise of stock options

© 2006 by Tony Gauvin, UMFK Millions Raised by Dot Coms Business Services Content Retail Infrastructure ISPs Software Totals Data Source: PriceWaterhouse Coopers Moneytree Survey 2001

© 2006 by Tony Gauvin, UMFK Reality Check (from Thomson Financial)  1% of IPOs traded below $1 per share one year after going public Between  12% of IPOs traded below $1 per share on April 1, 2001  Some of these IPOs with their stock highs IVillage.com $ Ask Jeeves.com $ NetZero $40.00 Drkoop.com $45.75

© 2006 by Tony Gauvin, UMFK 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)

© 2006 by Tony Gauvin, UMFK Table 4. Estimated Quarterly U.S. Retail Sales (Not Adjusted 1 ): Total and E-commerce 2 (Estimates are based on data from the Monthly Retail Trade Survey and administrative records.) Source:

© 2006 by Tony Gauvin, UMFK Anonymous 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.

© 2006 by Tony Gauvin, UMFK The 2 nd Generation 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

© 2006 by Tony Gauvin, UMFK 2 nd Generation Business Involvement with eCommerce Source: adapted from

© 2006 by Tony Gauvin, UMFK 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

© 2006 by Tony Gauvin, UMFK 1 st and 2 nd Generations Compared 1 st Generation  Technology-driven  Revenue growth emphasis  Venture capital financing  Ungoverned  Entrepreneurial  Disintermediation  Perfect Markets  Pure Online strategies  First Mover advantage 2 nd 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

© 2006 by Tony Gauvin, UMFK An eCommerce Timeline SOURCE: the Gartner Group High Visibility

© 2006 by Tony Gauvin, UMFK 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 business  Business continues to be the driver of technology

© 2006 by Tony Gauvin, UMFK 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

© 2006 by Tony Gauvin, UMFK 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

© 2006 by Tony Gauvin, UMFK Questions?? Tony Gauvin Assistant Professor of eCommerce University of Maine at Fort Kent 23 University Drive Fort Kent, me (207)