BUSINESS

TECHNOLOGY
SOCIETY
E-COMMERCE
Business
Internet advertising growth resumes, at a faster rate
than traditional advertising.
Social marketing/advertising grows faster than
search or display advertising.
E-books finally take off and expand the market for
text, supported by the iPad, Kindle, Nook, and
iPhone.
New mobile payment platforms emerge to challenge
PayPal.
Technology
Smartphones, tablets, and e-book readers, along
with associated software applications, and coupled
with 3G/4G cellular network expansion, fuel rapid
growth of the mobile platform.
Cloud-based streaming services for music and video
replace sales of downloads and physical product.
Nearly a million software apps fuel growth in app
sales, marketing, and advertising; transforming
software production and distribution.
Society

The mobile, always on culture in business and
family life continues to grow.
Venture capital investing in e-commerce explodes for
social, mobile, and local software applications.
CHAPTER 1
Introduction to E-commerce
Facebook: The New face of E-commerce
800 million active users.
People spend over 700 billion minutes per month on
the site.
Facebook is the worlds LARGEST online social
network.
Facebook is positioning itself as the embodiment of a
new kind of e-commerce called social e-commerce.
So what is social e-commerce?
Its more than just showing ads for products and
having users click their way off-site to purchase
something.
Its more than companies having Facebook pages
where they promote their wares.
Its more than a search engine displaying ads.

IT IS ALL THESE THINGS
E-commerce

The use of the Internet and the Web to transact
business.
More formally, digitally enabled commercial
transactions between and among organizations and
individuals.
Internet is a world-wide network of computer
networks, and the Web is one of the Internets most
popular services, providing access to billion of Web
pages.
World Wide Web Pages. the most popular service that
runs on the Internet; provides easy access to
Digitally enabled transactions include all transactions
mediated by digital technology.
Commercial transactions involve the exchange of value
(e.g., money) across organizational or individual
boundaries in return for products and services.
E-commerce vs. E-business
E-commerce encompasses the entire world of
electronically based organizational activities that
support a firms market exchanges-including a firms
entire information systems infrastructure.
(Rayport & Jaworski, 2003)

E-business encompasses the entire world of internal
and external electronically based activities, including
e-commerce. (Kalakota & Robinson, 2003)
E-business

The digital enabling of transactions and processes
within a firm, involving systems under the control of
the firm.
E-business does not include commercial transactions
involving an exchange of value across organizational
boundaries.
Ex. A companys online inventory control mechanisms
Eight Unique Features of E-commerce
Technology
1. Ubiquity
2. Global reach
3. Universal standards
4. Richness
5. Interactivity
6. Information density
7. Personalization/Customization
8. Social technology
Ubiquity
Internet/Web technology is available everywhere: at work,
at home, and elsewhere via mobile devices, anytime.
The marketplace is extended beyond traditional boundaries
and is removed from a temporal and geographic location.
Marketspace is created; shopping can take place
anywhere. Customer convenience is enhanced, and
shopping costs are reduced.

Marketplace physical space you visit in order to transact.
Marketspace marketplace extended beyond traditional boundaries and
removed from a temporal and geographical location.
Global reach
The technology reaches across national boundaries,
around the Earth.
Commerce is enabled across cultural and national
boundaries seamlessly and without modification.
Marketspace includes potentially billions of
consumers and millions of businesses worldwide.

Reach the total number of users or customers an e-
commerce business can obtain.
Universal standards
There is one set of technology standards, namely
Internet standards.
There is a common, inexpensive, global technology
foundation for businesses to use.

Universal standards standards that are shared by all nations
around the world.
Richness
Video, audio, and text messages are possible.
Video, audio, and text marketing messages are
integrated into a single marketing message and
consuming experience.

Richness the complexity and content of a message.
Interactivity
The technology works through interaction with the
user.
Consumers are engaged in a dialog that dynamically
adjusts the experience to the individual, and makes
the consumer a co-participant in the process of
delivering goods to the market.

Interactivity technology that allows for two-way
communication between merchant and consumer.
Information density
The technology reduces information costs and raises
quality.
Information processing, storage, and communication
costs drop dramatically, while currency, accuracy,
and timeliness improve greatly. Information
becomes plentiful, cheap, and available.

Information density the total amount and quality of
information to all market participants.
Price transparency refers to the ease with which
the consumers can find out the variety of prices in a
market.
Cost transparency refers to the ability of
consumers to discover the actual costs merchants
pay for products.
Personalization/Customization
The technology allows personalized messages to be
delivered to individuals as well as groups.
Personalization of marketing messages and
customization of products and services are based on
individual characteristics.

Personalization the targeting of marketing messages to
specific individuals by adjusting the message to a persons
name, interest and past purchases.
Customization changing the delivered product or service
based on a users preferences or prior behavior.
Social technology
User content generation and social networks.
New internet social and business models enable user
content creation and distribution, and support social
networks.

Types of E-commerce
Classified by market relationship
1. Business-to-Consumer (B2C) E-commerce
2. Business-to-Business (B2B) E-commerce
3. Consumer-to-Consumer (C2C) E-commerce

Classified by technology used
4. Peer-to-Peer (P2P) E-commerce
5. Mobile Commerce (M-commerce)
Business-to-Consumer (B2C) E-commerce
Online businesses selling to individual consumers.
Online businesses attempt to reach individual
consumers.
Seven different B2C business models:
Portals
Online retailers
Content providers
Transaction brokers
Market creators
Service providers
Community providers
The Growth of B2C E-commerce
Figure 1.3
SOURCES: Based on data from eMarketer, Inc., 2011a; authors estimates.
Business-to-Business (B2B) E-commerce
Online businesses selling to other businesses.
It is the largest form of e-commerce in which
businesses focus on selling to other businesses.

Two primary business models used within the B2B arena:
New marketplaces which include e-distributors, e-procurement
companies, exchanges and industry consortia.
Private industrial networks.
The Growth of B2B E-commerce
Figure 1.4
SOURCES: Based on data from U.S. Census Bureau, 2011b; authors estimates.
Consumer-to-Consumer (C2C) E-commerce
Consumers selling to other consumers.
It provides a way for consumers to sell to ach other,
with the help of an online market maker such as the
auction site eBay.
The consumer prepares the product fro market,
places the product for auction or sale, and relies on
the market maker to provide catalog, search engine,
and transaction-clearing capabilities so that products
can be easily displayed, discovered, and paid for.
Peer-to-Peer (P2P) E-commerce
Use of peer-to-peer technology, which enables
internet users to share files and computer resources
directly without having to go through a central Web
server, in e-commerce.
P2P networks make money by encouraging a very
large audience of Internet users to share files, and in
the process, expose the audience to advertising
messages.

Mobile Commerce (M-commerce)
Use of wireless digital devices to enable transactions
in the Web.
M-commerce involves the use of wireless networks to
connect laptops, netbooks, smartphones such as
iPhone, Android, and Blackberry, and iPads to the
Web.

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




The Growth of the
Internet, Measured by
Number of Internet
Hosts with Domain
Names

Figure 1.2








SOURCE: Internet Systems Consortium, Inc.,
2011.
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 1 trillion unique URLs; 120 billion pages
indexed

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
investmentfirst mover advantage