1. ELC 200 Day 2 Introduction to E-Commerce 1 Copyright, Tony Gauvin, UMFK, 2011

2. Agenda Questions? The Revolution Is Just Beginning Assignment 1 posted  Due Thursday, February 7 @ 9:35 AM  assignment1.pdf assignment1.pdf

3. e-commerce Kenneth C. Laudon Carol Guercio Traver business. technology. society. eighth edition Copyright © 2012 Pearson Education, Inc.

4. Chapter 1 The Revolution Is Just Beginning

5. Chapter Learning 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.

6. Class Discussion Facebook: The New Face of E-commerce? Do you use Facebook, and if so, how often? What has the experience been like? Have you purchased anything based on an advertisement on Facebook or by using a link provided by a friend? Are you concerned about the privacy of the information you have posted on Facebook? Copyright © 2012 Pearson Education, Inc.Slide 1-6 https://www.facebook.com/about/privacy/#!/about/privacy/your-info

7. E-commerce Trends 2011–2012 Social networking continues to grow Expansion of social e-commerce platform Mobile platform begins to rival PC platform Localization of e-commerce (Groupon) Explosive growth in online video viewing Continued privacy and security concerns Copyright © 2012 Pearson Education, Inc.Slide 1-7

8. 8 US Census Bureau 2010 e-Stats report E-commerce as Percent of Total Value: 2009 - 2010

9. Copyright © 2012 Pearson Education, Inc.Slide 1-9

10. Total US retail Slide 1-10 Copyright © 2012 Pearson Education, Inc. Source: http://www.economagic.com/em-cgi/data.exe/cenret/nrt101sa

11. Copyright © 2012 Pearson Education, Inc.Slide 1-11 Source: http://www.slate.com/blogs/moneybox/2012/02/17/e_commerce_sales_up_5_8_percent_best_quarter_ in_five_years.html http://www.slate.com/blogs/moneybox/2012/02/17/e_commerce_sales_up_5_8_percent_best_quarter_ in_five_years.html

12. 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 © 2012 Pearson Education, Inc.Slide 1-12

13. 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 © 2012 Pearson Education, Inc.Slide 1-13

14. E-commerce vs. E-business E-business:  Digital enabling 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 © 2012 Pearson Education, Inc.Slide 1-14

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

16. Why Study E-commerce? E-commerce technology is different, more powerful than previous technologies E-commerce brings fundamental changes to commerce Traditional commerce:  Consumer as passive targets  Sales-force driven  Fixed prices  Information asymmetry Copyright © 2012 Pearson Education, Inc.Slide 1-16

17. 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 Copyright © 2012 Pearson Education, Inc.Slide 1-17

18. Web 2.0 User-centered applications and social media technologies  User-generated content and communication  Highly interactive, social communities  Large audiences; yet mostly unproven business models  e.g., Twitter, YouTube, Facebook, Second Life, Wikipedia, Digg Copyright © 2012 Pearson Education, Inc.Slide 1-18

19. 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 © 2012 Pearson Education, Inc.Slide 1-19

20. The Internet Worldwide network of computer networks built on common standards Created in late 1960s  2002_0918_Internet_History_and_Growth.ppt 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 © 2012 Pearson Education, Inc.Slide 1-20

21. The Growth of the Internet, Measured by Number of Internet Hosts with Domain Names Figure 1.2, Page 23 Copyright © 2012 Pearson Education, Inc.Slide 1-21 SOURCE: Internet Systems Consortium, Inc., 2011.

22. The Web Most popular Internet service Developed in early 1990s  http://www.w3.org/History.html 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 reports 1 trillion unique URLs; 120 billion pages indexed Copyright © 2012 Pearson Education, Inc.Slide 1-22

23. Copyright © 2010 Pearson Education, Inc. Insight on Technology: Spider Webs, Bow Ties, Scale-Free Networks, and the Deep Web 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”? Slide 1-23

24. Copyright © 2010 Pearson Education, Inc.Slide 1-24 http://www9.org/w9cdrom/160/160.html http://www.eoearth.org/article/Complex_systems http://www.estudiolivre.org/tiki-index.php?page=SistemaVizster http://bigpicture.typepad.com/writing/2006/11/what_does_the_i.html http://www.almaden.ibm.com/almaden/webmap_press.html

25. Origins and 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 © 2012 Pearson Education, Inc.Slide 1-25

26. The Growth of B2C E-commerce Figure 1.3, Page 25 Copyright © 2012 Pearson Education, Inc.Slide 1-26 SOURCES: Based on data from eMarketer, Inc., 2011a; authors’ estimates.

27. The Growth of B2B E-commerce Figure 1.4, Page 28 Copyright © 2012 Pearson Education, Inc.Slide 1-27 SOURCES: Based on data from U.S. Census Bureau, 2011b; authors’ estimates.

28. Technology and E-commerce in Perspective The Internet and Web: Just two of a long list of technologies that have greatly changed commerce. Others:  Automobiles  Radio E-commerce growth will eventually cap as it confronts its own fundamental limitations. Copyright © 2012 Pearson Education, Inc.Slide 1-28

29. 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 Digital Divide Saturation and ceiling effects Copyright © 2012 Pearson Education, Inc.Slide 1-29

30. 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 © 2012 Pearson Education, Inc.Slide 1-30

31. Insight on Business: Class Discussion Party Like It’s 1999 What explains the rapid growth in private investment in e-commerce firms in the period 1998–2000? Was this investment irrational? What type of Internet investments became popular in late 2008 through early 2010, and why? What is the value to investors of a company such as Groupon, 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? Copyright © 2012 Pearson Education, Inc.Slide 1-31

32. Early Visions of E-commerce Computer scientists:  Inexpensive, universal communications and computing environment accessible by all Economists:  Nearly perfect competitive market; 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 © 2012 Pearson Education, Inc.Slide 1-32

33. Assessing E-commerce Many early visions not fulfilled  Friction-free commerce Consumers less price sensitive Considerable price dispersion  Perfect competition Information asymmetries persist  Intermediaries have not disappeared  First mover advantage Fast-followers often overtake first movers Copyright © 2012 Pearson Education, Inc.Slide 1-33

34. 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 © 2012 Pearson Education, Inc.Slide 1-34

35. 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 © 2012 Pearson Education, Inc.Slide 1-35

36. The Internet and the Evolution of Corporate Computing Figure 1.8, Page 44 Copyright © 2012 Pearson Education, Inc.Slide 1-36

37. Insight on Society: Class Discussion Online Privacy: Is the Age of Privacy Over? Why are social network sites interested in collecting user information? What types of privacy invasion are described in the case? Which is the most privacy-invading, and 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 © 2012 Pearson Education, Inc.Slide 1-37

38. 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 © 2012 Pearson Education, Inc.Slide 1-38

39. Copyright © 2012 Pearson Education, Inc.Slide 1-39