Business to Consumer E-Commerce Dogus Madrali Shaun Nicholson Telesa Nolan Chris Saeger 9/17/2018

Topics Being Covered Demographics – Dogus Madrali Introduction – Shaun Nicholson Demographics – Dogus Madrali B2C Revenue Growth & Statistics – Shaun Nichoson Pathways to E-business Leadership Study – Telesa Nolan On-line Gambling Case Study – Chris Saeger Conclusion – Chris Saeger 9/17/2018

Terms Pure Plays - are companies without a traditional brick-and-mortar firm or strictly internet (Amazon.com) Brick and Clicks – are Brick-and-Mortar companies who have implemented e-business in some fashion (Barnes & Noble.com) E- Business model – method of doing business that contributes to the firm’s profitability either by increasing revenue or decreasing cost 9/17/2018 Source: Strauss, Judy & Frost, R. “E-Marketing” Prentice Hall, New Jersey 2001

E-Business Models Content Sponsorship Model – companies that create valuable content or services on their websites, draw lots of traffic and sell advertising (Yahoo, Google) Direct Selling Model –when manufacturers sell directly to consumers, eliminating channel intermediaries (Dell, Gateway) Infomediary Model – refers to an organization that collects and sells information about consumers or businesses (Gator) Intermediary Models – these are the middlemen as in traditional business practices 1. Brokers and Agents – brings buyers and sellers together but neither purchases nor take possession of product (Ebay, Carpoint) 2. E-Tailers – are firms that buy products and resell them online (Amazon) 9/17/2018 Source: Strauss, Judy & Frost, R. “E-Marketing” Prentice Hall, New Jersey 2001

Demographics 9/17/2018

Global spread of Internet Hosts A “host” is a computer that acts as a source of information that can be obtained over the internet The total number of hosts is a valuable measure of Internet growth. Few hosts until the early 1990s, at which point the number began to grow at a tremendous pace, nearly doubling every year between 1990 and 1996. On a hosts per-capita basis, with the exception of Finland, the United States leads the world by a significant margin 9/17/2018 Source: www.cyberatlas.internet.com

Global spread of Internet Hosts 9/17/2018 Source: Wall Street Journal - February 10th

Source: www.enchantedwebsites.com Worldwide Internet Population 9/17/2018 Source: www.enchantedwebsites.com

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Source: http://glreach.com/globalstats Global Internet Statistics (by language)-Total: 619 Million (Sept. 2002) 9/17/2018 Source: http://glreach.com/globalstats

US Internet Population By 2002 the US internet population is 149 million = 54% of entire US population = 33% of worldwide internet population 9/17/2018 Sourc: www.enchantedwebsites.com

Breakdown of US Internet Population by Age 9/17/2018 Source: www.enchantedwebsites.com

Breakdown of US Internet Population by Gender 9/17/2018 Source: www.enchantedwebsites.com

Breakdown of US Internet Population by Education 9/17/2018 Source: www.enchantedwebsites.com

Source: www.enchantedwebsites.com Why people are online? 9/17/2018 Source: www.enchantedwebsites.com

Total Online Shopping Population in the US 9/17/2018 Source: www.enchantedwebsites.com

Source: www.cyberatlas.internet.com Who's shopping? - 28 percent of Internet users globally have either shopped online or plan to do so in the next six months.  - 16 percent of men using the Internet have shopped online compared with 13 percent of women. 9/17/2018 Source: www.cyberatlas.internet.com

Source: cyberatlas.internet.com Top 15 Shopping Destinations For Week Ending December 1st, 2002 Excluding Travel (U.S. Homes) Source: cyberatlas.internet.com 9/17/2018

Source: cyberatlas.internet.com Fastest Growing Major E-Commerce Categories Excluding Travel, Auctions, and Large Corporate Purchases Period: Weeks Ending Nov 8, 2002 to Dec 6, 2002 Source: cyberatlas.internet.com 9/17/2018

Source: cyberatlas.internet.com Top Shopping Categories During the 2002 Holiday Season, Ranked by Spending (11/2 - 12/27) Source: cyberatlas.internet.com 9/17/2018

View of E-Shopping Concerns 9/17/2018 Source: www.cyberatlas.internet.com

Revenue Growth & Statistics 9/17/2018

Rise of International E-commerce Revenues Expected According to the latest predictions of IDC Research e-commerce revenues will amount to a staggering $1.6 trillion USD by 2003 International Internet users have increasingly turned to e-commerce and accounted for an estimated 52 percent of online transactions in 2001. In 1999, the international share was only 38 percent. This year will be the last that the majority of e-commerce revenues are generated in the US 9/17/2018 Source: www.cyberatlas.internet.com

E-Commerce is Big Business in US B2C E-Commerce refers to all forms of retail commercial transactions occurring over an open network which includes online selling of goods and services directly to consumers Business-to-consumer e-commerce in the US accounts for almost one-quarter of total e-commerce worldwide today As total online consumer revenues and the number of online buyers continue to climb, the average annual online expenditure per buyer, which has increased at a rapid yearly pace, was expected to reach $976 in 2002 9/17/2018 Source: www.cyberatlas.internet.com

E-Commerce is Big Business in US 9/17/2018

Consumers Like Buying on the Web A recent study shows consumers like to buy of the web. “The University of Michigan study shows that e-commerce displays more customer satisfaction, loyalty and prospects for future economic growth than any other sector of the economy.” -www.investors.com 9/17/2018 Source: University of Michigan Customer Satisfaction Study

Consumers Like Buying on the Web Source: Univ Consumers Like Buying on the Web Source: Univ. of Michigan Customer Satisfaction Study source: www.investors.com 9/17/2018

Online Spending Increasing According to Goldman Sachs, Harris Interactive and Nielsen-NetRatings U.S. Consumers spent 15.7 billion online during the 2002 Holiday Season, up 22% from 2001 Consumers spent 16% of their holiday budgets on online purchases compared with 14% in 2001 Source: www.nua.ie 9/17/2018

Source: www.census.gov/estats Size of E-Commerce Market According to the United States Department of Commerce 2000 Census According to the 2000 US Census estimates, 94% of E-Commerce is B-to-B and only 6% is B-to-C. Estimate assumes manufacturing and wholesale data in entirely B-to-B and retail and service data is entirely B-to-C 2002 Census currently being conducted Source: www.census.gov/estats 9/17/2018

Source: www.census.gov/estats Size of E-Commerce Market According to the United States Department of Commerce 2000 Census 9/17/2018 Source: www.census.gov/estats

Source: www.census.gov/estats Retail E-Commerce Sales According to the United States Department of Commerce 2000 Census Non-store Retailers, in particular Electronic Shopping and Mail Order Houses, account for 74% of retail e-sales. This category includes catalog and mail-order operations, retail sites selling solely over the internet, and e-commerce business units of “brick and click” retailers. Source: www.census.gov/estats 9/17/2018

E-Sales for Electronic Shopping and Mail Order Houses by Merchandise Line According to the United States Department of Commerce 2000 Census 9/17/2018

E-Commerce Still Small Piece of Pie Estimated Quarterly U.S. Retail Sales: Total and E-commerce (Data in millions of dollars, not adjusted for seasonal, holiday and trading-day differences.) Period Retail Sales 1 E-commerce as a Percent of Total Sales Total E-commerce 2002 1st Quarter 743,810 9,880 1.3 2002 2nd Quarter 825,243 10,265 1.2 2002 3rd Quarter 827,585 11,083 2002 4th Quarterp 869,588 14,334 1.6 1 Does not include Food Services. r Revised. p Preliminary. Source: U.S. Department of Commerce 9/17/2018

Web Commerce Has Room To Grow The convenience B2C E-Commerce currently only benefits certain parts of world North America, Europe, and Asia Pacific made up 94% of all worldwide e-commerce in 2000 It is predicted that by the end of 2003 the business-to-consumer transactions in North America, Europe, and Asia Pacific combined will have multiplied by over seven times the 2000 amount 9/17/2018 Source: www.cyberatlas.internet.com

What is the present outlook on e-commerce? As established business-to-consumer (B2C) companies set out to take advantage of the Internet, many have found the task far more difficult and potentially destabilizing than they had anticipated. No mere business tool, the Internet goes to the heart of the corporation, challenging its existing business models and customer relationships. ---Willcocks Study--- Gartner Group predicts continued strength in B2C spending over the next three years, with revenue seen at $3.24 trillion in the United States and $2.58 trillion in Europe -----MacVittie Article--- 9/17/2018

Pathways to E-Business Leadership Study by Leslie Willcocks and Robert Plant 9/17/2018

Pathways to e-business leadership Study by Leslie Willcocks and Robert Plant Studied 58 major B2C corporations from three continents and a wide range of industries. Study found of the 58 – 15 “leaders”, 25 “laggards” and 18 “ medium-performing” organizations Of the “Leaders” group all shared genetic characteristics that distinguished them from other companies. Source: Willcocks, Leslie P. & Plant, Robert, “Pathways to e-business leadership: Getting from bricks to clicks” Mit Sloan Management Review, Cambridge, Spring 2001 vol. 42 issue 3 pp. 50-59 9/17/2018

Source: Willcocks & Plant Study 9/17/2018 Source: Willcocks & Plant Study

E-Strategic Grid: Technology First to Technology Intelligent Management of Technology Technology as an Asset 9/17/2018 Source: Willcocks and Plant Study

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E-Strategic Grid: Brand Brand Reinforcement Levis Brand Repositioning Yahoo! Brand Creation Prudential Assurance - Egg.com Brand Followership Amazon 9/17/2018

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E-Strategic Grid: Service Value Added Practices include: Personalization Tiered service levels Keeping it simple Responding to what customers do not like doing or do badly Providing a one stop shop for service Balancing customer self-service with support 9/17/2018

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E-Strategic Grid: Market Concern with Market Growth: Integrating processes Integrating technology Integrating skills 9/17/2018

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E-Strategic Grid The Low Performers or Laggards: The IT department was made responsible for e-business developments Senior business managers underfunded and undervalued IT and e-business developments IT and Web-based technologies were treated as a cost center rather than a profit center The CIO was positioned as a specialist functional manager Believed E-commerce was a passing fad or silver bullet 9/17/2018

E-Strategic Grid E-Business Leaders shared similar attributes: Integrated Web technologies into their core Used information gathered online to gain insight into the customer Augmented service and focus intensively on customers and marketing Recognized that competition opportunities and customer expectations evolve quickly 9/17/2018

Maslow – The Internet What would he think? Abraham Maslow, born April 1, 1908 and his theory of human motivation based on hierarchy of needs has made him well known. How does this relate to the Internet you say? If he were alive today what would he think of the Internet. The Internet has been found to be able to satisfy all our needs with just a CLICK. 9/17/2018 Source: www.encarta.msn.com

Maslow’s Hierarchy of Needs Maslow vs. Ecommerce Maslow’s Hierarchy of Needs Self actualization - being all that you can be Self Esteem - strength,achievement self respect Social Needs - affection, belonging, acceptance, friendship Safety Needs – security, protection from harm Physiological Needs – hunger, thirst, shelter, etc 9/17/2018 Source: www.encarta.msn.com

Physiological Needs hunger, thirst, shelter, etc Brick & Click                                                                                              Pure Play 9/17/2018 source: developed by Telesa Nolan

Safety Needs security, protection from harm                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Safety Needs security, protection from harm Personal Safety Sales – Pure Play Investments – Brick & Click Insurance – Pure Play 9/17/2018

Social Needs (affection, belonging, acceptance, friendship) Brick & Click Pure Plays Urbancity.com 9/17/2018

Self Esteem strength, achievement, and self respect Brick and Click Pure Plays 9/17/2018

Self actualization (being all that you can be)                                             9/17/2018

Online Gambling 9/17/2018

Online Gambling History World’s first online casino opened in August 1995 with 18 casino games, located offshore (Turks and Caicos Islands.) Internet Casinos Inc developed their virtual casino for only $1.5 million compared to cost of $300 million to open a casino resort. According to founder Warren B Eugene, ICI house cut averages 24% compared to 8% to 16% for a typical US casino. Source: Gambling on the Internet by Cynthia R Janower of Boston Consulting Group 9/17/2018

Online Gambling History According to the Justice Department, existing laws make all Internet gambling illegal for Americans. 1961 Wire Wager Act specifically prohibits the use of telephone lines for the purpose of placing a bet. Despite these laws, offshore casinos have grown from 2 dozen sites in 1995 to almost 2,000 in 2002. Americans will gamble more than $2 billion through these sites in 2003. Source: Internetnews.com/ec-news/article.php/2168531 9/17/2018

Online Gambling Greenfield Study 2001 survey of 1000 users who had visited an online gambling site. Only 13% of users opened an account. 50% of those polled said they were concerned about the safety of their money and whether they would actually receive their winnings. 4% were willing to gamble $100+ online while 24% were willing the gamble that amount at an offline casino. “From our research, it’s evident that users are crying out for a name-recognized casino. If they were to enter the area, I think they would have great success.” - Gail Janensch, Greenfield VP Source: www.ecommercetimes.com 9/17/2018

Source: Internetnews.com/ec-news/article.php/2168531 Online Gambling Advertising increasing according to Jupiter Media Metrix Online advertising by virtual casinos increased 170% between December 2000 and December 2001, from 911 million ad impresions to 2.5 billion. The sector has become the fifth largest advertiser online, while moving its ad-buys to main-stream sites. Traffic increasing, 13.6 million people visited online gambling sites in December 2001 alone. Source: Internetnews.com/ec-news/article.php/2168531 9/17/2018

Online Gambling Growth Projections In 2001, analysts estimated the online gambling market at $2 billion. Cristiansen Capital Advisors projects that the online gambling market will reach $6 billion in 2003 and as much as $10 billion by 2005 Informa Media Group claims that the revenue from online gambling will reach $14.5 billion by 2006. Source: Internetnews.com/ec-news/article.php/2168531 9/17/2018

Casino Games Top Casinos - Dec 2001 Blackjack Baccarat Carribbean Poker Pai Gow Poker Video Poker Deuces Wild Craps Slots Roulette Keno Multiplayer & Chat Top Casinos - Dec 2001 Kcasino.com - 2.3 M visitors Webstakes.com - 2.3 M visitors Aceshigh.com - 2.1 M visitors Luckynugget.com - 1.7 M visitors Source: www.ecommercetimes.com Source: SwissCasino.com 9/17/2018

Source: www.goldentigercasino.com 9/17/2018 Source: www.goldentigercasino.com

Online Sportsbooks Other Betting Golf Football Soccer Baseball Tennis Hockey Horse Racing Football Baseball Basketball Auto Racing Boxing Source: www.sportingbetusa.com Other Betting Just about anything you can think of: Start date of war with Iraq Number of Super Bowl Commercials Source: www.internetnews.com 9/17/2018

Online Gambling Legal Controversy “Internet Gambling has grown from a nuisance to a booming e-commerce empire fueled in great part by Americans.” As of March 2003 Congress was debating the issue. “Ban it? Sen. Jon Kyl (R. Ariz.) wants to cut off American access to offshore casinos and sportsbooks by prohibiting U.S. banks, credit card companies and other internet payment systems from making payments to gambling sites.” Source: www.internetnews.com/ec-news/article.php/2168531 9/17/2018

Online Gambling Legal Controversy “Legalize it? Rep. John Conyers (D. Mich.) likens attempts to ban gambling with the national effort to ban alcohol in the 1920’s. Conyers says a federal prohibition will create gambling speakeasies controlled by organized crime or crooked operators. His answer? Legalize it, regulate it and tax it. Stated risks include child welfare, rigged games and money laundering. Antigua, home to only 68,000 people, has over 100 licensed online casino operators has plans to challenge any US law to criminalize online betting with the WTO. Source: www.internetnews.com/ec-news/article.php/2168531 9/17/2018

Internet & Society “Researchers at Carnegie Mellon University have found that people who spend even a few hours a week online experience higher levels of depression and loneliness than they would have if they used the computer network less frequently.” Netaddiction.com - Internet addiction is a clinical disorder. Self assessments offered for: Internet Addiction Cybersexual Addiction Obsessive Online Traders Online Auction Addiction Parent-Child Addiction Test www.nytimes.com/library/tech/98/08/biztech/articles/30depression.html

Conclusion E-Commerce is Big Business Globally and in the U.S. B2C E-Commerce continues to grow at an impressive rate. New markets continue to develop within e-commerce If a company is to exploit the Internet to achieve business goals, its journey through the e-business strategic grid has to be guided by both new management thinking and certain perennial principles and practices. Strategy has to stay flexible because even leading companies find they cannot assume that their market position on the Internet will remain constant. It changes 24 hours a day, seven days a week, time zone to time zone, and market segment to market segment. 9/17/2018

View of E-Shopping Concerns 9/17/2018

ANY QUESTIONS? 9/17/2018