Copyright © 2002 Pearson Education, Inc. Slide 1-1

Copyright © 2002 Pearson Education, Inc. Slide 1-2 CHAPTER 1 Created by, David Zolzer, Northwestern State University—Louisiana The Revolution Is Just Beginning

Copyright © 2002 Pearson Education, Inc. Slide 1-3 Learning Objectives  Define e-commerce and describe how it differs from e-business  Identify the unique features of e-commerce technology and their business significance  Describe the major types of e-commerce  Understand the visions and forces behind the E-Commerce I era

Copyright © 2002 Pearson Education, Inc. Slide 1-4 Learning Objectives  Understand the successes and failures of E-Commerce I  Identify several factors that will define the E-commerce II era  Describe the major themes underlying the study of e-commerce  Identify the major academic disciplines contributing to e-commerce research

Copyright © 2002 Pearson Education, Inc. Slide 1-5 Amazon.com: Before and After

Copyright © 2002 Pearson Education, Inc. Slide 1-6 Amazon.com: Before and After  Most well-known e-commerce company  Conceived by Jeff Bezos in 1994  Opened in July 1995  Four compelling reasons to shop  Selection (1.1 million titles)  Convenience (anytime, anywhere)  Price (high discounts on bestsellers)  Service (automated order confirmation, tracking, and shipping information)

Copyright © 2002 Pearson Education, Inc. Slide 1-7 Amazon.com: Before and After ($1.4 Billion)$2.7 Billion2000 ($720 Million)$1.6 Billion1999 ($125 Million)$610 Million1998 ($31 Million)$148 Million1997 ($6.24 Million)$15.6 Million1996 EarningsRevenues Revenues and Earnings

Copyright © 2002 Pearson Education, Inc. Slide 1-8 E-commerce vs. E-business E-commerce involves  Digitally enabled commercial transactions between 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

Copyright © 2002 Pearson Education, Inc. Slide 1-9 E-commerce vs. E-business E-business involves  Digital enablement of transactions and processes within a firm, involving information systems under the control of the firm  E-business does not involve commercial transactions across organizational boundaries where value is exchanged

Copyright © 2002 Pearson Education, Inc. Slide 1-10 The Difference Between E- commerce and E-Business Page 8, Figure 1.1

Copyright © 2002 Pearson Education, Inc. Slide 1-11 Unique of E-commerce Technology and Their Business Significance E-commerce:  is ubiquitous  has global reach  operates according to universal standards  provides information richness  is interactive  increases information density  permits personalization

Copyright © 2002 Pearson Education, Inc. Slide 1-12 Seven Unique Features of E-commerce Technology and Their Business Significance Page 9, Table 1.1

Copyright © 2002 Pearson Education, Inc. Slide 1-13 Page 11, Figure 1.2 Changing Trade-Off Between Richness and Reach

Copyright © 2002 Pearson Education, Inc. Slide 1-14 Major Types of E-Commerce  Market relationships  Business-to-Consumers (B2C)  Business-to-Business (B2B)  Consumer-to-Consumer (C2C)  Technology-based  Peer-to-Peer (P2P)  Mobile Commerce (M-commerce)

Copyright © 2002 Pearson Education, Inc. Slide 1-15 Major Types of E-Commerce Page 14, Table 1.2

Copyright © 2002 Pearson Education, Inc. Slide 1-16 Business-to-Consumer E- commerce  Most commonly discussed type  Online businesses attempt to reach individual consumers  Consumers will spend $65 billion in 2001.

Copyright © 2002 Pearson Education, Inc. Slide 1-17 Business-to-Business E-commerce  Businesses focus on sell to other businesses  Largest form of e-commerce  $700 billion in transactions in 2001  Primarily involved inter-business exchanges at first  Other models have developed  e-distributors  infomediaries  B2B service providers

Copyright © 2002 Pearson Education, Inc. Slide 1-18 Consumer-to-Consumer E- commerce  Provide a way for consumers to sell to each other  Estimated $5 billion market  Consumer:  prepares the product for market  places the product for auction or sale  relies on market maker to provide catalog, search engine, and transaction clearing capabilities

Copyright © 2002 Pearson Education, Inc. Slide 1-19 Peer-to-Peer E-commerce  Enables Internet users to share files and computer resources  Napster

Copyright © 2002 Pearson Education, Inc. Slide 1-20 Mobile E-commerce  Wireless digital devices enable transactions on the Web  Uses personal digital assistants (PDAs) to connect  Used most widely in Japan and Europe

Copyright © 2002 Pearson Education, Inc. Slide 1-21 Growth of the Internet and the Web  Created in the late 1960s  About 350 million computers worldwide to date  Links businesses, educational institutions, government agencies, and individuals  Provides services such as , document transfer, newsgroups, shopping, research, instant messaging, music, video, and news

Copyright © 2002 Pearson Education, Inc. Slide 1-22 Growth of the Internet and the Web  Internet hosts are growing at a rate of 45% per year  Extraordinary growth -- time to reach 30% US households  Radio - 38 years  Television - 17 years  Internet/Web - 8 years (1993)

Copyright © 2002 Pearson Education, Inc. Slide 1-23 The Growth of the Internet Page 16, Figure 1.3

Copyright © 2002 Pearson Education, Inc. Slide 1-24 The Growth of Web Content Page 17, Figure 1.4

Copyright © 2002 Pearson Education, Inc. Slide 1-25 The Growth of B2C E-Commerce Page 20, Figure 1.5

Copyright © 2002 Pearson Education, Inc. Slide 1-26 The Growth of B2B E-Commerce Page 21, Figure 1.6

Copyright © 2002 Pearson Education, Inc. Slide 1-27 Origins and Growth of E-Commerce  Baxter Healthcare  Primitive form of B2B using telephone-based modem to permit hospitals to reorder supplies (early 1970s)  PC-based remote order entry system (1980s)  Electronic Data Interchange (EDI) standards developed that permitted firms to exchange commercial documents and conduct digital commercial transactions across private networks (1980s)

Copyright © 2002 Pearson Education, Inc. Slide 1-28 Origins and Growth of E-Commerce  French Minitel videotext system  First B2C arena (1981)  15 million in use throughout France  World Wide Web  1993 first browsers  1995 first banner ads

Copyright © 2002 Pearson Education, Inc. Slide 1-29 Technology and E-Commerce in Perspective Internet and the Web are just two of a long list of technologies that have greatly change commerce  Other technologies spawned business models and strategies  Explosive early growth followed by retrenchment and then long- term successful exploitation of the technology

Copyright © 2002 Pearson Education, Inc. Slide 1-30 Technology and E-Commerce in Perspective Although e-commerce has grown explosively, there is no guarantee it will continue to grow  Confront own fundamental limitations  B2C only about 1% of overall retail market  With current growth rates, B2C will roughly equal the annual revenue of Wal-Mart in 2005

Copyright © 2002 Pearson Education, Inc. Slide 1-31 Limitations of the Growth of B2C E-Commerce Page 23, Table 1.3

Copyright © 2002 Pearson Education, Inc. Slide 1-32 Web Access Via Wireless Devices in the United States Page 24, Figure 1.7

Copyright © 2002 Pearson Education, Inc. Slide 1-33 E-Commerce I and II  E-Commerce I  Explosive growth starting in 1995  Widespread of Web to advertise products  Ended in 2000 when dot.com began to collapse  E-Commerce II  Began in January 2001  Reassessment of e-commerce companies

Copyright © 2002 Pearson Education, Inc. Slide 1-34 E-Commerce I  For computer scientist and information technologists  Vindication of a set of information technologies developed over 40 years  Extending from the early Internet to the PC and local area networks  The vision of universal communications

Copyright © 2002 Pearson Education, Inc. Slide 1-35 E-Commerce I  For economists  Raised realistic prospect of perfect Bertrand Market  where price, cost, and quality information is equally distributed  where a nearly infinite set of suppliers compete against one another  where customers have access to all revelant market information worldwide  Merchants have equal direct access to hundreds of millions of customers

Copyright © 2002 Pearson Education, Inc. Slide 1-36 E-Commerce I Disintermediation  displacement of market middlemen who traditionally are intermediaries between producers and consumers by a new direct relationship between manufacturers and content originators with their customers

Copyright © 2002 Pearson Education, Inc. Slide 1-37 E-Commerce I Friction-free commerce  a vision of commerce in which  information is equally distributed  transaction costs are low  prices can be dynamically adjusted to reflect actual demand  intermediaries decline  unfair competitive advantages are eliminated

Copyright © 2002 Pearson Education, Inc. Slide 1-38 E-Commerce I  First mover  a firm that is first to market in a particular area and that moves quickly to gather market share  Network effect  occurs where users receive value from the fact that everyone else uses the same tool or product

Copyright © 2002 Pearson Education, Inc. Slide 1-39 Amounts Raised by Venture-Backed Internet Companies in Page 25, Table 1.4

Copyright © 2002 Pearson Education, Inc. Slide 1-40 E-Commerce II  Crash in stock market values of E- commerce I companies throughout 2000 is an end to E-commerce I  Led to a sobering reassessment of the prospects of e-commerce and the methods of achieving business success.  E-commerce II begins in 2001 and ends five year later -- the limit for making technology and business projections

Copyright © 2002 Pearson Education, Inc. Slide 1-41 E-Commerce II  Reasons for the end of E-Commerce I  run-up in technology stocks due to enormous information technology capital expenditure of firms rebuilding their internal business systems to withstand Y2K  telecommunications industry had built excess capacity in high-speed fiber optic networks  1999 e-commerce Christmas season provided less sales growth that anticipated and demonstrated e-commerce was not easy (eToys.com)  valuations of dot.com and technology companies had risen so high supporters were questioning whether earnings could justify the prices of the shares.

Copyright © 2002 Pearson Education, Inc. Slide 1-42 Insight on Business: A Short History of dot.com IPOS  Between 1998 and 2000 venture capitalists poured an estimated $120 billion into approximately 12,450 dot.com start-up ventures  Investment bankers took 1,262 of these companies public in IPOS  IPO shares were targeted to open around $15 per share, and it was not uncommon for them to be trading at $45 a share or more later the same trading day

Copyright © 2002 Pearson Education, Inc. Slide 1-43 E-Commerce I and E-Commerce II Compared Page 32, Table 1.5

Copyright © 2002 Pearson Education, Inc. Slide 1-44 April 2001 NRF/Forrester Online Retail Index Page 33, Table 1.6

Copyright © 2002 Pearson Education, Inc. Slide 1-45 Top 25 Properties of March 2001 (Combined Home and Work) Page 34, Table 1.7

Copyright © 2002 Pearson Education, Inc. Slide 1-46 Top 20 Web Retailers Among U.S. Home Users (January, 2001) Page 35, Table 1.8

Copyright © 2002 Pearson Education, Inc. Slide 1-47 Understanding E-Commerce: Organizing Themes  Technology: Infrastructure  development and mastery of digital computing and communications technology  Business: Basic Concepts  new technologies present businesses and entrepreneurs with new ways of organizing production and transacting business  Society: Taming the Juggernaught  global nature of e-commerce poses public policy issues of equity, equal access, content regulation, and taxation

Copyright © 2002 Pearson Education, Inc. Slide 1-48 The Internet and the Evolution of Corporate Computing Page 37, Figure 1.8

Copyright © 2002 Pearson Education, Inc. Slide 1-49 Disciplines Concerned with E- Commerce Page 39, Figure 1.9