E-commerce Introduction Dr. Drew Hwang 1 Based on Laudon and Traver textbook

E-commerceE-commerceIntroductionIntroduction

Dr. Drew HwangDr. Drew Hwang

1

Based on Laudon and Traver textbook

MySpace and FacebookMySpace and Facebook A Case Study A Case Study

• A service model of and the new face of e-A service model of and the new face of e-commerce in the 21st centurycommerce in the 21st century

• Never before in the history of media have Never before in the history of media have such large audiences been aggregated and such large audiences been aggregated and made accessible.made accessible.

• What was the idea behind the creation of What was the idea behind the creation of MySpace and Facebook? MySpace and Facebook?

• What are these services and how much are What are these services and how much are they worth? they worth?

• How do they make money selling online How do they make money selling online services and how much can you make? services and how much can you make?

• Why are the social media networks related to Why are the social media networks related to ecommerce?ecommerce?

2

MySpace and FacebookMySpace and Facebook Size of Users Size of Users

• Sopranos Sopranos – an American television drama series created an American television drama series created

and premiered on the premium cable and premiered on the premium cable network HBO in the United States on from network HBO in the United States on from 1999 to 2007. 1999 to 2007.

– Audience size: 11 million (out of 111 million)Audience size: 11 million (out of 111 million)• MySpace and FaceBookMySpace and FaceBook

– Audience size in the U.S.: 72 million Audience size in the U.S.: 72 million (Myspace) + 40 million (Facebook) monthly (Myspace) + 40 million (Facebook) monthly in the summer of 2008in the summer of 2008

– Audience size internationally: 130 million Audience size internationally: 130 million (Myspace) + 100 million (Facebook) (Myspace) + 100 million (Facebook) monthlymonthly

3

MySpace MySpace History History

• Founded by Tom Anderson and Chris Founded by Tom Anderson and Chris DeWolfe in January 2004DeWolfe in January 2004

• Original idea: a sort of bulletin board Original idea: a sort of bulletin board for people to talk about the things for people to talk about the things they loved, and do it in a personal they loved, and do it in a personal wayway

• Internet is a incubator of ideas and Internet is a incubator of ideas and dreamsdreams

4

MySpace MySpace They Mean Business They Mean Business

• MySpace is supported by MySpace is supported by advertisingadvertising, where , where audience size is critical. You go to MySpace if audience size is critical. You go to MySpace if you want to reach 100 million people in a you want to reach 100 million people in a place. place.

• CartierCartier launched product pages in MySpace launched product pages in MySpace for its “Love by Cartier" product line.for its “Love by Cartier" product line.

• Procter & GambleProcter & Gamble has used MySpace to has used MySpace to launch new products by linking their product launch new products by linking their product pages to the MySpace pages of musicians pages to the MySpace pages of musicians whose visitors have the right demographics. whose visitors have the right demographics.

• Toyota has used MySpace to set up a profile Toyota has used MySpace to set up a profile of its Yaris car, and users can become “ of its Yaris car, and users can become “ friends” of Yaris.friends” of Yaris.

5

MySpace MySpace Its Worth Its Worth

• In July 2005, Rupert Murdoch’s News In July 2005, Rupert Murdoch’s News Corporation bought MySpace for $580 Corporation bought MySpace for $580 million. million.

• Many believe the real value of MySpace was Many believe the real value of MySpace was in the billions of dollars. in the billions of dollars.

• In August 2006, MySpace struck a deal with In August 2006, MySpace struck a deal with Google for $900 million, allowing Google to Google for $900 million, allowing Google to display short text ads next to search results display short text ads next to search results generated by MySpace. generated by MySpace.

• Analysts believe that MySpace had about Analysts believe that MySpace had about $685 million in total revenue for its fiscal $685 million in total revenue for its fiscal year ending in June 2008 and will have over year ending in June 2008 and will have over $ 1 billion by 2010.$ 1 billion by 2010.

6

Facebook Facebook History and Worth History and Worth

• FoundedFounded by Harvard student Mark Zuckerberg by Harvard student Mark Zuckerberg• Original ideaOriginal idea: as a hobby to create an online digital : as a hobby to create an online digital

version of the traditional student class picture version of the traditional student class picture • About 90% of college students in the U.S. have a About 90% of college students in the U.S. have a

Facebook profile.Facebook profile.• Like MySpace, Facebook is becoming a general-Like MySpace, Facebook is becoming a general-

purpose platform for conducting social life.purpose platform for conducting social life.• Unlike MySpace, it supplies source code and Unlike MySpace, it supplies source code and

encourage outside firms to build applications that run encourage outside firms to build applications that run on the its site. on the its site.

• As a result, Facebook is growing at twice the rate of As a result, Facebook is growing at twice the rate of MySpace in 2008.MySpace in 2008.

• In May 2008, eMarketer estimated that Facebook In May 2008, eMarketer estimated that Facebook would have around $ 300 million in revenue for 2008.would have around $ 300 million in revenue for 2008.

7

E-commerce E-commerce Some Stats and Movements in the U.S., Some Stats and Movements in the U.S.,

20082008• Online consumer sales: expanded around 14% to

an estimated $ 255 billion • Shoppers are buying expensive and “high-touch”

goods (involving personal, face-to-face attention or service) online such as consumer electronics, home furnishings, and apparel.

• Individuals online: 173 million (total population about 300 million)

• Households online: 84 million or about 70% the total households of 120 million

• On an average day: – go on line: 112 million – send emails: 97 million– share music on p2p networks: 33 million

8

E-commerce E-commerce Some Stats and Movements in the U.S., Some Stats and Movements in the U.S.,

20082008• On an average day:

– research a product: 35 million– use Wikipedia: 62 million– create a social network profile: 28

million have– create a blog: 21 million

• People who have purchased something online: expanded to about 117 million

• B2B e-commerce: more than $ 3.8 trillion • Household bandwidth of cable or DSL: 72

million (about 62% of all U. S. households)

9

E-commerce E-commerce Major Business Trends, 2008-2009 Major Business Trends, 2008-2009

• New business models emerge based on social technologies and consumer- generated content from videos and photos, to blogs and reviews.

• Search engine marketing challenges traditional marketing and advertising media as consumers switch their eyes to the Web.

• Retail e-commercecontinues to grow at double- digit rates.

• Online population growth slows, but average purchase expands.

• The online demographics of shoppers continues to broaden with the fastest growth among teens and tweens, and older adults

10


• Online sites continue to strengthen profitability by refining their business models and leveraging the capabilities of the Internet.

• The first wave of e-commerce transformed the business world of books, music, brokerage, and air travel. Today industries facing a similar transformation include marketing/advertising, telecommunications, entertainment, print media, real estate, hotels, bill payments, and software.

11


• Small businesses and entrepreneurs continue to flood into the e-commerce marketplace, often riding on the infrastructures created by industry giants such as Amazon, eBay, and Google.

• Brand extension through the Internet grows as large firms such as Sears, JCPenney, L. L. Bean, and WalMart pursue integrated, multi- channel bricks- and- clicks strategies.

• B2B supply chain transactions and collaborative commerce continue to strengthen and grow beyond the $ 3.8 trillion mark.

12

E-commerce E-commerce Major Technology Trends, 2008-2009 Major Technology Trends, 2008-2009

• Wireless Internet connections (Wi-Fi, WiMax, and 3G telephone) grow rapidly.

• A new mobile computing and communications platform emerges based on smart iPhones and Blackberries to rival the PC platform.

• Podcasting takes off as a new media format for distribution of video, radio, and user-generated content.

• The Internet broadband foundation becomes stronger in households and businesses. Bandwidth prices fall as telecommunications companies re- capitalize their debts.

• Computing and networking component prices continue to fall dramatically.

• New Internet-based models of computing such as .NET and Web services expand B2B opportunities.

13

E-commerce E-commerce Major Society Trends, 2008-2009 Major Society Trends, 2008-2009

• Consumer and user-generated content, and syndication in the form of blogs, wikis, virtual lives, and social networks, grow to form an entirely new self- publishing forum that engages millions of consumers.

• Virtual life sites such as Second Life emerge as a new form of Internet-based entertainment that causes millions to reduce television viewing.

• Traditional media such as newspapers, television broadcasters, and magazine publishers continue to lose subscribers, and adopt online, interactive models.

14


• Conflicts over copyright management and control grow in significance.

• Explosive growth in online viewing of video and television programs.

• Over 76 million adults join a social network on the Internet, with the majority over 35 years of age.

• Taxation of Internet sales becomes more widespread and accepted by large online merchants.

• Controversy over content regulation and controls increases.

15


• Surveillance of Internet communications grows as a part of the “ war on terror.”

• Concerns over commercial and governmental privacy invasion grow as firms provide access to government agencies of private personal information.

• Internet fraud, abuse, and identity theft occurrences increase.

• Spam grows despite new laws and promised technology fixes.

• Invasion of personal privacy on the Web expands as marketers expand their capabilities to track users.

16

E-commerce E-commerce The Future The Future

• The first 14 yearsThe first 14 years– just the beginningjust the beginning– called the first 30 seconds of the e-called the first 30 seconds of the e-

commercecommerce• The 21The 21stst century century

– It will become an age of a digitally It will become an age of a digitally enabled social and commercial life.enabled social and commercial life.

– E-commerce will eventually impact E-commerce will eventually impact nearly all commerce.nearly all commerce.

– Most commerce will be e-commerce by Most commerce will be e-commerce by the year 2050.the year 2050.

17

E-commerce E-commerce Definition - Common Definition - Common

• Commercial activity conducted via Commercial activity conducted via the the InternetInternet. (wiktionary.com). (wiktionary.com)

• Commerce that is Commerce that is transactedtransacted electronicallyelectronically, as over the , as over the InternetInternet. . (answers.com)(answers.com)

• Is faxing an order through the Is faxing an order through the Internet e-commerce? Internet e-commerce?

• Is emailing an invoice to a customer Is emailing an invoice to a customer e-commerce?e-commerce?

18

E-commerce E-commerce Definition - Laudon Definition - Laudon

• It is the use of the It is the use of the InternetInternet and the and the WebWeb to to transacttransact business. business.

• It focuses on It focuses on digitally enabled commercial digitally enabled commercial transactionstransactions between and among between and among organizations and individuals. organizations and individuals.

• Digitally enabled transactionsDigitally enabled transactions include all include all transactions mediated by digital technology. transactions mediated by digital technology. For the most part, this means transactions For the most part, this means transactions that occur over the Internet and the Web. that occur over the Internet and the Web.

• Commercial transactionsCommercial transactions involve the involve the exchange of value across organizational or exchange of value across organizational or individual boundaries in return for products individual boundaries in return for products and services. and services.

19

E-commerce E-commerce vs. E-business vs. E-business

• E-commerce > E-business: E-commerce E-commerce > E-business: E-commerce encompasses the entire world of encompasses the entire world of electronically based organizational electronically based organizational activities that support a firm’s market activities that support a firm’s market exchanges.exchanges.

• E-business > E-commerce : E-business E-business > E-commerce : E-business encompasses the entire world of internal encompasses the entire world of internal and external electronically based and external electronically based activities, including e- commerce.activities, including e- commerce.

• It depends on the definition.It depends on the definition.

20


• E-businessE-business: the digital enabling of transactions and : the digital enabling of transactions and processes within a firm, involving information processes within a firm, involving information systems under the control of the firm. systems under the control of the firm.

• E-business does not include commercial transactions E-business does not include commercial transactions involving an exchange of value involving an exchange of value across organizational across organizational boundariesboundaries. .

• Some e-business applications (e.g., online inventory Some e-business applications (e.g., online inventory control system, warehouse product delivery system, control system, warehouse product delivery system, etc.) provide etc.) provide supportsupport for online e-commerce for online e-commerce exchanges. exchanges.

• E-business applications turn into e-commerce only E-business applications turn into e-commerce only when when an exchange of value an exchange of value occurs.occurs.

• Some e-commerce and e-business systems are Some e-commerce and e-business systems are interconnectedinterconnected at the firm’s boundary where internal at the firm’s boundary where internal business systems link up with suppliers or customers.business systems link up with suppliers or customers.

21


22

E-commerce E-commerce Why Study E-commerce? Why Study E-commerce?

• Were there courses for “Were there courses for “TV TV CommerceCommerce” or “” or “Radio CommerceRadio Commerce”?”?

• E-commerce technologyE-commerce technology is more is more powerful than any of the other powerful than any of the other technologies.technologies.

• E-commerce has created a E-commerce has created a digital digital market market that is far more larger than that is far more larger than the previous ones.the previous ones.

• E-commerce has also brought more E-commerce has also brought more fundamental, unprecedented fundamental, unprecedented shifts in shifts in commercecommerce..

23

E-commerce E-commerce Types Types

• Business-to-Consumer (B2C)Business-to-Consumer (B2C)– online businesses selling to individual consumersonline businesses selling to individual consumers– the most commonly discussed typethe most commonly discussed type– business models: portals, online retailers, content business models: portals, online retailers, content

providers, transaction brokers, service providers, providers, transaction brokers, service providers, and community providersand community providers

• Business-to-Business (B2B)Business-to-Business (B2B)– online businesses selling to other businessesonline businesses selling to other businesses– the largest typethe largest type– net marketspacesnet marketspaces: e- distributors, e- procurement : e- distributors, e- procurement

companies, exchanges and industry consortiacompanies, exchanges and industry consortia– private industrial networksprivate industrial networks: single firm networks, : single firm networks,

industry-wide networks.industry-wide networks.

24

E-commerce E-commerce Types Types

• Consumer-to-Consumer (C2C)Consumer-to-Consumer (C2C)– consumers selling to other consumersconsumers selling to other consumers– the most innovative type the most innovative type – eBay, CraigListeBay, CraigList

• Peer-to-Peer (P2P)Peer-to-Peer (P2P)– consumers sharing files or other computer consumers sharing files or other computer

resources with other consumersresources with other consumers– the most controversial typethe most controversial type– requires no intermediaryrequires no intermediary

• Mobile Commerce (M-commerce)Mobile Commerce (M-commerce)– use of wireless digital devices to enable use of wireless digital devices to enable

transactions on the Webtransactions on the Web– the newest typethe newest type

25

Documents

E-commerce Introduction Dr. Drew Hwang 1 Based on Laudon and Traver textbook