Lecture 1-Ecommerce

Chapter 1: An Introduction to ecommerce

By

Habib Ullah Qamar

MSCS,MBA(HRM)

@theITeducation

Learning objective

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.

Understand the evolution of e-commerce from its early years to today.

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.

Recommended Books /

Resources

E-Commerce by Kenneth C. Loudon, Carol Traver : 2014 version

Wikipedia.org

http://www.theITeducation.com/

http://slideshare.net/habibullahqamar/

Lets StartE-Commerce

Introduction

What is social media

What are popular social media

Facebook

Twitter

Pinterest

Success story of Pinterest (2009)

Fastest web to get 10million

In 2014 more than 50 millions

Third most visited website

In 2012 started monetize using business

For business now it’s a communication tool

For consumers its an inspiration and aspiration source

History of Ecommerce

1994: it did not exist

2013: around 155 million American consumers are

expected to spend about $419 billion, and businesses

more than $4.8 trillion, purchasing goods and services

online or via a mobile device.

A similar story has occurred throughout the world. And

in this short period of time, e-commerce has been

reinvented not just once, but twice.

The early years of e-commerce, during the late 1990s,

were a period of business vision, inspiration, and

experimentation.

History of Ecommerce

There followed a period of retrenchment and

reevaluation, which led to the stock market crash of

2000–2001, with the value of e-commerce,

telecommunications, and other technology stocks

dropping.

After the bubble burst, many people were quick to

write off e-commerce. But they were wrong. The

surviving firms refined and polished their business

models, ultimately leading to models that actually

produced profits. Between 2002–2008, retail e-

commerce grew at more than 25% per year.

History of Ecommerce

Today, we are in the middle of yet another transition:

A new and vibrant social, mobile, and local model of

e-commerce growing alongside the more traditional e-

commerce retail sales model exemplified by Amazon.

Social network sites such as Facebook, Twitter,

YouTube, and Pinterest, which enable users to

distribute their own content have rocketed to

prominence.

Encouraged by the explosive growth in smartphones

such as iPhones and Androids, tablet computers, and

ultra-lightweight laptops

What is e-commerce?

“the use of the Internet, the World Wide Web (Web), and mobile apps to transact business”.

The terms Internet and Web are actually two very different things.

The Internet is a worldwide network of computer networks, and the Web is one of the Internet’s most popular services, providing access to billions of Web pages.

An app (short-hand for application) is a software application. The term is typically used when referring to mobile applications.

The professional literature sometimes refers to e-commerce as “digital commerce”

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.

Others argue, on the other hand, that e-business encompasses the entire world of internal and external electronically based activities, including e-commerce.

eight unique Features OF e-

commerce technology

eight unique Features OF e-

commerce technology

Ubiquity : In traditional commerce, a marketplace is a

physical place you visit in order to transact. E-

commerce, in contrast, is characterized by its ubiquity :

it is available just about everywhere, at all times. It

liberates the market from being restricted to a physical

space and makes it possible to shop from your desktop,

at home, at work, or even from your car, using mobile

e-commerce.

A marketplace extended beyond traditional boundaries

and removed from a temporal and geographic location.

From a consumer point of view, ubiquity reduces

transaction costs.

Eight Unique Features OF e-

commerce Technology

Global Reach : E-commerce technology permits commercial transactions to cross cultural, regional, and national boundaries far more conveniently and cost-effectively than is true in traditional commerce. Now market size for e-commerce merchants is roughly equal to the size of the world’s online population.

Universal standards: Technical standards of the Internet for conducting e-commerce are universal standards and they are shared by all nations around the world. In contrast, most traditional commerce technologies differ from one nation to the next. For instance, television and radio standards differ around the world, as does cell phone technology.

Lower Market entry cost, price discovery is simple

eight unique Features OF e-

commerce technology

Richness: Information richness refers to the complexity

and content of a message (Evans and Wurster, 1999).

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. The Internet has the

potential for offering considerably more information

richness than traditional media such as printing

presses, radio, and television because it is interactive

and can adjust the message to individual users.

Chatting with an online sales person, for instance,

comes very close to the customer experience in small

retail shop.

eight unique Features OF e-

commerce technology

Interactivity : Unlike any of the commercial technologies

of the twentieth century, with the possible exception of

the telephone, e-commerce technologies allow for

interactivity, meaning they enable two-way communication

between merchant and consumer and among consumers.

Information density : E-commerce technologies vastly

increase information density—the total amount and

quality of information available to all market

participants, consumers, and merchants alike. E-

commerce technologies reduce information collection,

storage, processing, and communication costs and increase

the currency, accuracy, and timeliness of information

making information more useful and important than ever

eight unique Features OF e-

commerce technology

Personalization/customization : 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. Given the interactive nature of e-commerce technology, much information about the consumer can be gathered in the marketplace at the moment of purchase.

Social technology: user content generation and social networking In a way quite different from all previous technologies, e-commerce technologies have evolved to be much more social by allowing users to create and share content with a worldwide community.

Types of E-Commerce

Business-to-Consumer (B2C)

Business-to-Business (B2B)

Consumer-to-Consumer(C2C)

Business to Government (B2G)

Social E-Commerce

M-Commerce

Local E-Commerce

Origins and Growth of E-

Commerce

Based on growth of the internet, Web, and mobile PalteForm.

In the late 1970s, a pharmaceutical firm named Baxter Healthcare initiated a primitive form of B2B e-commerce by using a telephone-based modem that permitted hospitals to reorder supplies from Baxter.

In the B2C arena, the first truly large-scale digitally enabled transaction system was deployed in France in 1981. The Minitel was a French videotext system that combined a telephone with an 8-inch screen. By the mid-1980s, more than 3 million Minitels were deployed, and more than 13,000 different services were available (Read more from book)

B2C e-commerce in the United States will grow by about 14% annually

Origins and Growth of E-

Commerce

Electronic Funds Transfer

Electronic Data Interchange (EDI-an old name of ecommerce) among business in computer readable format. It started in 1096 with the invention of computer networks

EDI meant buying expensive computer hardware and software and then either establishing direct network connections (using leased telephone lines) to all trading partners or subscribing to a value-added network. A value-added network (VAN) is an independent firm that offers connection and transaction forwarding services to buyers and sellers engaged in EDI.

Origins and Growth of E-

Commerce The Dot-Com Boom, Bust, and Rebirth

The second wave of Ecommerce

History/ Growth of

Ecommerce

E-commerce 1995–2000: invention

E-commerce 2001–2006: consolidation

E-commerce 2007—present: reinvention

History

What is the major factor of

the success of a business?

Spending Investment and capital

Getting more Customers

Other

The Answer

Read the story of Twitter, Facebook, Pintrest,

Imagebazar, hamriweb etc

You will find minimum capital and investment

Started with zero customer

But

Started with a Planned Business Model,

That is the key to success for a business!

What is Business Model?

A set of planned activities designed to result in a profit

in a marketplace.

A business model is not always the same as a business

strategy, although in some cases they are very close in

so far as the business model explicitly takes into

account the competitive environment (Magretta, 2002).

The business model is at the center of the business

plan. A business plan is a document that describes a

firm’s business model.

An e-commerce business model aims to use and control

the unique qualities of the Internet, the Web, and the

mobile platform.

Eight key elements of a business model

Eight key elements of a

business model

Why customers will choose to do business with the firm instead of another company and what the firm provides that other firms do not and cannot?

Value proposition : defines how a company’s product or service fulfills the needs of customers. A company’s value proposition is at the very heart of its business model.

From the consumer point of view, successful e-commerce value propositions include personalization and customization of product offerings, reduction of product search costs, reduction of price discovery costs, and facilitation of transactions by managing product delivery.

Eight key elements of a

business model A firm’s revenue model describes how the firm will earn revenue,

generate profits, and produce a superior return on invested

capital. We use the terms revenue model and financial model

interchangeably.

Eight key elements of a

business model Market opportunity refers to the company’s intended marketspace

(i.e.an area of actual or potential commercial value) and the

overall potential financial opportunities available to the firm in

that marketspace. It depends on smaller market niches.

Eight key elements of a

business model A firm’s competitive environment refers to the other companies

selling similar products and operating in the same marketspace.

It also refers to the presence of substitute products and potential

new entrants to the market, as well as the power of customers

and suppliers over your business.

How many competitors are active, how large their operations are,

what the market share of each competitor is, how profitable these

firms are, and how they price their products, all these queries

must be learned.

Eight key elements of a

business model competitive advantage : achieved by a firm when it can produce a

superior product and/or bring the product to market at a lower

price than most, or all, of its competitors.

Asymmetry : has more resources

first-mover advantage

Complementary resources: resources other than production i.e.

marketing and reputation

unfair competitive advantage : factor other firm cannot (brand

name copy or imitate)

Perfect market (no asymmetry, equal )

Leverage : using name into other markets

Eight key elements of a

business model Market strategy : the plan you put together that details exactly

how you intend to enter a new market and attract new customers.

The best business concept, or idea, will fail if it is not properly

marketed to potential customers.

For instance, Twitter, YouTube, and Pinterest have a social network

marketing strategy that encourages users to post their content on

the sites for free, build personal profile pages, contact their

friends, and build a community. In these cases, the customer

becomes part of the marketing staff!

Eight key elements of a

business model Although many entrepreneurial ventures are started by one

visionary individual(FB), it is rare that one person alone can grow

an idea into a multi-million dollar company.

Fast-growth companies ,especially e-commerce businesses, need

employees and a set of business procedures.

In short need an organization to efficiently implement their

business plans and strategies.

Organizational development : plan describes how the company

will organize the work that needs to be accomplished.

eBay founder Pierre Omidyar started an online auction site,

according to some sources, to help his girlfriend trade Pez

dispensers with other collectors, but within a few months the

volume of business had far exceeded what he alone could handle.

Eight key elements of a

business model Management Team : employees of the company responsible for

making the business model work.

A strong management team gives a model instant credibility to

outside investors, immediate market-specific knowledge, and

experience in implementing business plans.

Team should be able to change the model and redefine the

business as it becomes necessary

Summary of Eight key

elements of a business model

Resources

E-Commerce by Kenneth C. Loudon, Carol Traver : 2014 version : Chapter 1

Gary P.Schneider Electronic Commerce- chapter 1

www.Wikipedia.org

http://www.slideshare.net/habibullahqamar

http://theITeducation.com/