copyright © 2002 pearson education, inc. slide 1-1
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Copyright © 2002 Pearson Education, Inc. Slide 1-2
CHAPTER 1
Created by, David Zolzer, Northwestern State University—Louisiana
The Revolution Is Just Beginning
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Amazon.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)
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Amazon.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
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E-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
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E-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
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The Difference Between E-Commerce and E-Business
Page 8, Figure 1.1
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Seven Unique Features of E-commerce Technology and Their Business Significance
Page 9, Table 1.1
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Page 11, Figure 1.2
Changing Trade-Off Between Richness and Reach
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Major 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)
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Business-to-Consumer E-commerce
Most commonly discussed type Online businesses attempt to
reach individual consumers Consumers will spend $65 billion
in 2001.
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Business-to-Business E-commerce 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
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Consumer-to-Consumer E-commerce
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
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Peer-to-Peer E-commerce
Enables Internet users to share files and computer resources
Napster
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Mobile E-commerce
Wireless digital devices enable transactions on the Web
Uses personal digital assistants (PDAs) to connect
Used most widely in Japan and Europe
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Growth 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
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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)
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Origins and Growth of E-Commerce 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)
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Origins 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
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Technology and E-Commerce in Perspective
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
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Technology and E-Commerce in Perspective
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
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Limitations of the Growth of B2CE-Commerce
Page 23, Table 1.3
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Web Access Via Wireless Devices in the United States
Page 24, Figure 1.7
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E-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
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E-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
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E-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
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E-Commerce I 1995-2000
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
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E-Commerce I 1995-2000
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
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E-Commerce I 1995-2000
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
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E-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
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E-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.
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E-Commerce I and E-Commerce II Compared
Page 32, Table 1.5
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Understanding E-Commerce: Organizing 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
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The Internet and the Evolution of Corporate Computing
Page 37,
Figure 1.8
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Disciplines Concerned with E-Commerce
Page 39, Figure 1.9