Electronic Commerce

Dr. Robert Chi

Chair and Professor, IS department

Chief editor, Journal of Electronic Commerce Research

Year 2000, The bubble burst?

• The party is over – the New York Post

• Next big thing? There never was; There never will be?

What is E-commerce

• Disintermediation• Examples

– Yahoo, myyahoo.com• Individualization

– Dell• Mass customization

– Fedex• Interactivity

– Walmart• Extranet

Origin of the Internet

• Innovation Phase (1961-1974)

• Institutional phase (1975-1995)

• Commercialization Phase (1995-present)

Impacts (1)

• Makes a massive quantitative of data more available and easier to access then ever before (information transparency)– Bring buyers and seller together

• Instantaneous and two way information exchange (Interactivity)– Efficiency, effectiveness and Better customer service

• Customization and individualization– Demand driven business model, Customer centered

approach

Impacts (2)

• Digitalization– Digital products– Digital transaction– Digital delivery

• Globalization– Offshore outsourcing– Globalized logistics

7 unique features of E-commerce Technology)

• Ubiquity

• Global reach

• Universal Standard

• Richness

• Interactivity

• Information Density

• Personalization/Customization

Types of E-commerce

• B2C (150 billion in 2005)

0

50

100

150

200

250

1997 1999 2001 2003 2005 2007

Revenue

• B2B (4000 billion in 2005)

0

1000

2000

3000

4000

5000

6000

1998 2000 2002 2004 2006

B2B (billion)

• C2C

• C2B

• M-commerce

E-commerce I and I

E-commerce I E-commerce II

Technology driven Business driven

Revenue growth emphasis Earning and profits emphasis

Venture capital financing Traditional financing

Ungoverned Strong regulation and governance

Entrepreneurial Large traditional firms

Dis-intermediation Strengthening intermediaries

Perfect markets Imperfect markets, brands and network effects

Pure online strategies Mixed clicks and bricks strategies

First move advantages Strategic follower strength; complimentary assets

E-commerce Business Models– Business models?

• A set of planned activities (business processes) designed to result in a profit in a marketplace.

– Key factors• Value proposition

– How a company’s product or services fulfill the needs of customers. Why should the customer buy from you?

• Revenue model– How the firm will earn revenue, generate profits.

• Market opportunity– What market space do you intend to serve and what is its size

• Competitive environment– What special advantages does your firm bring to the market space

• Market strategy– How do you plan to promote your products or services to attract your target audience

Continued..

• Organizational development– What types of organizational structures within the firm are

necessary to carry out the business plan

• Management team– What kinds of experience and background are important

for the company’s leaders to have

Major B2C Business Models (handout 1)

• Portal: yahoo.com

• Etailer: amazon.com

• Content provider: wsj.com

• Transaction broker: etrade.com

• Market creator: ebay.com

• Service provider: mycfo.com

• Community provider: about.com

Major B2B Business Models (handout 2)

• Net Marketplaces– E-distributor: staples.com

– E-purcurement: Ariba.com

– Exchanges: gepolymerland.com

– Industry consortia:

• Private Industrial Networks– Single firm networks

• Buyer, seller

– Industry-wide networks

Other Business Models (handout 2)

• C2C: ebay.com

• P2P” kazaa.com

• M-commerce:

Web design

• Static vs. dynamic web design– HTML, XML..– ASP, Coldfusion…

• Color Scheme

• Layout

• Domain Names

In class exercise

• Develop an e-commerce business model which is preferred to be unique and design the first page of its web site

• Teamwork, 20 minutes

Internet Marketing Strategy

• Strategy – What to do– How to do it– Led by a slogan

• Microsoft: anywhere anytime• What do you want to do today• Starbucks: a cup at a time• Disneyland: the happiest place on earth

– A company with a good strategy • Conscious • capable

Marketing strategy (handout 6)

• Pure Play– Segmentation

• Meaningful and actionable

– Target market selection• Segment size and growth• Structure attractiveness: porter’s 5 forces model• objectives and resources:

– Positioning: articulate what the brand stand for in the consumer’s mind

The future Infrastructure

• Current limitations– bandwidth, services, architecture, HTML, wired

• The Internet2 project (Next generation Internet project)– High speed network

– Including revolutionary internet applications

– Rapid transfer of new network services ands applications to the broader internet community

Fiber optics and wireless (handout 4,5)

• Fiber• Wireless

– Telephone wireless access• 460 million cell phones sold in 2003• 1G: analog transmission, circuit switch• 2G: digital transmission, circuit switch• 3G: digital transmission, packet switch• Global system for mobile communication (GSM) vs. Code

division multiple access(CDMA)

– Computer network wireless access• WiFi, WiFi5, WiMax, BlueTooth