History of E-Commerce

History of E-Commerce

E-commerce refers to the use of the Internet and

the Web to transact business. More formally,
e-commerce is about digitally enabled commercial
transactions between and among organizations and
individuals. For the most part, this means
transactions that occur over the Internet and the
Web. Commercial transactions involve the
exchange of value (e.g., money) across
organizational or individual boundaries in return
for products and services.

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 History of E-Commerce

E-commerce began in 1995 when one of the first

Internet portals, Netscape.com, accepted the first
ads from major corporations and popularized the
idea that the Web could be used as a new medium
for advertising and sales. No one envisioned at the
time what would turn out to be an exponential
growth curve for e-commerce retail sales, which
doubled and tripled in the early years. E-commerce
grew at double-digit rates until the decline of
2008–2009 when growth slowed to a crawl.

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 History of E-Commerce

In 2009, e-commerce revenues were flat, not bad

considering that traditional retail sales were
shrinking by 5 percent annually. In fact,
e-commerce during the recession was the only
stable segment in retail. Amazon’s 2009 revenues
were up 25 percent over 2008 sales. Despite the
recession, in 2010, the number of online buyers
increased by 6 percent and the average annual
purchase is increased upto 5 percent. Amazon’s
sales grew by 28 percent in the year.

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History of E-Commerce

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 History of E-Commerce

Mirroring the history of many technological

innovations, such as the telephone, radio, and
television, the very rapid growth in e-commerce in
the early years created a market bubble in
e-commerce stocks. Like all bubbles, the “dot-com”
bubble burst (in March 2001). Amazon, eBay,
Expedia, and Google, the results have been more
positive: Collecting revenues, fine-tuned business
models that produce profits, and rising stock
prices.

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 History of E-Commerce

By 2006, e-commerce revenues returned to solid

growth, and have continued to be the fastest
growing form of retail trade in the United States,
Europe, and Asia.
Online consumer sales grew to an estimated $225
billion in 2010, an increase of more than 12
percent over 2009 (including travel services and
digital downloads), with 133 million people
purchasing online and 162 million shopping and
gathering information but not necessarily
purchasing
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 History of E-Commerce

The number of individuals of all ages online in the

United States expanded to 221 million in 2010, up
from 147 million in 2004. In the world, over 1.9
billion people are now connected to the Internet.
Growth in the overall Internet population has
stimulated growth in e-commerce
Approximately 80 million households have
broadband access to the Internet in 2010,
representing about 68 percent of all households.

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 History of E-Commerce

About 83 million Americans now access the

Internet using a smartphone such as an iPhone,
Droid, or BlackBerry. Mobile e-commerce has
begun a rapid growth based on apps, ring tones,
downloaded entertainment, and location-based
services. In a few years, mobile phones will be the
most common Internet access device.

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 History of E-Commerce

On an average day, an estimated 128 million adult

U.S. Internet users go online. About 102 million
send e-mail, 81 million use a search engine, and 71
million get news. Around 63 million use a social
network, 43 million do online banking, 38 million
watch an online video, and 28 million look for
information on Wikipedia (Pew Internet &
American Life Project, 2010).

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 History of E-Commerce

The e-commerce revolution is still unfolding.

Individuals and businesses will increasingly use the
Internet to conduct commerce as more products
and services come online and households switch to
broadband telecommunications. More industries
will be transformed by e-commerce, including
travel reservations, music and entertainment,
news, software, education, and finance.

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 History of E-Commerce

Eight unique Features of E-Commerce

Ubiquity. Internet/Web technology is available
everywhere: at work, at home, and elsewhere via
mobile devices.
Global reach. The technology reaches
across national boundaries, around the Earth.
Richness. Video, audio, and text messages are
possible.
Universal standards. There is one set of technology
standards, namely Internet standards.

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 History of E-Commerce

Interactivity. The technology works through

interaction with the user.
Information Density. The technology reduces
information costs and raises quality.
Personalization/Customization. The technology
allows personalized messages to be delivered to
individuals as well as groups.
Social technology. User content generation and
social networking.

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 Development of Telegraph

Developed in the 1830s and 1840s by Samuel

Morse (1791-1872) and other inventors, the
telegraph revolutionized long-distance
communication. It worked by transmitting
electrical signals over a wire laid between stations.
In addition to helping invent the telegraph, Samuel
Morse developed a code (bearing his name) that
assigned a set of dots and dashes to each letter of
the English alphabet and allowed for the simple
transmission of complex messages across telegraph
lines.
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 Development of Telegraph

In 1844, Morse sent his first telegraph message,

from Washington, D.C., to Baltimore, Maryland; by
1866, a telegraph line had been laid across the
Atlantic Ocean from the U.S. to Europe. Although
the telegraph had fallen out of widespread use by
the start of the 21st century, replaced by the
telephone, fax machine and Internet, it laid the
groundwork for the communications revolution
that led to those later innovations.

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 Development of Telegraph

Before the development of the electric telegraph in

the 19th century revolutionized how information
was transmitted across long distances, ancient
civilizations such as those in China, Egypt and
Greece used drumbeats or smoke signals to
exchange information between far-flung points.
However, such methods were limited by the
weather and the need for an uninterrupted line of
sight between receptor points.

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 Development of Telegraph

Before the development of the electric telegraph in

the 19th century revolutionized how information
was transmitted across long distances, ancient
civilizations such as those in China, Egypt and
Greece used drumbeats or smoke signals to
exchange information between far-flung points.
However, such methods were limited by the
weather and the need for an uninterrupted line of
sight between receptor points.

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 Mail Order
Mail order is the buying of goods or services by
mail delivery. The buyer places an order for the desired
products with the merchant through some remote
method such as through a telephone call or web site.
Then, the products are delivered to the customer. The
products are typically delivered directly to an address
supplied by the customer, such as a home address, but
occasionally the orders are delivered to a
nearby retail location for the customer to pick up. Some
merchants also allow the goods to be shipped directly
to a third party consumer, which is an effective way to
send a gift to an out-of-town recipient.
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 Call Centers

Individuals have been selling, explaining, and

promoting products, services, and ideas over the
phone since telephones were invented. However,
the modern call center agent works an entirely
different job than the first call center agents.
A call Centre is a centralized office used for
receiving or transmitting a large volume of
requests by telephone.

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 Call Centers
Like many revolutionary technologies, the call Centre
has a creation myth. This states that call centres as we
know them today originate from the Automatic Call
Distributor developed in 1973 by US firm Rockwell
(the Rockwell Galaxy) to allow Continental Airlines to
run a telephone booking system. As it turns out, this
was all good marketing baloney. Rockwell did indeed
develop their Automated Call Distributor in 1973 and it
was installed that year. Rockwell’s claim to the first
ACD installation may be inaccurate, but they were
certainly amongst the first and most successful
manufacturers.
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 Call Centers

First ACD

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 Call Centers

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 Electronic Data Interchange
Electronic Data Interchange
(EDI) is one of the earliest uses
of information technology for
supply chain management. EDI
involves the electronic
exchange of business
transaction documents over
the internet & other networks
between supply chain trading
partner (organizations & their
customer & suppliers).
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 Electronic Data Interchange
Data representing a variety of business
transaction documents (such as purchase
orders, invoices, requests for quotations
& shipping notices) are automatically exchanged
between computers using standard documents
message formats.

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 Electronic Data Interchange
EDI is the electronic interchange of business
information using a standardized format; a
process which allows one company to send
information to another company electronically
rather than with paper. Business entities
conducting business electronically are called
trading partners.

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 Electronic Data Interchange
Many business documents can be exchanged
using EDI, but the two most common are
purchase orders and invoices. At a minimum,
EDI replaces the mail preparation and handling
associated with traditional business
communication. However, the real power of EDI
is that it standardizes the information
communicated in business documents, which
makes possible a "paperless" exchange.

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 Electronic Data Interchange
EDI applies to documents such as purchase
orders, invoices, shipping notices and
commission sales reports, as well as other
important or classified information. For
example, an insurance company can verify
that an applicant has a driver's license through
an EDI exchange.

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 Web Business

WEB business (electronic business) is the conduct

of business processes on the Internet. These
electronic business processes include buying and
selling products, supplies and services; servicing
customers; processing payments; managing
production control; collaborating with business
partners; sharing information; running automated
employee services; recruiting; and more.
■

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 Web Business

E-business can comprise a range of functions

and services, ranging from the development
of intranets and extranets to e-service, the
provision of services and tasks over the
Internet by application service providers.

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 Web Business

Today, as major corporations continuously

rethink their businesses in terms of the
Internet, specifically its availability, wide
reach and ever-changing capabilities, they
are conducting e-business to buy parts and
supplies from other companies, collaborate
on sales promotions, and conduct joint
research.

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 Web Business

With the security built into today's browsers,

and with digital certificates now available for
individuals and companies from Verisign, a
certificate issuer, much of the early concern
about the security of business transaction on
the Web has declined, and e-business by
whatever name is accelerating.

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 Network Economy

The interlinking of business processes and economic

activity through the use of information technology.
• A situation in which a business will benefit through the
feedback provided by those who use the product or
service. Network economics is a product of
the network effect, whereby an increase in the value of a
good or service increases as the number of buyers or
subscribers multiplies. For example, online communities
like LinkedIn and Twitter continually evolve with respect to
their service offerings, providing a wider set of products
as their online communities continue to grow.

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 Network Economy

The network economy is the emerging

economic order within the information
society. The name stems from a key attribute
- products and services are created and value
is added through social networks operating
on large or global scales.

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 Network Economy
With the rapid rise of The Internet of Things and Big
Data, we’re now living in a world where everything –
people, business, process, and data – is connected.
We’re expanding the use of valuable networks by
linking our favorite social channels such as Facebook,
Twitter etc to companies offering goods and services
with the brands we love.
Now Companies own less infrastructure, inventory,
and manufacturing equipment than ever before.

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 Metcalfe’s Law

Metcalfe’s Law was conceived by George

Gilder but is attributed to Robert Metcalfe,
co-inventor of Ethernet (1980). Metcalfe’s
Law is a concept used in computer networks
and telecommunications to represent the
value of a network. Metcalfe's Law states
that a network's impact is the square of the
number of nodes in the network.

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 Metcalfe’s Law

It speaks to both the growth in the number

of connections as well as the value. Given
that the Internet as we know it today was
not around when the Law was formulated, it
spoke more to the value of devices in
general. For example, owning a single fax
machine useless.

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 Metcalfe’s Law

When there are two fax machines, you can

communicate with one other person, but
when there are millions, the device has some
value. For example, if the network has 5
machines its value would be 25 (5^2=25),
but if another network had 1000 machines
its value would be 1,000,000.

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 Economy scale offer vs. demand

Economies of Scale refer to the cost

advantage experienced by a firm when it
increases its level of output. The advantage
arises due to the inverse relationship
between per-unit fixed cost and the quantity
produced. The greater the quantity of output
produced, the lower the per-unit fixed cost.

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 Economy scale offer vs. demand

Economies of scale also result in a fall in

average variable costs (average non-fixed
costs) with an increase in output. This is
brought about by operational
efficiencies and cooperation as a result of an
increase in the scale of production.

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Economy scale offer vs. demand

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 Economy scale offer vs. demand
Economies of scale apply to a variety of
organizational and business situations and at
various levels, such as a business or
manufacturing unit, plant or an entire
enterprise. When average costs start falling
as output increases, then economies of scale
are occurring. Some economies of scale, such
as capital cost of manufacturing facilities and
friction loss of transportation and industrial
equipment, have a physical or engineering
basis.
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Economy scale offer vs. demand

As quantity of
production
increases from
Q to Q2, the
average cost
of each unit
decreases
from C to C1.
LRAC is the
long run
average cost

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 Economy scale offer vs. demand

Demand Side Economies of Scale exists in

those industries where the value of a
product or service increases in accordance
with the number of users of that product or
service. So, where the more users there are,
the more valuable the product / service
becomes.

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 Economy scale offer vs. demand
Therefore, Demand Side Economies of Scale
predominantly exists in industries where
networks are important, such as online
social networks, online dating sites, online
games. This is because the more users they
have in their network, the more valuable
their service becomes. Clearly a dating site
with lots of users will be more appealing and
therefore more valuable to a potential new
user than a dating site with only a few users.
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 Economy scale offer vs. demand
However, the benefits of developing a wide
network of users, will not only help a business
win even more customers and differentiate
itself from its competitors (allowing it to charge
its customers / advertisers more), it will also
mean it will be very difficult for new
competitors, starting from ‘ground zero’, with
no users in their network (no matter how good
their technology is or how well funded they are)
to come into the market and attempt to eat
away at the business’s market share.
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 Economy scale offer vs. demand

Facebook’s continued dominance in its

particular brand of social networking is not
as the result of its technology or in its level of
financing, but because it already has so many
users in its network. The same is true for
Twitter.

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 Economy scale offer vs. demand
A couple of decades ago demand side
economies of scale was commonly
overlooked as a potential source of
competitive advantage because, prior to the
internet being adopted in masse, products /
services that relied networks of users were
difficult to create and therefore were rare.
However, it has now become central to the
strategies of the many of the most exciting
businesses around today.
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 Dominance Model

“Business is profit, can be more the main

objective of a business than betting is the
main of making profit and acquiring wealth
through the satisfaction of human wants”
-R.Urvick

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 Dominance Model

“Business comprises all profit seeking

activities and enterprises that provide goods
and services necessary to an economic
system. It is the economic pulse of a nation,
striving to increase society’s standard of
living. Profits are primary mechanize for
motivating these activities.”- Boone louis.

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 Dominance Model

GOVERNMENT
A group of people that governs a community
or unit.
It sets and administers public policy and
exercise executive, political and sovereign
power through customs, institutions, and
laws within a state.
Types- democracy, republic, monarchy,
aristocracy(any class or group considered to
be superior, as through education, ability, wea
lth, or social prestige. )
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 Dominance Model

SOCIETY
•In common words the term society refers to
members of specific groups.

Definition-Society is a system of usages and

procedures, authority and mutual aid, of
many groupings and divisions, of human
behaviour and of liberties.-Macler

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Importance of BGS to managers
•To understand the role of business in society.
•To understand the business power in society.
•It becomes criteria for managerial decisions.
•To understand the extent of corporate social
responsibility.
•To know the ethical duties of managers and need
for regulations.
•To succeed in meeting the objectives of business.
•To excel in managerial performance.
•To monitor the non economic environment by
taking stock of the situation before anything
happens.
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 Dominance Model

Implications:
Began in 1970’s
Business and government dominate the
great mass of people ,which result in the
enrichment of a few at the expense of many.
Proper measure of corporate performance is
profit.
Ethical duty of management is to promote
the interests of shareholders

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Dominant enterprise model

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 Perspectives of dominance model
•The view that business is the most powerful
institution in society, because of its control of
wealth.
•A merger wave between 1895 and 1904
concentrated economic growth. The first Merger
Wave is documented to have occurred after the
Depression of 1883, between the years of 1897 and
1907

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 Perspectives of dominance model
During this period, majority of merger activities –
about two thirds of them – were concentrated in a few
industries which were mainly the dealers in
petroleum products, metals, mining, transportation,
and food products. These industries also became
highly concentrated because most of the mergers
were horizontal mergers. A horizontal merger is
a merger or business consolidation that occurs
between firms that operate in the same space, as
competition tends to be higher and the synergies and
potential gains in market share are much greater for
merging firms in such an industry.
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 Perspectives of dominance model
Cost estimation models are
mathematical algorithms or parametric
equations used to estimate the costs of a
product or project. The results of the models
are typically necessary to obtain approval to
proceed, and are factored into business plans,
budgets, and other financial planning and
tracking mechanisms.

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 Perspectives of dominance model
These algorithms were originally performed
manually but now are almost universally
computerized. They may be standardized
(available in published texts or purchased
commercially) or proprietary, depending on
the type of business, product, or project in
question. Simple models may use
standard spreadsheet products.

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THANK YOU

E-Commerce 59