Copyright © 2002 Pearson Education, Inc.

Slide 1-1
 CHAPTER 1

The Revolution Is Just

Beginning
Created by, David Zolzer, Northwestern State University—Louisiana

Copyright © 2002 Pearson Education, Inc. Slide 1-2

 Learning Objectives
 Define e-commerce and describe how it
differs from e-business
 Identify the unique features of e-commerce
technology and their business significance
 Describe the major types of e-commerce
 Understand the visions and forces behind
the E-Commerce I era

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 Learning Objectives
 Understand the successes and failures of
E-Commerce I
 Identify several factors that will define the
E-commerce II era
 Describe the major themes underlying the
study of e-commerce
 Identify the major academic disciplines
contributing to e-commerce research

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Amazon.com:
Before and After

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Amazon.com: Before and After
 Most well-known e-commerce company
 Conceived by Jeff Bezos in 1994
 Opened in July 1995
 Four compelling reasons to shop
 Selection (1.1 million titles)
 Convenience (anytime, anywhere)
 Price (high discounts on bestsellers)
 Service (automated order confirmation,
tracking, and shipping information)

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Amazon.com: Before and After

Revenues and Earnings

Revenues Earnings

1996 $15.6 Million ($6.24 Million)

1997 $148 Million ($31 Million)

1998 $610 Million ($125 Million)

1999 $1.6 Billion ($720 Million)

2000 $2.7 Billion ($1.4 Billion)

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E-commerce vs. E-business
E-commerce involves
 Digitally enabled commercial transactions
between organizations and individuals.
 Digitally enabled transactions include all
transactions mediated by digital technology
 Commercial transactions involve the
exchange of value across organizational or
individual boundaries in return for products or
services

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E-commerce vs. E-business
E-business involves
 Digital enablement of transactions and
processes within a firm, involving
information systems under the control of
the firm
 E-business does not involve commercial
transactions across organizational
boundaries where value is exchanged

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The Difference Between E-
commerce and E-Business
Page 8, Figure 1.1

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Unique of E-commerce Technology
and Their Business Significance
E-commerce:
 is ubiquitous
 has global reach
 operates according to universal
standards
 provides information richness
 is interactive
 increases information density
 permits personalization

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Seven Unique Features of E-commerce
Technology and Their Business
Significance
Page 9, Table 1.1

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Changing Trade-Off Between
Richness and Reach
Page 11, Figure 1.2

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Major Types of E-Commerce
 Market relationships
 Business-to-Consumers (B2C)
 Business-to-Business (B2B)
 Consumer-to-Consumer (C2C)
 Technology-based
 Peer-to-Peer (P2P)
 Mobile Commerce (M-commerce)

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Major Types of E-Commerce
Page 14, Table 1.2

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Business-to-Consumer E-
commerce
 Most commonly discussed type
 Online businesses attempt to
reach individual consumers
 Consumers will spend $65 billion
in 2001.

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Business-to-Business E-commerce
 Businesses focus on sell to other
businesses
 Largest form of e-commerce
 $700 billion in transactions in 2001
 Primarily involved inter-business
exchanges at first
 Other models have developed
 e-distributors
 infomediaries
 B2B service providers
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Consumer-to-Consumer E-
commerce
 Provide a way for consumers to sell
to each other
 Estimated $5 billion market
 Consumer:
 prepares the product for market
 places the product for auction or sale
 relies on market maker to provide
catalog, search engine, and
transaction clearing capabilities

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Peer-to-Peer E-commerce
 Enables Internet users to share
files and computer resources
 Napster

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Mobile E-commerce
 Wireless digital devices enable
transactions on the Web
 Uses personal digital assistants
(PDAs) to connect
 Used most widely in Japan and
Europe

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Growth of the Internet and the Web
 Created in the late 1960s
 About 350 million computers
worldwide to date
 Links businesses, educational
institutions, government agencies,
and individuals
 Provides services such as e-mail,
document transfer, newsgroups,
shopping, research, instant
messaging, music, video, and news
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Growth of the Internet and the Web
 Internet hosts are growing at a
rate of 45% per year
 Extraordinary growth -- time to
reach 30% US households
 Radio - 38 years
 Television - 17 years
 Internet/Web - 8 years (1993)

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The Growth of the Internet
Page 16, Figure 1.3

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The Growth of Web Content
Page 17, Figure 1.4

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The Growth of B2C E-Commerce
Page 20, Figure 1.5

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The Growth of B2B E-Commerce
Page 21, Figure 1.6

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Origins and Growth of E-Commerce
 Baxter Healthcare
 Primitive form of B2B using telephone-based
modem to permit hospitals to reorder supplies
(early 1970s)
 PC-based remote order entry system (1980s)
 Electronic Data Interchange (EDI)
standards developed that permitted firms
to exchange commercial documents and
conduct digital commercial transactions
across private networks (1980s)

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Origins and Growth of E-Commerce
 French Minitel videotext system
 First B2C arena (1981)
 15 million in use throughout France
 World Wide Web
 1993 first browsers
 1995 first banner ads

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Technology and E-Commerce in
Perspective
Internet and the Web are just two of a
long list of technologies that have
greatly change commerce
 Other technologies spawned business
models and strategies
 Explosive early growth followed by
retrenchment and then long-term
successful exploitation of the
technology

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Technology and E-Commerce in
Perspective
Although e-commerce has grown
explosively, there is no guarantee it will
continue to grow
 Confront own fundamental limitations
 B2C only about 1% of overall retail
market
 With current growth rates, B2C will
roughly equal the annual revenue of
Wal-Mart in 2005

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Limitations of the Growth of B2C
E-Commerce
Page 23, Table 1.3

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Web Access Via Wireless Devices
in the United States
Page 24, Figure 1.7

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E-Commerce I and II
 E-Commerce I
 Explosive growth starting in 1995
 Widespread of Web to advertise
products
 Ended in 2000 when dot.com began to
collapse
 E-Commerce II
 Began in January 2001
 Reassessment of e-commerce
companies

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E-Commerce I 1995-2000
 For computer scientist and
information technologists
 Vindication of a set of information
technologies developed over 40
years
 Extending from the early Internet
to the PC and local area networks
 The vision of universal
communications

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E-Commerce I 1995-2000
 For economists
 Raised realistic prospect of perfect Bertrand
Market
 where price, cost, and quality information is equally
distributed
 where a nearly infinite set of suppliers compete
against one another
 where customers have access to all revelant market
information worldwide
 Merchants have equal direct access to
hundreds of millions of customers

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E-Commerce I 1995-2000
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
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E-Commerce I 1995-2000
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
 unfair competitive advantages are
eliminated
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E-Commerce I 1995-2000
 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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Amounts Raised by Venture-Backed
Internet Companies in 1996-2000
Page 25, Table 1.4

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E-Commerce II 2001-2006
 Crash in stock market values of E-
commerce I companies throughout 2000 is
an end to E-commerce I
 Led to a sobering reassessment of the
prospects of e-commerce and the
methods of achieving business success.
 E-commerce II begins in 2001 and ends
five year later -- the limit for making
technology and business projections

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E-Commerce II 2001-2006
 Reasons for the end of E-Commerce I
 run-up in technology stocks due to enormous information
technology capital expenditure of firms rebuilding their
internal business systems to withstand Y2K
 telecommunications industry had built excess capacity in
high-speed fiber optic networks
 1999 e-commerce 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.

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Insight on Business:
A Short History of dot.com IPOS
 Between 1998 and 2000 venture capitalists
poured an estimated $120 billion into
approximately 12,450 dot.com start-up
ventures
 Investment bankers took 1,262 of these
companies public in IPOS
 IPO shares were targeted to open around
$15 per share, and it was not uncommon
for them to be trading at $45 a share or
more later the same trading day

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E-Commerce I and E-Commerce II
Compared
Page 32, Table 1.5

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April 2001 NRF/Forrester Online
Retail Index

Page 33, Table 1.6

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Top 25 Properties of March 2001
(Combined Home and Work)
Page 34, Table 1.7

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 Top 20 Web Retailers Among U.S.
Home Users (January, 2001)
Page 35, Table 1.8

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Understanding E-Commerce:
Organizing Themes
 Technology: Infrastructure
 development and mastery of digital computing
and communications technology
 Business: Basic Concepts
 new technologies present businesses and
entrepreneurs with new ways of organizing
production and transacting business
 Society: Taming the Juggernaught
 global nature of e-commerce poses public
policy issues of equity, equal access, content
regulation, and taxation
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The Internet and the Evolution of
Corporate Computing

Page 37,
Figure 1.8

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Disciplines Concerned with E-
Commerce
Page 39, Figure 1.9

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