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Copyright © 2010 Pearson Education, Inc.
E-commerce
Kenneth C. LaudonCarol Guercio Traver
business. technology. society.Sixth Edition
Copyright © 2010 Pearson Education, Inc.Copyright © 2007 Pearson Education, Inc. Slide 1-2
Chapter 1
The Revolution Is Just Beginning
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
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
Copyright © 2010 Pearson Education, Inc.
The First 30 Seconds
First 15 years of e-commerceJust the beginningRapid growth and change
Technologies continue to evolve at exponential ratesDisruptive business changeNew opportunities
Slide 1-5
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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 1-6
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
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
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 density7. Personalization/customization8. Social technology
Slide 1-9
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
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
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
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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.
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 exponentially2 billion Web pages in 2000 At least 40–50 billion pages today
Slide 1-14
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
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
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The Growth of B2C E-commerceFigure 1.4, Page 25
Slide 1-17
SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors’ estimates.
Copyright © 2010 Pearson Education, Inc.
The Growth of B2B E-commerceFigure 1.5, Page 28
Slide 1-18
SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.
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 commerceAutomobilesRadio
E-commerce growth will eventually cap as it confronts its own fundamental limitations.
Slide 1-19
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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 effectsSlide 1-20
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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
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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 advantageSlide 1-22
Copyright © 2010 Pearson Education, Inc.
Insight on Business
The Internet Investment RollercoasterClass 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
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Assessing E-commerce
Many early visions not fulfilledFriction-free commerce
Consumers less price sensitive Considerable price dispersion
Perfect competition Information asymmetries persist
DisintermediationFirst mover advantage
Fast-followers often overtake first movers
Slide 1-24
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
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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
policySlide 1-26
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The Internet and the Evolution of Corporate
Computing
Figure 1.9, Page 44
Slide 1-27
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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
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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
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 HallPublishing as Prentice Hall
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