Slide 1
E-COMMERCE& IT BUSINESSBased on Kenneth C. Laudon, Carol
Guercio Traver. (2009). E-Commerce -- Business, Technology,
Society. Pearson.7th SemesterLearning MethodsLecturingQuizCase
learning & discussionAssignment &
PresentationMultimediaProjectPractical hands-on
(additional)RulesProportionAssignment = 40%Mid Exam = 30%Final Exam
= 30%Max 3 absenceNo CheatingSyllabusOverviewPart 3, Business
Concepts and Social Issues, focuses directly on the business
concepts and social-legal issues that surround the development of
e-commerce.Chapter 6 focuses on e-commerce consumer behavior, the
Internet audience, and introduces the student to the basic of
online marketing and branding, including online marketing
technologies and marketing strategies.Chapter 7 is devoted to
online marketing communications, such as online advertising, e-mail
marketing, and search-engine marketing.Chapter 8 provides thorough
introduction to the social and legal environment of e-commerce.
Here youll find a description of the ethical and legal dimensions
of e-commerce, including a thorough discussion of the latest
development in personal privacy, intellectual property, Internet
governance, jurisdiction, and public health and welfare issues such
as pornography, gambling, and health information.Part 4, E-commerce
in Action. focuses on real world e-commerce experiences in retail
and services, online media, auctions, portals, and social networks,
and business-to-business e-commerce. These chapters take a sector
approach rather than a conceptual approach as used in earlier
chapters. E-commerce is different in each of these sectors.Chapter
9 takes a closer look at the experience of firms in the retail
marketplace for both goods and services, including both pure-pkay
online firms such as Amazon and Expedia, and also mixed strategy
bricks-and-clicks firms such as Wal-Mart and JPPenney.Chapter
10explores the world of online content and digital media, and
examines the enormous changes in online publishing and
entertainment industries that have occurred over the last two
yearsChapter 11 explores the online world of auctions, portals, and
social networks. We describe a number of succesfull ventures here,
including eBay and Yahoo, and communities such as Facebook, Myspace
and iVillage.Chapter 12 explores the world of B2B e-commerce,
describing both electronic Net marketplaces and the less-heralded,
but very large arena of private industrial networks and the
movement toward collaborative commerce.Reference BooksKenneth C.
Laudon, Carol Guercio Traver. (2009). E-Commerce -- Business,
Technology, Society. Pearson.Evans, Dave. (2010). Social Media
Marketing. Wiley: Indiana.What will you learn?7Copyright 2004
Pearson Education, Inc.Slide 1-8Amazon.com:Tuned-Up and
ProfitableStory of Amazon in many ways mirrors story of e-commerce
itselfAmazon offers consumers four compelling reasons to shop:
selection, convenience, price and serviceFounded in 1995, went
public in 1997From 1997-2000, revenues increased from $148 million
to $2.7 billion but so did losses, to $1.4 billionIn 2001-2002, new
focus on cost-cutting and achieving profitability leads to first
quarterly profits ever in 2002 What is your definition on
E-Commerce?
Watch Videos9Copyright 2009 Pearson Education, Inc. Publishing
as Prentice HallE-commerce Trends: 2008-2009New business models
based on social technologies and user-generated content Search
engine marketing challenges traditional marketingMore and more
people/businesses use Internet to conduct commerceBroadband and
wireless Internet access growingContinued conflict over copyrights,
content regulation, taxation, privacy, Internet fraud and
abuse.
Slide 1-10Copyright 2009 Pearson Education, Inc. Publishing as
Prentice HallWhat is E-commerce? The use of the internet and the
web to transact business.Involves digitally enabled commercial
transactions between and among organizations and
individualsDigitally enabled transactions include all transactions
mediated by digital technologyCommercial transactions involve the
exchange of value across organizational or individual boundaries in
return for products or servicesSlide 1-11Copyright 2009 Pearson
Education, Inc. Publishing as Prentice HallE-commerce vs.
E-businessE-business:Digital enablement of transactions and
processes within a firm, involving information systems under firms
controlDoes not include commercial transactions involving an
exchange of value across organizational boundariesSlide
1-12Copyright 2004 Pearson Education, Inc.Slide 1-13The Difference
between E-commerce and E-businessFigure 1.1, Page 11
13Copyright 2009 Pearson Education, Inc. Publishing as Prentice
HallWhy Study E-commerce?Technology is different and more powerful
than other technologiesHas challenged much traditional business
thinkingHas a number of unique features that help explain why we
have so much interest in e-commerceSlide 1-14Why no TV-Commerce?
information asymmetry14Unique Features of E-Commerce
TechnologyMarketplace: physical place to transactMarketspace:
marketplace extended beyond traditional boundaries
Traditional: richness vs reach15Unique Features of E-Commerce
TechnologyCopyright 2004 Pearson Education, Inc.Slide 1-17The
Changing Trade-off between Richness and ReachFigure 1.2, Page
15
17Copyright 2009 Pearson Education, Inc. Publishing as Prentice
HallWeb 2.0The new WebApplications and technologies that allow
users to: create, edit, and distribute content share preferences,
bookmarks, and online personasparticipate in virtual livesBuild
online communitiesExamplesYouTube, Photobucket, FlickrMySpace,
Facebook, LinkedInSecond LifeWikipedia
Slide 1-18Types of E-CommerceCopyright 2004 Pearson Education,
Inc.Slide 1-20Business-to-Consumer (B2C) E-commerceInvolves online
businesses attempting to reach individual consumersIn 2002, total
B2C revenues were about $72-$78 billionMany types of business
models within this category including online retailers, content
providers, portals, transaction brokers, service providers, market
creators and community providersCopyright 2004 Pearson Education,
Inc.Slide 1-21Business-to-Business (B2B) E-commerceInvolves
businesses focusing on selling to other businessesLargest form of
e-commerce ($800 billion in 2002)Two primary business models within
B2B: Net marketplaces (includes e-distributors, e-procurement
companies, exchanges and industry consortia)Private industrial
networks (includes single firm networks and industry-wide
networks)Copyright 2004 Pearson Education, Inc.Slide
1-22Consumer-to-Consumer (C2C) E-commerceProvides a way for
consumers to sell to each other, with the help of an online market
makereBay most well-known exampleEstimated that size of C2C
commerce will reach $15 billion by 2004Copyright 2004 Pearson
Education, Inc.Slide 1-23Peer-to-Peer (P2P) E-commerceUses
peer-to-peer technology, which enables Internet users to share
files and computer resources without having to go through a central
Web serverNapster most well-known example until put out of business
for copyright infringementToday, Kazaa is the leading P2P software
network, although also under attack for copyright
infringementCopyright 2004 Pearson Education, Inc.Slide
1-24M-commerceUse of wireless digital devices such as cell phones
and handheld devices to enable transactions on the WebMost widely
used in Japan and Europe (especially Finland)Expected to grow
rapidly in U.S. over the next five years.The Growth of the
internetWhat is the difference between internet & web?Copyright
2009 Pearson Education, Inc. Publishing as Prentice HallThe
InternetWorldwide network of computer networks built on common
standardsCreated in late 1960sServices include the Web, e-mail,
file transfers, etc.Can measure growth by looking at number of
Internet hosts with domain names Slide 1-26Copyright 2009 Pearson
Education, Inc. Publishing as Prentice HallThe Growth of the
Internet, Measured by Number of Internet Hosts with Domain
Names
Figure 1.3, Page 23
Slide 1-27SOURCE: Internet Systems Consortium, Inc. , 2008.
27Copyright 2009 Pearson Education, Inc. Publishing as Prentice
HallThe WebMost popular service on the InternetDeveloped in early
1990sProvides access to Web pages (HTML documents)Can include text,
graphics, animations, music, videosWeb content has grown
exponentially, from around 2 billion Web pages in 2000 to around 40
- 50 billion todaySlide 1-28Copyright 2009 Pearson Education, Inc.
Publishing as Prentice HallThe Growth of Web Content
Slide 1-29Figure 1.4, Page 24 SOURCE: Google Inc., 2008; authors
estimates
29Case reading: Insight on Technology - Spider webCopyright 2004
Pearson Education, Inc.Slide 1-31Insight on Technology: Spider
Webs, Bow Ties, and Scale-Free NetworksSmall world theory of Web
(every Web page is thought to be separated from any other Web page
by a small number of clicks) has been debunked by recent
researchNew research indicates Web has bow-tie form with a strongly
connected component, In pages,Out pages, tendrils and
tubes.Barabasi calls Web a scale-free network with very connected
super nodesCopyright 2004 Pearson Education, Inc.Slide 1-32Insight
on Technology: Spider Webs, Bow Ties, and Scale-Free NetworksPage
22
32Copyright 2009 Pearson Education, Inc. Publishing as Prentice
HallTechnology and E-commerce in PerspectiveThe Internet and Web
are just two of a long list of technologies, such as automobiles
and radio, that have followed a similar historical path. Although
e-commerce has grown explosively, eventually its growth will cap as
it confronts its own fundamental limitations.Slide 1-33Copyright
2009 Pearson Education, Inc. Publishing as Prentice HallPotential
Limitations on the Growth of B2C E-commerceExpensive technology
Sophisticated skill set Persistent cultural attraction of physical
markets and traditional shopping experiencesPersistent global
inequality limiting access to telephones and computersSaturation
and ceiling effectsSlide 1-34Copyright 2009 Pearson Education, Inc.
Publishing as Prentice HallOrigins and Growth of E-commerce1995:
Beginning of e-commerceFirst sales of banner advertisementsSince
then, e-commerce fastest growing form of commerce in U.S.
Slide 1-35Copyright 2004 Pearson Education, Inc.Slide
1-36E-commerce I and E-commerce IIE-commerce I: A period of
explosive growth and extraordinary innovation; key concepts
developed and exploredBegins in 1995, ends in March 2000 when stock
market valuations for dot.com companies begin to collapseThousands
of dot.com companies formed, backed by over $125 billion in
financial capitalE-commerce II: Characterized by a reassessment of
e-commerce companies and their valueBegins in January 2001;
ongoingCopyright 2004 Pearson Education, Inc.Slide 1-37The Visions
and Forces Behind E-commerce 1: 1995-2000For computer scientists: A
vindication of the vision of a universal communications and
computing environmentBelief that Internet should not be controlled
by government, and remain free for allFor economists:Vision of a
perfect Bertrand market and friction-free commerce, characterized
by low transaction costs, low search costs, price transparency, low
menu costs, dynamic pricing, disintermediation, and elimination of
unfair competitive advantages
Copyright 2004 Pearson Education, Inc.Slide 1-38The Visions and
Forces Behind E-commerce I: 1995-2000 (contd)For entrepreneurs,
their financial backers and marketing professionals, e-commerce
represented an extraordinary opportunity to return far above normal
returns on investment based on:Worldwide access to consumersNew
marketing communications technologies that were universal,
inexpensive and powerfulAbility to segment market First mover
advantages by building in switching costsNetwork effectsCASE
READINGInsight on Business: Dot-Com Deja VuCopyright 2004 Pearson
Education, Inc.Slide 1-40Quarterly Amounts Raised by Venture-Backed
FirmsFigure 1.8, Page 29
40Copyright 2004 Pearson Education, Inc.Slide 1-41Insight on
Business: A Short History of Dot.Com IPOsBetween 1998-2000, over
$120 billion invested by venture capitalists in over 12,450 dot.com
start-up venturesOver 1,260 of these firms went public in initial
public offerings (IPOs)During E-commerce I heyday (1998-2000),
shares often tripled or quadrupled in value on 1st day of tradingBy
2003, many of these firms either are trading at much lower values
or have shut downSecond wave of dot.com investment is focusing on
acquisition of Web companies
Copyright 2004 Pearson Education, Inc.Slide 1-42E-commerce II:
2001-2007Crash in stock market values for e-commerce companies
throughout 2000 marks end of E-commerce I periodReasons for
crash:Run-up in technology stocks due to enormous information
technology capital expenditure of firms rebuilding their internal
business systems to withstand Y2KTelecommunications industry had
built excess capacity in high-speed fiber optic networks1999
Christmas season provided less sales growth that anticipated and
demonstrated e-commerce was not easy (eToys.com)Valuations of
dot.com and technology companies had risen so high supporters were
questioning whether earnings could justify the prices of the
shares.
E-Commerce EvolutionCopyright 2004 Pearson Education, Inc.Slide
1-44E-commerce Today: Successes and FailuresE-commerce I a stunning
technological successE-commerce I a mixed success from a business
perspectiveMany visions developed during E-commerce I not
fulfilledEconomists visions of friction-free commerce and Bertrand
model of extreme market efficiency not entirely
realizedEntrepreneurs and venture capitalists visions have not
materialized exactly as predicted eitherCopyright 2004 Pearson
Education, Inc.Slide 1-45E-commerce I and E-commerce II
ComparedTable 1.5, Page 35
45Factors that will Define the Future of E-CommerceCopyright
2004 Pearson Education, Inc.Slide 1-47Predictions for the
FutureTechnology of e-commerce will continue to propagate through
all commercial activityE-commerce prices will rise to cover the
real cost of doing business on Web and pay investors reasonable
rate of returnE-commerce margins and profits will rise to levels
more typical of all retailersIn B2C and B2B, traditional Fortune
500 companies will play growing and dominant roleNumber of
successful pure online companies will decline and most successful
e-commerce firms will adopt mixed clicks and bricks
strategiesGrowth of regulatory activity worldwideCopyright 2009
Pearson Education, Inc. Publishing as Prentice HallThe Growth of
B2C E-commerceFigure 1.5, Page 25
Slide 1-48SOURCES: eMarketer, Inc., 2008d; U.S. Census Bureau,
2008; authors estimates.
48Copyright 2009 Pearson Education, Inc. Publishing as Prentice
HallThe Growth of B2B E-commerceFigure 1.6, Page 28
Slide 1-49SOURCES: U.S. Census Bureau, 2008; authors
estimates.
49Copyright 2004 Pearson Education, Inc.Slide 1-50Understanding
E-commerce: Organizing ThemesTechnology: Development and mastery of
digital computing and communications technology Business: New
technologies present businesses and entrepreneurs with new ways of
organizing production and transacting businessSociety: Intellectual
property, individual privacy and public policy
Copyright 2004 Pearson Education, Inc.Slide 1-51The Internet and
the Evolution of Corporate ComputingFigure 1.9, Page 41
51CASE READINGInsight on Society: Holding on to your privacy
onlineCopyright 2004 Pearson Education, Inc.Slide 1-53Insight on
Society: Keeping Your Clickstream Private is Getting
HarderOne-to-one marketing/personalization is one of the virtues or
vices of e-commerce, depending on ones
perspectiveClickstreamclicking behavior at a site; used to create a
user profile by advertising networks such as DoubleClick,
ValueClick, 24/7 Real MediaWeb sites also use Web logs, cookies,
Web bugs and spyware/adwareMany consumers feel these practices
constitute invasion of privacyWays to protect privacy merchant and
advertising network privacy policies, new technologies,
lawsE-Commerce Study Themes NeededMajor Academic DisciplinesWhat
have you learned?56Case ReadingCopyright 2004 Pearson Education,
Inc.Slide 1-58Case Study: Kazaa Is Rockin and Rappin But for How
Long?Kazaas Media Desktop largest and most successful free music
file-swapping site; 65 million users worldwide; 3 million downloads
per week; 1 billion tracks availableRelies on a software program
known as Fast Track; claims there is no central index, control, or
administrationMakes money by acting as an advertising network; has
also developed parallel network called Altnet that uses a
pay-for-download business modelCurrently being sued by RIAA and
MPIA for copyright infringement (Metro Goldwyn Mayer Studios v.
Grokster et al.) April 2003, court ruled defendants not liable;
case is being appealed
DiscussionHow can P2P file-sharing networks make money if they
do not sell music?Into which category or categories do e-commerce
do P2P file-sharing fall?What social issues are raised by P2P
file-sharing protocols and programs such as BitTorrent? Is the
record industry justified in attempting to shut them down? Why or
why not?Wny do people older than 21 tend to use legitimate
downloading sites whereas younger people tend to use illegal
sites?THANKS
