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

2. Copyright © 2010 Pearson Education, Inc. Copyright © 2007 Pearson Education, Inc. Slide 1-2 Chapter 1 The Revolution Is Just Beginning

3. Copyright © 2010 Pearson Education, Inc. Facebook and MySpace: It’s All About You Class Discussion How is Facebook different from MySpace? Have you used Facebook or MySpace, and if so, how often? What was your experience? Why do you think Facebook has overtaken MySpace as the most popular social networking site? Slide 1-3

4. Copyright © 2010 Pearson Education, Inc. E-commerce Trends 2009–2010 New business models based on social technologies, consumer-generated content, and services 2009 a flat year, but growth expected to resume in 2010 Broadband and wireless access continue to grow Mobile e-commerce begins to take off Traditional media losing subscribers Slide 1-4

5. Copyright © 2010 Pearson Education, Inc. The First 30 Seconds First 15 years of e-commerce  Just the beginning  Rapid growth and change Technologies continue to evolve at exponential rates  Disruptive business change  New opportunities Slide 1-5

6. Copyright © 2010 Pearson Education, Inc. What is E-commerce? Use of Internet and Web to transact business More formally:  Digitally enabled commercial transactions between and among organizations and individuals Slide 1-6

7. Copyright © 2010 Pearson Education, Inc. 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 Slide 1-7

8. Copyright © 2010 Pearson Education, Inc. 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 Slide 1-8

9. Copyright © 2010 Pearson Education, Inc. Unique Features of E-commerce Technology 1. Ubiquity 2. Global reach 3. Universal standards 4. Information richness 5. Interactivity 6. Information density 7. Personalization/customization 8. Social technology Slide 1-9

10. Copyright © 2010 Pearson Education, Inc. Web 2.0 Applications, technologies that allow users to:  Create and share content, preferences, bookmarks, and online personas  Participate in virtual lives  Build online communities Examples  YouTube, Photobucket, Flickr, Google, iPhone  MySpace, Facebook, LinkedIn  Second Life  Wikipedia Slide 1-10

11. Copyright © 2010 Pearson Education, Inc. 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) Slide 1-11

12. Copyright © 2010 Pearson Education, Inc. 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 Slide 1-12

13. Copyright © 2010 Pearson Education, Inc. The Growth of the Internet, Measured by Number of Internet Hosts with Domain Names Figure 1.3, Page 23 Slide 1-13 SOURCE: Internet Systems Consortium, Inc., 2009.

14. Copyright © 2010 Pearson Education, Inc. The Web Most popular Internet service Developed in early 1990s Provides access to Web pages  HTML documents that may include text, graphics, animations, music, videos Web content has grown exponentially  2 billion Web pages in 2000  At least 40–50 billion pages today Slide 1-14

15. Copyright © 2010 Pearson Education, Inc. 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? 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”? Slide 1-15

16. Copyright © 2010 Pearson Education, Inc. Origins & Growth of E-commerce Precursors:  Baxter Healthcare  Electronic Data Interchange (EDI)  French Minitel (1980s videotext system)  None had functionality of Internet 1995: Beginning of e-commerce  First sales of banner advertisements Since then, e-commerce fastest growing form of commerce in the United States Slide 1-16

17. Copyright © 2010 Pearson Education, Inc. The Growth of B2C E-commerce Figure 1.4, Page 25 Slide 1-17 SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors’ estimates.

18. Copyright © 2010 Pearson Education, Inc. The Growth of B2B E-commerce Figure 1.5, Page 28 Slide 1-18 SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.

19. 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. Slide 1-19

20. Copyright © 2010 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 Saturation and ceiling effects Slide 1-20

21. Copyright © 2010 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 networking, services Slide 1-21

22. Copyright © 2010 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 Slide 1-22

23. Copyright © 2010 Pearson Education, Inc. Insight on Business The Internet Investment Rollercoaster Class Discussion What explains the rapid growth in private investment in e-commerce firms in the period 1998–2000? Was this investment irrational? What was the effect of the big bust of March 2000 on e- commerce investment? What is the value to investors of a company such as YouTube which has yet to show profitability? Why do you think investors today would be interested in investing in or purchasing e-commerce companies? Would you invest in an e-commerce company today? Slide 1-23

24. Copyright © 2010 Pearson Education, Inc. 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 Slide 1-24

25. Copyright © 2010 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 Growth of regulatory activity worldwide Influence of cost of energy Slide 1-25

26. Copyright © 2010 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 Slide 1-26

27. Copyright © 2010 Pearson Education, Inc. The Internet and the Evolution of Corporate Computing Figure 1.9, Page 44 Slide 1-27

28. Copyright © 2010 Pearson Education, Inc. Insight on Society Privacy Online: Does Anybody Care? 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? Slide 1-28

29. Copyright © 2010 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 Slide 1-29

30. Copyright © 2010 Pearson Education, Inc.Slide 1-30 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall