E-commerce : Introduction
1
Outline/Learning Outcomes
n E-commerce statistics
n Definition of E-commerce
n Motivations for developing E-commerce
n Different types of E-commerce
n Examples of E-commerce
n Advantages of E-commerce
n Effects of E-commerce
n Business issues related to E-commerce
n Technical aspects of E-commerce
2
Number of E-commerce Sites in the World
30
25
20
Number (Million)
15
10
0
2019 2020 2021 2022
Source: [Link]
3
Global Retail E-commerce Sales
9
7
US Dollars (Trillion)
0
2021 2022 2023 2024 2025 2026
Source: [Link]
4
E-commerce as Percentage of Total Retail Sales
30
25
20
Percentage
15
10
0
2015 2016 2017 2018 2019 2020 2021 2022* 2023* 2024* 2025* 2026*
Source: [Link]
*projected
commerce-share-of-retail-sales-worldwide/
5
Global Mobile Commerce Sales
4
3.5
2.5
US $ (Trillion)
1.5
0.5
0
2016 2017 2018 2019 2020 2021
Source: [Link]
6
Global Social Commerce Sales
3.5
2.5
US Dollars (Billion)
1.5
0.5
0
2022 2023 2024 2025 2026
Source: [Link]
7
Top 10 E-commerce Countries
3000
2500
2000
US$ (Billion)
1500
1000
500
da
US
UK
ia
ain
ina
ea
ce
n
an
pa
d
an
or
na
Ch
Sp
In
rm
Ja
Ca
Fr
Ge
u th
So
Source: [Link]
8
Number of E-commerce Users/Buyers
2.5
2
Number (Billion)
1.5
0.5
0
2014 2015 2016 2017 2018 2019 2020 2021
Source: [Link]
9
Top Five Reasons for Online Buying
60
50
40
Percentage
30
20
10
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/d
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tu
sy
Us
ns
re
Fr
Ea
o
sy
up
Ea
Co
Source: [Link]
10
Shopping Cart Abandonment Rate
80
78
76
74
Percentage
72
70
68
66
64
62
2015 2016 2017 2018 2019 2020 2021 2022
Source: [Link]
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Shopping Cart Abandonment - Reasons
Credit card not accepted
Not sufficient payment methods
Unsatisfactory return policy
Website errors
Could not see/calculate total order cost
Compl icated checkout procedure
Concern with providing credi t card…
Slow delivery
Need for creating an account
High extra costs
0 10 20 30 40 50 60
Percentage
Source: [Link]
12
Top E-commerce Companies (June 2022)
based on Market Capitalisation
1200
1000
US Dollars (Billion)
800
600
400
200
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Source: [Link]
13
Popular Platform for Social Commerce
(Percentage of survey respondents who have made a purchase)
60%
50%
40%
30%
20%
10%
0%
Facebook Instagram YouTube Tik Tok SnapChat Twitter
Source: [Link]
14
Popular E-commerce Platforms – Market Share
Others
PrestaShop
OpenCart
Ecwid
SquareSpace eCommerce
WooCommerce
Shopify
0 10 20 30 40 50 60 70
Percentage
Source: [Link]
15
Shopify
[Link]
[Link]
n What are the key features?
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Technological revolutions
n Industrial revolution – automation/mechanical
n Electronic revolution - computing
n Network revolution - connection
n AI revolution - intelligence
What are the effects?
The Internet is the engine of the network
revolution and E-commerce is the fuel.
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Evolution of the Internet
n Global connectivity
q FTP, emails
n Effective information retrieval
q Web-based systems
n Integrated systems and secure transactions
q E-commerce systems
n Mobile and intelligent systems
q M-commerce systems
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What is E-commerce?
19
What are the differences between the
physical world and cyber world?
Physical World Cyber World
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Interesting aspects ...
n New business rules:
q “No matter how far your competitors are, they are still one-
click away.”
q “No matter how big your company is, you are still limited by
say the 15-inch computer screen”
n E-commerce relies on IP; not only the Internet Protocol but also..
q Innovation and People
q Investment and Partnership
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Academic aspects
n Commerce:
q sale and purchase of goods and services
n Electronic commerce:
q sale and purchase of goods and services by electronic
means
n Internet commerce:
q doing business on the Internet: a subset of E-commerce
n E-business
q a wider perspective
q involves integrating IT and the business process
q E-commerce is a subset of e-business
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Types of commerce
Commerce
Electronic Physical or Traditional Commerce
Commerce
Internet ggg
Commerce
Business Consumer focused
focused E-commerce ggg
E-commerce
Reference
H. Chan, R. Lee, T. Dillon and E. Chang, E-Commerce: Fundamentals and Applications, John Wiley & Sons (England) 2001.
23
DIGITAL phenomenon
n What are the drivers of E-commerce?
D
I
G
I DIGITAL
T
A
L
Reference
H. Chan, R. Lee, T. Dillon and E. Chang, E-Commerce: Fundamentals and Applications, John Wiley & Sons (England) 2001.
24
Different types of E-commerce
Business Consumer
(organization) (individual)
Business B2B B2C
(organization) (e.g. Alibaba) (e.g. [Link])
Consumer C2B C2C
(individual) (e.g. Priceline) (e.g. eBay)
Reference:
H. Chan, R. Lee, T. Dillon and E. Chang, E-Commerce: Fundamentals and Applications, John Wiley & Sons (England) 2001.
25
Examples
n B2C: [Link]
q virtual store
n C2C: [Link]
q auction system/service
n C2B: [Link] (changed now)
q demand collection
q reverse auction
n B2B: [Link]
q marketplace for businesses
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E-commerce scenarios
n Retailing (selling tangible goods)
q More customer control
q Search/Evaluate/Execute (SEE) better
n Servicing (selling intangible goods)
q Round the clock
q Better customer service
q Stay in touch with customers
n Publishing (selling information)
q Mass customization
q Real-time
n Supply chain management (managing relationship)
q Demand driven
q Hub-based
Discussion: Any further comments?
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3T
n Old ways of solving old problems
q =Tradition
n New ways of solving old problems
q =Translation
n New ways of solving new problems
q =Transformation
n A successful E-commerce company should focus on
transformation not translation (e.g., [Link],
eBay).
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Business model
A business model should answer three basic questions:
n What values can your business give to customers?
q What can you offer?
n What are your competitive advantages?
q Why should customers use your products or services?
n How does your business make profits (i.e., revenue model)?
q How can you survive and grow?
“A successful business model should make sense and make cents.”
Examples of revenue models:
n Advertisement-based e.g., Yahoo!, Google
n Commission-based e.g., eBay
n Transaction-based e.g., [Link]
n Subscription-based e.g., your ISP
Please read the reference for further information.
Reference: [Link]
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Traditional commerce vs. E-commerce
n Marketplace => Marketspace
n Fixed pricing => Dynamic pricing
n “Hard” goods => “Soft” goods/Hybrid goods
n Standard product => Customized product
n Supply driven => Demand driven
n Mass marketing => Personalized marketing
References
E. Turban et al., Electronic Commerce – A Managerial Perspective, Prentice-Hall, Upper
Saddle River, NJ, 2000.
A. Hartman et al., Net Ready: Strategies for Success in the E-conomy, McGraw-Hill, New York,
2000.
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Porter’s five forces
n New competitors
n Existing competitors
n Bargaining power of customers
n Bargaining power of suppliers
n New substitutes
Reference:
M. E. Porter, "Strategy and the Internet", Harvard Business Review, March 2001.
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Effect of E-commerce : Porter’s model
Let’s think about how the traditional travel agents are affected by E-commerce.
n The entry cost is lower because it is easier to set up electronic travel agents on
the Internet.
n The bargaining power of buyers is increased because consumers can compare
prices more easily on the Internet.
n Competition is intensified because competitors (both local and global) can offer
better customer services on the Internet.
n The bargaining power of suppliers is increased because they can reach the
consumers directly through the Internet.
n Some companies may enter the market by using a new business model (e.g.,
Priceline sells air-tickets using the “name-your-price” model).
Reference:
M. E. Porter, "Strategy and the Internet", Harvard Business Review, March 2001.
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Effect on the value chain
The PUSH model (Traditional supply chain)
Supplier Wholesaler Distributor Customer
The PULL model (Demand chain)
Customer e-broker
Supplier
Distributor
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Internet-enabled value chain
According to Michael Porter's model, here are some possible
enhancements on the Internet-enabled value chain for a
bookstore.
n The bookstore can co-ordinate the procurement activities with
its suppliers (e.g., publisher) more effectively and efficiently.
n Sales persons can read stock information on-line.
n The ordering process can be fully automated.
n Books can be sold via both physical and digital channels.
n Customers can track their orders through the Web.
Reference:
M. E. Porter, "Strategy and the Internet", Harvard Business Review, March 2001.
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What are the advantages of E-commerce?
n To consumers:
q SEE better: Search, Evaluate and Execute better
n To businesses:
q Profit = Revenue - Cost
q E-commerce can increase revenue and decrease
operating cost
References
R. Kalakota and A. B. Whinston, Electronic Commerce – A Manager’s Guide, Addison-Wesley, Reading, MA,
1997.
G. P. Schneider and J. T. Perry, Electronic Commerce, Course Technology, 2000.
E. Turban et al., Electronic Commerce – A Managerial Perspective, Prentice-Hall, Upper Saddle River, NJ,
2000.
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E-commerce technology
n Ubiquity – anywhere, anytime
n Global – one global cyber space, no boundary
n Standards – Worldwide Internet-based standards
n Richness – multimedia information
n Interactivity – real time customer interaction
n Personalization/customization – customized
information and promotion
n Social networking – user-driven content (“many-to-
many” connectivity)
Reference: K. C. Laudon and C. G. Traver, E-Commerce 2014 / 2020-2021, Pearson, 2013 / 2020.
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Evolution of E-commerce
Phase 1: Phase 2: Phase 3:
Invention Consolidation Re-invention and
Integration
Driven by Internet Driven by business Driven by business and
technology multi-technologies
Focus on revenue Focus on profit Focus on customers and
(“make sense”) (“make cents”) competitiveness
Entrepreneurial Adoption by large Full adoption
companies
Pure cyber “Brick and clicks” Hybrid/integration
Low complexity High complexity Even more complex:
content, user
experience, services,
web/mobile access etc.
Reference: K. C. Laudon and C. G. Traver, E-Commerce 2014 / 2020-2021, Pearson, 2013 / 2020.
37
Three-tier technical model
Server side
Client side Service system Backend system
38
Basic technical model
Service system Backend system
Web Server Application Server
Internet Database
Intranet
Firewall
(Secure)
Client side Server side
39
Technical building blocks
n Web system and protocols (HTTP)
n Web development (HTML, CSS, JavaScript, React, [Link] etc.)
n Security:
q network layer: firewalls, VPN
q transport layer: SSL/TLS
q application layer: SET, 3-D Secure
n Payment (4Cs):
q Credit card, Check, Cash, Credit/debit (funds transfer)
n Others:
q Recommendation algorithms
q Blockchain, cryptocurrencies, NFT
q Metaverse
q Artificial intelligence
40
Framework for this subject
Applications
Web
Web System Programming/ Security Payment Others
Development
Business Model
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