Lecture E-Commerce - Chapter 2: E-Commerce

In this chapter, the learning objectives are: Classification of computers, computer network, introduction to internet, growth of internet, introduction to web and growth of web, internet and web gave birth to e- commerce, understand the evolution from internet to e-commerce, define e-commerce and describe how it differs from e-business,...

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CSC 330 E-Commerce

Teacher

Ahmed Mumtaz Mustehsan

GM-IT CIIT Islamabad

Virtual Campus, CIIT

COMSATS Institute of Information Technology

T1-Lecture-2

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 Classification of computers Computer network.

 Introduction to internet, growth of internet.

 Introduction to web and growth of web.

 Internet and Web gave birth to e- commerce.

 Understand the evolution from internet to e-commerce.

 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 of e-commerce.

 Evolution of e-commerce.

 Discuss the origins and growth of e-commerce.

 Identify the factors that will define the future of e-commerce.

 Describe the major themes underlying the study of e-commerce.

 Identify the major academic disciplines contributing to

e-commerce

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Computer classifications

Mainframes:

- term for very large computers

- used to handle large amount of data or

- work stations with computing capabilities

- single-users systems linked to form a network

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What is a network

Series of points or nodes interconnected by

communication paths

Node is a connection point for transmitting data

Network can interconnect with other networks to

form global networks

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when internet born

Worldwide network of computer networks built on

common standards

Created in late 1960s (1969) when terminals were

connected with mainframe computers

The purpose was to create a net that can function

even if one center is destroyed in a military attack

◦Network can continue to be functional even if some nodes are destroyed, as long as information can

pass through other nodes

Services include the Web, e-mail, file transfers, etc

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The mainframe was connected to another mainframe

of the company in another location via dedicated

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Network crossed boundaries

Internet: a network of networks that covers the entire globe

Connections across countries and continents made through dedicated fast lines

A company may have one local network (LAN) in NY, which is connected to the Internet through a Regional network

Well established in North America, Europe and

certain Asian countries

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When The Web born

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

◦2 billion Web pages in 2000

◦ At least 40–50 billion pages today (2010)

◦Now ? (Crossed Trillian)

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1-The Growth of the Internet, Measured by

Number of Internet Hosts with Domain Names

SOURCE: Internet Systems Consortium,

Inc., 2009.

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web to web 2.0 ; another evolution

e-commerce, internet, set of applications and social

media brought together the evolution of web usually

called web 2.0;

The Applications and Technologies allowed the 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

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The Internet and

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What is E-commerce?

Use of Internet and Web for business transection

More formally:

◦Digitally enabled commercial transactions

between and among organizations and

individuals

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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

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The Difference Between E-commerce

and E-Business

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1-Why Study E-commerce?

E-commerce technology is different, more powerful than previous technologies

E-commerce bringing fundamental changes to

commerce Introduce new buzz words:

Marketplace: a physical place where you go for

business transection

Marketspace: marketplace extended beyond traditional boundaries; removed from temporal and geographic limitations

Information asymmetry: any disparity in relevant market information among parties in a transection

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Unique Features of E-commerce Technology

1 Ubiquity: available everywhere anytime, i.e Internet/Web

technology is available everywhere; at work, at home, and elsewhere via mobile devices and round the clock

(anytime).

2 Global reach: the total number of users or customers an

e-commerce business can obtain is a measure of its reach

The technology reaches across cultural and national

boundaries, round the globe

3 Universal standards: technical standard of conducting

e-commerce There is one set of technology standards,

namely Internet standards as compared to different

standards followed by different nations.

4 Information richness: complexity of the content of a

message Unlimited information of a product is available

through video, audio, and text messages at internet and

social media.

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5 Interactivity: The technology works through interaction with

the user One shopkeeper can handle large number of

clients simultaneously at internet.

6 Information density: the total amount of information

available to all market stakeholders the technology

reduces information collection costs and raises quality

through social media

7 Personalization/customization: Personalization: The

targeting of marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases (Customization) delivery of product or

service based on a user's preferences or prior behavior

8 Social technology: user content generation and social

networking The e-commerce technologies have evolved

users to create and generate contents in the form of web, Facebook pages, text, video, music and photos with

worldwide communities.

Unique Features of E-commerce Technology

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◦e-commerce consumers selling to other consumers

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Types of E-commerce

Classified by Technology used

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, (example sharing videos through Torrents)

Mobile commerce (M-commerce)

◦m-commerce use of wireless digital devices to enable transactions on the Web

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Evolution of E-Commerce

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

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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

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E-COMMERCE TECHNOLOGIES

A commercial History

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The Growth of B2C E-commerce

Figure 1.4, Page 25

SOURCES: eMarketer, Inc., 2009a; U.S Census Bureau, 2009b; authors’ estimates.

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The Growth of B2B E-commerce

SOURCES: U.S Census Bureau, 2009a; authors’ estimates.

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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 effects

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Early Visions of E-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 advantage

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Early Visionary introduced new terminologies

Disintermediation: displacement of market middlemen

who traditionally are intermediaries between producers and consumers by a new direct relationship between

manufacturers and content originators with their

customers

friction-free commerce : a vision of commerce in which information is equally distributed, transaction costs are low, prices can be dynamically adjusted to reflect actual demand, intermediaries decline, and unfair competitive advantages are eliminated

first mover: a firm that is first to market in a particular

area and that moves quickly to gather market share

network effect: occurs where users receive value from the fact that everyone else uses the same tool or product

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Assessing e-commerce

Many early visions not fulfilled

Friction-free commerce

 Consumers less price sensitive

 Considerable price dispersion

Perfect competition

 Information asymmetries persist

Disintermediation

 Smart people/ firms buy and sell goods using

their expertise, end-user is still paying more

First mover advantage

 Fast-followers often overtake first movers

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 Electronic commerce can increase sales and decrease

costs

 If advertising is done well on the Web, it can get a firm’s

promotional message out to potential customers in every

country

 Using e-commerce sales support and order-taking

processes, a business can:

 Reduce costs of handling sales inquiries

 Provide price quotes

 E commerce has increased the purchasing and selling

opportunities for buyers and sellers.

 made negotiating price and delivery terms easy.

Advantages and Disadvantages of Commerce

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Perishable products are difficult to sell online

It is difficult to:

◦Calculate return on investment

◦Integrate existing databases and

transaction-processing software into software that enables e-commerce

Cultural and legal obstacles exist

Advantages and Disadvantages of Commerce

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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 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

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Understanding E-commerce:

Organizing Themes

Technology:

and communications technology

Business:

ways of organizing production and transacting

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Technical approach

Computer science

Development of computer Hardware, software, and

Tele-communication systems, standard of encryption

and database design

Management science

Mathematical model of business processes,

optimization of processes, opportunity to exploited

Internet technology

Academic Disciplines Concern with e-commerce

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Academic Disciplines Concern with e-commerceBehavioral approach

Brand development and extension, consumer behavior on web sites,

using web technology target different segment consumer groups

 Management

Entrepreneurial behavior and challenges faced by young firms

 Finance/accounting

Valuation and accounting practices.

 Sociology/ psychology Internet usage, the role social

inequalities, use of web as a social network and group

communications.

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Points of Discussions.

1. What techniques of privacy invasion are prevailing

through social media?

2. How do you protect your privacy on the Web?

3. Is e-commerce any different than traditional markets

with respect to privacy? Don’t merchants always want

to know their customer?

4. What impact has created by OLX in our society?

What type of risk is involved?

5. 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?

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