Chapter 1

Overview of Electronic
Commerce (E-Commerce)
Instructor: Nguyen Thi Thuy Hanh, PhD
Faculty of Information Systems
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Learning Objectives

1.1 Understand why it is important to study e-commerce.

1.2 Define e-commerce, understand how e-commerce differs from e-
business.
1.3 Identify and describe the unique features of e-commerce
technology and discuss their business significance.
1.4 Describe the major types of e-commerce.
1.5 Understand the evolution of e-commerce from its early years to
today.
1.6 Describe the major themes underlying the study of e-commerce.
1.7 Identify the major academic disciplines contributing to e-
commerce.
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Everything On Demand: The

“Uberization” of E-commerce
• Class Discussion
– Have you used Uber or any other on-demand service
companies?
– What is the appeal of these companies for users and
providers?
– Are there any negative consequences to the increased
use of on-demand services like Uber and Airbnb?

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The First Thirty Seconds

• First two decades of e-commerce
– Just the beginning
– Rapid growth and change
• Technologies evolve at exponential rates
– Disruptive business change
– New opportunities
• Why study e-commerce
– Understand opportunities and risks
– Analyze e-commerce ideas, models, issues

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Introduction to E-commerce
• Use of Internet to transact business
– Includes Web, mobile browsers and apps
• More formally:
– Digitally enabled commercial transactions between and
among organizations and individuals

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Discussion
• Difference between E-commerce & Traditional commerce?
+ Interaction
Suitability
Transaction processing
Scope
Accessibility
Cost effectiveness

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The Difference between

E-commerce and E-business
• E-business:
– Digital enabling of transactions and processes within a
firm, involving information systems under firm’s control
– Does not include commercial transactions involving an
exchange of value across organizational boundaries

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• E-commerce primarily involves transactions that cross firm boundaries.

• E-business primarily involves the application of digital technologies to business processes
within the firm.

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Technological Building Blocks

Underlying E-commerce
• Internet
• World Wide Web
– HTML
– Deep Web v s “surface” Web
ersu

• Mobile platform
– Mobile apps

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Forecast number of mobile users worldwide

from 2020 to 2025(in billions)

Source; statista,2023

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Insight on Technology: Will Apps

Make the Web Irrelevant?
• Class Discussion
– What are the advantages and disadvantages of apps,
compared with websites, for mobile users?
– What are the benefits of apps for content owners and
creators?
– Will apps eventually make the Web irrelevant? Why or
why not?

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Major Trends in E-commerce

• Business trends include:
– All forms of e-commerce show very strong growth
• Technology trends include:
– Mobile platform has made mobile e-commerce reality
• Societal trends include:
– Increased online social interaction and sharing

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Additional concepts
• Information asymmetry refers to any disparity in relevant market
information among parties in a transaction.

• Marketplace is a physical place you visit in order to transact

• Marketspace—a marketplace extended beyond traditional

boundaries and removed from a temporal and geographic location

• Transaction costs—the costs of participating in a market

• Cognitive energy refers to the mental effort required to complete

a task

• Market entry costs—the cost merchants must pay just to bring

their goods to market

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Additional concepts
• Search costs—the effort required to find suitable products

• Price transparency refers to the ease with which consumers can find
out the variety of prices in a market

• Cost transparency refers to the ability of consumers to discover the

actual costs merchants pay for products

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Unique Features of E-commerce

Technology

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Unique Features of E-commerce

Technology (1 of 2)
1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness

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Unique Features of E-commerce

Technology (2 of 2)
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology

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BUSINESS SIGNIFICANCE OF THE EIGHT UNIQUE FEATURES OF E-COMMERCE

TECHNOLOGY

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E-Commerce Glossary
- B: Business - Doanh Nghiệp
- 2: To
- E: Employee - Nhân Viên
- G: Government - Chính phủ
- C: Consumer - Khách hàng
- C: Citizen - Công dân

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Types of E-commerce
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
• Mobile e-commerce (M-commerce)
• Social e-commerce
• Local e-commerce

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Figure 1.5 The Growth of B2C E-

commerce in the United States

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Figure 1.7 The Growth of B2B E-

commerce in the United States

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Figure 1.8 The Growth of M-

commerce in the United States

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THE RELATIVE SIZE OF DIFFERENT TYPES OF E-COMMERCE IN THE UNITED

STATES IN 2020

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Unit: Billion USD

Global e-commerce revenue via social networks

(E-Commerce of Vietnam, Ministry of Industry and Trade, 2022)
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Vietnam's e-commerce: growth rate of over 25% in 2022

45
39
40
35
30
25
20
15 13
10 8 7
5.9 5.7
2.5 3 2.4 3.9
5 1.8 1.4
0
2020 2021 2025

Revenue of E-commerce Revenue of Online travel

Revenue of Transportation and food Revenue of online audiovisual content

Unit: Billion USD

E-commerce revenue over the year in Vietnam
(E-Commerce of Vietnam, Ministry of Industry and Trade, 2022)
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Percentage of enterprises doing business on social networks

(Vietnam E-Commerce Association, 2023)
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E-commerce: A Brief History (1 of 4)

• Precursors
– Baxter Healthcare modem-based system
– Order entry systems
– Electronic Data Interchange (EDI) standards
– French Minitel

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E-commerce: A Brief History (2 of 4)

• 1995–2000: Invention
– Sale of simple retail goods
– Limited bandwidth and media
– Euphoric visions of
▪ Friction-free commerce
▪ First-mover advantages
– Dot-com crash of 2000

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E-commerce: A Brief History (3 of 4)

• 2001–2006: Consolidation
– Emphasis on business-driven approach
– Traditional large firms expand presence
– Start-up financing shrinks
– More complex products and services sold
– Growth of search engine advertising
– Business web presences expand

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E-commerce: A Brief History (4 of 4)

• 2007–Present: Reinvention
– Rapid growth of:
▪ Web 2.0, including online social networks
▪ Mobile platform
▪ Local commerce
▪ On-demand service economy
– Entertainment content develops as source of revenues
– Transformation of marketing

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Figure 1.10 Periods in the

Development of E-commerce

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Assessing E-commerce (1 of 2)
• Stunning technological success
• Early years a mixed business success
– Few early dot-coms have survived
– Online sales growing rapidly
• Many early visions not fulfilled
– Price dispersion
– Information asymmetry
– New intermediaries

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Assessing E-commerce (2 of 2)
• Other surprises
– Fast-follower advantages
– Start-up costs
– Impact of mobile platform
– Emergence of on-demand e-commerce

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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

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Figure 1.11 The Internet and the

Evolution of Corporate Computing

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CASE STUDY: Insight on Society:

Facebook and the Age of Privacy
• Class discussion:
– Why are social networks interested in collecting user
information?
– What types of privacy invasion are described in the
case? Which is the most privacy-invading, and why?
– How is e-commerce different from traditional markets
with respect to privacy? Don’t merchants always want
to know their customer?
– How do you protect your privacy online?

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Academic Disciplines Concerned

with Technology
• Technical
– Computer science, management science, information
systems
• Behavioral
– Information systems research, economics, marketing,
management, finance/accounting, sociology

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Careers in E-commerce
• Position: Category specialist in E-commerce Retail
Program
• Qualification/Skills
• Preparing for the Interview
• Possible Interview Questions

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