THE REVOLUTION

IS JUST BEGINNING

How is e-commerce different from e-business?

IS FACEBOOK THE NEW FACE OF E-COMMERCE? Facebook has over a billion active users

More than 50% of active users log on daily 150 million active users in the US Average user has 130 friends More than 75% users outside US

International audience third in size only to Google and Yahoo

FB positioned to be the embodiment of new kind of e-commerce called, “social e-commerce.”

FB is poised to become Largest social search Largest online content network Largest social online ad network The most privacy invading service on the Internet

FACEBOOK AND PRIVACY CONCERNS Facebook was reported in 2011 to have been

tracking members even when they were logged out of Facebook through cookies. Tracking without users’consent or knowledge not

proper Facebook states their mission is to “make the

world more open and connected.” New applications can potentially lead to more

breaches Timeline – a feature to help people share their life

stories with friends online Ticker – not a real hit with many (stalker feeling) OpenGraph – users can hear and see the music and

movies their friends like

OPENGRAPH Partnered with Netflix and Spotify and

othersUsers will be able hear the music or look at

films friends have stated a preference for in their profile

Spotify feels this higher level of involvement will make users twice as likely to pay for music. Users simply move the curser over their friends

images to hear/listenMost users are unaware that any track you

listen to is automatically shared with your FB friends … resulting in backlash against Spotify and FB

FACEBOOK AND THE FUTURE The face of e-commerce to come? A hornet’s nest of social and business

controversies. Peak capitalization was $104B Privacy record the worst amongst any of

the large Internet companiesSubject to periodic user revolts

Increasing competition from smaller networks promising users complete control over personal information (Google+, Tmblr)

SOCIAL E-COMMERCE More than just showing ads for products and

having users click their way off site to purchase something

More than using FB to promote a company’s wares

More than a search engine displaying ads All these things listed above and more …

Example – Walt Disney Company released a FB app called “Disney Tickets Together” Allowed users to buy TS3 tickets without leaving FB

… just give Disney access to your personal information profile, enter a zip code and a list of nearby theaters and show times appears …

WALT DISNEY COMPANY’S FB APP Option to invite

FB friends as well as friends without FB accounts to the TS3 pageSuccess – over 5

million people “like” TS3 and large groups of tickets sold

Unique aspect Transaction took

place without leaving FB

FB hope to fully evolve into an e-commerce platform like Amazon or eBay

HOW DO YOU LEARN ABOUT NEW PRODUCTS? Traditionally …

Friends Relatives Neighbors colleagues i.e., your social

network Mass media

advertising plays a role but social networks play a key role for early adopters

We tend to consume the same products our friends consume, listen to the same music, use the same service providers

The world is changing and we are doing our “social networking” on the Internet via sites like FB

HOW DO YOU ACQUIRE THE PRODUCTS? Social Network

friend introduces you to a music trackYou could ask

where they bought it, use Google or another search engine OR what if it was available on FB without ever leaving the site?

FB benefits because you stay on site and FB can offer and introduce you to more products and services

How does this stay in line with the initial FB mission?

FACEBOOK EMERGES AS A “SOCIAL SEARCH” The introduction to new products can lead to

your friends recommendations on patronage Expansion possible of recommendation on

related networks as wellThe FB search engine is based on your social

networks and the members of your networkUltimately every time you purchase a product or

search information for a product your friends are notified

You assume an “influencer” role in a decision making process for your friends

The key is how well FB can invade its user’s privacy!!

INVASION OF PRIVACY FB and its founder,

Mark Zuckerberg have tried to persuade users to give up their privacy and reveal details

Persuasion has not been effective.

Privacy is “no longer cool” No Privacy policy

replaced the “only friends will see profile”

Google search your name

FB Beacon Program (2007) Automatically inform

participating advertisers about user preferences Negative feedback

caused FB to abandon plan

December 2009 FB released a privacy

statement encouraging members to share information

Privacy is an “evolving social norm” what??

April 2010 Social Plug-Ins –

implemented by outside websites

User hits “like” button and friends will know about it

SO WHO CARES ABOUT PRIVACY? In 1/2010

Zuckerburg declared the “age of privacy had come to an end” Have social norms

changed? Or is this wishful thinking of advertisers?

December 2009 – without user’s consent FB publishing name, profile gender

Pandora music selections automatically shared with friends and the entire Internet

May 2010 – bowing to intense pressure from foreign governments and Congress and privacy advocates, new privacy policy released

PRIVACY POLICIES Privacy policies

put billions of dollars at stake Advertising and

transaction fees “Privacy

Destruction” models involve users voluntarily posting information (or deceived)

Privacy was first confronted in the Roman Republic in 542 B.C. .. Limits held in all most major governments

FB flip flopped! Since 2007 FB

controls user content with less warning and control given to users

PRIVACY “Like” Buttons

Alert friends browsing and purchasing from third party advertisers (like abandoned Beacon Program)

2010 FB began dispersing information to Yelp, MS and Pandora without consent of users

MoveOn.org initially resisted the Beacon program and gained 50,000 members in 10 days

FB allowed “opt in” to appease users - a sham since Fandango, Blockbuster, Hotwire were all receiving information!

500,000 users joined online resistance FB conducted an online survey regarding privacy

Result – you own your information – new privacy policy required users to wade through 170 information categories

5/2010 – another apology for complicated process

Resulted in Congressional interest

FTC investigating FB policies

Currently FB is selling user information relating to many characteristics reported in your information section

COMPETITION FB refuses to make “no sharing”

the default optionHopes to catch users not paying attention to “share” information

Smaller social networks such as Pipio and OneSocialWeb, Crabgrass and Elgg are hoping to attract FB users

1994-2010 E-COMMERCE (1ST 30 SECONDS) 1994

E-commerce did not exist as we know itBy 2010 consumers spent $256 billion and

businesses spent $3.6 trillion on services and products

2010E-commerce had been reinvented TWICE!Late 1990s period of business vision,

experimentation and inspirationRetrenchment, reevaluation resulted in the

e-collapse in 2000-2001Market value fell by 90%

1994-2011 By 2001 many ready to write off e-commerce

and predicted stagnating growth WRONG!

2002-2008 retail e-commerce grew at over 25% yearly

Transition again Social network based model of e-commerce

“social e-commerce intertwining with FB, Twitter, Photobucket, YouTube

Traditional Amazon style model continues alongside this new evolution

Why significant – viewership down for TV networks and cable, newspapers shriveling, magazines struggling

2010 E-COMMERCE – THE REVOLUTION IS BEGINNING Online consumer

sales grew 12.7% Traditional retail

2.5% Growth in US via

increased spending by existing buyers Trust in buying more

expensive “high touch” items such as electronics, apparel, furnishings

221 million (2010) vs. 211 (2009) million online

70% households online 78% Internet users

online daily 62% send email 49% use search engine 43% get news 38% social networking 26% banking 23% watch videos 17% Wikipedia!

2011-2012 85% of online users have

purchased online Another 30 million

+conducted information search

Demographic profile is expanding

B2B - $3.6 trillion (30%) of total B2B

Internet technology gains depth and power 68% US households have DSL or broadband

69% of world users have mobile access to Internet

TRENDS IN E-COMMERCE 2010-2012 (BUSINESS) New Social e-commerce

emerging based on social networking and supported by advertising

FB 1 billion users world wide

Twitter 500+ million Tweeple; 100 million active users

Consumer goods finding online markets

First wave of e-commerce transformed music, air travel, brokerages

2nd Wave Marketing/advertising,

telecommunications, entertainment, real estate, bill payment

Small business entering using platforms of Apple, FB, Amazon, Google

2010-2011 Technology

Mobile applications and access on iPhones, Blackberries and other smartphones, netbooks and the iPad rivaling the PC platform

250,000+ apps in the Apple Store enabling the delivery of products and services

Computing and networking increasingly affordable

Cloud computing and Web services expand B2B

Realtime advertising

Society 34 gigabytes daily

consumption by the average American (increasing)

Traditional media losing subscribers

Explosive growth in online viewing

Social networking increasingly popular in all demos

China and India growth at 15-20% yearly

Virtual lives continue to grow as does self publishing

E-COMMERCE The use of the

Internet and the WWW to transact business

Commercial transactions refer to the exchange of valueNo value, no

commerce

E-BusinessDigital enabling of

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

E-Commerce Involves

transactions across entities

8 UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY Ubiquity

available everywhere at all times

Global Reach Universal

Standards i.e., Internet/technical standards

Richnessvideo, audio,

text messaging

Interactivity Technology works

through the interaction with the user ( 2 way)

Information density Reduces

information costs and raises quality

Personalization/Customization

Social technology User content

generation and social networking

WEB 2.0 – PLAY MY VERSION Users create, edit

and distribute the content of others

Share preferences, bookmarks, online personas;

Participate in virtual lives and build online communities

Examples Twitter – 140

character messages 1,000% growth a

year

YouTube –Google owned ($1.65B purchase) 2 billion video

streams daily

Photobucket Posting and sharing

photos, videos, emails, IM

One click shares to FB, MySpace

100 million worldwide users

WEB 2.0 – PLAY MY VERSION iPhones

50 million sold by 2012

Supports mobile versions of Web 2.0 applications

650k iPhone 5’s in Q3 iPad

True platform for web commerce

Google 179 million unique US

visitors monthly

Wikipedia Sharing of knowledge

worldwide Collaboratively edited, 3.4

million articles in English 365 million unique visitors

Digg Enables users to tag and

share Web pages, vote on what like best, popular promoted to front page

WordPress Create a blog or Website on

the Web Open Source product – free

of charge written by a collaboration of volunteers

TYPES OF E-COMMERCE Business to

Consumer E-Commerce $255 billion in

2010 Consumer to

Consumer E-Commerce eBay, Craigslist,

$80 billion

B2B E-Commerce $3.6 trillion in 2010

Peer to Peer E-Commerce Share files and

computer resources Mobile Commerce

(M Commerce) Wireless digital

devices Smart phones exploding

the market and demand for high speed access

GROWTH OF THE INTERNET AND THE WEB The push behind

the growth and significance is based upon the developments of the Web and the Internet

The Internet is a worldwide network of computer networks built on common standards.

The Internet (1960s) connected a small # of mainframes… now the largest network including over 1 billion computers Links businesses,

educational institutions, governmental agencies, individuals

GROWTH OF THE INTERNET AND THE WEB Internet hosts with

domain names growth since1993 Less than 10 million to

732 million in 245 countries as of 2010 (Internet Systems Consortium, 2010)

Diffusion of other technologies Radio – 38 years for 30%

share of hh TV 17 years Internet/Web – 53% in 10

yrs

WWW most popular service that runs on the Internet infrastructure Killer application that

made the Internet commercially appealing

Web developed in the early 90’s.

The billions of Web pages are indexed by Google, Yahoo! and other search engines

SPIDER WEBS, BOW TIES, SCALE FREES NETWORKS AND THE DEEP WEB Google id’d over 1 trillion

web pages in 2008, by 2010 over 2 trillion This constitutes a

fraction of the Web universe

Hyperlinks allow the “Small World Theory” for social networks to play out .. Every human being connected by six degrees of separation (Kevin Bacon!)

Web “small world theory” states that every Web page is separated by any other by just 19 clicks

IBM researchers found the Web not like a spider web but a bow tie SCC – strongly connected

component Right side of bow tie is a set of

44 million OUT pages you could get to from center but could not return to the center from

OUT pages are corporate intranet and other Web site pages designed to trap you in a site when you land

Left side had 44 million IN pages from which you could get to the center but not travel to from the center

43 million pages are “tendrils” do not link in or out from the center

16 million pages disconnected from everything

UM found the Web significantly changed shape from 2005-2010 Consolidation of the backbone

of telecommunications providers and applications (90% of web traffic will be video by 2014).

B2B VS B2C E-COMMERCE

B2B E-commerce is about 10 times the size of B2C E-commerce.

By 2014 B2B is projected to reach $5.2 trillion Fostered the

development of thousands of entrepreneurial start ups, however, will most likely go the way of radio or automobiles and consolidate

B2C commerce is still a small part of overall $3.9 trillion retail market (slightly over 6%)

Current projections show all over B2C e-commerce by 2013 will still be less than Walmart’s 2008 revenue

However with double digit growth anticipated e-commerce should rise to 20% overall retail by 2020

SPIDER WEBS, BOW TIES, SCALE FREES NETWORKS AND THE DEEP WEB In reality the “small

world theory” and the idea the Web connections will grow exponentially are not really supported 75% chance that there

is no path from one randomly chosen page to another

Traffic moves along a very small number of super highways

The Deep Web Google’s English

language crawler does not crawl Chinese web sites and vice versa ..

Crawlable Web of 2 trillion pages or more is just apart of the larger unknown deep web Possibly a trillion more

pages that are proprietary or not linked to other pages

To be successful in e-commerce must stay connected …

Deeppeep.org looking at deep web