E-commerce Today and Growth Trends

E-commerce Today

• E-commerce is the use of the internet and web to conduct business transactions, between organizations and individuals, exchanging value (e.g., money) for products/services.
• E-commerce began in 1995, with Netscape.com accepting advertisements, popularizing the web as a commercial medium.
• Early e-commerce growth was exponential, doubling and tripling in the beginning years, slower growth during 2008–2009 recession. Traditional retail sales were declining by 5% annually during this time.
• E-commerce revenues grew 15 to 25% yearly until 2008–2009, then slowed. In 2016, an estimated 15% annual growth was projected.

Growth of E-commerce

• A graph (Figure 10.1) displays the growth in e-commerce revenue from 2013 to 2019.
• E-commerce revenue growth was very rapid in the early years, creating a market bubble in e-commerce stocks, ultimately bursting in 2001.
• Many e-commerce companies failed during this time.
• However, companies like Amazon, eBay, Expedia and Google saw soaring revenues, fine-tuned business models and increasing stock prices, by 2006, e-commerce revenues returned to solid growth and continued to be fastest-growing retail trade in US, Europe, and Asia.

Online Consumer Sales

• Online consumer sales are expected to reach $669 billion in 2017, up more than 15% from 2016.
• 185 million people made online purchases in 2017, with an additional 217 million gathering information to potentially purchase in the future.
• Internet usage will grow to 270 million people in the US in 2017 (up from 147 million in 2004).
• More than 3.3 billion people worldwide have internet connection.

Mobile E-commerce

• Mobile e-commerce saw rapid growth, with $170 billion in 2017 (25% of all e-commerce and 50% of retail e-commerce).
• Mobile phone users access the internet more than 80% using their phones.

Business-to-Business E-commerce

• B2B e-commerce, meaning the Internet used for business to business commerce is expanding, exceeding $7 trillion.

Why E-commerce is Different

• Ubiquity: E-commerce accessibility is available everywhere, anytime. (Marketspace).
• Global Reach: E-commerce transactions easily span international boundaries, with potential markets size that equals the global internet population.
• Universal Standards: E-commerce uses universal standards making it easier globally for computers to connect.
• Richness: E-commerce can deliver richer more diverse experiences (video, audio, text).
• Interactivity: E-commerce allows for interactions and communication between consumers and vendors on a large scale.
• Information Density: E-commerce offers detailed and extensive information, at low cost.
• Personalization/Customization: E-commerce allows for tailored messages and products based on user preferences.
• Social Technology: E-commerce supports user-generated content and online social networking.

Eight Unique Features of E-commerce Technology

• Ubiquity: Wide availability through multiple devices across the world.
• Global Reach: No geographical limitations.
• Universal Standards: Based on common technical standards.
• Richness: Supports varied content delivery methods (video, audio, text).
• Interactivity: Enables two-way communication.
• Information Density: Increases the available information, accuracy, and speed of transmitting information.
• Personalization/Customization: Offers tailored messages and products.
• Social Technology: Facilitates user content generation and social networks.

Universal Standards

• Common Internet standards make e-commerce possible across different types of computers and technologies.
• This contrasts with traditional commerce where standards often vary by country or region.

Richness

• Information richness refers to the complexity and content of a message.
• Traditional markets and sales provide the highest richness of information delivered. .
• E-commerce technologies allow richer messages to vast numbers of people through video, audio and text.

Interactivity

• E-commerce is interactive, allowing for two-way communication between consumers and vendors
• This is different from other forms of communication (TV) and greatly expands the possible interactions.

Information Density

• E-commerce significantly increases the amount and quality of information available to businesses and consumers.
• Transaction and information costs decrease as information is more accurate and available in real-time, often at no or little cost .

Price Transparency

• E-commerce facilitates price transparency and cost discovery for consumers.