E-COMMERCE : THE REVOLUTION IS JUST BEGINNING
1.1 E-Commerce : The Revolution is Just Beginning
The Amazon story is emblematic of the e-commerce environment of the past two years : an early period of business vision, inspiration, and experimentation, followed by immense difficulties proving new technologies and new business models. Many e-commerce companies failed during this process, resulting in hundreds of bankruptcy fillings.
In 1994, e-commerce as we know it did not exist. In 2003, businesses are expected to spend over $1 trillion purchasing goods and services from other business on the web (U.S Census Bureau, 2003). From a standing start in 1995, this type of commerce, called electronic commerce or e-commerce, experienced growth rates of well over 100% a year, although the rate has slowed and is now growing at over 30% year. These development have created the first widespread digital electronic marketplaces.
It is important to realize that the rapid growth and change that has occurred in the first eight years of e-commerce represents just the beginning-what we could be called the first thirty seconds of the e-commerce revolution. The twenty first century will barely perceive at this time. It appears likely that e-commerce will eventually impact nearly all commerce, or that most commerce will be e-commerce by the year 2050.
WHAT IS E-COMMERCE
E-commerce is the use of the internet and the web to transact business. More formally, digitally enabled commercial transactions between and among organizations and individuals.
THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS
Some argue that e-commerce encompasses the entire world of electronically based organizational activities that support a firm’s market exchanges-including a firm’s entire information system’s infrastructure (Rayport and Jaworski, 2003). Other argue, on the other hand, that e-business encompasess the entire world of internal and external electronically based activities, including e-commerce (Kalakota and robinson,2003).
For the most part, e-business does not include commercial transactions involving an exchange of value across organizational boundaries. It is true, however, that a firm’s e-business infrastructure provides support for online e-commerce exchanges; the same infrastructure and skill sets are involved in both e-business and e-commerce. E-commerce and e-business system blur together at the business firm boundary, at the point where internal business systems link up with suppliers or customers, for instance.
WHY STUDY E-COMMERCE ?
Prior to the development of e-commerce, the process of marketing and selling goods was a mass marketing and sales force-driven process. Consumers were considered to be trapped by geographical and social boundaries, unable to search widely for the best price and quality. Information about prices, costs and fees could be hidden from the consumer, creating profitable “information asymmetries” for the selling firm. Information asymmetry refers to any disparity in relevant market information among parties in a transaction.
E-commerce has challenged much of this traditional business thinking. There’s seven unique features of e-commerce technology that both challenge traditional business thinking and explain why we have so much interest in e-commerce.
SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY
1. Ubiquity
Available just about everywhere, at all times. A unique feature of e-commerce technology.
2. Global Reach
The total number of users or customers an e-commerce business can obtain.
3. Universal Standards
Standards that are shared by all nations around the world.
4. Richness
The complexity and content of a message.
5. Interactivity
Technology that allows for two way communication between merchant and consumer.
6. Information Density
The total amount and quality of information available to all market participants.
7. Personalization/Customization
- Personalization : the targeting of marketing messages to specific individuals by adjusting the message to a person’s name, interest, and past purchases.
- Customization : changing the delivered product or service based on a user’s preferences or priod behavior.
TYPES OF E-COMMERCE
There are a variety of different types of e-commerse and many different types of e-commerce and many different ways to characterize these types. For the most part, we distinguish different types of e-commerce by the nature of the market relationship-who is selling to whom. The exceptions are P2P and m-commerce, which are technology based distinctions.
1. Business to Consumer (B2C) e-commerce
The most commonly discussed type of e-commerce, in which online businesses attempt to reach individual consumers.
2. Business to Business (B2B) e-commerce
In which business focus on selling to other businesses, is the largest form of e-commerce, with about $800 billion in transactions in the US for 2002.
3. Consumer to Consumer (C2C) e-commerce
Provides a way for consumers to sell to esch other, with the help of an online market maker such as the auction site and eBay.
4. Peer 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, in e-commerce.
5. Mobile commerce (m-commerce)
Refers to the use of wireless digital devices to enable transactions on the Web.
GROWTH OF THE INTERNET AND THE WEB
The technology juggernaut behind e-commerce is the internet and the World Wide Web. The internet is a worldwide network of computer networks built on common standards. The internet links businesses, educational institutions, government agencies, and individuals together, and provides users with services sucs as e-mail, document transfer, newsgroups, shopping, research, instant messaging, music, videos, and news. The web provides access to an estimated 6 billion pages or documents created in a language called HTML (Hyper Text Markup Language). These HTML pages contain information, including text, graphics, animations, and other objects, made available for public use.
1.2 E-COMMERCE I AND II
E-commerce I is a period of explosive growth in e-commerce, beginning in 1995 and ending in 2000.
E-commerce II is the current era of e-commerce, beginning in 2001
THE VISIONS AND FORCES BEHIND E-COMMERCE I
For computer scientist and information technologies, E-commerce I was a powerful vindication of a set of information technologies that had developed over a period of forty years, extending from the development of the early internet to the PC, to local area networks.
For economists, e-commerce raised the realistic prospect of a perfect Bertrand Market ; where price, cost, and quality information is equally distributed, a nearly infinite set of suppliers complete against one another, and customers have access to all relevant market information worldwide.
For merchants, the cost of searching for customers would also fall, reducing the need for wasteful advertising.
For real world entrepreneurs, their financial backers, and marketing professionals in the e-commerce I period, the idea of friction free commerce was far from their own visions.
Thus, the E-commerce I period was driven largely by vision of profiting from new technology, with the emphasis on quickly achieving very high market visibility.
1.3 UNDERSTANDING E-COMMERCE : ORGANIZING THEMES
It is useful to think about e-commerce as involving three broad interrelated themes : technology, business and society
TECHNOLOGY : INFRASTRUCTURE
E-commerce is above all else a technologicallydriven phenomenon that relies a host of information technologies as well as fundamental concepts from computer science developed over a 50-year period.
E-commerce relies on all these basic technologies, not just the internet. The internet, while representing a sharp break from prior corporate computing and communications technologies, is nevertheless just the latest development in the evolution of corporate computing and part of the continuing chain of computer based innovations in business.
BUSINESS : BASIC CONCEPTS
While the technology provides the infrastructure, it is the business applications, the potential for extraordinary returns on investment, that create the interest and excitement in e-commerce. New technologies change the strategies or plans existing firms : Old strategies are made obsolete and new ones need to be invented.
SOCIETY : TAMING THE JUGGERNAUT
Since the internet and the web are exceptionally adept at tracking the identity and behavior of individuals online, e-commerce raises difficulties for preserving privacy, the ability of individuals to place limits on the type and amount of information collected about them, and to control the uses of their personal information. The global nature of e-commerce also posses public policy issues of equity, equal access, content regulation, and taxation.
1.1 E-Commerce : The Revolution is Just Beginning
The Amazon story is emblematic of the e-commerce environment of the past two years : an early period of business vision, inspiration, and experimentation, followed by immense difficulties proving new technologies and new business models. Many e-commerce companies failed during this process, resulting in hundreds of bankruptcy fillings.
In 1994, e-commerce as we know it did not exist. In 2003, businesses are expected to spend over $1 trillion purchasing goods and services from other business on the web (U.S Census Bureau, 2003). From a standing start in 1995, this type of commerce, called electronic commerce or e-commerce, experienced growth rates of well over 100% a year, although the rate has slowed and is now growing at over 30% year. These development have created the first widespread digital electronic marketplaces.
It is important to realize that the rapid growth and change that has occurred in the first eight years of e-commerce represents just the beginning-what we could be called the first thirty seconds of the e-commerce revolution. The twenty first century will barely perceive at this time. It appears likely that e-commerce will eventually impact nearly all commerce, or that most commerce will be e-commerce by the year 2050.
WHAT IS E-COMMERCE
E-commerce is the use of the internet and the web to transact business. More formally, digitally enabled commercial transactions between and among organizations and individuals.
THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS
Some argue that e-commerce encompasses the entire world of electronically based organizational activities that support a firm’s market exchanges-including a firm’s entire information system’s infrastructure (Rayport and Jaworski, 2003). Other argue, on the other hand, that e-business encompasess the entire world of internal and external electronically based activities, including e-commerce (Kalakota and robinson,2003).
For the most part, e-business does not include commercial transactions involving an exchange of value across organizational boundaries. It is true, however, that a firm’s e-business infrastructure provides support for online e-commerce exchanges; the same infrastructure and skill sets are involved in both e-business and e-commerce. E-commerce and e-business system blur together at the business firm boundary, at the point where internal business systems link up with suppliers or customers, for instance.
WHY STUDY E-COMMERCE ?
Prior to the development of e-commerce, the process of marketing and selling goods was a mass marketing and sales force-driven process. Consumers were considered to be trapped by geographical and social boundaries, unable to search widely for the best price and quality. Information about prices, costs and fees could be hidden from the consumer, creating profitable “information asymmetries” for the selling firm. Information asymmetry refers to any disparity in relevant market information among parties in a transaction.
E-commerce has challenged much of this traditional business thinking. There’s seven unique features of e-commerce technology that both challenge traditional business thinking and explain why we have so much interest in e-commerce.
SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY
1. Ubiquity
Available just about everywhere, at all times. A unique feature of e-commerce technology.
2. Global Reach
The total number of users or customers an e-commerce business can obtain.
3. Universal Standards
Standards that are shared by all nations around the world.
4. Richness
The complexity and content of a message.
5. Interactivity
Technology that allows for two way communication between merchant and consumer.
6. Information Density
The total amount and quality of information available to all market participants.
7. Personalization/Customization
- Personalization : the targeting of marketing messages to specific individuals by adjusting the message to a person’s name, interest, and past purchases.
- Customization : changing the delivered product or service based on a user’s preferences or priod behavior.
TYPES OF E-COMMERCE
There are a variety of different types of e-commerse and many different types of e-commerce and many different ways to characterize these types. For the most part, we distinguish different types of e-commerce by the nature of the market relationship-who is selling to whom. The exceptions are P2P and m-commerce, which are technology based distinctions.
1. Business to Consumer (B2C) e-commerce
The most commonly discussed type of e-commerce, in which online businesses attempt to reach individual consumers.
2. Business to Business (B2B) e-commerce
In which business focus on selling to other businesses, is the largest form of e-commerce, with about $800 billion in transactions in the US for 2002.
3. Consumer to Consumer (C2C) e-commerce
Provides a way for consumers to sell to esch other, with the help of an online market maker such as the auction site and eBay.
4. Peer 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, in e-commerce.
5. Mobile commerce (m-commerce)
Refers to the use of wireless digital devices to enable transactions on the Web.
GROWTH OF THE INTERNET AND THE WEB
The technology juggernaut behind e-commerce is the internet and the World Wide Web. The internet is a worldwide network of computer networks built on common standards. The internet links businesses, educational institutions, government agencies, and individuals together, and provides users with services sucs as e-mail, document transfer, newsgroups, shopping, research, instant messaging, music, videos, and news. The web provides access to an estimated 6 billion pages or documents created in a language called HTML (Hyper Text Markup Language). These HTML pages contain information, including text, graphics, animations, and other objects, made available for public use.
1.2 E-COMMERCE I AND II
E-commerce I is a period of explosive growth in e-commerce, beginning in 1995 and ending in 2000.
E-commerce II is the current era of e-commerce, beginning in 2001
THE VISIONS AND FORCES BEHIND E-COMMERCE I
For computer scientist and information technologies, E-commerce I was a powerful vindication of a set of information technologies that had developed over a period of forty years, extending from the development of the early internet to the PC, to local area networks.
For economists, e-commerce raised the realistic prospect of a perfect Bertrand Market ; where price, cost, and quality information is equally distributed, a nearly infinite set of suppliers complete against one another, and customers have access to all relevant market information worldwide.
For merchants, the cost of searching for customers would also fall, reducing the need for wasteful advertising.
For real world entrepreneurs, their financial backers, and marketing professionals in the e-commerce I period, the idea of friction free commerce was far from their own visions.
Thus, the E-commerce I period was driven largely by vision of profiting from new technology, with the emphasis on quickly achieving very high market visibility.
1.3 UNDERSTANDING E-COMMERCE : ORGANIZING THEMES
It is useful to think about e-commerce as involving three broad interrelated themes : technology, business and society
TECHNOLOGY : INFRASTRUCTURE
E-commerce is above all else a technologicallydriven phenomenon that relies a host of information technologies as well as fundamental concepts from computer science developed over a 50-year period.
E-commerce relies on all these basic technologies, not just the internet. The internet, while representing a sharp break from prior corporate computing and communications technologies, is nevertheless just the latest development in the evolution of corporate computing and part of the continuing chain of computer based innovations in business.
BUSINESS : BASIC CONCEPTS
While the technology provides the infrastructure, it is the business applications, the potential for extraordinary returns on investment, that create the interest and excitement in e-commerce. New technologies change the strategies or plans existing firms : Old strategies are made obsolete and new ones need to be invented.
SOCIETY : TAMING THE JUGGERNAUT
Since the internet and the web are exceptionally adept at tracking the identity and behavior of individuals online, e-commerce raises difficulties for preserving privacy, the ability of individuals to place limits on the type and amount of information collected about them, and to control the uses of their personal information. The global nature of e-commerce also posses public policy issues of equity, equal access, content regulation, and taxation.
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