E-Buisness Models - Chapter 2 (2)

Chapter 2 The Revolution Is Just Beginning Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.

Class Discussion Pinterest: A Picture Is Worth a Thousand Words  Have you used Pinterest or any other content curation sites? What are your main interests?  Have you purchased anything based on a pin or board on Pinterest or any other curation site?  Why do Pinterest links drive more purchasing than Facebook links? Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-2.

E-commerce Trends 2013–2014  Expansion of social, local, and mobile e-commerce  Mobile platform begins to rival PC platform  Continued growth of cloud computing  Explosive growth in “Big Data”  E-books gain wide acceptance  Continued growth of user-generated content Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-3.

The First 30 Seconds  First 17 years of e-commerce Just the beginning Rapid growth and change  Technologies continue to evolve at exponential rates Disruptive business change New opportunities Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-4.

What Is E-commerce?  Use of Internet and Web to transact business  More formally: Digitally enabled commercial transactions between and among organizations and individuals Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-5.

E-commerce vs. E-business  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 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-6.

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 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-7.

Eight Unique Features of E-commerce Technology 1. Ubiquity Ubiquity is defined as an available just about every where , at all times . While traditional commerce based on marketplace , which is restricted to physical place and time , this is called bricks and mortar. When traditional commerce carried out by electronic means, and removed from temporal and geographic location , this is called marketspace. Slide 1-8.

Class Discussion Eight Unique Features of E-commerce Technology  2. Global reach when e-commerce technology permits commercial transactions to cross cultural, regional, and national boundaries far more conveniently and cost-effectively.Therefore , the total of internet customer is equal the word’s online population. Reach in e-commerce is defined as “The total number of users or customers an e-commerce business can obtain”.  3. universal standards  e-commerce has unusual feature of e-commerce technologies is that the technical standards of the Internet, and therefore the technical standards for conducting e-commerce, are universal standards—they are shared by all nations around the world. In contrast, most traditional commerce technologies differ from one nation to the next (e.g TV, Radio, mobile)  universal standards reduce search costs —the effort required to find the prices of products. Copright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-9.

Class Discussion Eight Unique Features of E-commerce Technology  4. Richness refers to the complexity and content of a message.  Traditional markets, national sales forces, and small retail stores have great richness: they are able to provide personal, face-to-face service using aural and visual cues when making a sale. The Internet has the potential for offering considerably . more information richness than traditional media such as printing presses, radio, and television because it is interactive and can adjust the message to individual users.  5. Interactivity Unlike any of the commercial technologies of the twentieth century, with the possible exception of the telephone, e- commerce technologies allow for interactivity, meaning they enable two- way communication between merchant and consumer and among consumers. Traditional television, for instance, cannot ask viewers questions or enter into conversations with them, or request that customer information be entered into a form. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-10.

Class Discussion Eight Unique Features of E-commerce Technology  6. Information Density the total amount and quality of information available to all market participants, consumers, and merchants alike.  Price transparency refers to the ease with which consumers can find out the variety of prices in a market; cost transparency refers to the ability of consumers to discover the actual costs merchants pay for products.  7. Personalization/Customization  Personalization refers :merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases. Today this is achieved in a few milliseconds and followed by an advertisement based on the consumer’s profile.  Customization means the changing the delivered product or service based on a user’s preferences or prior behavior Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-11.

Eight Unique Features of E-commerce Technology  8. Social Technology : allowing users to create and share content with a worldwide community. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-12.

Web 2.0  Web 1.0 :The Internet started out as a simple network to support e-mail and file transfers among remote computers. The Web started out as a way to use the Internet to display simple pages and allow the user to navigate among the pages by linking them together electronically.  Web 2.0 : set of applications and technologies that allows users to create, edit, and distribute content; share preferences, bookmarks, and online personas; participate in virtual lives; and build online communities.  Examples: Twitter, YouTube, Instagram, Wikipedia, Tumblr  How many characters does twitter allow users to send messages ? Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-13.

Types of E-commerce  May be classified by market relationship or technology  Business-to-Consumer (B2C)  Business-to-Business (B2B)  Consumer-to-Consumer (C2C)  Social e-commerce  Mobile e-commerce (M-commerce)  Local e-commerce Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-14.

 Business-to-business (B2B) e-commerce, in which businesses focus on selling to other businesses, is the largest form of e-commerce, with about $4.7 trillion in transactions in the United States in 2013  There is an estimated $12.9 trillion in business-to-business exchanges of all kinds, online and offline, suggesting that B2B e-commerce has significant growth potential. The ultimate size of B2B e-commerce is potentially huge. There are two primary business models used within the B2B arena: Net marketplaces, which include e-distributors, e-procurement companies, exchanges and industry consortia, and private industrial networks. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-15.

 Consumer-to-consumer (C2C) e-commerce provides a way for consumers to sell to each other, with the help of an online market maker such as eBay or Etsy, or the classifieds site Craigslist. Given that in 2013, eBay is likely to generate around $75 billion in gross merchandise volume around the world, it is probably safe to estimate that the size of the global C2C market in 2013 is more than $90 billion.  Mobile e-commerce, or m-commerce, refers to the use of mobile devices to enable online transactions. M-commerce involves the use of cellular and wireless networks to connect laptops, smartphones such as the iPhone, Android, and BlackBerry, and tablet computers such as the iPad to the Internet. Once connected, mobile consumers can conduct transactions, including stock trades, in-store price comparisons, banking, travel reservations, and more. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-16.

Class Discussion  Local e-commerce, as its name suggests, is a form of e-commerce that is focused on engaging the consumer based on his or her current geographic location. Local merchants use a variety of online marketing techniques to drive consumers to their stores. Local e-commerce is the third prong of the social, mobile, local e-commerce wave, and is expected to grow in the United States from $3.6 billion in 2011 to an estimated $4.4 billion in 2013 e.g of local e-commerce is groupon which offers subscribers daily deals from local businesses in the form of “Groupons,” discount coupons that take effect once enough subscribers have agreed to purchase. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-17.

 Business-to-Consumer (B2C) e-commerce is The most commonly discussed type of e-commerce is business-to-consumer (B2C) e- commerce, in which online businesses attempt to reach individual consumers. B2C commerce includes purchases of retail goods, travel services, and online content. Even though B2C is com paratively small  Social e-commerce is e-commerce that is enabled by social networks and online social relationships. It is sometimes also referred to as Facebook commerce, but in actuality is a much larger phenomenon that extends beyond just Facebook. The growth of social e-commerce is being driven by a number of factors, including the increasing popularity of social sign-on (signing onto Web sites using your Facebook or other social network ID), network notification (the sharing of approval or disapproval of products, services, and content via Facebook’s Like button or Twitter tweets), online collaborative shopping tools, and social search (recommendations from online trusted friends). Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-18.

The Growth of B2C E-commerce Figure 1.3, Page 20 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall SOURCE: Based on data from eMarketer, Inc., 2013a; authors’ estimates. Slide 1-19.

The Growth of B2B E-commerce Figure 1.4, Page 21 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall SOURCE: Based on data from U.S. Census Bureau, 2013; authors’ estimates. Slide 1-20.

The Internet  Worldwide network of computer networks built on common standards  Created in late 1960s  Services include the Web, e-mail, file transfers, and so on  Can measure growth by number of Internet hosts with domain names Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-21.

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 exponentially  Google reports 30 trillion unique URLs; 120 billion Web pages indexed Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-22.

The Mobile Platform  Most recent development in Internet infrastructure  Enables access to the Internet via wireless networks or cell-phone service  Mobile devices include Tablets Smartphones Ultra-lightweight laptops Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-23.

Insight on Technology: Class Discussion Will Apps Make the Web Irrelevant?  What are the advantages and disadvantages of apps, compared with Web sites, for mobile users?  What are the benefits of apps for content owners and creators?  Will apps eventually make the Web irrelevant? Why or why not? Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-24.

Origins and Growth of E-commerce  Precursors: Baxter Healthcare Electronic Data Interchange (EDI) French Minitel (1980s videotex system) None had functionality of Internet  1995: Beginning of e-commerce First sales of banner advertisements  E-commerce fastest growing form of commerce in United States Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-25.

E-commerce: A Brief History  1995–2000: Invention Key concepts developed Limited bandwidth and media Euphoric visions of  Friction-free commerce  Lowered search costs, disintermediation, price transparency, elimination of unfair competitive advantage  First-mover advantages  Network profits Dot-com crash of 2000 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-26.

E-commerce: A Brief History (cont.)  2001–2006: Consolidation Emphasis on business-driven approach Traditional large firms expand presence Start-up financing shrinks up More complex products and services sold Growth of search engine advertising Business Web presences expand to include e-mail, display and search advertising, and limited community feedback features Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-27.

E-commerce: A Brief History (cont.)  2007–Present: Reinvention Rapid growth of:  Online social networks  Mobile platform  Local commerce Entertainment content develops as source of revenues Transformation of marketing  Coordinated marketing on social, mobile, local platforms  Analytic technologies Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-28.

Insight on Business: Class Discussion Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-29.

Assessing E-commerce  Many early visions not fulfilled Friction-free commerce  Consumers less price sensitive  Considerable price dispersion Perfect competition  Information asymmetries persist Intermediaries have not disappeared First mover advantages  Fast-followers often overtake first movers Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-30.

Predictions for the Future  Technology will propagate through all commercial activity  Large, traditional companies will continue to play dominant role, consolidating audiences  Start-up ventures can still attract large audiences in non- dominated arenas  Integrated online/offline companies will experience more growth than purely online companies  Additional factors:  Increased regulation and control  Cost of energy Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-31.

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 policy Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-32.

The Internet and the Evolution of Corporate Computing Figure 1.11, Page 41 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-33.

Insight on Society: Class Discussion Facebook and the Age of Privacy  Why are social network sites interested in collecting user information?  What types of privacy invasion are described in the case? Which is the most privacy-invading, and 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? Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-34.

Academic Disciplines Concerned with E-commerce  Technical approach  Computer science  Management science  Information systems  Behavioral approach  Information systems  Economics  Marketing  Management  Finance/accounting  Sociology Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-35.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-36.