What is E-commerce And its Types

By: Liaquat Ali Rahoo 1

CHAPTER 1CHAPTER 1

The Revolution Is Just The Revolution Is Just BeginningBeginning


Learning ObjectivesLearning Objectives Define e-commerce and describe how it

differs from e-business Identify the unique features of e-commerce

technology and their business significance Describe the major types of e-commerce Understand the visions and forces behind

the E-Commerce I era


Learning ObjectivesLearning Objectives Understand the successes and failures of

E-Commerce I Identify several factors that will define the

E-commerce II era Describe the major themes underlying the

study of e-commerce Identify the major academic disciplines

contributing to e-commerce research


Amazon.com: Before and AfterAmazon.com:

Before and After


Amazon.com: Before and AfterAmazon.com: Before and After

Most well-known e-commerce company Conceived by Jeff Bezos in 1994 Opened in July 1995 Four compelling reasons to shop

Selection (1.1 million titles) Convenience (anytime, anywhere) Price (high discounts on bestsellers) Service (automated order confirmation,

tracking, and shipping information)


Amazon.com: Before and AfterAmazon.com: Before and After

($1.4 Billion)$2.7 Billion2000

($720 Million)$1.6 Billion1999

($125 Million)$610 Million1998

($31 Million)$148 Million1997

($6.24 Million)$15.6 Million1996

EarningsRevenues

Revenues and Earnings


E-commerce vs. E-businessE-commerce vs. E-business

E-commerce involves Digitally enabled commercial transactions

between organizations and individuals. Digitally enabled transactions include all

transactions mediated by digital technology

Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services


E-commerce vs. E-businessE-commerce vs. E-business

E-business involves Digital enablement of transactions

and processes within a firm, involving information systems under the control of the firm

E-business does not involve commercial transactions across organizational boundaries where value is exchanged


The Difference Between E-The Difference Between E-commerce and E-Businesscommerce and E-Business

Page 8, Figure 1.1


Unique of E-commerce Technology Unique of E-commerce Technology and Their Business Significanceand Their Business Significance

E-commerce: is ubiquitous has global reach operates according to universal standards provides information richness is interactive increases information density permits personalization


Seven Unique Features of E-commerce Seven Unique Features of E-commerce Technology and Their Business SignificanceTechnology and Their Business Significance

Page 9, Table 1.1


Page 11, Figure 1.2

Changing Trade-Off Between Changing Trade-Off Between Richness and ReachRichness and Reach


Major Types of E-CommerceMajor Types of E-Commerce

Market relationships Business-to-Consumers (B2C) Business-to-Business (B2B) Consumer-to-Consumer (C2C)

Technology-based Peer-to-Peer (P2P) Mobile Commerce (M-commerce)


Major Types of E-CommerceMajor Types of E-CommercePage 14, Table 1.2


Business-to-Consumer E-Business-to-Consumer E-commercecommerce

Most commonly discussed type Online businesses attempt to reach

individual consumers Consumers will spend $65 billion in 2001.


Business-to-Business E-Business-to-Business E-commercecommerce

Businesses focus on sell to other businesses

Largest form of e-commerce $700 billion in transactions in 2001 Primarily involved inter-business

exchanges at first Other models have developed

e-distributors infomediaries B2B service providers


Consumer-to-Consumer E-Consumer-to-Consumer E-commercecommerce

Provide a way for consumers to sell to each other

Estimated $5 billion market Consumer:

prepares the product for market places the product for auction or sale relies on market maker to provide catalog,

search engine, and transaction clearing capabilities


Peer-to-Peer E-commercePeer-to-Peer E-commerce

Enables Internet users to share files and computer resources

Napster


Mobile E-commerceMobile E-commerce

Wireless digital devices enable transactions on the Web

Uses personal digital assistants (PDAs) to connect

Used most widely in Japan and Europe


Growth of the Internet and the WebGrowth of the Internet and the Web

Created in the late 1960s About 350 million computers worldwide to

date Links businesses, educational institutions,

government agencies, and individuals Provides services such as e-mail,

document transfer, newsgroups, shopping, research, instant messaging, music, video, and news


Growth of the Internet and the Web Internet hosts are growing at a rate of

45% per year Extraordinary growth -- time to reach

30% US households Radio - 38 years Television - 17 years Internet/Web - 8 years (1993)


The Growth of the InternetPage 16, Figure 1.3


The Growth of Web ContentPage 17, Figure 1.4


The Growth of B2C E-CommerceThe Growth of B2C E-CommercePage 20, Figure 1.5


The Growth of B2B E-CommerceThe Growth of B2B E-CommercePage 21, Figure 1.6


Origins and Growth of E-Origins and Growth of E-CommerceCommerce

Baxter Healthcare Primitive form of B2B using telephone-based modem to

permit hospitals to reorder supplies (early 1970s) PC-based remote order entry system (1980s)

Electronic Data Interchange (EDI) standards developed that permitted firms to exchange commercial documents and conduct digital commercial transactions across private networks (1980s)


Origins and Growth of E-CommerceOrigins and Growth of E-Commerce

French Minitel videotext system First B2C arena (1981) 15 million in use throughout France

World Wide Web 1993 first browsers 1995 first banner ads


Technology and E-Commerce in Technology and E-Commerce in PerspectivePerspective

Internet and the Web are just two of a long list of technologies that have greatly change commerce

Other technologies spawned business models and strategies

Explosive early growth followed by retrenchment and then long-term successful exploitation of the technology


Technology and E-Commerce in Technology and E-Commerce in PerspectivePerspective

Although e-commerce has grown explosively, there is no guarantee it will continue to grow

Confront own fundamental limitations B2C only about 1% of overall retail market With current growth rates, B2C will roughly

equal the annual revenue of Wal-Mart in 2005


Limitations of the Growth of B2CLimitations of the Growth of B2CE-CommerceE-Commerce

Page 23, Table 1.3


Web Access Via Wireless Devices in Web Access Via Wireless Devices in the United Statesthe United States

Page 24, Figure 1.7


E-Commerce I and IIE-Commerce I and II E-Commerce I

Explosive growth starting in 1995 Widespread of Web to advertise

products Ended in 2000 when dot.com began to

collapse E-Commerce II

Began in January 2001 Reassessment of e-commerce

companies


E-Commerce I 1995-2000E-Commerce I 1995-2000

For computer scientist and information technologists Vindication of a set of information

technologies developed over 40 years Extending from the early Internet to the

PC and local area networks The vision of universal communications


E-Commerce I 1995-2000E-Commerce I 1995-2000 For economists

Raised realistic prospect of perfect Bertrand Market where price, cost, and quality information is

equally distributed where a nearly infinite set of suppliers

compete against one another where customers have access to all revelant

market information worldwide

Merchants have equal direct access to hundreds of millions of customers



Disintermediation displacement of market middlemen who

traditionally are intermediaries between producers and consumers by a new direct relationship between manufacturers and content originators with their customers



Friction-free commerce a vision of commerce in which

information is equally distributed transaction costs are low prices can be dynamically adjusted to

reflect actual demand intermediaries decline unfair competitive advantages are

eliminated



First mover a firm that is first to market in a

particular area and that moves quickly to gather market share

Network effect occurs where users receive value

from the fact that everyone else uses the same tool or product


Amounts Raised by Venture-Backed Amounts Raised by Venture-Backed Internet Companies in 1996-2000Internet Companies in 1996-2000

Page 25, Table 1.4


E-Commerce II 2001-2006E-Commerce II 2001-2006

Crash in stock market values of E-commerce I companies throughout 2000 is an end to E-commerce I

Led to a sobering reassessment of the prospects of e-commerce and the methods of achieving business success.

E-commerce II begins in 2001 and ends five year later -- the limit for making technology and business projections


E-Commerce II 2001-2006E-Commerce II 2001-2006

Reasons for the end of E-Commerce I run-up in technology stocks due to enormous information

technology capital expenditure of firms rebuilding their internal business systems to withstand Y2K

telecommunications industry had built excess capacity in high-speed fiber optic networks

1999 e-commerce Christmas season provided less sales growth that anticipated and demonstrated e-commerce was not easy (eToys.com)

valuations of dot.com and technology companies had risen so high supporters were questioning whether earnings could justify the prices of the shares.


Insight on Business:Insight on Business:A Short History of dot.com IPOSA Short History of dot.com IPOS

Between 1998 and 2000 venture capitalists poured an estimated $120 billion into approximately 12,450 dot.com start-up ventures

Investment bankers took 1,262 of these companies public in IPOS

IPO shares were targeted to open around $15 per share, and it was not uncommon for them to be trading at $45 a share or more later the same trading day


E-Commerce I and E-Commerce E-Commerce I and E-Commerce II ComparedII Compared

Page 32, Table 1.5


April 2001 NRF/Forrester Online April 2001 NRF/Forrester Online Retail IndexRetail Index

Page 33, Table 1.6


Top 25 Properties of March 2001 Top 25 Properties of March 2001 (Combined Home and Work)(Combined Home and Work)

Page 34, Table 1.7


Top 20 Web Retailers Among U.S. Home Users Top 20 Web Retailers Among U.S. Home Users (January, 2001)(January, 2001)

Page 35, Table 1.8


Understanding E-Commerce: Understanding E-Commerce: Organizing ThemesOrganizing Themes

Technology: Infrastructure development and mastery of digital computing

and communications technology Business: Basic Concepts

new technologies present businesses and entrepreneurs with new ways of organizing production and transacting business

Society: Taming the Juggernaught global nature of e-commerce poses public

policy issues of equity, equal access, content regulation, and taxation


The Internet and the Evolution of Corporate Computing

Page 37,

Figure 1.8


Disciplines Concerned with E-Disciplines Concerned with E-CommerceCommerce

Page 39, Figure 1.9

What is E-commerce And its Types

Education