Chapter 1

Introduction to Ecommerce

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

 Outline
 E-commerce and its difference with e-business.
 Features of e-commerce technology
 Web 2.0 applications.
 Major types of e-commerce.
 Evolution of e-commerce
 Factors that will define the future of e-commerce.
 Major themes underlying the study of e-commerce.
 Major academic disciplines contributing to e-
commerce.

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 E-commerce Trends
 Expansion of social, local, and mobile
e-commerce
 Mobile platform begins to rival PC platform
 Continued growth of cloud computing
 Explosive growth in “Big Data”
 E-books gain wide acceptance
 Continued growth of user-generated content

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 The First 30 Seconds
 First 19 years of e-commerce
 Just the beginning
 Rapid growth and change

 Technologies continue to evolve at

exponential rates
 Disruptive business change
 New opportunities

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 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 1-5
 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

Slide 1-6
 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
 Mass-marketing driven
 Sales-force driven
 Fixed prices
 Information asymmetry

Slide 1-7
 Eight Unique Features of
E-commerce Technology
1. Ubiquity
2. Global reach
3. Universal standards
1. Lowers market entry cost, enables easy price discovery, and network externalities
benefit consumers because everyone uses the same technology

4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology

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 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
 Examples: Twitter, YouTube, Instagram,
Wikipedia, Tumblr

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 Types of E-commerce
 May be classified by market relationship or technology

 Business-to-Consumer (B2C)
 Business-to-Business (B2B)
 Consumer-to-Consumer (C2C)
 Social e-commerce
 Mobile e-commerce (M-commerce)
 Local e-commerce

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 The Growth of B2C E-commerce

SOURCE: Based on data from eMarketer, Inc., 2013a; authors’ estimates.

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 The Growth of B2B E-commerce

SOURCE: Based on data from U.S. Census Bureau, 2013; authors’ estimates.

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 The Internet
 Worldwide network of computer
networks built on common standards
 Created in late 1960s
 Services include the Web, e-mail, file
transfers, and so on
 Can measure growth by number of
Internet hosts with domain names

Slide 1-13
 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
 Google reports 30 trillion unique URLs; 120
billion Web pages indexed

Slide 1-14
 The Mobile Platform
 Most recent development in Internet
infrastructure
 Enables access to the Internet via
wireless networks or cell-phone service
 Mobile devices include
 Tablets
 Smartphones
 Ultra-lightweight laptops

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 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

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 E-commerce: A Brief History
 1995–2000: Invention
 Key concepts developed
 Limited bandwidth and media
 Euphoric visions of
 Friction-free commerce
 Lowered search costs, disintermediation, price
transparency, elimination of unfair competitive advantage
 First-mover advantages
 Network profits

 Dot-com crash of 2000

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 E-commerce: A Brief History (cont.)
 2001–2006: Consolidation
 Emphasis on business-driven approach
 Traditional large firms expand presence
 Start-up financing shrinks up
 More complex products and services sold
 Growth of search engine advertising
 Business Web presences expand to include e-
mail, display and search advertising, and limited
community feedback features

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 E-commerce: A Brief History (cont.)
 2007–Present: Reinvention
 Rapid growth of:
 Online social networks
 Mobile platform
 Local commerce

 Entertainment content develops as source of

revenues
 Transformation of marketing
 Coordinated marketing on social, mobile, local platforms
 Analytic technologies

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 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 advantages
 Fast-followers often overtake first movers

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 Predictions for the Future
 Technology will propagate through all commercial
activity
 Large, traditional companies will continue to play
dominant role, consolidating audiences
 Start-up ventures can still attract large audiences in non-dominated
arenas
 Integrated online/offline companies will experience
more growth than purely online companies
 Additional factors:
 Increased regulation and control
 Cost of energy

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 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

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The Internet and
the Evolution
of Corporate
Computing

Slide 1-23
 Academic Disciplines
Concerned with E-commerce
 Technical approach  Behavioral approach
 Computer science  Information systems
 Management science  Economics
 Information systems  Marketing
 Management
 Finance/accounting
 Sociology

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