E-Commerce: Business. Technology. Society

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 2010
Slide 1-2
Facebook and MySpace: Its 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
Slide 1-3
E-commerce Trends 20092010
New business models based on social

technologies, consumer-generated
content, and services
2009 a flat year, 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
Slide 1-4
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
Slide 1-5
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
Slide 1-6
E-commerce vs. E-business

E-business:
Digital
enablement of transactions and

processes within a firm, involving
information systems under firms control
Does
not include commercial

transactions involving an exchange of
value across organizational boundaries
Copyright 2010
Slide 1-7
Why Study E-commerce?
E-commerce technology is different,

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
Slide 1-8
Unique Features of E-commerce

Technology
1.
2.
3.
4.
5.
6.
7.
8.
Ubiquity
Global reach
Universal standards
Information richness
Interactivity
Information density
Personalization/customization
Social technology
Copyright 2010
Slide 1-9
Web 2.0
Applications,
technologies that
allow users to:
Create
and share content, preferences,

bookmarks, and online personas
Participate in virtual lives
Build online communities
Examples
YouTube,
Photobucket, Flickr, Google, iPhone

MySpace, Facebook, LinkedIn
Second Life
Wikipedia
Copyright 2010
Slide 1-10
Types of E-commerce
Classified
by market relationship
Business-to-Consumer
Business-to-Business
(B2C)
(B2B)
Consumer-to-Consumer
Classified
Peer-to-Peer
Mobile
(C2C)
by technology used
(P2P)
commerce (M-commerce)
Copyright 2010
Slide 1-11
The Internet
Worldwide network of computer networks

built on common standards
Created in late 1960s
Services include the Web, e-mail, file

transfers, etc.
Can measure growth by looking at number

of Internet hosts with domain names
Copyright 2010
Slide 1-12
The Growth of
the Internet,
Measured by
Number of
Internet Hosts
with Domain
Names
Figure 1.3, Page 23
SOURCE: Internet Systems Consortium,
Inc., 2009.
Copyright 2010
Slide 1-13
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
billion Web pages in 2000

At least 4050 billion pages today
Copyright 2010
Slide 1-14
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?
Copyright 2010
Slide 1-15
Origins & Growth of E-commerce
Precursors:
Baxter
Healthcare
Electronic
French
None
Data Interchange (EDI)
Minitel (1980s videotext system)
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
Copyright 2010
Slide 1-16
The Growth of B2C E-commerce

Figure 1.4, Page 25
SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors estimates.
Copyright 2010
Slide 1-17
The Growth of B2B E-commerce

Figure 1.5, Page 28
SOURCES: U.S. Census Bureau, 2009a; authors estimates.
Copyright 2010
Slide 1-18
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.
Copyright 2010
Slide 1-19
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
Copyright 2010
Slide 1-20
E-commerce: A Brief History

19952000:
Innovation
Key
concepts developed
Dot-coms; heavy venture capital investment
20012006:
Emphasis
Consolidation
on business-driven approach
2006Present:
Reinvention
Extension
of technologies
New models based on user-generated content,
social networking, services
Copyright 2010
Slide 1-21
Early Visions of E-commerce
Computer scientists:
Inexpensive,
universal communications and

computing environment accessible by all
Economists:
Nearly
perfect competitive market and friction-free

commerce
Lowered search costs, disintermediation, price
transparency, elimination of unfair competitive
advantage
Entrepreneurs:
Extraordinary
opportunity to earn far above normal

returns on investmentfirst mover advantage
Copyright 2010
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
19982000? Was this investment irrational?
What was the effect of the big bust of March 2000

on e-commerce 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 ecommerce companies? Would you invest in an ecommerce company today?
Copyright 2010
Slide 1-23
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
Copyright 2010
often overtake first movers

Slide 1-24
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, 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
Copyright 2010
Slide 1-25
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 2010
Slide 1-26
The Internet
and the
Evolution
of Corporate
Computing
Figure 1.9, Page 44
Copyright 2010
Slide 1-27
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

privacy-invading? Why?
Is e-commerce any different than traditional

markets with respect to privacy? Dont
merchants always want to know their
customer?
How do you protect your privacy on the Web?
Copyright 2010
Slide 1-28
Academic Disciplines Concerned

with E-commerce
Technical
approach
Computer
science
Management
science
Information
systems
Behavioral
approach
Information
systems
Economics
Marketing
Management
Finance/accounting
Sociology
Slide 1-29
All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

Publishing as Prentice Hall
Slide 1-30

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E-commerce

business. technology. society.

Copyright 2007 Pearson Education, Inc.

Facebook and MySpace: Its All About

How is Facebook different from

Have you used Facebook or MySpace,

Why do you think Facebook has

E-commerce Trends 20092010

New business models based on social

2009 a flat year, but growth expected to

Broadband and wireless access continue to

Mobile e-commerce begins to take off

Traditional media losing subscribers

The First 30 Seconds

of Internet and Web to

E-commerce vs. E-business

enablement of transactions and

not include commercial

Why Study E-commerce?

E-commerce technology is different,

E-commerce bringing fundamental

Unique Features of E-commerce

and share content, preferences,

Photobucket, Flickr, Google, iPhone

Worldwide network of computer networks

Created in late 1960s

Services include the Web, e-mail, file

Can measure growth by looking at number

popular Internet service

documents that may include text,

content has grown exponentially

billion Web pages in 2000

Spider Webs, Bow Ties, Scale-Free

What is the small world theory of the Web?

What is the significance of the bow-tie

Why does Barabasi call the Web a scale-free

Origins & Growth of E-commerce

Data Interchange (EDI)

Minitel (1980s videotext system)

had functionality of Internet

1995: Beginning of e-commerce

sales of banner advertisements

Since then, e-commerce fastest

The Growth of B2C E-commerce

The Growth of B2B E-commerce

SOURCES: U.S. Census Bureau, 2009a; authors estimates.

Technology and E-commerce in

The Internet and Web: Just two of a

E-commerce growth will eventually cap

Potential Limitations on the

Sophisticated skill set

Persistent cultural attraction of physical

Persistent global inequality limiting access

Saturation and ceiling effects

E-commerce: A Brief History

Early Visions of E-commerce

universal communications and

perfect competitive market and friction-free

opportunity to earn far above normal

The Internet Investment Rollercoaster

What explains the rapid growth in private

What was the effect of the big bust of March 2000

What is the value to investors of a company such