12/2/19

Introduction to Electronic Commerce:

Concepts and Case Studies

Professor Paulo Rita

(prita@novaims.unl.pt)

Instituto Superior de Estatística e Gestão de Informação

Universidade Nova de Lisboa

Agenda

1. Intro
2. Features
3. Types
4. History
5. Themes & Disciplines

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Learning Objectives
• 1.1 Understand why it is important to study e-commerce.

• 1.2 Define e-commerce, understand how e-commerce differs from e-

business, identify the primary technological building blocks underlying e-
commerce, and recognize current trends in e-commerce.

• 1.3 Identify and describe the unique features of e-commerce technology

and discuss their business significance.

• 1.4 Describe the major types of e-commerce.

• 1.5 Understand the evolution of e-commerce from its early years to today.

• 1.6 Describe the major themes underlying the study of e-commerce.

• 1.7 Identify the major academic disciplines contributing to e-commerce.

The First Thirty Seconds

• First 20 years of e-commerce

– Just the beginning
– Rapid growth and change
• Technologies evolve at exponential rates
– Disruptive business change
– New opportunities
• Why study e-commerce (1.1)
– Understand opportunities and risks
– Analyze e-commerce ideas, models, issues

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Major Trends in E-commerce

• Business trends include:

– All forms of e-commerce show very strong growth
• Technology trends include:
– Mobile platform has made mobile e-commerce
reality
• Societal trends include:
– Increased online social interaction and sharing

Introduction to E-commerce (1.2)

• Use of Internet to transact business

– Includes Web, mobile browsers and apps
• More formally:
– Digitally enabled commercial transactions
between and among organizations and individuals

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The Difference Between E-commerce

and E-business

• E-business:
– Digital enabling of transactions and processes
within a firm, involving information systems under
firm’s control
– Does not include commercial transactions
involving an exchange of value across
organizational boundaries

Technological Building Blocks Underlying E-commerce

• Internet
• World Wide Web
– HTML (Hyper Text Markup Language)
– Deep Web vs. “surface” Web
• Mobile platform
– Mobile apps

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Unique Features of EC Technology (1.3.)

1. Ubiquity
2. Global reach
3. Universal standards
4. Information richness

Unique Features of EC Technology

5. Interactivity
6. Information density
7. Personalization/customization
8. Social technology

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Types of E-commerce (1.4)

• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
• Mobile e-commerce (M-commerce)
• Social e-commerce
• Local e-commerce

Figure 1.5: The Growth of B2C E-commerce in the U.S.

Copyright © 2018 Pearson Education Ltd

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Figure 1.7: The Growth of B2B E-commerce in the U.S.

Copyright © 2018 Pearson Education Ltd

Figure 1.8: The Growth of M-commerce in the U.S.

Copyright © 2018 Pearson Education Ltd

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E-commerce: A Brief History (1.5)

• 1995–2000: Invention
– Sale of simple retail goods
– Limited bandwidth and media
– Euphoric visions of
• Friction-free commerce
• First-mover advantages
– Dot-com crash of 2000

E-commerce: A Brief History

• 2001–2006: Consolidation
– Emphasis on business-driven approach
– Traditional large firms expand presence
– Start-up financing shrinks
– More complex products and services sold
– Growth of search engine advertising (SEA)
– Business Web presences expand

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E-commerce: A Brief History

• 2007–Present: Reinvention
– Rapid growth of:
• Web 2.0, including online social networks
• Mobile platform
• Local commerce
• On-demand service economy
– Entertainment content develops as source of
revenues
– Transformation of marketing

Figure 1.10: Periods in the Development of EC

Copyright © 2018 Pearson Education Ltd

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Assessing E-commerce

• Stunning technological success

• Early years a mixed business success
– Few early dot-coms have survived
– Online sales growing rapidly
• Many early visions not fulfilled
– Price dispersion
– Information asymmetry
– New intermediaries

Assessing E-commerce

• Other surprises
– Fast-follower advantages
– Start-up costs
– Impact of mobile platform
– Emergence of on-demand e-commerce

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Understanding EC: Organizing Themes (1.6)

• Technology:
– Development and mastery of digital computing and
communications technology
• Business:
– New technologies present businesses with new ways of
organizing production and transacting business
• Society:
– Intellectual property, individual privacy, public welfare
policy

Figure 1.11:
The Internet and
the Evolution of
Corporate
Computing

Copyright © 2018 Pearson Education Ltd

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Academic Disciplines Concerned with Technology (1.7)

• Technical
– Computer science, management science,
information systems
• Behavioral
– Information systems research, economics,
marketing, management, finance/accounting,
sociology

Uber: The New Face of E-commerce?

• Class Discussion
– Have you used Uber or any other on-demand service companies?
– What is the appeal of these companies for users and providers?
– Are there any negative consequences to the increased use of on-
demand services like Uber and Airbnb?

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New On-Demand Service EC Business Model

• Disruption of major industries: transportation, hotels,

real estate, house cleaning, maintenance, grocery
shopping.

• Lyft (ride service)

• Airbnb (rooms for rent)
• Trusk (movers)
• Task Rabbit (part-time household helpers)
• Deliveroo (food delivery)
• ZipJet (laundry service)
• BloomThat (flower delivery)

UBER different services

• UberX (compact sedans; least expensive)

• UberBlack (town cars; higher priced)
• UberPool (rise-sharing service)
• UberEats (food delivery service)
• UberRush(same day delivery service)
• UberCargo (trucking service)

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UBER profile

• 480 cities; 69 countries

• Over 1 million drivers worldwide
– 44% with college degrees (vs. 15% taxi drivers)
– 71% boosted income and financial security
– 73% prefer job allowing customization of working hours
• Revenue: > $2 billion
• Profit: North America and Europe; losses (China,
India)
• Valuation: Market Cap. $ 54 billion

Value proposition

• Customers
– free sign up;
– use smartphone and credit car;
– cost known in advance;
– few minutes for pick-up
• Drivers
– generate revenue with their own cars;
– set their own hours

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UBER´s Business Model

• Smartphone-based platform
• Sharing economy but transactions involve an online
intermediary
• Disruption of traditional taxi business model by
offering superior, fast, convenient taxi service
• More efficient
• Independent contractors, not employees
• User reviews and driver reviews (5-point system)

Other Features

• Costs of running a taxi service are entirely shifted to

drivers
• The higher the demand, the higher the price of a ride
• There is no regulatory taxi commission setting
uniform per kilometer fares

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Some Challenges

• Violation of public transport laws and regulations

• Illegal car service
• Breaking taxi regulations
• An information society service or a transportation
service?
• On-demand service firms likely to create a society of
part-time. Low-paid, temp work, displacing
traditional full-time, secure jobs

Insight on Technology: Will Apps

Make the Web Irrelevant?

• Class Discussion
– What are the advantages and disadvantages of
apps, compared with websites, 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?

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Questions

• Will web browsers be forgotten relics, as we

rely entirely on apps to do both our work and
our play on the Internet?

• Will the web and apps coexist peacefully as vital

cogs in the Internet ecosystem?

• Will the app craze eventually die down as tech

users gravitate back towards the web as the
primary way to perform internet-related tasks?

Some Stats

• iPhone (2007)
• App Store (2008)
• Sales revenue of apps > $100 billion (2020)
• 75% smartphone app minutes spent on and
individual´s top 3 apps … but visit 27 apps per month
• Mobile addicts use smartphone apps > 60 times a
day
• Mobile apps: 58% total digital time spent online; 3,5
hours a day within apps

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Benefits and limitations

• Mobile apps used anywhere, more convenient and boast

more streamlined, elegant interfaces than mobile web
browsers (+)
• Apps also more appealing to content creators and media
companies – easier to control and monetize (+)

• Depth of web browsing experience trumps apps, i.e.

browsers have an openness and flexibility that apps lack
(-)
• The connections between websites enhance their
usefulness and value to users (-)

Future

• HTML5: more dynamic web content

• Bringing the best of the app experience to the web &
with apps developing new web-like capabilities?

• Apple Store 75% > Google Play, but Android in 80%

of smartphones worldwide
• Facebook from website to mobile app plus
Instagram, WhatsApp

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Insight on Business: Rocket Internet

• 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 Rocket Internet?
– Is an incubator the best solution for start-ups to find
funding? Why or why not?

Brief Profile

• Incubator / Tech startups

• Launches e-commerce and other internet
start-ups in emerging markets
• More than 100 companies, with 30,000
employees in 120 countries
• Market Capitalization: €4 billion
• Interdisciplinary teams
• Cut down operational costs

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Features

• Profit margins are higher, although markets are smaller

(vs. AMZN: razor-thin margins but enormous scope and
market reach)

• Criticism: clones of successful US-based businesses are

launched in other markets

• Also: launching companies modeled after established

businesses in emerging markets, and then selling these
ventures to those established businesses when they´re
looking to expand into those markets

Features

• But: focused less on their eventual sale to bigger companies

and more on their own growth

• Increasing focus on quality and profitability over quantity and

selling

• As the global economy continues to rely more on the internet

and internet-based services, accelerators will have prominent
role in markets around the world

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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?

Privacy

• New era of openness and transparency?

• But: 80% citizens fear the Internet is a threat
to their privacy
• Privacy – limitations on what personal
information government and private
institutions can collect and use

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FB Privacy Policies

• FB business model based on selling access to a

database of personal information, i.e., control
over personal information which is then sold to
advertisers and other third parties
• 2007: Beacon program designed to broadcast
users´ activities on participating websites to their
friends
• 2009: publish users´ basic personal information
on the public Internet

FB Privacy Policies

• 2011: publicizing users´ ”likes” of various

advertisers in sponsored stories, including users´
names and profile pictures
• 2012: mobile advertising pushing ads to mobile
news feeds of users based on the apps they use
• 2012: Facebook exchange – serving ads to FB
users based on their browsing activity while not
on FB
• 2013: targeted ads based on offline data

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FB Privacy Policies

• 2013: scanning users´ private FB messages

and mining them for data (references to URLs
sold to advertisers)
• 2014: mobile app recognizes music, TV show
or movie playing in the background when a
user makes a status update
• 2015/16: Facial recognition software (tag user
in photos – “tag suggestions”)

Case Study: Puma goes Omni

1. What is the purpose of Puma’s content

management system?
2. Why did Puma build a single centralized website
rather than continue with multiple websites
serving different countries and regions?
3. What social media sites does Puma use and
what do they contribute to Puma’s marketing
effort?

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PUMA

• Presence in FB, TWTR, Instagram, Pinterest,

Snapchat, Youtube – driving conversation,
deepening engagement
• Dedicated sport, country, region and product
category pages were created for each social
network
• Puma uses data-driven approach, geo
targeting posts, personalized messages to
maximize fan engagement

PUMA

• Integration of channels into a cohesive customer

acquisition strategy – emerging world of omni-
channel retailing (encompassing all digital and
social technologies)
• Customers can examine, access, purchase, and
return goods from any channel, even changing
channels during the process
• Omni-channel - the complete integration of
shopping and brand experience, combining
offline events and sales and online promotions
and brand building

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PUMA

• Unify the look across numerous categories

and content types: custom-built content
management system (CMS)
• CMS integrates with a language translation
tool, a Storefinder tool that helps visitors
locate Puma stores, and Puma´s product
inventory manager
• Customization of Puma shoes

PUMA

• Streamline EC teams in three major market regions:

North America, Europe, Asia-Pacific to adapt strategy
to individual areas
• Example, in Asia-Pacific region traditional paid media
advertising was ineffective compared with social
marketing
• PUMA was able to improve conversion rates from 10%
to 20% and boosting average order value by 12%
• Better collection of customer data to personalized
marketing and develop more appealing products
(cannot compete on price with mass merchandisers
such as Amazon and Zappos)

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