Copyright © 2004 Pearson Education, Inc. Slide 1-1 E-commerce Kenneth C. Laudon Carol Guercio Traver business. technology. society. Second Edition

Copyright © 2004 Pearson Education, Inc. Slide 1-2 Chapter 1 The Revolution Is Just Beginning

Copyright © 2004 Pearson Education, Inc. Slide 1-3 Burst of the dot.com Bubble Late 1990’s – flourish of new dot.com businesses March 2000 – stock market value of e- commerce, telecom, and technology stocks plummeted by more than 90% Many forecasters predicted the demise of e- commerce

Copyright © 2004 Pearson Education, Inc. Slide 1-4 E-commerce Revolution E-commerce revolution is in the early phases In 2003, 75 million American consumers spent $100 billion purchasing products and services on the Internet In 2007, consumer spending is expected to be around $250 billion and businesses will complete another $5.4 trillion in online transactions (eMarketer, 2003)

Copyright © 2004 Pearson Education, Inc. Slide 1-5 Focus of the Course How are business models changing given the increase in e-commerce? How can businesses position themselves for profitability in this new environment?

Copyright © 2004 Pearson Education, Inc. Slide 1-6 E-commerce Defined E-commerce involves digitally enabled commercial transactions between and among organizations and individuals Digitally enabled transactions include all transactions mediated by digital technology Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services

Copyright © 2004 Pearson Education, Inc. Slide 1-7 How is e-commerce different from traditional commerce? Ubiquitous (available everywhere, all the time) Expands global reach (across cultural/national boundaries) Operates according to universal standards (lowers market entry for merchants and search costs for consumers) Interactive (between technology and user) Increases information density (amount and quality of information available to all market participants) Permits personalization/customization

Copyright © 2004 Pearson Education, Inc. Slide 1-8 Major Types of E-commerce Table 1.3, Page 17

Copyright © 2004 Pearson Education, Inc. Slide 1-9 Growth of the Internet The Internet is a worldwide network of computer networks built on common standards Internet was first created in 1960s Today is world’s largest network, connecting over 500 million computers worldwide Services include the Web, , file transfers, etc. Can measure growth of Internet by looking at number of Internet hosts with domain names:  In January 2003, there were 170 million Internet hosts with domain names, up from 70 million in 2000  Growing at about 50% a year

Copyright © 2004 Pearson Education, Inc. Slide 1-10 The Growth of the Internet, Measured by Number of Internet Hosts with Domain Names Figure 1.3, Page 20

Copyright © 2004 Pearson Education, Inc. Slide 1-11 Growth of the Web Web is the most popular service on the Internet Developed in early 1990s Provides access to Web pages -- documents created with HTML Can include text, graphics, animations, music, videos Web content in form of Web pages has grown exponentially, from over 2 billion pages in 2000 to over 6 billion pages in 2003

Copyright © 2004 Pearson Education, Inc. Slide 1-12 The Growth of Web Content Figure 1.4, Page 21

Copyright © 2004 Pearson Education, Inc. Slide 1-13 Origins and Growth of E-commerce For our purposes, we will date the beginning of e-commerce to 1995  First banner advertisements - October 1994  First sales of banner ad space - early 1995 Since then, has been fastest growing form of commerce in U.S.

Copyright © 2004 Pearson Education, Inc. Slide 1-14 The Growth of B2C E-commerce Figure 1.5, Page 24

Copyright © 2004 Pearson Education, Inc. Slide 1-15 The Growth of B2B E-commerce Figure 1.6, Page 25

Copyright © 2004 Pearson Education, Inc. Slide 1-16 E-commerce I and E-commerce II Compared Table 1.5, Page 35

Copyright © 2004 Pearson Education, Inc. Slide 1-17 NRF/Forrester Online Retail Index, December 2002 Table 1.6, Page 37

Copyright © 2004 Pearson Education, Inc. Slide 1-18 Fastest Growing Non-Travel E-commerce Categories 2002 Table 1.7, Page 38

Copyright © 2004 Pearson Education, Inc. Slide 1-19 Top 25 Shopping Web Sites for Week Ending November 10, 2002 Table 1.8, Page 39

Copyright © 2004 Pearson Education, Inc. Slide 1-20 Understanding E-commerce: Organizing Themes Technology: Development and mastery of digital computing and communications technology Business: New technologies present businesses and entrepreneurs with new ways of organizing production and transacting business Society: Intellectual property, individual privacy and public policy

Copyright © 2004 Pearson Education, Inc. Slide 1-21 Case Study: Kazaa Is Rockin’ and Rappin’ But for How Long? Kazaa’s Media Desktop – largest and most successful free music file-swapping site; 65 million users worldwide; 3 million downloads per week; 1 billion tracks available Relies on a software program known as Fast Track; claims there is no central index, control, or administration Makes money by acting as an advertising network; has also developed parallel network called Altnet that uses a pay-for-download business model Currently being sued by RIAA and MPIA for copyright infringement (Metro Goldwyn Mayer Studios v. Grokster et al.)  April 2003, court ruled defendants not liable; case is being appealed

Copyright © 2004 Pearson Education, Inc. Slide 1-22 Kazaa’s Home Page Page 47

Copyright © 2004 Pearson Education, Inc. Slide 1-23 Music Swapping Software Page 48