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E-commerce
Kenneth C. Laudon
Carol Guercio Traver

business. technology. society.
Fourth Edition
Copyright 2007 Pearson Education, Inc.
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Chapter 1
The Revolution Is Just
Beginning
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MySpace and Facebook: Its All About You
Class Discussion
What was the idea behind the creation of
MySpace? Facebook different from MySpace
How is?
Have you used MySpace or Facebook, and if
so, how often? What was your experience?
Do you think these sites will continue to
grow?
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E-commerce Trends: 2007-2008
New business models based on social
technologies and user-generated content
Search engine marketing dominates online
advertising
More and more people/businesses use
Internet to conduct commerce
Broadband and wireless Internet access
growing
Continued conflict over copyrights, content
regulation, taxation, privacy, Internet fraud
and abuse.

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What is E-commerce?
Involves digitally enabled commercial
transactions between and among
organizations and individuals
Digitally enabled transactions include all
transactions mediated by digital technology
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E-commerce vs. E-business
E-business:
Digital enablement of transactions and processes
within a firm, involving information systems under
firms control
E-Business in addition to encompassing E-
commerce includes both front and back-office
applications that form the engine for modern E-
commerce
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Why Study E-commerce?
Technology is different and more powerful
than other technologies
Has challenged much traditional business
thinking
Has a number of unique features that help
explain why we have so much interest in e-
commerce
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Unique Features of E-commerce Technology
Ubiquitous
Global reach
Universal standards
Information richness
Interactive
Information density
Personalization/customization
Social technology
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Web 2.0
The new Web
Applications and technologies that allow users
to:
create, edit, and distribute content
share preferences, bookmarks, and online personas
participate in virtual lives
Examples
YouTube, Photobucket, Flickr
MySpace, Facebook, LinkedIn
Second Life
Wikipedia


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Types of E-commerce
Classified by nature of market relationship
Business-to-Consumer (B2C) : A transaction that occurs
between a company and a consumer
Business-to-Business (B2B)
Consumer-to-Consumer (C2C)
Classified by type of technology used
Peer-to-Peer (P2P) : Peer-to-peer refers to the design of
a service that does not rely on centralized networking
services. Ex: File sharing
Mobile commerce (M-commerce)

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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, etc.
Can measure growth by looking at number of
Internet hosts with domain names

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The Growth of the
Internet, Measured
by Number of
Internet Hosts with
Domain Names
Figure 1.3, Page 23
SOURCE: Internet Systems Consortium, Inc. (www.isoc.org), 2007.
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The Web
The most popular service on the Internet
Developed in early 1990s
Provides access to Web pages (HTML documents)
Can include text, graphics, animations, music,
videos
Web content in form of Web pages has grown
exponentially, from over 2 billion pages in 2000 to
over 50 billion pages in 2007
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The Growth of
Web Content
Figure 1.4, Page 24
SOURCE: Based on data from Google Inc., 2007.
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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?


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Origins and Growth of E-commerce
Precursors include
Baxter Healthcare
Electronic Data Interchange (EDI)
French Minitel (1980s videotext system)
None of precursor systems had the functionality
of the Internet
We date the beginning of e-commerce to 1995
Since then, has been fastest growing form of
commerce in U.S.

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The Growth of B2C E-commerce
Figure 1.5, Page 25
SOURCES: Based on data from eMarketer, Inc., 2007a; U.S. Census Bureau, 2007;
Forrester Research, 2007a; authors estimates.
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The Growth of B2B E-commerce
Figure 1.6, Page 28
SOURCES: Based on data from U.S. Census Bureau, 2007; authors estimates.
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Technology and E-commerce in Perspective
The Internet and Web are just two of a long
list of technologies, such as automobiles and
radio, that have followed a similar historical
path.
Although e-commerce has grown explosively,
eventually its growth will cap as it confronts
its own fundamental limitations.
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Potential Limitations on the Growth of
B2C E-commerce
Expensive technology
Complex software interface
Sophisticated skill set
Persistent cultural attraction of physical
markets and traditional shopping experiences
Persistent global inequality limiting access to
telephones and computers
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The Visions and Forces Behind E-commerce:
19952000
For computer scientists, vindicated a vision of
universal communications and computing
environment
For economists, vision of a perfect Bertrand
market and friction-free commerce
For entrepreneurs, their financial backers and
marketing professionals, represented an
extraordinary opportunity to return far above
normal returns on investment.


Copyright 2007 Pearson Education, Inc.
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Insight on Business: Dot-com IPOs: its
Dj Vu All Over Again
Class Discussion
What explains the rapid growth in private investment
in e-commerce firms in the period 19982000? Was
this investment irrational?
Why do you think investors in 2007 are once again
interested in investing in or purchasing e-commerce
companies? Would you invest in an e-commerce
company today?
Whats happening today? Go to the
PricewaterhouseCoopers MoneyTree Web site for
the latest information:
http://www.pwcmoneytree.com/moneytree/index.jsp


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Assessing E-commerce: Successes,
Surprises and Failures
A stunning technological success
Early years have been a mixed success from
a business perspective
Many visions developed during early days of
e-commerce not fulfilled
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Predictions for the Future
E-commerce technology will continue to propagate
through all commercial activity
E-commerce prices will rise to cover the real cost of
doing business on the Web and pay investors
reasonable rate of return
E-commerce margins and profits will rise to levels
more typical of all retailers
In B2C and B2B, traditional Fortune 500 companies
will play growing and dominant role
Number of successful pure online companies will
decline and most successful e-commerce firms will
adopt mixed clicks and bricks strategies
Growth of regulatory activity worldwide
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Understanding E-commerce: Organizing
Themes
Technology: Development and mastery of
digital computing and communications
technology
Business: New technologies present
businesses and entrepreneurs with new ways
of organizing production and transacting
business
Society: Intellectual property, individual
privacy, and public policy

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The Internet
and
the Evolution
of Corporate
Computing
Figure 1.10, Page 44
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Insight on Society: Holding On to Your
Privacy Online
Class Discussion
What are the techniques of privacy invasion
described in the case?
Which of these techniques is the most
privacy-invading? Why?
Is the Internet and 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?
Privacy Online Techniques

https://www.eff.org/wp/effs-top-12-ways-protect-
your-online-privacy
1) Do not reveal personal information inadvertently.
2) Turn on cookie notices in your Web browser, and/or use
cookie management software or infomediaries.
3) Keep a "clean" e-mail address.
4) Don't reveal personal details to strangers or just-met
"friends
5) Realize you may be monitored at work, avoid sending
highly personal e-mail to mailing lists, and keep sensitive
files on your home computer.








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Privacy Online Techniques

https://www.eff.org/wp/effs-top-12-ways-protect-
your-online-privacy
6. Beware sites that offer some sort of reward or prize in
exchange for your contact information or other personal details
7. Do not reply to spammers, for any reason.
8. Be conscious of Web security.
9. Be conscious of home computer security.
10. Examine privacy policies and seals.
11. Remember that YOU decide what information about yourself to
reveal, when, why, and to whom.
12. Use encryption!










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The significance of the bow-tie form of the Web
It is important to understand the foundational form of the Web. It
can be described as a "bow tie" when examining it on a macro
level.
The Core: The center of the model is the core. It consists of
intensely linked sites; much like a network where starting at one
site you can eventually find all the websites in the core through
their links.
Origination Sites: These are sites that have outward links
connecting it to the core sites. They can therefore be hard to find
because they do not have many links back from the core.
Termination Sites: Termination sites are the opposite of
origination sites. They have links coming from the core but not
back to the core.

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My Space : is a place where people come to connect,
discover, and share.
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The difference between Myspace and Facebook
Myspace is used by people of all ages from 13-
whatever, people usually talk to people they know and
people they dont know on myspace, myspace has
music, a profile for most musicians with music players
with their songs on their page, myspace has "myspace
tv" like youtube and many other features
Facebook is really straightforward, nicely organized
easy and efficient to use mostly used by high schoolers
and college people but used by other age groups too,
facebook has a lot of "applications" and groups

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The difference between Myspace and Facebook
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Criteria Myspace Facebook
Layouts All kinds of personalities in the
designs
The design is clean and clear with
not as much information or style.
Information You can put a great deal more
information in the profile in
Myspace
You will not be putting in as much
information
Privacy Myspace was targeted to a
much larger target group and
therefore was more open to
many visitors.
It was set up with a great deal
more privacy
Target Myspace has been formed with
entertainment and music in
mind
The interface is based around
information. The pages are clean
and clear with information and
technology.
Technology Myspace is more popular and
well designed.
The favorite of many is the history
tracker that helps show visitors
and the owner of the page what
has happened new.
Second Life
Second Life is an online virtual world developed by Linden Lab.
It was launched on June 23, 2003. A number of free client
programs, or Viewers,
[1][2]
enable Second Life users, to interact
with each other through avatars (Also called Residents).
Residents can explore the world (known as the grid), meet other
residents, socialize, participate in individual and group activities,
and create and trade virtual property and services with one
another. Second Life is intended for people aged 16 and over.
[3]

Built into the software is a three-dimensional modeling tool
based on simple geometric shapes that allows residents to build
virtual objects. There is also a procedural scripting language,
Linden Scripting Language, which can be used to add
interactivity to objects.

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Second Life
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Second Life is a world created from the
undiluted dreams and desires of
thousands of people.

It's a virtual world called Second Life,
where imaginary goods are traded for
legal tender, and at least one participant
in the online program has made a million
dollars.





Small word theory of the web
We all have friends and they have further
friends who have friends again and so on. In
fact, this multiplication effect quickly leads to a
huge number of connections with people within
relatively few friendship 'hops'.
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Mobile e-commerce
It was developed in 1997 to mean "the delivery
of electronic commerce capabilities directly into
the consumers hand, anywhere, via wireless
technology.

"a retail outlet in your customers
pocket.
Products and services: Mobile Money Transfer;
ATM; ticketing; banking; brokerage; auctions,
browsing, purchase, marketing and advertising;
information services; vouchers, coupons and
loyalty cards

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The difference between E-commerce & E-Business

E-commerce is buying and selling using an electronic medium. It is
accepting credit and payments over the net, doing banking transactions
using the Internet, selling commodities or information using web.
E-Business in addition to encompassing E-commerce includes both front
and back-office applications that form the engine for modern E-commerce.
E-business is not just about E-commerce transactions; it's about re-
defining old business models, with the aid of technology to maximize
customer value. E-Business is the overall strategy and E-commerce is an
extremely important facet of E-Business.
Thus e-business involves not merely setting up the company website and
being able to accept credit card payments or being able to sell products or
services on time. It involves fundamental re-structuring and streamlining of
the business using technology by implementing enterprise resource
planning (ERP) systems, supply chain management, customer relationship
management, data ware housing, data marts, data mining, etc.

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Spider Web
A software program that travels the Web
(hence the name "spider"), locating and
indexing websites for search engines.
All the major search engines, such as Google
and Yahoo!, use spiders to build and update
their indexes.
These programs constantly browse the Web,
traveling from one hyperlink to another.
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Bow-ties
They have been developed for demonstrating
management of security, information technology,
business interruption and project risks.
It provides a readily understood visualization of
the relationships between the causes of
business upsets, the escalation of such events,
the controls preventing the event from occurring
and the preparedness measures in place to limit
the business impact
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Bow-ties (Fig)
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Scale-Free Network
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All nodes would be connected
to the same degree, most would
have a number of connections

Deep Web Class Discussion
Online discussions among students by leading
to a deeper understand
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PricewaterhouseCoopers
MoneyTree Web site
The MoneyTree Report is a quarterly study of venture capital
investment activity in the United States.
The MoneyTree Report is the definitive source of information
on emerging companies that receive financing and the venture
capital firms that provide it. The study is a staple of the financial
community, entrepreneurs, government policymakers and the
business press worldwide.
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Project 1 - Scope
The history of the business;
history of the firms e-commerce activity;
implications of e-commerce for the firms sales, costs,
and profits;
firms needs or requirements with respect to hardware,
software, skilled labor , and supportive institutions and
services; and programs/services available locally to
facilitate the adoption of e-commerce.

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Project 1 - Discussion
Each case study firm was asked to comment on:
(1) The problems or costs associated with adopting
an e-commerce strategy and
(2) Anything that they would do differently with
respect to e-commerce if they had the opportunity
to start the process over.

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