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E-Commerce Introduction

Definitions (no prevailing definitions). E-CommerceUse of the Internet/Web to conduct business transactions and support business processesE-BusinessThere is no standardized distinction between e-commerce and e-businessHowever, some authors define E-business is an objective and e-commerce as a m

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E-Commerce Introduction

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    1. E-Commerce Introduction Daniel J. McFarland, Ph.D.

    2. Definitions (no prevailing definitions) E-Commerce Use of the Internet/Web to conduct business transactions and support business processes E-Business There is no standardized distinction between e-commerce and e-business However, some authors define E-business is an objective and e-commerce as a means by which to accomplish the objective

    3. Traditional Commerce A marketing paradox: Customers are passive, often unwilling, targets of advertising campaigns Customers actively initiate most transactions With traditional commerce customers are largely: Restricted to certain geographical and social boundaries Have limited search capabilities Traditional commerce selling is conducted through well insulated channels Large information dissymmetry exists between buyer and seller

    4. The Seven Features of E-Commerce ? Ubiquity ? Global Reach ? Universal Standards ? Media Richness ? Interactivity ? Information Density ? Personalization/Customization

    5. ? Ubiquity E-commerce is not bound by the traditional limits of time & location Now able to non-verbally transact from: home, work, school, cell phone, or PDA Now able to non-verbally transact to: small and large companies anywhere on the globe Now able to complete a transaction without having to coordinate buyer & seller schedules; a buyer may conduct business at anytime without regard to the seller’s normal operating hours

    6. Benefits of Ubiquity Ubiquity promises to reduce the buyers transaction costs The costs of participating in the market Travel time/expense Coordination effort

    7. ? Global Reach E-commerce is not bound by the geographic, social, or cultural boundaries A merchant’s potential market exposure equals the world’s on-line population (over 400 million in 2001 and growing) Non-verbal transactions partially address language issues Always available transactions partially address time zone issues

    8. ? Universal Standards Most traditional commerce technologies differ throughout the globe TV Radio Telecommunications Mobile Technologies E-Commerce is a global standard

    9. Benefits of Universal Standards Universal standards promise to reduce: Market entry costs The costs to bring goods to market Consumer search costs The effort required to find suitable products First time in history a consumer is able to easily search for suppliers, prices, and delivery terms for a specific good throughout the world Reduces consumer/supplier information dissymmetry

    10. ? Information Richness Richness is the complexity & content of the message Rank-order of media richness for communications: Face-to-face Telephone E-mail Letter (single addressee) Memo (multiple addressees) Flyer/bulletin Traditional trade-off with media is richness versus reach Rank-order of media richness for commerce Face-to-face Internet Catalog Telephone Fax

    11. ? Interactivity 2-way communications Transaction has the ability to change based on the interactions (multiple future states) With the exception of the telephone, traditional commerce traditions

    12. ? Information Density Information density describes the entirety of available information (for all market participants) Quantity Quality Traditionally, information density was extremely costly Print costs, face-to-face/telephone time, … Storage and processing inadequacies Recipient of information may not be a willing participant (telemarketing) E-commerce can cheaply provide a massive amount of quality information in a non-invasive way

    13. ? Personalization/Customization Personalization alters an otherwise generic (typically marketing) message to reflect the personal preferences and/or behaviors of each individual recipient Customization alters a product/service to reflect personal preferences and/or behaviors for each individual consumer

    14. Types of E-Commerce Business-to-Consumer (B2C) Business-to-Business (B2B) Business-to-Employee (B2E) Consumer-to-Consumer (C2C) Peer-to-Peer (P2P) Mobile Commerce (M-Commerce)

    15. B2C A business provides goods/services directly to consumers e.g., Amazon.com

    16. B2B A business provides goods/services to another business e.g., eSteel.com

    17. B2E A business provides internal information/resources to its employees e.g., internal job postings, production data, quality data, health plan information

    18. C2C A forum whereby consumers may transact with other consumers (like a “yard sale”) e.g., eBay.com

    19. P2P Consumers share files with each other directly without having to “meet” in a forum (as required by C2C) Similar to Napster.com and Kazaa.com without having to go through the host site e.g., Gnutella

    20. M-Commerce Providing Internet accessibility and e-commerce capabilities to wireless devices such as cell phones & personal data assistants (PDA)

    21. The Future of E-Commerce Understanding Internet Usage Where do search engines look? Limiting factors for consumers Costs Complexity Culture Infrastructure That was then, this is now…

    22. Internet Usage: A Spider’s Web? Early conceptualization of Internet usage Everything is interconnected A web site can get to any other web site in 19 clicks

    23. Internet Usage: Bow Tie

    24. Limiting Factors for Consumers Home PC penetration has stabilized at @48% of households Expense: min $500 hardware, $20/month Skills: Setup complexity Operational complexity Troubleshooting complexity Culture The shopping experience is a social event Infrastructure Many countries do not provide an adequate infrastructure to support e-commerce (clean, reliable power and telecommunications)

    25. That was then, this is now Early E-Commerce Technology-driven Revenue growth emphasis VC financing Ungoverned Entrepreneurial Disintermediation “Perfect” markets Pure on-line strategies First mover advantages Future of E-Commerce Business-driven Earning/Profit emphasis Traditional financing Regulation/governance Large, traditional firms Strengthen intermediaries Brands, network effects Mixed (clicks & bricks) Strategic follower strength

    26. Predictions Annual e-commerce sales will grow 45% each year for at least the next 3 years E-commerce traffic is increasing at the rate of 60% annually Product/Service offerings & creativity will match the growth in e-commerce sales & traffic Top few sites will continue to garner the vast majority of audience share

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