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ECT 250: Survey of ECommerce Technology


Run-up in technology stocks due to enormous IT capital expenditure of firms ... development and mastery of digital computing and communications technology ... – PowerPoint PPT presentation

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Title: ECT 250: Survey of ECommerce Technology

ECT 250 Survey of E-Commerce Technology
  • Introduction to e-commerce

Introduction to the course
  • What is e-commerce?
  • What infrastructures are needed?
  • E-commerce I vs e-commerce II
  • Business and marketing issues
  • Legal and security aspects
  • Web sites design (Front Page)

Things I have done on the Web
  • Got information
  • Bought/sold things
  • Paid parking tickets lt
  • Compared prices
  • Made international phone calls
  • Communicated with people
  • Filled prescriptions
  • Submitted grades
  • Managed my investments and bank accounts
  • Checked out my kids at daycare

Electronic commerce
  • Often the term electronic commerce is equivalent
    to shopping on the web.
  • The term electronic business refers to the
    digital enablement of transactions within a firm
    that do not directly generate revenues from
  • In this course we will use the term e-commerce
    in its broadest sense.

  • We define e-commerce as the use of electronic
    data transmission to implement or enhance any
    business activity.
  • Using the Internet and the Web to carry on
    commercial transactions
  • A firms online inventory and other information

Traditional commerce
  • Marketing and selling driven by mass-marketing
    and an army of sales(wo)men
  • Consumers passive targets of advertising
    campaign and branding tricks.
  • Target audience categorized by strict
    geographical and social boundaries
  • Information asymmetry info about prices, costs
    and fees could be easily kept hidden

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Types of e-commerce
  • Business-to-consumer 65 billion (
  • merchandiser sells products to consumer
  • Business-to-business 700 billion (
  • Inter-business exchanges, e-distributors,
  • Consumer-to-consumer 5 billion (
  • Consumers sell to each other via an online market
  • Peer-to-peer
  • Users share files and applications (no central
    Web server)
  • Government-to-consumer (IRS)
  • Mobile commerce Japan and Europe
  • Use of wireless digital devices to enable
    transactions on the Web

Whats behind e-commerce?
  • The Internet (late 60s) a worldwide network of
    computer networks built on common standards (350
    million computers).
  • The World Wide Web (early 90s) the killer
    application that runs on the Internet
    infrastructure. (over 1-2 billion pages). With
    the invention of GUI, color, voice and video were
    added to the Internet.

The growth of the Internet
  • Internet hosts are growing at a rate of 45 per
  • Time to reach 30 of US households
  • Radio 38 years
  • Television 17 years
  • Internet/Web 8 years (1993)

Growth of the Internet
Growth of Web content
Growth of B2C E-commerce
Growth of B2B E-commerce
E-commerce is not new
  • Baxter Healthcare
  • Early 1970s Primitive form of B2B using
    telephone-based modem to permit hospitals to
    reorder supplies
  • 1980s PC-based remote order entry system
  • 1980s Electronic Data Interchange (EDI) Permitted
    firms to exchange commercial documents and
    conduct digital commercial transactions across
    private networks
  • 1981 French Minitel videotext system
  • First B2C arena, 15 million in use throughout

E-commerce is not old
  • 1991 The World Wide Web is created
  • 1995 First advertising banners appear on Modern e-commerce is born
  • 1995 2000 E-commerce I phase (The dot com
  • 2000 Tech stock crash (The dot com bomb)
  • 2000 - now E-commerce II phase ( Im still

E-commerce in perspective
  • Although e-commerce has grown explosively, there
    is no guarantee it will continue to grow at these
  • Confront own fundamental limitations
  • B2C only about 1 of overall retail market
  • With current growth rates, B2C will roughly equal
    the annual revenue of Wal-Mart in 2005
  • EX in 1915 there were 250 US car manufacturer
  • by1940 there were only 5

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E-commerce I and II
  • E-Commerce I
  • Explosive growth starting in 1995
  • Widespread use of Web to advertise products
  • Ended in 2000 when began to collapse
  • E-Commerce II
  • Began in January 2001
  • Reassessment of e-commerce companies
  • From clicks to bricks and clicks

E-commerce I (1995-200)
  • For computer scientist and information
  • Vindication of a set of information technologies
    developed over 40 years
  • Extending from the early Internet to the PC and
    local area networks
  • The vision of universal communications

E-commerce I ( 1995-2000)
  • For economists
  • Prospect of a perfect Bertrand Market
  • where price, cost, and quality information is
    equally distributed
  • where a nearly infinite set of suppliers compete
    against one another
  • where customers have access to all relevant
    market information worldwide
  • Merchants have equal direct access to hundreds of
    millions of customers

E-commerce I ( 1995-2000)
  • 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

E-commerce I ( 1995-2000)
  • Friction-free commerce
  • information is equally distributed
  • transaction costs are low
  • prices can be dynamically adjusted to reflect
    actual demand
  • intermediaries decline
  • unfair competitive advantages are eliminated

E-commerce I ( 1995-2000)
  • First mover
  • a firm that is first to market in a particular
    area and that moves quickly to gather market
  • Network effect
  • occurs where users receive value from the fact
    that everyone else uses the same tool or product

Amounts Raised by Venture-Backed Internet
Companies in 1996-2000
The bomb
  • Crash in stock market values of E-commerce I
    companies throughout 2000 marks the end to
    E-commerce I
  • Led to a sobering reassessment of the prospects
    of e-commerce and the methods of achieving
    business success.
  • E-commerce II begins in 2001

Some reasons behind the crash
  • Run-up in technology stocks due to enormous IT
    capital expenditure of firms rebuilding their
    internal business systems to withstand Y2K
  • Telecommunications industry had built excess
    capacity in high-speed fiber optic networks
  • 1999 e-commerce Christmas season provided less
    sales growth that anticipated and demonstrated
    e-commerce was not easy (
  • Some tech companies had stock values 400 times
    their earnings, while traditional companies were
    selling for 10/15 times their earnings

E-commerce I and II compared
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A short history of IPOs
  • Between 1998 and 2000 venture capitalists poured
    an estimated 120 billion into approximately
    12,450 start-up ventures
  • Investment bankers took 1,262 of these companies
    public in IPOS
  • IPO shares were targeted to open around 15 per
    share, and it was not uncommon for them to be
    trading at 45 a share or more later the same
    trading day

E-commerce organizing themes
  • Technology Infrastructure
  • development and mastery of digital computing and
    communications technology
  • Business Basic Concepts
  • new technologies present businesses and
    entrepreneurs with new ways of organizing
    production and transacting business
  • Society Taming the Juggernaught
  • global nature of e-commerce poses public policy
    issues of equity, equal access, content
    regulation, and taxation

Some conclusions
  • Although B2C e-commerce gets most of the
  • press, B2B e-commerce is larger and has strong
  • potential for growth.
  • E-commerce is a rapidly changing area.
  • Example
  • IPO 34/share Now?
  • Certain businesses are better suited than others
  • for e-commerce

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