E-commerce 2014

business. technology. society.

tenth edition

Kenneth C. Laudon
Carol Guercio Traver

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice

Hall
Chapter 1
The Revolution Is Just Beginning

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

 E-commerce Trends 2013–2014
 Expansion of social, local, and mobile
e-commerce
 Mobile platform begins to rival PC platform
 Continued growth of cloud computing
 Explosive growth in “Big Data”
 E-books gain wide acceptance
 Continued growth of user-generated
content

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 The First 30 Seconds
 First 17 years of e-commerce
 Just the beginning
 Rapid growth and change

 Technologies continue to evolve at

exponential rates
 Disruptive business change
 New opportunities

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 What Is E-commerce?
 Use of Internet and Web to transact
business
 More formally:
 Digitally enabled commercial transactions
between and among organizations and
individuals

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 E-commerce vs. 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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 Why Study E-commerce?
 E-commerce technology is different, more powerful
than previous technologies
 E-commerce brings fundamental changes to
commerce
 Traditional commerce:
 Consumer as passive targets
 Mass-marketing driven
 Sales-force driven
 Fixed prices
 Information asymmetry (any disparity in relevant market
information)

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 Eight Unique Features of
E-commerce Technology
1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology

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 Web 2.0
 User-centered applications and social
media technologies
 User-generated content and communication
 Highly interactive, social communities
 Large audiences; yet mostly unproven business
models
 Examples: Twitter, YouTube, Instagram,
Wikipedia, Tumblr

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 Types of E-commerce
 May be classified by market relationship or technology

 Business-to-Consumer (B2C)
 Business-to-Business (B2B)
 Consumer-to-Consumer (C2C)
 Social e-commerce
 Mobile e-commerce (M-commerce)
 Local e-commerce

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 The Growth of B2C E-commerce
Figure 1.3, Page 20

SOURCE: Based on data from eMarketer, Inc., 2013a; authors’ estimates.

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 The Growth of B2B E-commerce
Figure 1.4, Page 21

SOURCE: Based on data from U.S. Census Bureau, 2013; authors’ estimates.
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 The Internet
 Worldwide network of computer
networks built on common standards
 Created in late 1960s
 Services include the Web, e-mail, file
transfers, and so on
 Can measure growth by number of
Internet hosts with domain names

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 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
 Google reports 30 trillion unique URLs; 120
billion Web pages indexed

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 The Mobile Platform
 Most recent development in Internet
infrastructure
 Enables access to the Internet via
wireless networks or cell-phone service
 Mobile devices include
 Tablets
 Smartphones
 Ultra-lightweight laptops

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 Insight on Technology: Class Discussion

Will Apps Make the Web Irrelevant?

 What are the advantages and
disadvantages of apps, compared with
Web sites, 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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 Origins and Growth of E-commerce
 Precursors:
 Baxter Healthcare
 Electronic Data Interchange (EDI)
 French Minitel (1980s videotex system)
 None had functionality of Internet

 1995: Beginning of e-commerce

 First sales of banner advertisements

 E-commerce fastest growing form of

commerce in United States
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 E-commerce: A Brief History
 1995–2000: Invention
 Key concepts developed
 Limited bandwidth and media
 Euphoric visions of
 Friction-free commerce
 Lowered search costs, disintermediation, price
transparency, elimination of unfair competitive advantage
 First-mover advantages
 Network profits

 Dot-com crash of 2000

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 E-commerce: A Brief History (cont.)
 2001–2006: Consolidation
 Emphasis on business-driven approach
 Traditional large firms expand presence
 Start-up financing shrinks up
 More complex products and services sold
 Growth of search engine advertising
 Business Web presences expand to include
e-mail, display and search advertising, and
limited community feedback features

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 E-commerce: A Brief History (cont.)
 2007–Present: Reinvention
 Rapid growth of:
 Online social networks
 Mobile platform
 Local commerce

 Entertainment content develops as source of

revenues
 Transformation of marketing
 Coordinated marketing on social, mobile, local platforms
 Analytic technologies

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 Insight on Business: Class Discussion

Start-up Boot Camp

 Why do you think investors today are still
interested in investing in start-ups?
 What are the benefits of investing in a company
that is a graduate of a Y Combinator boot camp?
 Is an incubator the best solution for start-ups to
find funding? Why or why not?

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 Assessing E-commerce
 Many early visions not fulfilled
 Friction-free commerce
 Consumers less price sensitive
 Considerable price dispersion

 Perfect competition
 Information asymmetries persist

 Intermediaries have not disappeared

 First mover advantages
 Fast-followers often overtake first movers

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 Predictions for the Future
 Technology will propagate through all commercial
activity
 Large, traditional companies will continue to play
dominant role, consolidating audiences
 Start-up ventures can still attract large audiences in non-dominated
arenas
 Integrated online/offline companies will experience
more growth than purely online companies
 Additional factors:
 Increased regulation and control
 Cost of energy

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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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The Internet and
the Evolution
of Corporate
Computing
Figure 1.11, Page 41

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 Insight on Society: Class Discussion

Facebook and the Age of Privacy

 Why are social network sites interested in collecting
user information?
 What types of privacy invasion are described in the
case? Which is the most privacy-invading, and 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?

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 Academic Disciplines
Concerned with E-commerce
 Technical approach  Behavioral approach
 Computer science  Information systems
 Management science  Economics
 Information systems  Marketing
 Management
 Finance/accounting
 Sociology

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