The Changing Face of eCommerce

1. The Changing Face of eCommerce Ling Chen lingchensh@126.com

2. Overview • A Brief Introduction • A Definition of eCommerce • The Beginnings • 1st Generation of eCommerce • Dot Coms • 2nd Generation of eCommerce • Main Stream eBusiness • The Future of eCommerce

3. An Early Definition Of eCommerce • From a communications perspective, EC is the delivery of goods, services, information, or payments over computer networks or by any other electronic means • From a business process perspective, EC is the application of technology towards the automation of business transactions and work flow • From a service perspective, EC is a tool that address the desire of firms, consumers, and management to cut services costs while improving the quality of customer service and increasing the speed of service delivery • From a online perspective, EC provides the capability of buying and selling products and information over the Internet and other online services From Electronic Commerce: A Managers’ Guide, Kalakota and Whinston, Addison Wesley, 1997

4. A Broader Definition • An attempt to increase transactional efficiency and effectiveness in all aspects of the design, production, marketing and sales of products or services for existing and developing marketplaces through the utilization of current and emerging electronic technologies Source: eCommerce faculty at UMFK

5. The beginnings of eCommerce • The Real Beginning • EFT, electronic finds transfer (1970’s) • EDI, electronic data Interchange (1980’s) • The Visible Beginning • April 1995, the Internet moved from the Federal Sector to the commercial sector when NSF decommissioned NSFNET and moved assets to vBNS (very-High-Speed Backbone Network Service) which allowed for ISPs (Internet Service Providers) to develop. • February 1996, The Telecommunications Act • Deregulation (move to industry self-regulation)

6. 1st Generation eCommerce(1995-2000) • Explosive Growth … mostly in “Dot Coms” • All about taking ideas to market FAST • The funding required for growth was investors not consumers • The goal was IPO • Talent left the major firms and joined start-ups • Traded security for the instant millionaire promise of stock options

7. Millions Raised by Dot Coms Data Source: PriceWaterhouse Coopers Moneytree Survey 2001

8. Reality Check (from Thomson Financial) • 1986-1995 • 1% of IPOs traded below $1 per share one year after going public • Between 1998-2000 • 12% of IPOs traded below $1 per share on April 1, 2001 • Some of these IPOs with their stock highs • IVillage.com $130.00 • Ask Jeeves.com $190.50 • NetZero $40.00 • Drkoop.com $45.75

9. The End of the Beginning • Only 10% of dot coms formed since 1995 still survive • An even smaller percentage generate a profit • Some projections (E-Commerce, Lauden and Traver, Addison Welsey,2002) • B2C revenues in 2001 are growing at 45% to 55% per year • By 2005 eCommerce revenue should grow to $647 billion (about 20% of total retail)

10. Table 4.     Estimated Quarterly U.S. Retail Sales (Not Adjusted1): Total and E-commerce2 (Estimates are based on data from the Monthly Retail Trade Survey and administrative records.) Source: http://www.census.gov/mrts/www/data/html/05Q3table4.html

11. Anonymous e-Mail Joke Three beggars were begging in New York City, each with a small cup in his hand. The first one wrote “beg” on his broken steel cup and he received 10 bucks after one day. The second one wrote “beg.com” on his cup and after one day he received hundreds of thousand dollars. Someone even wanted to take him to NASDAQ. The third one wrote “e-beg” on his cup. Both IBM and HP sent vice presidents to talk to him about a strategic alliance and offered him free hardware and professional consulting while Larry Ellison claimed on CNBC that e-beg uses 95% Oracle technology and i2 announced e-beg Trade Matrix, a B2B industry portal to offer supply chain integration in the beggar community.

12. The 2nd Generation 2001-2005 • eCommerce become eBusiness • 5 major components all geared to any firm’s desire to gain competitive advantage in their marketplace • eCommerce • buying & selling using the Internet • Business Intelligence • gathering and processing of information internal and external to firm in order gain strategic advantage • Customer relationship management • solidify and expand relationships across all stakeholders • Supply Chain Management • unified operations for transferring of goods from suppliers to manufactures and ultimately to the consumers • Enterprise Resource Management • the digital streamlining of an company’s processes

13. 2nd Generation Business Involvement with eCommerce Source: adapted from www.mohanbirsawhney.com

14. B2B Business to Business B2C Business to Consumer C2C Consumer to Consumer G2C Government to Constituent C2G Constituent to Government G2B Government to Business B2G Business to Government eCommerce Models

15. 1st Generation Technology-driven Revenue growth emphasis Venture capital financing Ungoverned Entrepreneurial Disintermediation Perfect Markets Pure Online strategies First Mover advantage 2nd Generation Business-driven Earnings and profits emphasis Traditional financing Stronger regulation and governance Larger traditional firms Strengthening intermediaries Imperfect markets, brands, and network effects Mixed “clicks and Bricks” Strategies Strategic follower strength 1st and 2nd Generations Compared

16. An eCommerce Timeline High Visibility SOURCE: the Gartner Group

17. The future of eCommerce • Continued integration of technology into business and organizational entities until at some point there will be no distinct line of demarcation • Business become eCommerce and eCommerce becomes business • Business continues to be the driver of technology

18. The future of eCommerce • The creation of a discontinuous marketplace economy in which firms will compete in one of only two possible marketplaces • Commodity based products and services • Major differentiation between competing products is cost • eCommerce adds to increased efficiency and effectiveness • Boutiques • Major differentiation between competing products is perceived quality or higher service • eCommerce adds increased distribution possibilities and increased marketing potential

19. Future of eCommerce • 7 features of eCommerce(E-Commerce: The Revolution is Just Beginning, Lauden and Traver, 2002) • Ubiquity • Global Reach • Universal Standards • Information richness • Interactivity • Information density • Personalization/Customization