E-Commerce: History and Evolution

Introduction to E-Commerce

• In the late 1990s, few companies engaged in online buying or selling
  • Amazon and eBay began to establish a foothold
• In 1998, Google search engine provided more relevant search results than existing search engines
  • It sold advertising based on a keyword bidding model
  • Google became one of today's most successful online companies

The Evolution of Electronic Commerce

• Mid-1990s to 2000 saw rapid growth, a "dot-com boom" which was followed by a "dot-com bust."
• The years 2000-2003 had overly gloomy news reports
• By 2003 there were signs of new life
  • Sales and profit growth returned
  • Electronic commerce grew at a rapid pace
  • Electronic commerce became part of the general economy
• The 2008 general recession saw electronic commerce hurt less than most of the economy
• From 2003 to the present, electronic commerce expanded more in good times and contracted less in bad times

Electronic Commerce & Electronic Business

• Electronic Commerce activities
  • Shopping on the Web
  • Businesses trading with other businesses
  • Internal company processes
• Electronic business
  • A broader term
  • All inclusive of the business activities using the Internet and the World Wide Web

Categories of Electronic Commerce

• Business-to-consumer (B2C) is consumer shopping on the Web
• Business-to-business (B2B) is e-procurement
  • Transactions conducted between Web businesses
  • Supply management (procurement) departments negotiate purchase transactions with suppliers

Business Operations

• Business processes are supply management (procurement) departments
• Business activity is a task performed by a worker which may or may not be related to a transaction
• A transaction is an exchange of value that involves at least one business activity
  • This can be the purchase, sale, or conversion of raw materials into finished product
• Business processes are a group of logical, related, sequential activities and transactions
• Web tools can help people to work more effectively through Telecommuting (telework)

Relative Size of Electronic Commerce Elements

• Business to business (B2B) has more dollar volume and number of transactions than business to consumer (B2C)
• The number of transactions supporting business processes is greater than B2C and B2B combined
• Consumer-to-consumer (C2C) is individuals buying and selling among themselves
  • This includes web auction sites
  • C2C sales are included in the B2C category if a seller acts as a business for transaction purposes
• Business-to-government (B2G)
  • This involves business transactions with government agencies like paying taxes and filing required reports
  • B2G transactions are included in B2B discussions

Electronic Funds Transfers (EFTs)

• Electronic Funds Transfers (EFTs) conduct wire transfers
• EFTs are also electronic transmissions of account exchange information
  • EFTs use private communications networks

Electronic Data Interchange (EDI)

• Electronic Data Interchange (EDI) refers to business-to-business transmission of computer-readable data in standard format
• Standard transmitting formats have the following benefits:
  • Reduced errors
  • Avoiding printing and mailing costs
  • Eliminating the need to reenter data
• Trading partners are businesses engaging in EDI with each other
  • EFI pioneers, such as Walmart, improved purchasing processes and supplier relationships
• Electronic Data Interchange (EDI)
  • EDI refers to the computer-to-computer exchange of documents between companies which replaces mail, fax, and email
  • The common exchanged documents are purchase orders, advanced shipment notices, and invoices

Development and Growth of Electronic Commerce

• Those engaging in commerce adopt available tools and technologies
• The Internet changed the way people buy, sell, hire, and organize business activities
• Problem faced by EDI pioneers was high implementation cost
  • Expensive computer hardware and software
  • Establishing direct network connections to trading partners or subscribing to value-added network (VAN)
• Value-added network (VAN)
  • An independent firm offering EDI connection and transaction forwarding services
  • EDI continues to be a large portion of B2B electronic commerce

The First wave of electronic commerce

• From 1995-2003
• 1995-2000 marked more than 12,000 Internet businesses starting
• From 2000 to 2003, $200 billion was invested which fueled online business activity growth rebirth
• The 2008 to 2009 recession
  • Growth continued, but at a slower rate

Characteristics of First and Second Wave of Electronic Commerce

• The first wave was a regional scope that was a United States Phenomenon
  • Companies easily obtained Startup Capital
  • Basic internet technologies where used, making it slow and inexpensive
  • Primarily relied on electronic (email use) where there was unstructured communication
  • The failed revenue source was online advertising
  • There were digital product sales that were fraught with difficulties (music industry)
• The second wave was a international scope
  • Companies where able to use Internal funds
  • Broadband connection where used to increase cost
  • Email was integral part of marketing and custome contact
  • Internet advertising was more successful thatn the first wave
  • Digital product sales were supporting legal distribution on the web

The Third Wave of Electronic Commerce

• Factors in the third wave include the emergence of mobile commerce
  • Smartphone technology and tablet computers have made the Internet available everywhere
  • An ever-increasing number of people have access to the Internet
• There is a critical mass of mobile users with powerful devices
• There is widespread participation in social networking
  • Often used to promote or sell goods and services
• Smaller businesses can use the Internet for sales, purchasing, and raising capital through crowdsourcing
• Analysis of large amounts of collected customer data uses the following
  • Big data
  • Data analytics
• Tracking technologies are integrated into B2B electronic commerce
  • RFID devices
  • Biometric technologies

Business Models, Revenue Models, and Business Processes

• A business model is a set of processes combined to achieve a company's goal, typically profit
• Electronic commerce first wave
  • Investors sought Internet-driven business models
  • Investors had expectations of rapid sales growth and market dominance
  • Successful "dot-com" business models were emulated
    • Michael Porter argued business models did not exist
• Instead of copying a model, a company should examine business elements
  • A company can streamline, enhance, and replace with Internet technology driven processes
• Revenue model used today involves a specific collection of business processes
  • Identify customers
  • Market to those customers
  • Generate sales
  • Classify revenue-generating activities for communication and analysis purposes

Focus on Specific Business Processes

• Examples of business processes
  • Purchasing raw materials or goods for resale
  • Converting materials and labor into finished goods
  • Managing transportation and logistics
  • Hiring and training employees
  • Managing business finances
• Companies should identify processes benefiting from e-commerce technology
• Internet technologies are a means to facilitate business processes
• Merchandising involves the combination of store design, layout, and product display knowledge

Salespeople and Commerce Strategies

• Salespeople Identify customer needs and find products or services meetings
• Traditional Commerce works well for products relying on personal selling skills and transactions involving large amounts of money
• In the combination of electronic and traditional commerce strategies, business operations include both commodity and personal inspection aspects

Electronic Commerce Suitability

• Electronic commerce helps increase profits, increase sales and decrease business costs
• The suitability is depends on available tech and changes as the new e-commerce tools emerge

Virtual Community

• Virtual community enables gathering of people online using Web 2.0 technologies

E-Commerce Buyer Opportunities

• E-commerce increases purchasing opportunities
• E-commerce helps with identifying new suppliers
• There is an easier ability to negotiate price & delivery terms
• There is widespread participation where its easier to promote or sell goods and services
• Companies are able to access Immediate access to prospective purchase information

Benefits of Electronic Commerce

• Benefits of electronic commerce extend to general society via the following:
  • Lower costs to issue and secure
  • Electronic payments of tax refunds, Public retirement and welfare support
  • Faster transmission and theft loss protection

Barriers to Electronic Commerce

• There are current barriers such as electronic payments are easier to audit and monitor
• There is telecommuting that reduces traffic, and pollution
• Companies must overcome poor choices for electronic commerce by selecting products and services available
• There are barriers that require critical mass of customers with appropriate technology and avoid being subject to government controls

Economic and Organization Factors

• Economics involves studying how people allocate scarce resources
• Markets are where potential sellers come into contact with buyers where there is currency or barter available -Hierarchical organizations replace market-negotiated transactions by introducing supervision and worker-monitoring elements

Transaction Costs

• Transaction costs are reduced with electronic commerce
• Ecommerce can Improve flow of information and increase coordination of actions
• Examples of employment transaction are that telecommuting reduced or eliminate transaction costs

Network Economic Structure

• Strategic alliances (strategic partnerships) must be neither market nor hierarchy
• The partnershipsCoordinate strategies must have coordinate strategies, resources, skill sets and Form long-term, stable relationships with other companies and individuals
• Companies must understand the concept of the business activities that is conducts

Strategic Business Unit Value Chains

• In a strategic business unit value chains, importance of primary activities depends on:
  • Product or service
  • Customers
• Awareness of businesses value chain activities
  • Allows identification of new opportunities
  • Useful way to think about general business strategy
• With SWOT Analysis , you need to define SWOT (strengths, weaknesses, opportunities, and threats)
• Take advantage of opportunities via strengths with these
  • Build on strengths
  • Avoid threats
  • Compensate for weak

The International Nature of Electronic Commerce

• The Internet connects computers worldwide, and when companies use the Web to improve business processes, they automatically operate in a global environment in a third wave
• Rapidly increasing proportion of business comes from outside the US
• China, India, and Brazil have seen enormous recent growth
• Its important to address government controls by imposing the right infrastructure

Trust and Translations Issues

• Important must be placed on establishing trusting relationships with customers
• You must use translation services and software and high priority pages for that
• Companies can rely on established brand names

Cultural issues

• With consideration to cultural issues, anticipate how the other party to a transaction will act in specific circumstances
• Be Mindful of discussion inhospitable to cultural environments
• Be mindful of the government controls in some cultures

Philippine Retail Association (PRA)

• The discussion is by The Philippine Retail Association (PRA) leads discussions -PRA represents local retailers who are concerned about the current retail landscape The solution is that they are Advocating for policy changes, particularly in taxation, and plan to discuss this further with the DOF in a meeting scheduled for January 6, 2025
• It is to be noted issue concerns the Philippine market, where both physical and online retailers operate