Introduction to

eCommerce Systems
CHAPTER 1

Faculty of Information & Communication Technology
BIC3513 E-Commerce Systems
LESOTHO
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Learning objectives
Define eCommerce and describe how it differs from eBusiness.
Identify and describe the unique features of eCommerce technology and
discuss their business significance.
Recognize and describe Web 2.0 applications.
Describe the major types of eCommerce .
Discuss the origins and growth of eCommerce .
Explain the evolution of eCommerce from its early years to today.
Identify the factors that will define the next five years of eCommerce .
Describe the major themes underlying the study of eCommerce .
Identify the major academic disciplines contributing to eCommerce .
Facebook: The New Face of
E-commerce?
Do you use Facebook, and if so, how often?
What has the experience been like?
Have you purchased anything based on an advertisement on Facebook
or by using a link provided by a friend?
Are you concerned about the privacy of the information you have posted
on Facebook?
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First Things First
Welcome to the new world of electronic commerce (eCommerce or EC)
The industry of the twenty-first century
Do business electronically from virtually anywhere in the world
that has a computer.
In 2011 alone, US eCommerce generated well over $310 billion
in retail business and over $3.36 trillion business-to-business
traffic.
The Internet - an international network of independent computer systems
precipitated the revolution.
Security
Privacy
Other problems
Has permeated virtually every phrase of society
E-commerce Trends 20112014
Social networking continues to grow
Expansion of social e-commerce platform
Mobile platform begins to rival PC platform
Localization of e-commerce (Groupon)
Explosive growth in online video viewing
Continued privacy and security concerns
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Myths about eCommerce
Setting up a Web site is easy.
eCommerce means no more mass marketing.
eCommerce means a new economy.
eCommerce is revolutionary.
eCommerce is a commercial fad that crashed in 2000.
All products can be sold online using identical business models.
Build it and they will come.
The middleman is out.
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The Drivers for eCommerce
Digital Convergence - digital devices communicating with one another
Anytime, anywhere, anyone - eCommerce is available to anyone
(24/7)
Changes in Organizations - todays businesses empower frontline
workers to do the kind of work once performed by junior management
Increasing pressure on operating costs and profit margins - global
competition and the proliferation of products and services worldwide
have added pressure on operating costs and profit margins
Demand for customized products and services - mass customization
puts pressure on firms to handle customized requests on a mass-market
scale
Changes in Organizational Makeup
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eCommerce Versus eBusiness
eCommerce
Selling goods and services on the retail level with anyone,
anywhere, via the Internet
Greater efficiency and effective exchange of goods and services
Exchange based upon transaction
A block of information exchange between the merchant and its
customers via the corporate Web site
www.amazon.com
eBusiness
Connecting critical business systems and constituencies directly
via the Internet
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eCommerce Versus eBusiness
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eCommerce Versus eBusiness
eBusiness:

Digital enablement of transactions and processes within a firm,
involving information systems under firms control

Does not include commercial transactions involving an exchange
of value across organizational boundaries
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eCommerce Is Not eBusiness
eBusiness - the conduct of business on the Internet, in supply-chain
planning, tracking, fulfillment, invoicement, and payment.

Includes buying and selling as well as servicing customer and
collaborating with business partners

Electronic information is used to boost performance and create value by
forming new relationships between and among businesses and customers.

One example of eBusiness is SAP ( www.sap.com)
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Why Study eCommerce ?
eCommerce technology is different, more powerful than
previous technologies

eCommerce bringing fundamental changes to commerce

Traditional commerce:
Passive consumer
Sales-force driven
Fixed prices
Information asymmetry
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Unique Features of
eCommerce Technology
1. Ubiquity (available everywhere, all the time)
2. Global reach (across cultural/national boundaries)
3. Universal standards (lowers market entry for merchants and search costs
for consumers)
4. Information richness (more powerful selling environment)
5. Interactivity (can simulate face-to-face experience, but on a global scale)
6. Information density (amount and quality of information available to all
market participants)
7. Personalization/customization
8. Social technology
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Web 2.0
Applications, technologies that allow users to:
Create and share content, preferences, bookmarks, and online
personas
Participate in virtual lives
Build online communities
Examples
YouTube, Photobucket, Flickr, Google, iPhone
MySpace, Facebook, LinkedIn
Second Life
Wikipedia
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Web 2.0
User-centered applications and social media technologies
User-generated content and communication
Highly interactive, social communities
Large audiences; yet mostly unproven business models
e.g., Twitter, YouTube, Facebook, Second Life,
Wikipedia, Digg.
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Types of eCommerce
Classified by market relationship
Business-to-Consumer (B2C)
Business-to-Business (B2B)
Consumer-to-Consumer (C2C)
Classified by technology used
Peer-to-Peer (P2P)
Enables Internet users to share files and computer
resources
Mobile commerce (M-commerce)
Types of eCommerce Examples
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eCommerce Applications
Business-to-Consumer (Internet)

Business-to-Business (Internet and Extranet)

Supply-Chain Management

Business-within-Business (Intranet)

Business-to-Government (B2G)
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Business-to-Consumer (Internet)
The consumers use of a merchants Web storefront or Web site

Modeled on the traditional shopping experience

Shopping cart is used to hold goods until the customer is ready to check
out
Online order form supported by the appropriate software

Checkout is order and payment processing
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Business-to-Business (Internet
and Extranet)
Business-to-Business eCommerce is industrial marketing among the
processes it handles are fulfillment and procurement

Companies can conveniently and quickly check their suppliers inventories
or make instant purchases

Competing online should also force prices for materials and supplies to
drop dramatically

B2B often use an extranet: a shared intranet vendors,
contractors, suppliers, and key customers
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Consumer-to-Consumer eCommerce
Provide a way for consumers to sell to each other
Consumer:
prepares the product for market
places the product for auction or sale
relies on market maker to provide catalog, search
engine, and transaction clearing capabilities
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Business-within-Business (Intranet)
Strictly a within company type of information exchange
Restricted to internal employees and customers
Firewalls to keep out non employees

E-mail replaces paper for the communication of messages order
acknowledgement and approvals, and other forms or correspondence

The intranet becomes a facilitator for the exchange of information and
services among the departments or divisions of a company

Different departments with different PCs or local area networks can
interact on an intranet
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Benefits of an Intranet
Low development and maintenance costs

Environmentally friendly because it is company-specific

Availability and sharing of information

Timely, current information

Quick and easy dissemination of information
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Business-to-Government (B2G)
The government market is strikingly similar to B2B.

Huge potential for savings in $1.8 trillion federal and $1 trillion state and
local expenditures

Changing the status quo in government is not so easy
Changes to employee tasks and job restructuring often create
resistance
Tax savings potential is not easily recognized
Committing to technology means constant need for upgrades and
additional costs
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Key Elements of Internet, Extranet, and
Intranet eCommerce
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The Internet
Worldwide network of computer networks built on common
standards

Created in late 1960s

Services include the Web, e-mail, file transfers, etc.

Can measure growth by looking at number of Internet
hosts with domain names
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The Web
Most popular Internet service
Developed in early 1990s
Provides access to Web pages
HTML documents that may include text, graphics,
animations, music, videos
Web content has grown exponentially
Google reports 1 trillion unique URLs; 120 billion pages
indexed
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INTERNET USAGE STATISTICS
The Internet Big Picture
World Internet Users and Population Stats
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WORLD INTERNET USAGE AND POPULATION STATISTICS
December 31, 2013
World
Regions
Population
( 2014 Est.)
Internet Users
Dec. 31, 2000
Internet Users
Latest Data
Penetration
(% Population)
Growth
2000-
2014
Users
%
of
Table
Africa 1,125,721,038 4,514,400 240,146,482 21.3 % 5,219.6 % 8.6 %
Asia 3,996,408,007 114,304,000 1,265,143,702 31.7 % 1,006.8 % 45.1 %
Europe 825,802,657 105,096,093 566,261,317 68.6 % 438.8 % 20.2 %
Middle
East
231,062,860 3,284,800 103,829,614 44.9 % 3,060.9 % 3.7 %
North
America
353,860,227 108,096,800 300,287,577 84.9 % 177.8 % 10.7 %
Latin
America /
Caribbean
612,279,181 18,068,919 302,006,016 49.3 % 1,571.4 % 10.8 %
Oceania /
Australia
36,724,649 7,620,480 24,804,226 67.5 % 225.5 % 0.9 %
WORLD
TOTAL
7,181,858,619 360,985,492 2,802,478,934 39.0 % 676.3 %
100.0
%
NOTES: (1) Internet Usage and World Population Statistics are for December 31, 2013. (2) CLICK on
each world region name for detailed regional usage information. (3) Demographic (Population)
numbers are based on data from the US Census Bureau and local census agencies. (4) Internet usage
information comes from data published by Nielsen Online, by the International Telecommunications
Union, by GfK, local ICT Regulators and other reliable sources. (5) For definitions, disclaimers,
navigation help and methodology, please refer to the Site Surfing Guide. (6) Information in this site
may be cited, giving the due credit towww.internetworldstats.com. Copyright 2001 - 2014, Miniwatts
Marketing Group. All rights reserved worldwide.

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TOP 20 COUNTRIES WITH HIGHEST NUMBER OF
INTERNET USERS - JUNE 30, 2012
#
Country or
Region
Population,
2012 Est
Internet Users
Year 2000
Internet Users
Latest Data
Penetration
(% Population)
Users
% World
1 China 1,343,239,923 22,500,000 538,000,000 40.1 % 22.4 %
2 United States 313,847,465 95,354,000 245,203,319 78.1 % 10.2 %
3 India 1,205,073,612 5,000,000 137,000,000 11.4 % 5.7 %
4 Japan 127,368,088 47,080,000 101,228,736 79.5 % 4.2 %
5 Brazil 193,946,886 5,000,000 88,494,756 45.6 % 3.7 %
6 Russia 142,517,670 3,100,000 67,982,547 47.7 % 2.8 %
7 Germany 81,305,856 24,000,000 67,483,860 83.0 % 2.8 %
8 Indonesia 248,645,008 2,000,000 55,000,000 22.1 % 2.3 %
9 United Kingdom 63,047,162 15,400,000 52,731,209 83.6 % 2.2 %
10 France 65,630,692 8,500,000 52,228,905 79.6 % 2.2 %
11 Nigeria 170,123,740 200,000 48,366,179 28.4 % 2.0 %
12 Mexico 114,975,406 2,712,400 42,000,000 36.5 % 1.7 %
13 Iran 78,868,711 250,000 42,000,000 53.3 % 1.7 %
14 Korea 48,860,500 19,040,000 40,329,660 82.5 % 1.7 %
15 Turkey 79,749,461 2,000,000 36,455,000 45.7 % 1.5 %
16 Italy 61,261,254 13,200,000 35,800,000 58.4 % 1.5 %
17 Philippines 103,775,002 2,000,000 33,600,000 32.4 % 1.4 %
18 Spain 47,042,984 5,387,800 31,606,233 67.2 % 1.3 %
19 Vietnam 91,519,289 200,000 31,034,900 33.9 % 1.3 %
20 Egypt 83,688,164 450,000 29,809,724 35.6 % 1.2 %
TOP 20 Countries 4,664,486,873 273,374,200 1,776,355,028 38.1 % 73.8 %
Rest of the World 2,353,360,049 87,611,292 629,163,348 26.7 % 26.2 %
Total World Users 7,017,846,922 360,985,492 2,405,518,376 34.3 % 100.0 %
NOTES: (1) Top 20 Internet User Statistics were updated for June 30, 2012. (2) Additional data for individual countries and
regions may be found by clicking each country name. (3) The most recent user information comes from data published
byNielsen Online, International Telecommunications Union, Official country reports, and other trustworthy research
sources. (4) Data from this site may be cited, giving the due credit and establishing an active link back
to www.internetworldstats.com.
Copyright 2012, Miniwatts Marketing Group. All rights reserved worldwide.

Origins & Growth of eCommerce
Precursors:
Baxter Healthcare (1970, pharmaceutical firm, B2B, telephone-based
modem, hospital reorder supplies)
Electronic Data Interchange (EDI) standards (exchange commercial
documents and transactions)
French Minitel (1980s videotext system, B2C, 13,000 services:
ticket agencies, travel services, retail products, online banking)
None had functionality of Internet
1995: Beginning of eCommerce
First sales of banner advertisements by AT&T, Volvo, Sprint
Since then, eCommerce fastest growing form of commerce in
the United States
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Share of retail online sales by type
of company
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Top 10 Most Popular Search
Engines | August 2014
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1 | Google 1 - eBizMBA Rank | 1,100,000,000 - Estimated Unique Monthly Visitors | 1 - Compete Rank | 1 -
Quantcast Rank | 1 - Alexa Rank | August 27, 2014. The Most Popular Search Engines | eBizMBA
2 | Bing 15 - eBizMBA Rank | 350,000,000 - Estimated Unique Monthly Visitors | 5 - Compete Rank | 19 -
Quantcast Rank | 22 - Alexa Rank | August 27, 2014. The Most Popular Search Engines | eBizMBA
3 | Yahoo! Search 18 - eBizMBA Rank | 300,000,000 - Estimated Unique Monthly Visitors
| *8* - Compete Rank |*28* - Quantcast Rank | NA - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA
4 | Ask 25 - eBizMBA Rank | 245,000,000 - Estimated Unique Monthly Visitors | 14 -
Compete Rank | 31 - Quantcast Rank | 31 - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA
5 | Aol Search 245 - eBizMBA Rank | 125,000,000 - Estimated Unique Monthly Visitors |
*250* - Compete Rank |*240* - Quantcast Rank | NA - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA
Top 10 Most Popular Search
Engines | August 2014
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6 | Wow 271 - eBizMBA Rank | 100,000,000 - Estimated Unique Monthly Visitors | 20 -
Compete Rank |*26* - Quantcast Rank | 767 - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA
7 | WebCrawler 511 - eBizMBA Rank | 65,000,000 - Estimated Unique Monthly Visitors
| 100 - Compete Rank |759 - Quantcast Rank | 674 - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA
8 | MyWebSearch 545 - eBizMBA Rank | 60,000,000 - Estimated Unique Monthly Visitors | *105*
- Compete Rank |1,124 - Quantcast Rank | 405 - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA
9 | Infospace 892 - eBizMBA Rank | 24,000,000 - Estimated Unique Monthly Visitors | *66* -
Compete Rank |*500* - Quantcast Rank | 2,110 - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA
10 | Info 1,064 - eBizMBA Rank | 13,500,000 - Estimated Unique Monthly Visitors | 378 -
Compete Rank |877 - Quantcast Rank | 1,938 - Alexa Rank | August 27, 2014.
The Most Popular Search Engines | eBizMBA