E-Business 2016 / 2017 - Department of Information and ... and describe the unique features of e-commerce technology and ... social, and local e-commerce ... Information density:

E-Business 2016 / 2017Dr. Sietse Overbeek

Chapter 1Introduction to E-commerce

Copyright © 2016 Pearson Education, Ltd.

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

Describe the major types ofe-commerce


Learning Objectives

Understand the evolution ofe-commerce

Describe the major themes underlying the study of e-commerce

Identify the major academic disciplines contributing to e-commerce


E-commerce Trends 2015–2016

Between 2002-2008 retail e-commerce grew at more than 25% per year

Continued expansion of mobile, social, and local e-commerce

Mobile platform rivals PC platform

Continued growth of cloud computing

Explosive growth in Big Data

Continued growth of user-generated content on social networks, blogs, wikis

Copyright © 2016 Pearson Education, Ltd. Slide 1-5

What could be an example of local e-commerce?

https://www.youtube.com/watch?v=MwZLSMGYLeE

E-commerce Trends 2015–2016

Between 2002-2008 retail e-commerce grew at more than 25% per year

Continued expansion of mobile, social, and local e-commerce

Mobile platform rivals PC platform

Continued growth of cloud computing

Explosive growth in Big Data

Continued growth of user-generated content on social networks, blogs, wikis


On what kind of reasoning does Big Data depend?

https://www.youtube.com/watch?v=MwZLSMGYLeE

Excursus: Induction

Deriving new knowledge out of an observable fact

Principle of Uniformity of Nature: patterns seen in past events to predict future events

Problem of induction (Hume, 1711-1776)

Induction leads to probability, not to certainty

Data-driven decisions are probably more reliable and risk-free


The First 30 Seconds

First 22 years of e-commerceArpaNet, DoD, NSF

Consolidation after dot-com crash

Technologies continue to evolve at exponential ratesDisruptive business change (e.g., Uber, Airbnb)

New opportunities (AmazonFresh and Picnic)


https://www.youtube.com/watch?v=qNKDDvtPaCs

https://www.picnic.nl/

Amazon in 1999


What Is E-commerce?

Use of Internet and Web to transact business

More formally:Digitally enabled commercial transactions

between and among organizations and individuals


E-business vs. E-commerce

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


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


Excursus: Information Asymmetry

Disparity in relevant market information among parties in a transaction

Before e-commerce: usually one national price was the norm (no dynamic pricing)


What could be an example of dynamic pricing in e-commerce?

Now: To a certain extent less information asymmetry. Why?

Information Asymmetry

Slide 1-15

Source: http://www.economist.com/blogs/economist-explains/2016/09/economist-explains-economics-1

Adverse Selection

€1000 for a good car (peach), €500 for a malfunctioning car (lemon)

No information for the buyer: Buyer cuts offer equally and offers €750 for both

Dealers who know for sure they have a peach will reject this offer

Slide 1-16

Adverse Selection

Which dealers will accept €750 for their cars?

Smart buyers knowing they will only ever be sold a lemon offer only €500

What is the concluding result of this information asymmetry?

Slide 1-17

How to solve this?

Signalling (Labour Market Example)

The search for the best job candidates

Workers ‘signal’ their talents, e.g., in the form of college degrees

Signals need to be credible. Why?

Warranties and brandsSlide 1-18

Screening (Insurance Market Example)

Insurance markets should naturally tend towards differentiated offerings

High-risk and low-risk customers gravitate towards different products

Also, a low-risk customer might get a premium insurance for a lower price

Slide 1-19

Adverse SelectionPlague for America’s Affordable Care

Act, a.k.a. ‘Obamacare’Fewer people than expected signed up to

insurance exchanges premiums vary less with risks insurers lose money price raise healthy customers pull out

Where is the information asymmetry here?

‘Ban the box’ campaignForbids employers to ask about criminal

records of job candidates before interviewing

Causes employers to discriminate by race

Slide 1-20

Adverse SelectionPlague for America’s Affordable Care

Act, a.k.a. ‘Obamacare’Fewer people than expected signed up to

insurance exchanges premiums vary less with risks insurers lose money price raise healthy customers pull out

Where is the information asymmetry here?

‘Ban the box’ campaignForbids employers to ask about criminal

records of job candidates before interviewing

Causes employers to discriminate by race

Slide 1-21

Eight Unique Features of E-commerce Technology




Ubiquity reduces transaction costs. Why?



Total number of customers an e-commerce

business can obtain is a measure of its reach



Universal standards:

• Market entry costs

• Search costs

• Price discovery

• Network externalities. What are these?



Personalization / customization: Blendle

http://www.blendle.nl/



Information density:

• Consumer’s win: cost and price transparency

• Merchant’s win: price discrimination



Two-way communication between merchant and consumer (interactivity)

through, e.g., chatting with an online sales person (richness)

Documents

E-Business 2016 / 2017 - Department of Information and ... and describe the unique features of e-commerce technology and ... social, and local e-commerce ... Information density: