1. Concepts and Essentials of Electronic Commerce
IT 361: E-Commerce Systems
Chapter 1
Concepts and Essentials of Electronic Commerce
Readings: Chapter 1 - The Revolution Is Just Beginning

2. Teaching Objectives
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.
Recognize and describe Web 2.0 applications.
Describe the major types of e-commerce.
Identify the factors that will define the next five years of e-commerce.
Describe the major themes underlying the study of e-commerce.
Lilac A. Al-Safadi

3. Pinterest: A Picture Is Worth a Thousand Words
Lilac A. Al-Safadi

4. Pinterest Successful e-commerce co. Based on assumptions
People love to collect things
People love to show off their collections
It has a global mission
Founded in 2009
Allows: create virtual scrapbooks, pin of board, liking, commenting, follow links, find someone with shared tastes
Lilac A. Al-Safadi

5. Pintesrest Fastest growing website in history to reach 10M users
Currently has 50M users, X2+ than prev. year
3rd most visited website after Facebook & Twitter
The stickest site (avrg 80min/session.
60% of users visit 1+ per week
Lilac A. Al-Safadi

6. Pintesrest Similar to Facebook 2012 free business accounts
2013 free web analytics tool
Revamp look
2013 introduced localized sites (UK, France)
Who’s on Pintesrest? (brands, consumers, retailers)
Developed with Django
Ties to other social networks
Mobile front (iphone app & HTML5)
Lilac A. Al-Safadi

7. Pintesrest Challenges
Copyright infringement
Spam & scam
Competition
Lilac A. Al-Safadi

8. E-commerce Defined Internet vs. Web vs. App
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

9. E-commerce vs. E-business
We use the term e-business to refer primarily to the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm
E-business does not include commercial transactions involving an exchange of value across organizational boundaries

10. E-commerce vs. E-business
Lilac A. Al-Safadi

11. Why Study E-commerce? “TV Commerce” “Radio Commerce”, Direct mail Commerce” “Highway commerce”
E-commerce technology is different and more powerful than any of the other technologies that we have seen in the past century.
E-commerce brought shift in commerce (transform vs. shape)
E-commerce has challenged much traditional business thinking (mass marketing, sales force-driven, passive trapped consumers, information asymmetry vs. price competitiveness, one national price vs. dynamic pricing, huge production vs. customization & personalization)
Marketplace became highly price competitive (difficult to prevent consumer from learning cost, price discrimination, profit making)
E-commerce has a number of unique features

12. Seven Unique Features of E-commerce Technology and Their Significance
Ubiquitous (available everywhere, all the time) (market place vs. market space). Results: reduced transaction cost & cognitive energy.
Offers global reach (across cultural/national boundaries). (market size & reach)
Operates according to universal technical standards (low market entry for merchants, low search costs for consumers, price discovery, experience network externalities)
Provides information richness (richness vs. reach)
Is interactive (can simulate face-to-face experience, but on a global scale)
Increases information density (amount and quality of information available to all market participants)
Permits personalization/customization
Social technology

14. Web 2.0
The “new” Web
Applications and technologies that allow users to:
create, edit, and distribute content
share preferences, bookmarks, and online personas
participate in virtual lives
M-M model
Examples
Twitter, YouTube, Instagram, Photobucket, Flickr
MySpace, Facebook, LinkedIn
Second Life
Wikipedia
Tumblr

15. Web2.0 features
Reply on user to create content (consumer-generated content)
Easy research capability
Highly interactive
Reply on broadband connectivity
Marginally profitable
Attract large audience
Opportunities for targeted marketing and advertising, consumer rating & review of products

16. Types of E-commerce
Classified by nature of market relationship
Business-to-Consumer (B2C)
Business-to-Business (B2B)
Consumer-to-Consumer (C2C)
Social e-commerce
Mobile commerce (M-commerce)
Local e-commerce

17. What are the benefits of apps for content owners and creators?
Insight on Technology: Will Apps make the web irrelevant? Class Discussion
What are the advantages and disadvantages of apps, compared with Web sites, for mobile users?
What are the benefits of apps for content owners and creators?
Will apps eventually make the Web irrelevant? Why or why not?

18. Potential Limitations on the Growth of B2C E-commerce
Expensive technology
Complex software interface
Sophisticated skill set
Persistent cultural attraction of physical markets and traditional shopping experiences
Persistent global inequality limiting access to telephones and computers

19. Insight on Business: Start-up Boot Camp Class Discussion
Why do you think investors today are still interested in investing in start-ups?
What are the benefits of investing in a company that is a graduate of a Y Combinator boot camp?
Is an incubator the best solution for start-ups to find funding? Why or why not?

20. Evolution of e-commerce
1995 – 2000
Invention
Consolidation
2007-present
Re-invention
Technology-driven
Revenue growth emphasis
Venture Capital financing
Ungoverned
Entrepreneurial
Disintermediation
Perfect market
Pure online strategies
First mover advantage
Low complexity retail product
Business-driven
Earnings & profit emphasis
Traditional financing
Stronger regulation & governance
Large traditional firms
Strengthening intermediaries
Imperfect markets, brands & network effect
Mixed “bricks & clicks” strategies
Strategic follower strength, complimentary assets
High complexity retail products & services
Mobile tech. enables social, local * m-commerce
Audience & social network growth emphasis
Smaller VC investment, early small form buyout by large online player
Extensive government surveillance
Entrepreneurial social & local firms
Proliferation of small online intermediaries renting business processes of large firms
Continue of imperfections, competition in select market
Return of pure online strategies in new markets; extension of brocks & clicks in traditional retail markets
First-mover advantages return in new markets as traditional web players catch up
Retails, services, and content

21. Lilac A. Al-Safadi

22. Insight on Society: Facebook and the Age of Privacy Class Discussion
Why are social network sites interested in collecting user information?
What types of privacy invasion are described in the case? Which is the most privacy-invading, and why?
Is e-commerce any different than traditional markets with respect to privacy? Don’t merchants always want to know their customer?
How do you protect your privacy on the Web?

23. Key Terms e-commerce e-business information asymmetry marketplace
ubiquity
marketspace
reach
universal standards
richness
interactivity
information density
Personalization customization
Web 2.0
Business-to-Consumer (B2C) e-commerce
Business-to-Business (B2B) e-commerce
Consumer-to-Consumer (C2C) e-commerce
Social commerce
mobile commerce (m-commerce)
disintermediation
friction-free commerce
first mover
network effect
Lilac A. Al-Safadi