.

E-commerce: business.
technology. society.
E-commerce
business. technology. society.
Global Edition
seventh edition

Kenneth C. Laudon
Carol Guercio Traver

Copyright © 2011 Pearson Education, Ltd.

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Chapter 1: The Revolution Is Just

Beginning
Chapter 1
Introduction to E-commerce

Copyright © 2007 Pearson Education, Inc. Slide 1-2

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Facebook:
The New Face of E-Commerce?
Class Discussion

 Do you use Facebook, and if so, how often? What

has the experience been like?
 Have you purchased anything based on an
advertisement on Facebook or by using a link
provided by a friend?
 Are you concerned about the privacy of the
information you have posted on Facebook?

Slide 1-3
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E-commerce Trends 2010-2011

 Social networking continues to grow
 Social e-commerce platform emerges
 Online consumer sales return to growth
 Mobile computing begins to rival PC
 Explosive growth in online video viewing
 Continued privacy and security concerns

Slide 1-4
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The First 30 Seconds

 First 16 years of e-commerce
Just the beginning
Rapid growth and change

 Technologies continue to evolve at

exponential rates
Disruptive business change
New opportunities

Slide 1-5
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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

Slide 1-6
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E-commerce vs. E-business

 E-business:

 Digital enablement 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

Slide 1-7
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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

Slide 1-8
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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

Slide 1-9
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Web 2.0
 Technologies that allow users to:
Create and share content, preferences,
bookmarks, and online personas
Participate in virtual lives

Build online communities

 E.g. Twitter, YouTube, Facebook, Second Life,

Wikipedia, Digg

Slide 1-10
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Types of E-commerce
 Classified by market relationship
 Business-to-Consumer (B2C)

 Business-to-Business (B2B)

 Consumer-to-Consumer (C2C)

 Classified by technology used

 Peer-to-Peer (P2P)

 Mobile commerce (M-commerce)

Slide 1-11
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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

Slide 1-12
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The Growth of
the Internet,
Measured by
Number of
Internet Hosts
with Domain
Names
Figure 1.3

SOURCE: Internet Systems Consortium,

Inc. , 2010.

Slide 1-13
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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 indexes between 75 – 100 billion
pages
Slide 1-14
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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”?

Slide 1-15
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Origins & 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
Slide 1-16
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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.

Slide 1-17
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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
Slide 1-18
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E-commerce: A Brief History

 1995-2000: Innovation
 Key concepts developed
 Dot-coms; heavy venture capital investment

 2001-2006: Consolidation
 Emphasis on business-driven approach

 2006-Present: Reinvention
 Extension of technologies
 New models based on user-generated content, social
networks, services
Slide 1-19
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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 investment – first mover advantage
Slide 1-20
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Insight on Business
“Noodlenomics” Guides Internet
Investment in 2010
Class Discussion

 What explains the rapid growth in private investment in

e-commerce firms in the period 1998–2000? 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 e-commerce companies?
Would you invest in an e-commerce company today?
Slide 1-21
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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

 Disintermediation
 First mover advantage
 Fast-followers often overtake first movers

Slide 1-22
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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.
 Regulatory activity worldwide will grow.
 Cost of energy will have an influence.

Slide 1-23
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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

Slide 1-24
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The Internet
and the
Evolution
of Corporate
Computing
Figure 1.9

Slide 1-25
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Insight on Society
Who Really Cares About Online Privacy?
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? Don’t merchants always
want to know their customer?
 How do you protect your privacy on the Web?

Slide 1-26