Ch 1 Bus 174

E-Commerce 2007-Present: Reinvention

-Beginning in 2007 with the introduction of the iPhone, to the present day, e-commerce has been transformed yet again by the rapid growth of Web 2.0, widespread adoption of consumer mobile devices such as smartphones and tablet computers, the expansion of e-commerce to include local goods and services, and the emergence of an on-demand service economy enabled by millions of apps on mobile devices and cloud computing. Web 2.0- A set of applications and technologies that enable user-generated content. -This period can be seen as both sociological, as well as a technological business, phenomenon. -The defining characteristics of this period are often characterized as the "social, mobile, local" online world. -Marketing has transformed by the increasing use of social networks, word-of-mouth, vial marketing, and much more powerful data repositories and analytic tools for truly personal marketing. -Social networks like FB and Twitter share similar characteristics. -First, they rely on user-generated content. (Regular people are creating, sharing, and broadcasting content to huge audiences.) -They are inherently highly interactive, creating new opportunities for people to socially connect to others. -Most recently, the reinvention of the Web and e-commerce has resulted in a new set of on-demand, personal service businesses such as Uber, Airbnb, Instacart, Handy, and Homejoy. -These businesses have been able to tap into a large reservoir of unused assets and to create lucrative markets based on the mobile platform infrastructure.

Business-to-Consumer (B2C) E-Commerce

-Most common type of e-commerce. -B2C is where online businesses attempt to reach individual consumers. -Includes purchases of retail goods, travel services, and online content. -B2C is comparatively small, but has grown exponentially since 1995, and is the type of e-commerce that most consumers are likely to encounter.

Technology: Infrastructure

-To understand the likely future of e-commerce, you need a basic understanding of the information technologies upon which it is built. -E-Commerce is above all else a technologically driven phenomenon that relies on a host of information technologies as well as fundamental concepts from computer science developed over a 50yr period. -The internet is nevertheless just the latest development in the evolution of corporate computing and part of the continuing chain of computer based innovations in business.

Origins and Growth of E-Commerce

1980's experienced the development of Electronic Data Interchange (EDI) standards that permitted firms to exchange commercial documents and conduct digital commercial transactions across private networks. -B2C first established in France in 1981 (The Mintel). -1995-2000: The period of Invention -2001-2006: The period of Consolidation -2007-Present: A period of reinvention with social, mobile, and local expansion.

First Mover

A form that is first to market in a particular area and that moves quickly to gather market share.

E-Commerce 2001-2006: Consolidation

A sobering period of reassessment of e-commerce occurred, with many critics doubting its long-term prospects. -Emphasis shifted to a more "Business-driven" approach rather than being technology driven; large traditional firms learned how to use the Web to strengthen their market positions. -Brand extension and strengthening became more important than creating new brands -Financing shrunk as capital markets shunned start-up firms -Traditional bank financing based on profitability returned. -During the period of consolidation, e-commerce changed to include not just retail products but also more complex services such as a travel and financial services. -This period was enabled by widespread adoption of broadband networks in American homes and businesses, coupled with the growing power and lower prices of personal computers that were the primary means of accessing the internet, usually from work or home. -Marketing on the internet increasingly meant using search engines advertising targeted to user queries, rich media and video ads, and behavioral targeting of marketing messages based on ad networks and auctions markets. -The web policy of both large and small firms expanded to include a broader "web presence" that included not just Web sites, but also email, display, and search engine campaigns; multiple Web sites for each product; and the building of some limited community feedback facilities. -E-Commerce in this period was growing again by more than 10% a year.

Application (App)

A software application. -The term is used when referring to mobile applications, although it is also sometimes used to refer to desktop computer applications as well.

Mobile Browser

A version of web browser software accessed via a mobile device.

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.

Internet

A worldwide network of computer networks.

E-commerce future

At the current moment, there is no foreseeable limit to the continued rapid development of e-commerce technology, or limits on the inventiveness of entrepreneurs to develop new uses for the technology.

E-commerce risk

Business fortunes are made and lost in periods of extraordinary change such as the period we are currently in.

Technical Approach of E-Commerce

Computer Scientists are Interested in development of computer hardware, software, standards, encryption, and database design and operation. -Operations management scientists are interest in building mathematical models of business processes and optimizing these processes. -They are interested in e-commerce as an opportunity to study how business firms can exploit the internet to achieve more efficient business operations.

E-commerce

Digital Commerce -(They are synonymous)

Disintermediation

Displacement of market middlemen who traditionally are intermediaries between producers and consumers by a new direct relationship between producers and consumers.

E-Commerce

E-Business (They are blurred together at the business firm boundary, the point where internal business systems link up with suppliers or customers. -E-business applications turn into e-commerce precisely when an exchange of value occurs.

Society: Taming The Juggernaut

E-Commerce is subject to the laws of nations and global entities. -Must understand the pressures that global e-commerce places on contemporary society in order to conduct a successful e-commerce business or understand the e-commerce phenomenon. -The global nature of e-commerce also poses public policy issues of equity, equal access, content regulation, and taxation.

Social Technology: User-Generated Content and Social Networks

E-commerce allows users to create and share content with a worldwide community. -Using these forms of communication, users are able to create new social networks and strengthen existing ones. Broadcast Model- One-to-Many, where content is created in a central location by experts (prof writers, editors, actors, directors, and producers) and audiences are concentrated in huge aggregates to consumer a standardized product. -The telephone is small exception and is a one-to-one technology. -E-commerce technology provides a unique, many-to-many model of mass communication.

E-Commerce Technologies Compared to Traditional Comm

E-commerce tech has the potential for offering considerably more info richness than traditional media such as printing presses, radio, and TV because they are interactive and can adjust the message to individual users.

Global Reach

E-commerce tech permits commercial transactions to cross cultural, regional, and national boundaries far more conveniently and cost-effectively that is true in traditional commerce. As a result, the potential market size for e-commerce merchants is roughly equal to the size of the world's online population. Reach- The total number of users or customers an e-commerce business can obtain.

Interactivity

E-commerce technologies enable two-way communication between merchant and consumer and among consumers. -Possibility of interacting with customers and businesses at quick responses because it is live. -Done so via smartphones, social networks, and twitter. -Interactivity allows an online merchant to engage a consumer in ways similar to a face-to-face experience.

Social E-Commerce

E-commerce that is enabled by social networks and online social relationships. -Driven by the increasing popularity of social sign-on, network notification, and online collaborative shopping tools, and social search.

Local E-Commerce

Focused on engaging the consumer based on his or her current geographic location. -The third prong of the mobile, social, and local e-commerce wave.

E-commerce by 2019

In this year, consumers will spend around 775 billion and businesses spend 8.5 trillion through e-commerce. By 2050, most commerce will be through e-commerce.

Digitally Enabled Transactions

Include all transactions mediated by digital technology. -For the most part, this means transactions over the internet, the web, and/or via mobile devices.

Behavioral Approach to E-Commerce

Information systems researchers are primarily interested in e-commerce because of its implications for firm and industry value chains, industry structure, and corporate strategy. -Economist have focused on online consumer behavior, pricing of digital goods, and on the unique features of digital electronic markets.

Commercial Transactions

Involve the exchange of value (ex. money) across organizational or individual boundaries in return for products and services. -Exchange of value is important for understanding the limits of e-commerce. (Without an exchange of value, no commerce occurs).

21 years of E-commerce

Known as the first 30 seconds in the beginning of e-commerce

Ubiquity

Marketplace- A physical place you visit in order to transact. -ex. TV and radio typically motivate the consumer to go someplace to make a purchase. Ubiquity- Available just about everywhere, at all times. -This liberates the market from being restricted to a physical space and makes it possible to shop from your desktop, at home, work, or car, using mobile e-commerce. Marketspace- A marketplace extended beyond traditional boundaries and removed from a temporal and geographic location. -Ubiquity reduces transaction costs Transaction Costs- the costs of participating in a market. -Ubiquity lowers the cognitive energy required to transact in a marketspace. Cognitive Energy- Refers to the mental effort required to complete a task.

Present E-commerce

Mobile, social, and local have become driving forces in e-commerce. Mobile Platform infrastructure: Also giving birth to another e-commerce innovation-on demand services are local and personal.

Menu Cost

National or Geographic pricing in traditional retailing

Business: Basic Concepts

New technologies present businesses and entrepreneurs with new ways of organizing production and transacting business. -New technologies change the strategies and plans of existing firms: old strategies are made obsolete and new ones need to be invented. -New technologies are the birthing grounds where thousands of new companies spring up with new products and services. -New technologies are the graveyard to many traditional companies. -To truly understand e-commerce, you will need to be familiar with some key busienss concepts, such as the nature of digital markets, digital goods, business models, firm and industry value chains, value webs, industry structure, digital disruption, and consumer behavior in digital markets.

Network Effect

Occurs where users receive value from the fact that everyone else uses the same tool or product. -EX. a common operating system, telephone system, or software application such as a proprietary instant messaging standard or an operating system such as windows.

Web

One of the internet's most popular services, providing access to billions of web pages.

World Wide Web (The Web)

One of the most popular services that runs on the internet infrastructure. -Developed in the early 90's and hence is of much more recent vintage than the internet. -The web provides access to billions of web pages indexed by google and other search engines. -These pages are created in a language called HTML (HyperText Markup Language). -HTML pages can contain texts, graphics, animations, and other objects. -Internet prior to the Web was primarily used for text communications, file transfers, and remote computing. -The Web added color, voice, and video to the internet, creating a communications infrastructure and information storage system that rivals TV, radio, magazines, and even libraries. -60 trillion unique URL's

Business-to-Business (B2B) E-Commerce

Online businesses selling to other businesses. -The largest form of e-commerce with around $6.3 trillion in transaction in the US in 2015. -Net Marketplaces- Includes e-distributors, e-procurement companies, exchanges and industry consortia, and private industrial networks.

1990's of E-Commerce

Period of business vision, inspiration, and experimentation.

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- Changing the delivered product or service based on a user's preferences or prior behavior. -Personalization and customization allow firms to precisely identify market segments and adjust their messages accordingly.

Prior to E-commerce

Prior to the development of e-commerce, the marketing and sale of goods was mass-marketing and sales force-driven processes. -Marketers viewed customers as passive targets of advertising campaigns and branding blitzes intended to influence their long-term product perceptions and immediate purchasing behavior.

Consumer-to-Consumer (C2C) E-Commerce

Provides a way for consumers to sell to each other, with the help of an online market maker (also called a platform provider) such as eBay or Etsy. -The global C2C market in 2015 was more than $100 billion. -In C2C e-commerce, the consumer prepares the product for the market, places the product for auction or sale, and relies on the market maker to provide catalog, search engine, and transaction-clearing capabilities so that products can be easily displayed, discovered, and paid for.

Mobile Platform

Provides the ability to access the internet from a variety of highly mobile devices such as smartphones, tablets, and lightweight computers via wireless networks or cell phone service.

E-Business

Refers primarily to the digital enabling of transactions of processes WITHIN a firm, involving information systems under the control of the firm. -Most part, e-business does not include commercial transactions involving an exchange of value across organizational boundaries. -EX. A company's online inventory control mechanisms are a component of e-business, but such internal processes do not directly generate revenue for the firm from outside businesses or consumers, as e-commerce, by definition, does. -E-business infrastructure provides support for online e-commerce exchanges, both used in e-business and e-commerce.

Information Asymmetry

Refers to any disparity in relevant market information among parties in a transaction. -It was so expensive to change national or regional prices in traditional retailing that one national price was the norm, and dynamic pricing to the marketplace let alone to individuals in the marketplace-changing prices in real time- was unheard of.

Richness

Refers to the complexity and content of a message. -Traditional markets, national sales forces, and small retail stores have great richness: they are able to provide personal, face-to-face service using aural and visual cues when making a sale. BEFORE THE DEVELOPMENT OF THE WEB, THERE WAS A TRADE-OFF BETWEEN RICHNESS AND REACH: THE LARGE THE AUDIENCE REACHED, THE LESS RICH THE MESSAGE.

Mobile E-Commerce (M- Commerce)

Refers to the use of mobile devices to enable online transactions. -Involves cellular and wireless networks to connect laptops, smartphones, and tablets to the internet.

2002-2008 E-Commerce

Retail commerce increased 25% a year.

E-commerce

Richness, ubiquity, global reach, universal standards, social technology, personalization and customization, information density, and interactivity.

Social Networks

Social networks enable social e-commerce by providing search, advertising, and payment services to vendors and customers.

Universal Standards

Standards that are shared by all nations around the world. -The universal technical standards of e-commerce greatly lower market entry costs Market Entry Costs- the cost merchants must pay just to bring their good to market. -Universal standards reduce search costs. Search Costs- the effort required to find suitable products. Network Externalities- Benefits that arise because everyone uses the same technology.

Smaller Businesses

Taking advantage of the internet and mobile platform as e-commerce technologies become less and less expensive.

Internet Host

The internet Systems Consortium as an IP address that returns a domain name in the in-addr.arpa domain, which is a special part of the DNS namespace that resolves IP addresses into domain names.

Information Density

The total amount and quality of information available to all market participants, consumers, and merchants alike. -E-Commerce increases information density. -E-commerce tech reduce information collection, storage, processing, and communication costs. -They also increase currency, accuracy, and timeliness of information-making info more useful than ever. -As a result, info becomes more plentiful, less expensive, and of higher quality. -Business consequences result from the increase in information density. -In E-commerce markets, prices and costs become more transparent. Price Transparency- refers to the ease with which consumers can find out the variety of prices in a market Cost Transparency- Refers to the ability of consumers to discover the actual costs merchants pay for products. -Merchants can discover much more about consumers because of info density and allows them to segment the market into groups willing to pay diff prices and permits them to engage in price discrimination. Price Discrimination- Selling the same goods, or nearly the same goods, to different targeted groups at different prices.

E-commerce

The use of internet, the world wide web, and mobile apps and browsers running on mobile devices to transact business.

Internet and Mobile

These platforms provide and environment that allows millions of people to create and share content, establish new social bonds, and strengthen existing ones through social network, photo and video posting, and blogging sites and apps, while at the same time creating significant privacy issues.

Pricing with E-commerce

Very difficult to hide costs and prices of products, and the entire marketplace potentially becomes highly price competitive.

E-Commerce 1995-2000: Invention

Years of explosive growth and extraordinary innovation, beginning in 1995 with the first widespread use of the Web to advertise products. -During this period, e-commerce meant selling retail goods, usually quite simple goods, on the internet. -Marketing was limited to unsophisticated static display ads and not very powerful search engines. -2000 (the dot-com crash) -The early success of e-commerce was a powerful vindication of a set of information technologies that had developed over a period of 40 years-extending from the development of the early internet, to the PC, to local area networks. -The internet spawned digital markets where information would be nearly perfect-something that is rarely true in other real-world markets. -The early years of e-commerce were driven largely by visions of profiting from new technology, with the emphasis on quickly achieving very high market visibility. -The source of financing was venture capital funds. -The ideology of the period emphasized the ungoverned "Wild West" character of the Web and the feeling that governments and courts could not possibly limit or regulate the internet; there was a general belief that traditional corporations were too slow and bureaucratic, too stuck in the old ways of doing business, to "get it" - to be competitive in e-commerce. -The emphasis during this period was destroying traditional distribution channels and disintermediating existing channels, using new pure online companies who aimed to achieve impregnable first-mover advantages. -Overall, this period was characterized by experimentation, capitalization, and hyper competition.