E-Commerce 2014: Kenneth C. Laudon Carol Guercio Traver

E-commerce 2014
business. technology. society.

tenth edition
Kenneth C. Laudon
Carol Guercio Traver
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 1
The Revolution Is Just Beginning
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

What Is E-commerce?
 Use of Internet and Web to transact
business
 More formally:
 Digitally enabled commercial transactions
between and among organizations and
individuals
Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall Slide 1-3
E-commerce vs. E-business
 E-business:
 Digital enabling 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
Why Study E-commerce?
 E-commerce technology is different, more
powerful than previous technologies
 E-commerce brings fundamental changes to
commerce
 Traditional commerce:
 Consumer as passive targets
 Mass-marketing driven
 Sales-force driven
 Fixed prices
 Information asymmetry
Types of E-commerce
 May be classified by market relationship or technology
 Business-to-Consumer (B2C)
 Business-to-Business (B2B)
 Consumer-to-Consumer (C2C)
 Social e-commerce
 Mobile e-commerce (M-commerce)
 Local e-commerce
The Growth of B2C E-commerce
Figure 1.3, Page 20
SOURCE: Based on data from eMarketer, Inc., 2013a; authors’ estimates.
The Growth of B2B E-commerce
Figure 1.4, Page 21
SOURCE: Based on data from U.S. Census Bureau, 2013; authors’ estimates.
The Internet
 Worldwide network of computer
networks built on common standards
 Created in late 1960s
 Services include the Web, e-mail, file
transfers, and so on
 Can measure growth by number of
Internet hosts with domain names
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 reports 30 trillion unique URLs; 120
billion Web pages indexed
The Mobile Platform
 Most recent development in Internet
infrastructure
 Enables access to the Internet via
wireless networks or cell-phone service
 Mobile devices include
 Tablets
 Smartphones
 Ultra-lightweight laptops
Insight on Technology: Class Discussion
Will Apps Make the Web Irrelevant?

 What are the advantages and
disadvantages of apps, compared
with Web sites, for mobile users?
 http://www.hswsolutions.com/services/mobile-web-development/mobile-website-vs-apps/
 What are the benefits of apps for

content owners and creators?
 Will apps eventually make the Web
irrelevant? Why or why not?
Origins and 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
E-commerce: A Brief History
 1995–2000: Invention
 Key concepts developed
 Limited bandwidth and media
 Euphoric visions of
 Friction-free commerce
 Lowered search costs, disintermediation, price
transparency, elimination of unfair competitive advantage
 First-mover advantages
 Network profits
 Dot-com crash of 2000
E-commerce: A Brief History (cont.)
 2001–2006: Consolidation
 Emphasis on business-driven approach
 Traditional large firms expand presence
 Start-up financing shrinks up
 More complex products and services sold
 Growth of search engine advertising
 Business Web presences expand to include
e-mail, display and search advertising, and
limited community feedback features
E-commerce: A Brief History (cont.)
 2007–Present: Reinvention
 Rapid growth of:
 Online social networks
 Mobile platform
 Local commerce
 Entertainment content develops as source of

revenues
 Transformation of marketing
 Coordinated marketing on social, mobile, local platforms
 Analytic technologies
Eight Unique Features of
E-commerce Technology
1. Ubiquity
2. Global reach
3. Universal standards
1. Lowers market entry cost, enables easy price discovery, and network
externalities benefit consumers because everyone uses the same technology
4. Information richness
5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology
International Nature of eCommerce(GS)
eCommerce is inherently International
Issues caused by this International nature:

• Trust
• Language
• Culture
• Infrastructure
• Government and Policies
A Typical International Transaction(GS)
Insight on Business: Class Discussion
Start-up Boot Camp

 Why do you think investors today are still
interested in investing in start-ups?
 What are the benefits of investing in a company
that is a graduate of a Y Combinator boot camp?
 Is an incubator the best solution for start-ups to
find funding? Why or why not?
Assessing E-commerce
 Many early visions not fulfilled
 Friction-free commerce
 Consumers less price sensitive
 Considerable price dispersion
 Perfect competition
 Information asymmetries persist
 Intermediaries have not disappeared

 First mover advantages
 Fast-followers often overtake first movers
Predictions for the Future
 Technology will propagate through all commercial
activity
 Large, traditional companies will continue to play
dominant role, consolidating audiences
 Start-up ventures can still attract large audiences in non-
dominated arenas
 Integrated online/offline companies will experience
more growth than purely online companies
 Additional factors:
 Increased regulation and control
 Cost of energy
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
The Internet and
the Evolution
of Corporate
Computing
Figure 1.11, Page 41
Insight on Society: Class Discussion
Facebook and the Age of Privacy

 Why are social network sites interested in collecting
user information?
 What types of privacy invasion are described in the
case? Which is the most privacy-invading, and 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?
Academic Disciplines
Concerned with E-commerce
 Technical approach  Behavioral approach
 Computer science  Information systems
 Management science  Economics
 Information systems  Marketing
 Management
 Finance/accounting
 Sociology

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E-commerce 2014

business. technology. society.

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

 Digital enabling of transactions and

 Does not include commercial transactions

SOURCE: Based on data from eMarketer, Inc., 2013a; authors’ estimates.

Will Apps Make the Web Irrelevant?

 What are the benefits of apps for

 1995: Beginning of e-commerce

 E-commerce fastest growing form of

 Dot-com crash of 2000

 Entertainment content develops as source of

Issues caused by this International nature:

Start-up Boot Camp

 Intermediaries have not disappeared

Facebook and the Age of Privacy

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