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09-05-00 Charles Heath, Xavier University

The Past, Present and Future of E-


Commerce
Marketing 932
E-Commerce
09-05-00 Charles Heath, Xavier University
History of E-Commerce
Background
E-commerce actually began in the 1970s when larger
corporations started creating private networks to share
information with business partners and suppliers.
This process, called Electronic Data Interchange (EDI),
transmitted standardized data that streamlined the
procurement process between businesses, so that paperwork
and human intervention were nearly eliminated.
EDI is still in place, and is so effective at reducing costs and
improving efficiency that an estimated 95% of Fortune
1,000 companies use it.
09-05-00 Charles Heath, Xavier University
History of E-Commerce
Prodigy was running text
ads and selling flowers in
the early '80s
The first documented
Online sale in 1994 was
what?
A CD
09-05-00 Charles Heath, Xavier University
History of E-Commerce
Online retailing began four years ago, and was pioneered
largely by Internet companies that didn't (and some still
don't) perform traditional retail, such as Amazon.com and
CDNow.
More recently, brand names like Barnes and Noble, the
Gap, and Wal-Mart have set up shop on the Net, and many
experts believe that these and other brand names will be
able to establish long-lasting presences on the Web.
Today, all a person needs is a computer, a browser, and
Internet access, and he or she can buy flowers, airline
tickets, and even a car. Tomorrow. who knows. The sky's
the limit.
09-05-00 Charles Heath, Xavier University
History of E-Commerce: Amazon.com
Early in 1994, working for D.E. Shaw in New York City,
Jeff Bezos, a restless, 30-year-old hedge fund manager
began researching the commercial possibilities of the Net.
A year later, Bezos drove west, raising venture funds for a
new small online book shop (originally called
Cadabra.com), to be launched from his garage in Bellevue,
Wash.
Running on a Website and a warehouse, by its third year
Bezos's precocious Amazon.com toppled $150 million in
annual sales a milestone that Wal-Mart founder Sam
Walton needed 12 years (and 78 stores) to reach.
09-05-00 Charles Heath, Xavier University
History of E-Commerce: Stocks
Electronic stock trading debuted 30 years ago with Instinet,
Reuters' computer network that allowed after-hours trading.
Charles Schwab first offered a dial-up trading service called The
Equalizer in 1985.
E*Trade founded in 1982 as an institutional trading service began
offering consumer trading in 1992 through America Online and
CompuServe.
True Web-based trading arrived in 1994 with Chicago-
based NET Investor, which offered 15-minute delayed
quotes and charged $35 per trade.
Ameritrade, Datek Online, and others followed, eventually
driving commissions to as low as $8 per trade, and forcing
the implementation of free, real-time stock quotes in 1998.
09-05-00 Charles Heath, Xavier University
History of E-Commerce: Ads
In 1994, the first national consumer brand site -
www.zima.com - was launched for the Coor's owned
beverage Zima.
In October of that year, Wired magazine's HotWired (now
part of Lycos-owned Wired Digital), dished up the first
banner ads from 12 advertisers, including AT&T, Club
Med, and Volvo.
Sales for the entire online ad industry were $1 million that
year, and HotWired owned 40 percent of it.
In 1998, online ad revenues reached $2 billion, topping
the $1.6 billion spent on "outside" ads, such as billboards.
General Motors alone pumped in $12.7 million. Online ad
revenue is expected to reach $11.5 billion by 2003 5
percent of the total U.S. ad market.
09-05-00 Charles Heath, Xavier University
History of E-Commerce: Travel
Booking a trip over the Web back in 1995 meant
going to a travel site and requesting a fare.
In early 1997, Travelocity offered a paging service
to its Web customers that alerted them if their flight
was delayed.
In the fall of 1997, Priceline.com launched its
innovative, bid-based market for discount airfares.
Today you can bid on empty seats, name your price,
choose a seat from a diagram, and know of fare
bargains often before agents have that information.
09-05-00 Charles Heath, Xavier University
History of E-Commerce
Web retail sales have jumped from a mere $700
million annually in 1996 to an estimated $20
billion in 1999, according to Forrester
1996
$20B
$700M
1999
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Global E-Commerce
among Internet users around the globe, 10 percent
shop online during a month.
In addition, 15 percent of users say they have
considered shopping online, but have not yet done
so.
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E-Commerce Today
Some major product categories have paved the way:
travel services ($5.95 billion in 1999 sales),
computer hardware and software ($5.8 billion),
books ($1.7 billion),
gifts and flowers ($730 million),
music ($540 million), and
apparel and footwear ($460 million),
(eMarketer in Business 2.0 Jan 2000).

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E-Commerce Services Today
In 1999, the online market size for business services
was estimated at $22 billion.
Primary service categories include
financial ($7.3 billion, 1999),
professional ($4.4 billion),
administrative support ($3.9 billion),
corporate travel ($5 billion), and
telecommunications ($1.5 billion).
By 2003, Forrester Research predicts that online
services will represent nearly 8 percent of the overall
sector hardly a drop in the bucket.
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Movers in E-Commerce 2000
The study found that office supplies showed the
greatest increase in online sales in July, to
$150 million from $110 million in June. Other
categories reporting gains included videos,
footwear and apparel, sporting goods,
appliances and furniture.
Computer hardware showed the largest
decrease for big-ticket items, to $377 million in
July from $424 million in June
09-05-00 Charles Heath, Xavier University
Future of E-Commerce
eMarketer, an Internet technology (IT) research and
reporting firm, estimates that the dollar figure for e-
commerce will rise from approximately U.S. $18 billion in
1998 to U.S. $294 billion in 2002.
$184 billion by 2004. (Forrester, Business 2.0 Jan 2000)
In Europe, consumers' internet purchases will jump from
2.9 billion in 1999 to 174 billion in 2005.
By 2006, US Government Will Collect $602 Billion Over
The Net
Online business-to-business e-commerce is projected to
speed past $1 trillion in annual revenue by 2003
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Future Trends to Watch in E-Commerce
Women take control. Women make or influence 80
percent of household sales in the United States, according to
WomanTrend, despite the fact that they make up 51 percent
of the population.
The untapped get tapped. Two highly touted markets
$509 million health and beauty, and $513 million grocery
still lag behind expectations.
More "click and mortar." Traditional retailers Circuit
City, Crate and Barrel, Sears, Toys R Us, Wal-Mart, and
Federated Department Stores missed the boat in 1995 and
1996, but rest assured they "get it" now, and are attempting
re-entry, this time around with more money and smarts.
Watch out.
09-05-00 Charles Heath, Xavier University
Still a Long Way To Go
Andersen Consulting and Forrester Research both
show shopping cart abandonment rates of 25%.
E-commerce still accounts for less than 1% of total
retail sales
Pure plays are struggling to maintain cash flow and
are either:
Folding
Cutting back
Being bought at cheap prices