The Changing Face of eCommerce

Tony Gauvin Assistant Professor of eCommerce University of Maine at Fort Kent

2006 by Tony Gauvin, UMFK

Overview

A Brief Introduction A Definition of eCommerce The Beginnings 1st Generation of eCommerce

of eCommerce

Dot Coms 2nd Generation Main

Stream eBusiness

The Future of eCommerce

2006 by Tony Gauvin, UMFK

An Early Definition Of eCommerce

From a communications perspective, EC is the delivery of goods, services, information, or payments over computer networks or by any other electronic means From a business process perspective, EC is the application of technology towards the automation of business transactions and work flow From a service perspective, EC is a tool that address the desire of firms, consumers, and management to cut services costs while improving the quality of customer service and increasing the speed of service delivery From a online perspective, EC provides the capability of buying and selling products and information over the Internet and other online services

From Electronic Commerce: A Managers Guide, Kalakota and Whinston, Addison Wesley, 1997

2006 by Tony Gauvin, UMFK

A Broader Definition

An attempt to increase transactional efficiency and effectiveness in all aspects of the design, production, marketing and sales of products or services for existing and developing marketplaces through the utilization of current and emerging electronic technologies
Source: eCommerce faculty at UMFK

2006 by Tony Gauvin, UMFK

The beginnings of eCommerce

The Real Beginning

EFT, electronic finds transfer (1970s) EDI, electronic data Interchange (1980s)

The Visible Beginning

April 1995, the Internet moved from the Federal Sector to the commercial sector when NSF decommissioned NSFNET and moved assets to vBNS (very-High-Speed Backbone Network Service) which allowed for ISPs (Internet Service Providers) to develop. February 1996, The Telecommunications Act

Deregulation (move to industry self-regulation)

2006 by Tony Gauvin, UMFK

1st Generation eCommerce (1995-2000)

Explosive Growth mostly in Dot Coms

All

about taking ideas to market FAST The funding required for growth was investors not consumers The goal was IPO Talent left the major firms and joined start-ups

Traded security for the instant millionaire promise of stock options

2006 by Tony Gauvin, UMFK

Millions Raised by Dot Coms

1996
Business Services Content Retail Infrastructure ISPs Software 780.42 233.72 108.25 466.67 369.41 1132.67

1997
1270.03 276.05 159.51 879.88 561.27 1634.05

1998
3409.02 455.02 540.66 1388.81 1030.25 2459.00

1999

2000

14749.78 295536.22 1977.78 4209.14 4589.29 3499.10 7132.39 2301.25 1941.79 13860.46 7577.11 2069.48

Totals

3102.54

4794.95

9361.86

36697.33

72411.02

Data Source: PriceWaterhouse Coopers Moneytree Survey 2001

2006 by Tony Gauvin, UMFK

Reality Check (from Thomson Financial)

1986-1995
1%

of IPOs traded below $1 per share one year after going public

Between 1998-2000
12%

of IPOs traded below $1 per share on April 1,

2001 Some of these IPOs with their stock highs

IVillage.com $130.00 Ask Jeeves.com $190.50 NetZero $40.00 Drkoop.com $45.75

2006 by Tony Gauvin, UMFK

The End of the Beginning

Only 10% of dot coms formed since 1995 still survive

An

even smaller percentage generate a profit

Some projections (E-Commerce, Lauden and Traver, Addison Welsey,2002)

B2C

revenues in 2001 are growing at 45% to 55% per

year By 2005 eCommerce revenue should grow to $647 billion (about 20% of total retail)

2006 by Tony Gauvin, UMFK

Table 4. Estimated Quarterly U.S. Retail Sales (Not Adjusted1): Total and E-commerce2 (Estimates are based on data from the Monthly Retail Trade Survey and administrative records.)

Source: http://www.census.gov/mrts/www/data/html/05Q3table4.html
2006 by Tony Gauvin, UMFK

Anonymous e-Mail Joke

Three beggars were begging in New York City, each with a small cup in his hand. The first one wrote beg on his broken steel cup and he received 10 bucks after one day. The second one wrote beg.com on his cup and after one day he received hundreds of thousand dollars. Someone even wanted to take him to NASDAQ. The third one wrote e-beg on his cup. Both IBM and HP sent vice presidents to talk to him about a strategic alliance and offered him free hardware and professional consulting while Larry Ellison claimed on CNBC that e-beg uses 95% Oracle technology and i2 announced e-beg Trade Matrix, a B2B industry portal to offer supply chain integration in the beggar community.

2006 by Tony Gauvin, UMFK

The 2nd Generation 2001-2005

eCommerce become eBusiness 5 major components all geared to any firms desire to gain competitive advantage in their marketplace

eCommerce

buying & selling using the Internet gathering and processing of information internal and external to firm in order gain strategic advantage solidify and expand relationships across all stakeholders unified operations for transferring of goods from suppliers to manufactures and ultimately to the consumers the digital streamlining of an companys processes

Business Intelligence

Customer relationship management

Supply Chain Management

Enterprise Resource Management

2006 by Tony Gauvin, UMFK

2nd Generation Business Involvement with eCommerce

Level of business impact
Business transformation (competitive advantage, industry redefinition)

Pure Play Enterprise

Pure dot-com (E*Trade)

Click and Mortar (eSchwab)

Effectiveness (Incremental sales, customer retention)

Business Process

Customer relationship management

Efficiency (Cost reduction)

Activity

Brochureware, Order processing

Source: adapted from www.mohanbirsawhney.com

2006 by Tony Gauvin, UMFK

eCommerce Models

B2B

C2G

Business to Business Business to Consumer

Constituent to Government Government to Business Business to Government

B2C

G2B

C2C

B2G

Consumer to Consumer Government to Constituent

G2C

2006 by Tony Gauvin, UMFK

1st and 2nd Generations Compared

1st Generation

2nd Generation

Technology-driven Revenue growth emphasis Venture capital financing Ungoverned Entrepreneurial Disintermediation Perfect Markets Pure Online strategies First Mover advantage

Business-driven Earnings and profits emphasis Traditional financing Stronger regulation and governance Larger traditional firms Strengthening intermediaries Imperfect markets, brands, and network effects Mixed clicks and Bricks Strategies Strategic follower strength

2006 by Tony Gauvin, UMFK

An eCommerce Timeline
High Visibility

SOURCE: the Gartner Group

2006 by Tony Gauvin, UMFK

The future of eCommerce

Continued integration of technology into business and organizational entities until at some point there will be no distinct line of demarcation
Business

become eCommerce and eCommerce becomes business Business continues to be the driver of technology

2006 by Tony Gauvin, UMFK

The future of eCommerce

The creation of a discontinuous marketplace economy in which firms will compete in one of only two possible marketplaces
Commodity based products and services Major differentiation between competing products is cost eCommerce adds to increased efficiency and effectiveness Boutiques Major differentiation between competing products is perceived quality or higher service eCommerce adds increased distribution possibilities and increased marketing potential

2006 by Tony Gauvin, UMFK

Future of eCommerce

7 features of eCommerce (E-Commerce: The

Revolution is Just Beginning, Lauden and Traver, 2002) Ubiquity Global Reach Universal Standards Information richness Interactivity Information density Personalization/Customization

2006 by Tony Gauvin, UMFK

Questions??
Tony Gauvin Assistant Professor of eCommerce University of Maine at Fort Kent 23 University Drive Fort Kent, me 04743 (207) 834-7519 tonyg@maine.edu http://www.umfk.maine.edu http://littleblack.umfk.maine.edu
2006 by Tony Gauvin, UMFK