MIS 456 - Ecommerce

Instructor: Ali Hashmi

Revolution is Just Beginning

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Facebook and MySpace: It’s All About You

How many people use Facebook or MySpace?

In 2009 , Facebook had around 92 million unique U. S. visitors, while MySpace had about 64 million.

How is Facebook different from MySpace?

Have you used Facebook or MySpace, and if so, how often? What was your experience?

Why do you think Facebook has overtaken MySpace as the most popular social networking site?

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What Is Internet

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The Internet

Worldwide network of computer networks built on common standards

Created in late 1960s

Services include the Web, e-mail, file transfers, etc.

Can measure growth by looking at number of Internet hosts with domain names

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The Growth of the Internet, Measured by Number of Internet Hosts with Domain Names

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SOURCE: Internet Systems Consortium,

Inc., 2009.

The Web

Most popular Internet service

Developed in early 1990s

Provides access to Web pages

HTML documents that may include text, graphics, animations, music, videos

Web content has grown exponentially

2 billion Web pages in 2000

At least 40–50 billion pages today Slide 1-10

What is E-commerce?

Use of Internet and Web to transact business

More formally:

Digitally enabled commercial transactions between and among organizations and individuals (B2C and B2B)

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E-commerce vs. E-business

E-business:

Digital enablement of transactions and processes within a firm, involving information systems under firm’s control

Does not include commercial transactions involving an exchange of value across organizational boundaries

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Difference between ecommerce and ebusiness

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E-commerce Trends 2009–2010

New business models based on social technologies, consumer-generated content, and services

2009 a flat year, but growth expected to resume in 2010

Broadband and wireless access continue to grow

Mobile e-commerce begins to take off

Web 2.0 has revolutionized e-commerce

Traditional media losing subscribers

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Why Study E-commerce?

E-commerce technology is different, more powerful than previous technologies

E-commerce bringing fundamental changes to commerce

Traditional commerce:

Passive consumer

Sales-force driven

Fixed prices

Information asymmetry

You can virtually run your business from any part of the world

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Evolution of Web

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What is Ecommerce all about Facebook passes Google as most visited site of 2010

Will Cloud computing establish itself?

Monetizing Digital Content e.g iTunes

M-commerce

Semantic Search

Role of Video - YouTube

E-commerce Security Challenge

Social Networking – Egyptian Revolution

Web 2.0/3.0/4.0

O2O - Groupon

Push Shopping

Virtual Goods and Currency

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Unique Features of E-commerce Technology

Is ubiquitous (available everywhere, all the time)

Offers global reach (across cultural/national boundaries)

Operates according to universal standards (lowers market entry for merchants and search costs for consumers)

Provides information richness (more powerful selling environment)

Is interactive (can simulate face-to-face experience, but on global scale)

Increases information density (amount and quality of information available to all market participants)

Permits personalization/customization

Social technology

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Web 2.0

Applications, technologies that allow users to: Create and share content, preferences, bookmarks, and

online personas

Participate in virtual lives

Build online communities

Examples YouTube, Photobucket, Flickr, Google, iPhone

MySpace, Facebook, LinkedIn

Second Life

Wikipedia

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Types of E-commerce

Classified by market relationship

Business-to-Consumer (B2C)

Business-to-Business (B2B)

Consumer-to-Consumer (C2C)

Classified by technology used

Peer-to-Peer (P2P)

Mobile commerce (M-commerce)

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B2C

Involves online businesses attempting to reach individual consumers

Many types of business models within this category including online retailers, content providers, portals, transaction brokers, service providers, market creators and community providers

E.g. BarnesandNoble.com, 1800Flowers.com, Godiva.com, REI.com

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The Growth of B2C E-commerce

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SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors’ estimates.

B2B

Involves businesses focusing on selling to other businesses

Two primary business models within B2B: Net marketplaces (includes e-distributors, e-procurement

companies, exchanges and industry consortia)

Private industrial networks (includes single firm networks and industry-wide networks)

E.g.Direct email marketing company(mail chimp), online CRM application (salesforce.com), grainger.com, techdata.com, alibaba.com, etc

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The Growth of B2B E-commerce Figure 1.5, Page 28

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SOURCES: U.S. Census Bureau, 2009a; authors’ estimates.

C2C

Provides a way for consumers to sell to each other, with the help of an online market maker

eBay, half.com, craigslist, etc

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P2P

Uses peer-to-peer technology, which enables Internet users to share files and computer resources without having to go through a central Web server

E.g: Torrents, limewire, etc

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M-commerce

Use of wireless digital devices such as cell phones and handheld devices to enable transactions on the Web

E.g Mobile banking, Mobile ticketing, etc

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Potential Limitations on the Growth of B2C E-commerce

Expensive technology

Sophisticated skill set

Persistent cultural attraction of physical markets and traditional shopping experiences

Persistent global inequality limiting access to telephones and computers

Saturation and ceiling effects Slide 1-28

Origins & Growth of E-commerce

Precursors to e-commerce include

Baxter Healthcare (in 1970s, used telephone-based modems to reorder supplies; in 1980s, became a PC-based remote order entry system)

Electronic Data Interchange (EDI) standards developed in 1980s; permitted firms to exchange commercial documents and conduct digital commercial transactions across private networks

French Minitel (1980s videotext system; still in use today)

None of these precursor system had functionality of Internet

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E-commerce: A Brief History

1995–2000: Innovation Key concepts developed

Dot-coms; heavy venture capital investment

First Banner Ad in 1994

2001–2006: Consolidation Emphasis on business-driven approach

2006–Present: Reinvention Extension of technologies

New models based on user-generated content, social networking, services Slide 1-30

Early Visions of E-commerce

Computer scientists: Inexpensive, universal communications and computing

environment accessible by all

Economists: Nearly perfect competitive market and friction-free

commerce

Lowered search costs, disintermediation, price transparency, elimination of unfair competitive advantage

Entrepreneurs: Extraordinary opportunity to earn far above normal

returns on investment—first mover advantage

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Ecommerce I & II Rollercoaster Ride

E-commerce I: A period of explosive growth and extraordinary innovation; key concepts developed and explored

Begins in 1995, ends in March 2000 when stock market valuations for dot.com companies begin to collapse

Thousands of dot.com companies formed, backed by over $125 billion in financial capital

E-commerce II: Characterized by a reassessment of e-commerce companies and their value

Begins in January 2001; ongoing

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Assessing E-commerce

Many early visions not fulfilled

Friction-free commerce

Consumers less price sensitive

Considerable price dispersion

Perfect competition

Information asymmetries persist

Disintermediation

First mover advantage

Fast-followers often overtake first movers

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Predictions for the Future

Technology will propagate through all commercial activity

Prices will rise to cover the real cost of doing business

E-commerce margins and profits will rise to levels more typical of all retailers

Cast of players will change Traditional Fortune 500 companies will play dominant role

New startup ventures will emerge with new products, services

Number of successful pure online stores will remain smaller than integrated offline/online stores

Growth of regulatory activity worldwide

Influence of cost of energy

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Understanding E-commerce: Organizing Themes

Technology: Development and mastery of digital computing and

communications technology

Business: New technologies present businesses with new ways of

organizing production and transacting business

Society: Intellectual property, individual privacy, public welfare

policy

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The Internet and the Evolution of Corporate Computing

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Academic Disciplines Concerned with E-commerce

Technical approach Computer science

Management science

Information systems

Behavioral approach Information systems

Economics

Marketing

Management

Finance/accounting

Sociology

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Case Questions

1. How can P2P file-sharing networks make money if they do not sell music?

2. Into which category or categories of e-commerce do P2P file-sharing networks fall?

3. What social issues are raised by P2P file-sharing protocols and programs such as BitTorrent? Is the record industry justified in attempting to shut them down? Why or why not?

4. Will the Supreme Court’s decision inhibit the development of P2P technology or the Internet itself, as proponents of P2P services have claimed?

5. Why do people older than 21 tend to use legitimate downloading sites whereas younger people tend to use illegal sites?

6. What difference would it make if the existing music labels disappeared for lack of revenue? What legitimate function do the music labels perform in the creation and distribution of original music

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Case Grading Guideline

6-8 slides with notes

At least 4 of the 6 questions are answered

Presentation delivery

Response to the questions

Questions prepared for the other teams

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