E - Commerce - Chapter 1

CSC 330 E-CommerceTeacher Ahmed Mumtaz Mustehsan GM-IT CIIT Islamabad Virtual Campus, CIIT COMSATS Institute of Information TechnologyT1-Lecture-2E Commerce:Chapter-1T1-Lecture-2For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, IncObjectivesClassification of computers. Computer network.Introduction to internet, growth of internet.Introduction to web and growth of web.Internet and Web gave birth to e- commerce.Understand the evolution from internet to e-commerce.Define e-commerce and describe how it differs from e-business.Identify and describe the unique features of e-commerce technology and discuss their business significance.Describe the major types of e-commerce.Evolution of e-commerce.Discuss the origins and growth of e-commerce.Identify the factors that will define the future of e-commerce.Describe the major themes underlying the study of e-commerce.Identify the major academic disciplines contributing to e-commerce. T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-3Computer classificationsMainframes: - term for very large computers - used to handle large amount of data or complex processes - main advantage is reliabilityMidrange: - medium sized, less expensive and smaller - usually a serverMicro-computer: - work stations with computing capabilities - single-users systems linked to form a networkT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-4 What is a networkSeries of points or nodes interconnected by communication pathsNode is a connection point for transmitting dataNetwork can interconnect with other networks to form global networks T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-5 Benefits of a networkFacilitates resource sharingProvides reliabilityCost effectiveProvide a powerful medium across geographical divideT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-6when internet bornWorldwide network of computer networks built on common standardsCreated in late 1960s (1969) when terminals were connected with mainframe computers.The purpose was to create a net that can function even if one center is destroyed in a military attack.Network can continue to be functional even if some nodes are destroyed, as long as information can pass through other nodes.Services include the Web, e-mail, file transfers, etc.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-7 In the 1980´sPersonal computers or terminals were connected to a server.The server was a mainframe, or connected to a mainframe computer.The mainframe was connected to another mainframe of the company in another location via dedicated lines.Only large companies could afford the expense and investment in equipment.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-8 Geographical DistanceLocal area network (LAN): small area, share a single serverMetropolitan area network (MAN): a wider network, can bridge several LAN’sWide area network (WAN): a broader area covered, can include several MAN’sT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-9Network crossed boundariesInternet: a network of networks that covers the entire globe Connections across countries and continents made through dedicated fast lines.A company may have one local network (LAN) in NY, which is connected to the Internet through a Regional network.Well established in North America, Europe and certain Asian countriesT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-10When The Web bornMost popular Internet serviceDeveloped in early 1990sProvides access to Web pages HTML documents that may include text, graphics, animations, music, videosWeb content has grown exponentially2 billion Web pages in 2000 At least 40–50 billion pages today (2010)Now ? (Crossed Trillian)T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-11The Growth of the Internet, Measured by Number of Internet Hosts with Domain NamesSOURCE: Internet Systems Consortium, Inc., 2009.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-12web to web 2.0 ; another evolutione-commerce, internet, set of applications and social media brought together the evolution of web usually called web 2.0; The Applications and Technologies allowed the users to: Create and share content, preferences, bookmarks, and online personas, participate in virtual lives, build online communitiesExamplesYouTube, Photobucket, Flickr, Google, iPhone, MySpace, Facebook, LinkedIn, Second Life, WikipediaT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc13The Internet and the evolution of corporate computing gives birth to e-commerceT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-14What is E-commerce? Use of Internet and Web for business transection.More formally:Digitally enabled commercial transactions between and among organizations and individuals.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-15E-commerce vs. E-businessE-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 boundariesT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-16The Difference Between E-commerce and E-BusinessT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-17Why Study E-commerce?E-commerce technology is different, more powerful than previous technologiesE-commerce bringing fundamental changes to commerce. Introduce new buzz words:Marketplace: a physical place where you go for business transection.Marketspace: marketplace extended beyond traditional boundaries; removed from temporal and geographic limitations.Information asymmetry: any disparity in relevant market information among parties in a transection.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-18Unique Features of E-commerce TechnologyUbiquity: available everywhere anytime, i.e. Internet/Web technology is available everywhere; at work, at home, and elsewhere via mobile devices and round the clock (anytime).Global reach: the total number of users or customers an e-commerce business can obtain is a measure of its reach. The technology reaches across cultural and national boundaries, round the globe. Universal standards: technical standard of conducting e-commerce. There is one set of technology standards, namely Internet standards as compared to different standards followed by different nations.Information richness: complexity of the content of a message. Unlimited information of a product is available through video, audio, and text messages at internet and social media.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-19Interactivity: The technology works through interaction with the user. One shopkeeper can handle large number of clients simultaneously at internet.Information density: the total amount of information available to all market stakeholders. the technology reduces information collection costs and raises quality through social media. Personalization/customization: Personalization: The targeting of marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases. (Customization) delivery of product or service based on a user's preferences or prior behaviorSocial technology: user content generation and social networking. The e-commerce technologies have evolved users to create and generate contents in the form of web, Facebook pages, text, video, music and photos with worldwide communities.Unique Features of E-commerce TechnologyT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-20Types of E-commerceClassified by Market RelationshipBusiness-to-Consumer (B2C)e-commerce online businesses attempt to reach individual consumers.Business-to-Business (B2B)e-commerce online businesses selling to other businessesConsumer-to-Consumer (C2C)e-commerce consumers selling to other consumersT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-21Types of E-commerceClassified by Technology usedPeer-to-Peer (P2P)e-commerce use of peer-to-peer technology, which enables Internet users to share files and computer resources directly without having to go through a central Web server, (example sharing videos through Torrents) Mobile commerce (M-commerce)m-commerce use of wireless digital devices to enable transactions on the WebT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-22Evolution of E-Commerce1995–2000: InnovationKey concepts developedDot-coms; heavy venture capital investment2001–2006: ConsolidationEmphasis on business-driven approach2006–Present: ReinventionExtension of technologiesNew models based on user-generated content, social networking, servicesT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-23Origins & Growth of E-commercePrecursors:Baxter Healthcare Electronic Data Interchange (EDI) French Minitel (1980s videotext system)None had functionality of Internet1995: Beginning of e-commerceFirst sales of banner advertisementsSince then, e-commerce fastest growing form of commerce in the United States T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-24E-COMMERCE TECHNOLOGIESA commercial HistoryT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-25The Growth of B2C E-commerceFigure 1.4, Page 25SOURCES: eMarketer, Inc., 2009a; U.S. Census Bureau, 2009b; authors’ estimates.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-26The Growth of B2B E-commerceSOURCES: U.S. Census Bureau, 2009a; authors’ estimates.T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-27Potential Limitations on the Growth of B2C E-commerceExpensive technology Sophisticated skill set Persistent cultural attraction of physical markets and traditional shopping experiencesPersistent global inequality limiting access to telephones and computersSaturation and ceiling effectsT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-28Early Visions of E-commerceComputer scientists: Inexpensive, universal communications and computing environment accessible by allEconomists: Nearly perfect competitive market and friction-free commerceLowered search costs, disintermediation, price transparency, elimination of unfair competitive advantageEntrepreneurs: Extraordinary opportunity to earn far above normal returns on investment first mover advantageT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-29Early Visionary introduced new terminologies Disintermediation: displacement of market middlemen who traditionally are intermediaries between producers and consumers by a new direct relationship between manufacturers and content originators with their customers.friction-free commerce : a vision of commerce in which information is equally distributed, transaction costs are low, prices can be dynamically adjusted to reflect actual demand, intermediaries decline, and unfair competitive advantages are eliminated.first mover: a firm that is first to market in a particular area and that moves quickly to gather market share.network effect: occurs where users receive value from the fact that everyone else uses the same tool or productT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-30Assessing e-commerceMany early visions not fulfilledFriction-free commerceConsumers less price sensitiveConsiderable price dispersionPerfect competitionInformation asymmetries persistDisintermediationSmart people/ firms buy and sell goods using their expertise, end-user is still paying more.First mover advantageFast-followers often overtake first moversT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-31Advantages:Electronic commerce can increase sales and decrease costsIf advertising is done well on the Web, it can get a firm’s promotional message out to potential customers in every country Using e-commerce sales support and order-taking processes, a business can:Reduce costs of handling sales inquiriesProvide price quotes E commerce has increased the purchasing and selling opportunities for buyers and sellers.made negotiating price and delivery terms easy.Advantages and Disadvantages of CommerceT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-32Disadvantages:Perishable products are difficult to sell onlineIt is difficult to:Calculate return on investmentIntegrate existing databases and transaction-processing software into software that enables e-commerceCultural and legal obstacles exist.Advantages and Disadvantages of CommerceT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-33Predictions for the FutureTechnology will propagate through all commercial activityPrices will rise to cover the real cost of doing businessE-commerce margins and profits will rise to levels all retailersCast of players will changeTraditional Fortune 500 companies will play dominant roleNew startup ventures will emerge with new products, servicesNumber of successful pure online stores will remain smaller than integrated offline/online storesGrowth of regulatory activity worldwideInfluence of cost of energyT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-34Understanding E-commerce: Organizing ThemesTechnology: Development and mastery of digital computing and communications technology Business: New technologies present businesses with new ways of organizing production and transacting businessSociety: Intellectual property, individual privacy, public welfare policyT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-35Technical approachComputer scienceDevelopment of computer Hardware, software, and Tele-communication systems, standard of encryption and database design. Management scienceMathematical model of business processes, optimization of processes, opportunity to exploited Internet technologyAcademic Disciplines Concern with e-commerceT1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-36Academic Disciplines Concern with e-commerceBehavioral approachInformation systemsData mining, Search engine design and AI.EconomicsConsumer behavior, pricing, and features of ecommerce market.MarketingBrand development and extension, consumer behavior on web sites, using web technology target different segment consumer groupsManagementEntrepreneurial behavior and challenges faced by young firms. Finance/accountingValuation and accounting practices.Sociology/ psychology Internet usage, the role social inequalities, use of web as a social network and group communications.1-37T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, IncPoints of Discussions.What techniques of privacy invasion are prevailing through social media?How do you protect your privacy on the Web?Is e-commerce any different than traditional markets with respect to privacy? Don’t merchants always want to know their customer?What impact has created by OLX in our society? What type of risk is involved?Why do you think investors today would be interested in investing in or purchasing e-commerce companies? Would you invest in an e-commerce company today? T1-Lecture-2 CSC330 E Commerce Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-38The end chapter-1Thank You