1. Copyright © 2002 Pearson Education, Inc.

2. The Revolution Is Just Beginning
CHAPTER 1
The Revolution Is Just Beginning
Created by, David Zolzer, Northwestern State University—Louisiana
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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
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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
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5. Amazon.com: Before and After
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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)
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7. Amazon.com: Before and After
($1.4 Billion)
$2.7 Billion
2000
($720 Million)
$1.6 Billion
1999
($125 Million)
$610 Million
1998
($31 Million)
$148 Million
1997
($6.24 Million)
$15.6 Million
1996
Earnings
Revenues
Revenues and Earnings
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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
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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
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10. The Difference Between E-commerce and E-Business
Page 8, Figure 1.1
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11. Unique of E-commerce Technology and Their Business Significance
is ubiquitous
has global reach
operates according to universal standards
provides information richness
is interactive
increases information density
permits personalization
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12. Seven Unique Features of E-commerce Technology and Their Business Significance
Page 9, Table 1.1
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13. Changing Trade-Off Between Richness and Reach
Page 11, Figure 1.2
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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)
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15. Major Types of E-Commerce
Page 14, Table 1.2
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16. Business-to-Consumer E-commerce
Most commonly discussed type
Online businesses attempt to reach individual consumers
Consumers will spend $65 billion in 2001.
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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
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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
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19. Peer-to-Peer E-commerce
Enables Internet users to share files and computer resources
Napster
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20. Wireless digital devices enable transactions on the Web
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
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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
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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)
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23. The Growth of the Internet
Page 16, Figure 1.3
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24. The Growth of Web Content
Page 17, Figure 1.4
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25. The Growth of B2C E-Commerce
Page 20, Figure 1.5
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26. The Growth of B2B E-Commerce
Page 21, Figure 1.6
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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)
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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
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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
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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
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31. Limitations of the Growth of B2C E-Commerce
Page 23, Table 1.3
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32. Web Access Via Wireless Devices in the United States
Page 24, Figure 1.7
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33. E-Commerce I and II E-Commerce I E-Commerce II
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
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34. For computer scientist and information technologists
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
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35. E-Commerce I 1995-2000 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
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36. E-Commerce I 1995-2000 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
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37. Friction-free commerce
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
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38. E-Commerce I 1995-2000 First mover Network effect
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
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39. Amounts Raised by Venture-Backed Internet Companies in 1996-2000
Page 25, Table 1.4
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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
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41. E-Commerce II 2001-2006 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.
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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
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43. E-Commerce I and E-Commerce II Compared
Page 32, Table 1.5
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44. April 2001 NRF/Forrester Online Retail Index
Page 33, Table 1.6
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45. Top 25 Properties of March 2001 (Combined Home and Work)
Page 34, Table 1.7
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46. Top 20 Web Retailers Among U.S. Home Users (January, 2001)
Page 35, Table 1.8
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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
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48. The Internet and the Evolution of Corporate Computing
Page 37,
Figure 1.8
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49. Disciplines Concerned with E-Commerce
Page 39, Figure 1.9
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