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The Past, Present and Future of E-Commerce. Marketing 932 E-Commerce. History of E-Commerce. Background E-commerce actually began in the 1970s when larger corporations started creating private networks to share information with business partners and suppliers.

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The Past, Present and Future of E-Commerce

Marketing 932


Charles Heath, Xavier University

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History of E-Commerce

  • Background E-commerce actually began in the 1970s when larger corporations started creating private networks to share information with business partners and suppliers.

  • This process, called Electronic Data Interchange (EDI), transmitted standardized data that streamlined the procurement process between businesses, so that paperwork and human intervention were nearly eliminated.

  • EDI is still in place, and is so effective at reducing costs and improving efficiency that an estimated 95% of Fortune 1,000 companies use it.

Charles Heath, Xavier University

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History of E-Commerce

  • Prodigy was running text ads and selling flowers in the early '80s

  • The first documented Online sale in 1994 was what?

  • A CD

Charles Heath, Xavier University

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History of E-Commerce

  • Online retailing began four years ago, and was pioneered largely by Internet companies that didn't (and some still don't) perform traditional retail, such as and CDNow.

  • More recently, brand names like Barnes and Noble, the Gap, and Wal-Mart have set up shop on the Net, and many experts believe that these and other brand names will be able to establish long-lasting presences on the Web.

  • Today, all a person needs is a computer, a browser, and Internet access, and he or she can buy flowers, airline tickets, and even a car. Tomorrow. who knows. The sky's the limit.

Charles Heath, Xavier University

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History of E-Commerce:

  • Early in 1994, working for D.E. Shaw in New York City, Jeff Bezos, a restless, 30-year-old hedge fund manager began researching the commercial possibilities of the Net.

  • A year later, Bezos drove west, raising venture funds for a new small online book shop (originally called, to be launched from his garage in Bellevue, Wash.

  • Running on a Website and a warehouse, by its third year Bezos's precocious toppled $150 million in annual sales — a milestone that Wal-Mart founder Sam Walton needed 12 years (and 78 stores) to reach.

Charles Heath, Xavier University

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History of E-Commerce: Stocks

  • Electronic stock trading debuted 30 years ago with Instinet, Reuters' computer network that allowed after-hours trading.

    • Charles Schwab first offered a dial-up trading service called The Equalizer in 1985.

    • E*Trade founded in 1982 as an institutional trading service began offering consumer trading in 1992 through America Online and CompuServe.

  • True Web-based trading arrived in 1994 with Chicago-based NET Investor, which offered 15-minute delayed quotes and charged $35 per trade.

  • Ameritrade, Datek Online, and others followed, eventually driving commissions to as low as $8 per trade, and forcing the implementation of free, real-time stock quotes in 1998.

Charles Heath, Xavier University

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History of E-Commerce: Ads

  • In 1994, the first national consumer brand site - - was launched for the Coor's owned beverage Zima.

  • In October of that year, Wired magazine's HotWired (now part of Lycos-owned Wired Digital), dished up the first banner ads from 12 advertisers, including AT&T, Club Med, and Volvo.

  • Sales for the entire online ad industry were $1 million that year, and HotWired owned 40 percent of it.

  • In 1998, online ad revenues reached $2 billion, topping the $1.6 billion spent on "outside" ads, such as billboards. General Motors alone pumped in $12.7 million. Online ad revenue is expected to reach $11.5 billion by 2003 5 percent of the total U.S. ad market.

Charles Heath, Xavier University

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History of E-Commerce: Travel

  • Booking a trip over the Web back in 1995 meant going to a travel site and requesting a fare.

  • In early 1997, Travelocity offered a paging service to its Web customers that alerted them if their flight was delayed.

  • In the fall of 1997, launched its innovative, bid-based market for discount airfares.

  • Today you can bid on empty seats, name your price, choose a seat from a diagram, and know of fare bargains often before agents have that information.

Charles Heath, Xavier University

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History of E-Commerce

  • Web retail sales have jumped from a mere $700 million annually in 1996 to an estimated $20 billion in 1999, according to Forrester





Charles Heath, Xavier University

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Global E-Commerce

  • among Internet users around the globe, 10 percent shop online during a month.

  • In addition, 15 percent of users say they have considered shopping online, but have not yet done so.

Charles Heath, Xavier University

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E-Commerce Today

Some major product categories have paved the way:

  • travel services ($5.95 billion in 1999 sales),

  • computer hardware and software ($5.8 billion),

  • books ($1.7 billion),

  • gifts and flowers ($730 million),

  • music ($540 million), and

  • apparel and footwear ($460 million),

    (eMarketer in Business 2.0 Jan 2000).

Charles Heath, Xavier University

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E-Commerce Services Today

  • In 1999, the online market size for business services was estimated at $22 billion.

  • Primary service categories include

    • financial ($7.3 billion, 1999),

    • professional ($4.4 billion),

    • administrative support ($3.9 billion),

    • corporate travel ($5 billion), and

    • telecommunications ($1.5 billion).

  • By 2003, Forrester Research predicts that online services will represent nearly 8 percent of the overall sector hardly a drop in the bucket.

Charles Heath, Xavier University

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Movers in E-Commerce 2000

  • The study found that office supplies showed the greatest increase in online sales in July, to $150 million from $110 million in June. Other categories reporting gains included videos, footwear and apparel, sporting goods, appliances and furniture.

  • Computer hardware showed the largest decrease for big-ticket items, to $377 million in July from $424 million in June

Charles Heath, Xavier University

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Future of E-Commerce

  • eMarketer, an Internet technology (IT) research and reporting firm, estimates that the dollar figure for e-commerce will rise from approximately U.S. $18 billion in 1998 to U.S. $294 billion in 2002.

  • $184 billion by 2004. (Forrester, Business 2.0 Jan 2000)

  • In Europe, consumers' internet purchases will jump from 2.9 billion in 1999 to 174 billion in 2005.

  • By 2006, US Government Will Collect $602 Billion Over The Net

  • Online business-to-business e-commerce is projected to speed past $1 trillion in annual revenue by 2003

Charles Heath, Xavier University

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Future Trends to Watch in E-Commerce

  • Women take control. Women make or influence 80 percent of household sales in the United States, according to WomanTrend, despite the fact that they make up 51 percent of the population.

  • The untapped get tapped. Two highly touted markets $509 million health and beauty, and $513 million grocery still lag behind expectations.

  • More "click and mortar." Traditional retailers Circuit City, Crate and Barrel, Sears, Toys R Us, Wal-Mart, and Federated Department Stores missed the boat in 1995 and 1996, but rest assured they "get it" now, and are attempting re-entry, this time around with more money and smarts. Watch out.

Charles Heath, Xavier University

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Still a Long Way To Go

  • Andersen Consulting and Forrester Research both show shopping cart abandonment rates of 25%.

  • E-commerce still accounts for less than 1% of total retail sales

  • Pure plays are struggling to maintain cash flow and are either:

    • Folding

    • Cutting back

    • Being bought at cheap prices

Charles Heath, Xavier University