3

The Internet?

• What is the Internet?

• Where is the Internet?

• Who is the Internet?

The Internet (from Networks topic)

• Internet – global network of interconnected networks

• Internet Service Providers
• World Wide Web -/Browsers
• https://www.youtube.com/watch?v=Dxcc6ycZ73M

• The Internet: Wires, Cables & Wi-fi

• https://www.youtube.com/watch?v=ZhEf7e4kopM

• The Internet: Packets, Routing & Reliability

• https://www.youtube.com/watch?v=AYdF7b3nMto
 5

Who is the Internet?

Source

Source: http://www.internetsociety.org/who-makes-internet-work-internet-ecosystem
 6

Who is the Internet?

 7

Web 1.0 v 2.0 v 3.0 :

Consumers and Producers Perspective

Source: http://buhalis.blogspot.com/2012/03/semantic-web-in-tourism-new-era.html
 8

Web 1.0

Source: blog.aysoon.com

When the “producers” of new information included..?

 9

Web 1.0 Example

Source: “wayback machine” (the Internet Archive, Yahoo! 1996)

 10

Web 2.0 / Social Technologies

When the “producers” of new information included..?

 11

Source: McKinsey Global Institute (2012) "The social economy: unlocking value and productivity through social technologies."
 12

Web 2.0 for you - Crowdfund your business

 13

Web 2.0 for you – amplify your voice

 15

Web 3.0 – next generation

Web 3.0 helps solve this problem how?

Whatever, it’s just semantics, right?

 16

Web 3.0 Technologies

Machine learning is
helping address this
missing piece

(Global
Positioning
Systems)
Semantic Web

Internet-enabled devices (Near Field Communication)

and sensor networks

When the “producers” of new information include…?

 17

Dimensions of Commerce [Pure Play]

Open iTunes
Engage iTunes
Buy song file

[Brick & Mortar]

Enter store
Engage clerk Where would VW be in this diagram?
Buy TV
Source: Chen, 2004
 18

E-commerce : Three Main Flavors

B2B
(B2G)

B2C

C2C
(P2P)

Mike Zack
 19

E-Commerce Scale
• Covid19 pandemic spurred e-commerce growth in 2020*
• Consumer spending online grew 32.4% in the US
• E-commerce penetration reached 19.6% in 2020, up from 15.8% in
2019 and 14.3% in 2018.
• https://www.digitalcommerce360.com/article/us-ecommerce-sales
• In 2020, over two billion people purchased goods or
services online
• E-retail sales surpassed 4.2 trillion U.S. dollars worldwide
• https://www.statista.com/topics/871/online-shopping/
• E-commerce in FMCG industry in different countries:
• https://www.statista.com/statistics/239300/number-of-online-buyers-in-
selected-countries/
 20

E-commerce share of total global retail sales

 21

Why is “digital” different?

• Characteristics
• Indestructibility
• Experienced versus diminished during consumption
• “Delete the obsolete”…not for digital goods
• What happens in Vegas does not really stay in Vegas (no universal “delete” button)

• Reproducibility
• Low cost/high speed of copying once created

• Transmutability
• Ease of customization
• Ease of high-jacking / plagiarism (Choi et al., 1997)

Always think about tech progress as a double-edged sword

 22

E-commerce scales business models

• Sales revenue-based

• Subscription revenue-based

• Transaction fees-based (marketplace/broker)

• Advertising revenue-based

• Affiliate referral-based

• Free/premium (“freemium”) service based

Adapted by Martin Dias based upon originally by Mike Zack

 23

E-Commerce affects macro/micro economics

• Market level demand patterns
• Ubiquity and global reach (leveling playing field)
• Transparency of product and service price/cost/value
• Price elasticity/discrimination experimentation (profiling)
• “Free” products abound
• High product differentiation (mass customization)

• Value chain level supply patterns

• Disintermediation: eliminate middlepersons, brokers/agents
• Reputation and price competition between partners
• Who owns the “relationship” with the customer?
• Feasibility and sustainability of multi-channel model

• Firm level cost structure

• Procurement, logistics and transportation costs (network orchestration)
• Marginal cost of (re)producing digital goods
• Customer engagement/service costs (rich-media interactivity)
Adapted by Martin Dias based upon original by Mike Zack
 24

E-Commerce leads to Digital disruption

…what if it didn't take a ton of money to make a ton of money?

Some key features:

Good news…
• Rapidly diminishing barriers to entry for new products and services (cost and speed)
• Exploiting digital toolsets (many that are free)
• Time-to-market cycle dramatically reduced (tech-enabled experimentation and feedback)
• New ideas of any size and potential impact and rapidly pursue target customers

Bad news… rivals and substitutes can come from any sector

Source: James McQuivey, Forrester Research

 25

… rivals and substitutes can come from any sector.

Smart home environmental control and security technologies
How is ADT now competing with Verizon,
Amazon, and Google?

Image source: ADT Pulse program

 26

E-Commerce leads to Digital disruption

Uber Technologies, Inc. offers online car
booking services via mobile phones.
• Based in San Francisco, California.
• Provides limousine and private cab
reservation services.
• Founded in 2009, the company was formerly
known as UberCab Inc. and changed its
name to Uber Technologies, Inc. in 2010.

Source: Bloomberg BusinessWeek Company Overview of Uber Technologies, Inc.

“Invasion of the Taxi Snatchers: Uber Leads an Industry's Disruption”

By Brad Stone, Bloomberg BusinessWeek, February 20, 2014
 27

E-Commerce leads to Digital disruption

 28

Digital disruption – a two-edged sword

B2C Success Factors

Online On-Ground
Selection & value
Performance & service
Look & feel
Advertising & incentives
Personal attention
Community relationships
Security & reliability

Adapted by Prof. Martin Dias from original by Prof. Mike Zack

 30

Essential e-commerce processes

Content Event
Management Notification

Access Collaboration
Profiling & Search Workflow
Control & & Discussion/
Personalizing Management Management
Security Trading

Shopping
Catalog Cart/
Management Payment

Adapted from Hoque (2000)

Functions
 31

E-Commerce technologies
• …offer firms the ability to market, sell, and service their
products to customers through the Web and channel
partners.

• E-commerce solutions can benefit enterprises:

• automate the Web sales process and customer
experience
• gain insight into customer behavior and preferences
• improve visibility into channel activities and performance
• improve customer satisfaction and loyalty

(Source: Gartner)
 32

Three-Tier Web Architecture

Tier 3 Tier 2 Tier 1
Database Web servers Client
& apps & e-commerce browser
(back end) applications (you as customer)

Internet
 33

Three-Tier Web Architecture

• Browsers/Mobile devices User Tier (1)

• Web Servers Web Tier (2)
• Commerce Application Servers
• Existing Business Applications Servers
• Existing Databases and SQL Backend/DB Tier (3)

a) HTTP, DNS, HTML Networking technologies

b) Internet transmission media between the Tiers
c) Network solution (e.g., LANs/WANs)
 34

Technologies of e-Commerce Tier 1

1 User request Browser 7
→ browser Browser:
→ HTTP request • receives HTTP
2 → sent to web site
message
Web server: • extracts HTML
• interprets HTTP Tier 2 The
request 6 internet • displays results
• calls on application Web Servers Web server
servers • receives processed Firewall/
• authorization request from app server
• shopping cart Router
• formats into HTML
• Etc. • creates HTTP response
• sends to the user
3
App server handles
request
• call on existing Tier 3
systems Application
• access databases Servers
• do own computing. 4
Existing
Existing applications Applications
• Application server 5 and databases
• Firm-specific and Databases
receives results from • respond to (backend)
apps and DBs application server
• sends results to the • send back results Legend
web server
database

How would you improve upon this diagram? server

 35

Three-Tier Web Architecture: User Tier

• A browser is a program that a user uses to interact with
web servers on the Internet.
• It communicates with a web server using the HTTP
protocol. It receives, processes and displays HTML
documents and transmits responses.
• Common browsers are Microsoft Edge, Safari, Mozilla
FireFox, and Chrome.
 36

Three-Tier Web Architecture: Web Tier

• A Web Server communicates with many browsers at a

time using HTTP, by processing and responding to their
requests. Web servers send browsers web pages as
HTML streams.
• The two most popular Web server programs are Apache,
commonly used on Linux, and IIS (Internet Information
Server), a component of Windows XP Professional and
other Windows products.

• A Commerce Server (aka Application Server) provides

a business with web-based programs that display
products, support online ordering, implements a
shopping cart, and process online payments
 37

E-Commerce Enablers/Providers
• E-commerce application providers provide software
applications, web software, security software and
database services for the purchase and sale of goods
• E-commerce technology infrastructure provider
provide routers, storage devices, servers, data centers
(including cloud computing and edge providers), and
networks which enable e-commerce.
• E-commerce support services provider offer technical
support services for software and hardware assets and
infrastructure
 38

Web-tier: enhanced by 3rd Parties…

End (edge) customers Company

Source: Akamai Technology

 39

Don’t forget
Tracking can to track!
help with IT ROI Current Avg.

How do Conversion and Revenue change with

degraded online performance?

Finding causal
relationships is typically
very challenging

What if Avg.
 40

Three-Tier Web Architecture: Backend Tier

Enterprise-wide Applications:
Applications

General
Function-
Purpose ERP CRM
specific
Software

Accounting

Operations
Software

Marketing

Services
Applications:

Sales
Applications:

HR
e.g., productivity
e.g., order entry,
tools, web
high-frequency
browsers, word-
trading, marketing
processing,
mail tools
spreadsheets
Shared Data Shared Data
Infrastructure

System Software: Operating systems, Database Management systems,

Network Management systems, & Utilities

Hardware: physical devices and components

 42

Takeaways for today?

• How are digital products/services different
from physical products/services and what
effect do these differences have on a company’s
competitive landscape?

• How have the capabilities of the world wide

web evolved and how are they trending (i.e., 1.0,
2.0, 3.0)?

• What are some economic implications of web-

based business models?
 43

Volkswagen Case debrief

“Builder”

https://www.vw.com/en/builder.html
 44

Next Session Planning

Specific Topic
• The Web and Information Management – Social technologies

Readings
• Session documents posted in Canvas; Web-based research for
case

Assignments to complete
• Zappos Case Study (not due for a grade)
 45

Additional slides
 Web 1.0 Web 2.0 Web 3.0 46
Capability Read-only Read-write Read-write-execute
Type of Web Simply Web Social Web Semantic Web
No. of users Millions Billions Trillons
Basic concept Connect information Connect people Connect knowledge
Orientation Company Focus Community Focus Individual Focus

Typical elements Home Pages Blogs / Wikis Live-streams / Waves

Content Owning Content Sharing Content Consolidating Content

Presentation Web Forms Web Applications Smart Applications

Search Directories Tagging User Behaviour

Revenues Page Views Cost Per Click User Engagement

Ad mode Banner Advertising Interactive Advertising Behavioral Advertising

Associated CNN Flikr, YouTube, Blogger GoogleMaps, My Yahoo!

websites
Years 1990-2000 2000-2010 2010-2020➔
Features Hyper linking and bookmarking on pages. Better interaction. Smart, web based
No communication between server and Includes functions like Video streaming, applications and functionalities.
user. Online documents, etc. An amalgamation of Web technology and
Websites were Static. Introduction of web applications. Knowledge
It allowed only browsing of content. Everything becomes online and stores on Representation (KR).
servers.
Archetype Britannica Online Wikipedia The Semantic Web

Protocols HTML/Portals XML / RSS RDF / RDFS / OWL

Typical File and Web Servers Ajax and JavaScript frameworks Semantic Searching
technologies Content and Enterprise Portals Adobe Flex Knowledge Bases
Search Engines (AltaVista, Yahoo!) Enterprise Jave, Microsoft.NET Framework Ontologies
E-mail (Yahoo!, Hotmail) (Server side) Personal Intelligent Digital Assistants
P2P File Sharing (Napster, BitTorrent) Blogs
Publish and Subscribe Technologies Wikis
Instant Messaging
 47

E-commerce : Three Main Flavors

B2B
(B2G)

B2C

C2C
(P2P)

Mike Zack
 48

E-commerce : B2C

B2C

• Merchant: direct
Mike Zack
 49

How soon will AR become a B2C essential?

What information
problem does AR
address?
 50

Essential e-Commerce processes

Return
 51

E-commerce : B2B

B2B
(B2G)

Mike Zack
 52

B2B: The Supply Chain Revisited

Image: Laudon & Laudon (2011)

 53

B2B Enabling Technologies: Electronic Data Interchange

(EDI)
Purchasing System Order Entry System

Translate Translate to
PO Order
to Split by Send to
transaction in-house transaction
standard vendor vendors
file format file
file
format
 54

B2B Enabling Technologies: Extranet

Extranet

Mike Zack
B2B EDI
 56

E-commerce : Three Main Flavors

B2B
(B2G)

B2C

C2C
(P2P)

Mike Zack
 57

E-commerce : C2C

C2C

• Marketplace: facilitated
 58

C2C and Web 2.0 Tools

• Conferencing / Integration with VoiP (data, voice)
• Instant messaging
• Synchronized Calendar
• Document collaboration
• Multi-media content creation/dissemination
• Social Networks (amplifies voice of the customer)
• Exchange platforms (e.g., Ebay, Craigslist, Angie’s List)
 59

B2B Marketplace Example: ec21.com

 60

The Web and its technologies

Sir Tim Berners-Lee, the inventor of the World Wide Web

 61

Internet Service Providers Leaderboard 2018

 62

E-Commerce Categories
Logistics Logistics
Supplier Supplier

Product Customer
Customer
Supplier Producer
Platform Platform
Product Provider Provider
Supplier Producer Customer Customer
B2B C2C

alibaba.com, indiamart.com, ec21.com, ebay.com, craigslist.com, taobao.com

Logistics
Supplier
Firm
Customer Product Customer
Supplier
Platform Platform
Provider Product Provider
Customer Firm Supplier Customer
C2B B2C

monster.com amazon.com, expedia,com

C: Customer; B: Business; One can replace B with G (Government) Adapted by Martin Dias from original by Mike Zack
 63

Why the E-Commerce Is Different

• Ubiquity
• Global reach
• Richness and complexity of content
• Interactivity
• Information density
• Price and cost transparency
• Personalization/Customizability
• Social Networking
 64

Four B2C E-commerce Strategies

Separation Integration

Strategic Joint
Spin-off In-house
partnership venture

• Focus Synergies
• Flexibility • Brand
• Information
• Purchasing
• Distribution
 65

Business-to-Business
Boston We need more wind Beijing
turbine parts

Baoding

Adapted by Martin Dias based upon originaly by Mike Zack

 66

Standards and More Standards

• Network - TCP/IP, DNS, DNSSEC, 802.11x

• Web server – HTML, XML, CSS, JavaScript
• Security – SSL, TLS, PCI CSS, PKI
• Data Exchange – DXF, JPEG, MP3, PDF

Without standards the

Internet would not be the
Internet as we know it!
 67

Standards and More Standards

• W3C – Web Standards Project to increase ability to share

data and reduce reliance on proprietary technologies

• PCI Compliance – Payment Card Industry requirements

for handling credit card transactions securely
 68

HTML (hypertext markup language)

<h4>Heading<\h4>
<b>bold text<\b>
<i>italic text\>

Heading
Bold text
Italic text
Browsers work the
same way as a word
processing program
 69

HTTP (hypertext transfer protocol)

Client (browser) I’m listening Web page server

for requests…

Please send me the

page “mike.htm”

Got your request

– OK, I’ll send it.

Here’s the file