E-commerce

business. technology. society.
Sixth Edition

Kenneth C. Laudon

Carol Guercio Traver

Copyright © 2010 Pearson Education, Inc.

Chapter 1

The Revolution Is Just Beginning

Copyright © 2007 2010 Pearson Education, Inc.

Slide 1-2

Facebook and MySpace: It’s All About You
Class Discussion
 

How is Facebook different from MySpace? Have you used Facebook or MySpace, and if so, how often? What was your experience? Why do you think Facebook has overtaken MySpace as the most popular social networking site?

Copyright © 2010 Pearson Education, Inc.

Slide 1-3

Inc. but growth expected to resume in 2010   Broadband and wireless access continue to grow Mobile e-commerce begins to take off  Traditional media losing subscribers Copyright © 2010 Pearson Education. and services 2009 a flat year. Slide 1-4 .E-commerce Trends 2009–2010   New business models based on social technologies. consumer-generated content.

Slide 1-5 . Inc.The First 30 Seconds  First 15 years of e-commerce Just the beginning Rapid growth and change  Technologies continue to evolve at exponential rates Disruptive business change New opportunities Copyright © 2010 Pearson Education.

Slide 1-6 .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 © 2010 Pearson Education. Inc.

Inc. E-business  E-business:  Digital enablement of transactions and processes within a firm.E-commerce vs. Slide 1-7 . involving information systems under firm’s control commercial transactions involving an exchange of value across organizational boundaries  Does not include Copyright © 2010 Pearson Education.

Slide 1-8 .Why Study E-commerce?  E-commerce technology is different. Inc. more powerful than previous technologies E-commerce bringing fundamental changes to commerce Traditional commerce:  Passive consumer  Sales-force driven  Fixed prices  Information asymmetry   Copyright © 2010 Pearson Education.

Unique Features of E-commerce Technology 1. 2. 3. Ubiquity Global reach Universal standards Information richness Interactivity Information density Personalization/customization Social technology Slide 1-9 Copyright © 2010 Pearson Education. 5. . 6. Inc. 4. 8. 7.

Web 2. preferences. Inc. Google.0  Applications. Flickr. bookmarks. Facebook. LinkedIn  Second Life  Wikipedia Copyright © 2010 Pearson Education. iPhone  MySpace. technologies that allow users to:  Create and share content. and online personas  Participate in virtual lives  Build online communities  Examples  YouTube. Photobucket. Slide 1-10 .

Types of E-commerce  Classified by market relationship  Business-to-Consumer (B2C)  Business-to-Business (B2B)  Consumer-to-Consumer (C2C)  Classified by technology used  Peer-to-Peer (P2P)  Mobile commerce (M-commerce) Copyright © 2010 Pearson Education. Slide 1-11 . Inc.

e-mail.    Can measure growth by looking at number of Internet hosts with domain names Slide 1-12 Copyright © 2010 Pearson Education. file transfers. Inc.The Internet  Worldwide network of computer networks built on common standards Created in late 1960s Services include the Web. etc. .

Inc. 2009.3. Copyright © 2010 Pearson Education.. Page 23 SOURCE: Internet Systems Consortium. Slide 1-13 .The Growth of the Internet. Measured by Number of Internet Hosts with Domain Names Figure 1. Inc.

music. videos  Web content has grown exponentially 2 billion Web pages in 2000  At least 40–50 billion pages today Copyright © 2010 Pearson Education. animations. Slide 1-14 . graphics.The Web  Most popular Internet service  Developed in early 1990s  Provides access to Web pages HTML documents that may include text. Inc.

Insight on Technology: Spider Webs. Bow Ties. Scale-Free Networks. . and the Deep Web Class Discussion   What is the “small world” theory of the Web? What is the significance of the “bow-tie” form of the Web?  Why does Barabasi call the Web a “scale-free network” with “very connected super nodes”? Slide 1-15 Copyright © 2010 Pearson Education. Inc.

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 Slide 1-16 Copyright © 2010 Pearson Education. Inc.

S. Copyright © 2010 Pearson Education.. Census Bureau. Inc. Page 25 SOURCES: eMarketer. Inc. authors’ estimates. 2009a.4. U. 2009b. Slide 1-17 .The Growth of B2C E-commerce Figure 1.

Slide 1-18 . Inc. 2009a. Census Bureau.The Growth of B2B E-commerce Figure 1.S. Page 28 SOURCES: U.5. Copyright © 2010 Pearson Education. authors’ estimates.

Slide 1-19 Copyright © 2010 Pearson Education. Inc. .Technology and E-commerce in Perspective  The Internet and Web: Just two of a long list of technologies that have greatly changed commerce  Automobiles  Radio  E-commerce growth will eventually cap as it confronts its own fundamental limitations.

. Inc.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 Slide 1-20   Copyright © 2010 Pearson Education.

E-commerce: A Brief History  1995–2000: Innovation  Key concepts developed  Dot-coms. Slide 1-21 . social networking. Inc. 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. services Copyright © 2010 Pearson Education.

disintermediation. Inc. universal communications and computing environment accessible by all  Economists:  Nearly perfect competitive market and friction-free commerce  Lowered search costs. elimination of unfair competitive advantage  Entrepreneurs:  Extraordinary opportunity to earn far above normal returns on investment—first mover advantage Copyright © 2010 Pearson Education.Early Visions of E-commerce  Computer scientists:  Inexpensive. price transparency. Slide 1-22 .

.Insight on Business The Internet Investment Rollercoaster Class Discussion  What explains the rapid growth in private investment in e-commerce firms in the period 1998–2000? Was this investment irrational?    What was the effect of the big bust of March 2000 on ecommerce investment? What is the value to investors of a company such as YouTube which has yet to show profitability? 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? Slide 1-23 Copyright © 2010 Pearson Education. Inc.

Slide 1-24 .Assessing E-commerce  Many early visions not fulfilled  Friction-free commerce  Consumers less price sensitive  Considerable price dispersion  Perfect competition  Information asymmetries persist  Disintermediation  First mover advantage  Fast-followers often overtake first movers Copyright © 2010 Pearson Education. Inc.

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 more typical of all retailers Cast of players will change   Traditional Fortune 500 companies will play dominant role New startup ventures will emerge with new products. Inc. 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 Slide 1-25 Copyright © 2010 Pearson Education. .

public welfare policy Copyright © 2010 Pearson Education. Slide 1-26 . individual privacy.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. Inc.

The Internet and the Evolution of Corporate Computing Figure 1. Slide 1-27 .9. Inc. Page 44 Copyright © 2010 Pearson Education.

. Inc.Insight on Society Privacy Online: Does Anybody Care? Class Discussion    What techniques of privacy invasion are described in the case? Which of these techniques is the most privacyinvading? 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? Slide 1-28  Copyright © 2010 Pearson Education.

Inc.Academic Disciplines Concerned with E-commerce  Technical approach  Computer science  Management science  Behavioral approach  Information systems  Economics  Information systems  Marketing  Management  Finance/accounting  Sociology Copyright © 2010 Pearson Education. Slide 1-29 .

Printed in the United States of America. Publishing as Prentice Hall Copyright © 2010 Pearson Education. Inc. stored in a retrieval system. or otherwise. without the prior written permission of the publisher. or transmitted. recording. Inc. electronic. mechanical. photocopying. Slide 1-30 . in any form or by any means. Copyright © 2010 Pearson Education.All rights reserved. No part of this publication may be reproduced.

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