e-commerce:B-2-C Jenny Stoehr, Eduardo Yamuni, & Matthew Doughty
Online Consolidation …2000 crash led to widespread dot-com destruction, although the strongest survived and continue to grow.
Demographics Of Internet and E-commerce Users
Global Internet Languages1 Total World Online Population: 529 million
US internet user statistics • US internet users: 104.8 million • US Women: 55.0 million • US Men: 49.8 million2 • 50.4% female, 49.6% male in 20003
However. . . • Average time spent online: roughly 11:20 for US men, 9:06 for US women (in Dec 2001)4 • Men seem more interested in purchasing items online: 58% of men, only 42% of women.5 • 53% of all US online buyers are male6
Young Users • Still mostly surfing or browsing. . . • 54% of connected 12-24 year olds (in 16 countries) used the internet to gather information about products, but only half of them are actually buying online. • Biggest-volume categories: • music (19%), • clothing (16%), • books (14%) • Popular e-commerce sites for the young included Amazon, eBay, Gap, JCrew, and FootLocker7
Recent Study: Holiday Shopping • By Pew Internet and American Life Project, January 1, 20028 • 64 million total e-shoppers in 2001, up from 53 million in 2000 • 26% of all US internet users made holiday purchases (29 million people). • Average spent per person: $392 (up from $330 last year).
Holiday Shopping • 58% of online holiday gift-buyers were women. • Sharpest increase came from minorities and the young (18-29). • 32% shopped from work, up from 26% last year.
Dissatisfaction w/ E-Shopping • Approximately 33% of those who bought gifts online last year did not repeat this year. • Reasons: • “Better ways to shop” than online • Merchandise sent was incorrect last year • Merchandise did not arrive on time last year • Worried about credit card security
Privacy9 • Major concerns (you’ve heard of them): • spam, • selling of personal information to other companies, • corporate or government surveillance • Clinton Administration policy advocated self-regulation: • “businesses must develop and post prominent, clearly written policies that inform consumers about the identity of the collector of their personal information, along with intended uses of that information.”
Questions • Question for audience: “What do you know about the user information policies of the websites you regularly visit?”
Privacy issues • Surveillance: web bugs and Carnivore • Web bugs are “Software code embedded in Internet banner ads, and invisible image file 1 pixel by 1 pixel that watches and records browsing activity on a user’s machine.” • Carnivore: FBI program that plugs into an ISP server and gathers data as a user logs into their ISP. Designed to combat cyber-terrorists, ACLU has strong concerns about potential abuse of its power.
Two Taxation Issues • E-commerce Taxation can be divided into two concerns: • 1. State Sales Tax Issues10 • 2. International Taxation11
State Sales Taxes10 • Currently, there are no state sales taxes which apply to e-commerce, because of Congressional legislation: the [renewed] Internet Tax Freedom Act of 2001, which expires in 2003. • The legislation augments a 1992 Supreme Court ruling “banning states from collecting taxes on transactions unless the retailer has a physical presence there.”
State Sales Taxes • Opponents of the ban tried to introduce a new provision which would require e-tailers without a physical presence to collect “online sales tax.” • Measure failed 43-57 in the US Senate. • Major opponents of tax ban: US states that collect sales tax. • Potential online 2001 tax revenue: $13.3 B
International E-Taxes11 • Controversial Issues: • Permanent Establishments (aka physical presence): do stand-alone computer servers constitute a PE? • Customs duties: currently a moratorium on taxation of electronic transmissions by WTO • European Union value-added taxes (VATs) • Consumption of services taxed at place of supply. • Imported Digital goods are treated as services, and therefore not taxed, but exports are taxed! • This hurts native (EU) exporters.
Taxation: Key Points • Currently little to no taxation of e-commerce. • Many possibilities now discussed by state or national governments • Organization for Economic Cooperation and Development (OECD) • Created framework for taxation of e-commerce • Most discussions now in committee – who knows how long until decisions reached?
Business Models • What is a Business Model? • A business model is the method of doing business used by a company to sustain itself. • Any given firm may combine various models as part of it’s web business strategy. • Business models in the web evolve rapidly and new models can be expected in the future. • Business models have taken another meaning now that they can be defined within the context of patent law.
Business Models • Brokerage Model They are market makers; they bring buyers and sellers together and facilitate transactions. • Market Exchange • Virtual Mall • Auction Broker • Reverse Auction • Search Agent
Business Models • Auction Broker: A site that conducts auctions for sellers, individuals or merchants. Ex: E-bay, AuctoinNet • Reverse Auction: Price is set by consumers own demand. “Name your own price”. Ex: Priceline, Respond.com • Market Exchange: Increasingly common in the B2B markets. • Virtual Mall: A site hosting many online merchants. Ex: Yahoo! Stores • Search Agent: Intelligent software used to search out the best price for a good or service.
Business Models • Advertising Model Provides content and services mixed with advertising messages (banner ads). • Generalized Portal: driven by generic or diversified content or service. Ex: Excite, Yahoo!, AOL. • Personalized Portal: portal with customization of the interface and content. • Vortal: portal with less volume and well defined user base. Design to attract advertisers willing to pay premium to reach a particular audience • Bargain Discounter: Sells goods typically at low or below cost and seeks to make profit thorough advertising.
Business Models • Infomediary Model based on collecting and selling data about customers and consumer habits to other businesses. • Merchant Model E-tailers • Virtual Merchant: Pure e-tailers. Ex: Amazon • Catalog Merchant: The migration of mail order to a web-based order business. Ex: Levenger • Click and Mortar: traditional Brick and Mortar establishment with web store front. Ex: The Gap, Borders.
Business Models • Other models include: • Manufacturer Model • Affiliate Model • Community Model • Subscription Model • Utility Model