E-Commerce Introduction - Student Web Pages

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E-Commerce Introduction - Student Web Pages Powered By Docstoc
					Daniel J. McFarland, Ph.D.

               (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
          Traditional Commerce
• A marketing paradox:
   – Customers are passive, often unwilling, targets of advertising
   – 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
       The Seven Features of
 Ubiquity
 Global Reach
 Universal Standards
 Media Richness
 Interactivity
 Information Density
 Personalization/Customization
                    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
         Benefits of Ubiquity
• Ubiquity promises to reduce the buyers
  transaction costs
  – The costs of participating in the market
     • Travel time/expense
     • Coordination effort
              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
• Always available transactions partially address
  time zone issues
         Universal Standards
• Most traditional commerce technologies
  differ throughout the globe
  –   TV
  –   Radio
  –   Telecommunications
  –   Mobile Technologies
• E-Commerce is a global standard
 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
            Information Richness
• Richness is the complexity         • Traditional trade-off with
  & content of the message             media is richness versus
   – Rank-order of media               reach
     richness for                       – Rank-order of media
     communications:                      richness for commerce
       • Face-to-face                       •   Face-to-face
       • Telephone                          •   Internet
       • E-mail                             •   Catalog
       • Letter (single addressee)          •   Telephone
       • Memo (multiple                     •   Fax
       • Flyer/bulletin
              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
           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
• E-commerce can cheaply provide a massive amount of
  quality information in a non-invasive way
 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
        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)
• A business provides goods/services directly
  to consumers
• e.g., Amazon.com
• A business provides goods/services to
  another business
• e.g., eSteel.com
• A business provides internal
  information/resources to its employees
• e.g., internal job postings, production data,
  quality data, health plan information
• A forum whereby consumers may transact
  with other consumers (like a “yard sale”)
• e.g., eBay.com
• 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
• Providing Internet accessibility and e-
  commerce capabilities to wireless devices
  such as cell phones & personal data
  assistants (PDA)
      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…
               Internet Usage:
              A Spider’s Web?
• Early
  conceptualization of
  Internet usage
   – Everything is
   – A web site can get to
     any other web site in
     19 clicks
Internet Usage: Bow Tie

   1-way IN                     1-way OUT
   44 Million                    44 Million
   Nodes            SCC
   (Newbee       56 Million        (Intranets,
   not yet         Nodes

SCC: Strongly connected components
Finding of Internet usage studies conducted by:
IBM, Compaq, & AltaVista
 Limiting Factors for Consumers
• Home PC penetration has stabilized at @48% of
   – 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
        That was then, this is now
• Early E-Commerce               • Future of E-Commerce
   –   Technology-driven            –   Business-driven
   –   Revenue growth emphasis      –   Earning/Profit emphasis
   –   VC financing                 –   Traditional financing
   –   Ungoverned                   –   Regulation/governance
   –   Entrepreneurial              –   Large, traditional firms
   –   Disintermediation            –   Strengthen intermediaries
   –   “Perfect” markets            –   Brands, network effects
   –   Pure on-line strategies      –   Mixed (clicks & bricks)
   –   First mover advantages       –   Strategic follower strength
• 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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Jun Wang Jun Wang Dr
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