Chapter - 1

Introduction to
E-commerce
HISTORY OF E-
COMMERCE

1990s – Invention Period:

• 1991: The Internet became accessible to the public.
• 1994: Netscape Navigator and secure online
transactions (SSL encryption) launched.
• Growth in e-commerce platforms like Amazon (1995)
and eBay (1995).
HISTORY OF E
COMMERCE

2000s – Growth and Dot-Com Crash:

• Rapid growth fueled by venture capital ended with the
dot-com bubble burst (2000)
• Surviving companies refined strategies, focusing on
long-term sustainability
HISTORY OF E
COMMERCE

2010s – Expansion:
• Rise of mobile commerce (m-commerce) and social
media-driven sales
• Global platforms like Alibaba and subscription-based
models gained popularity
HISTORY OF E
COMMERCE

2020s – Present:
• Surge in e-commerce due to the COVID-19 pandemic
• Integration of AI, personalized marketing, and
omnichannel retail experiences
• Advancements in payment technologies, such as
cryptocurrencies and BNPL (Buy Now, Pay Later)
WHAT IS
E-
COMMERCE?
INTRODUCTION
• The use of the internet, the web, and
mobile apps and browsers running on
mobile devices, to transact business.

• More formally, digitally enabled

commercial transactions between and
among organizations and individuals
WHAT IS
E-BUSINESS?
INTRODUCTION

the digital enabling of transactions and

processes within a firm, involving
information systems under the control of
the firm
DIFFERENCE BETWEEN E-
COMMERCE AND E-BUSINESS?
Aspect E-Commerce E-Business

Digital enablement of internal and

Definition Buying and selling goods/services online.
external business processes.
Broader scope, includes internal
Focuses on transactions involving exchange of
Scope operations and external
value across organizations.
transactions.
Supply chain management,
Online sales, customer interaction, and
Activities enterprise resource planning, and
marketing.
process automation.
Involves transactions across organizational Primarily internal, within the firm’s
Value Exchange
boundaries. control.
Online retail stores, marketplaces (e.g., Internal systems like ERP, CRM,
Examples
Amazon, eBay). and HR management tools.
Enhancing efficiency and
Generating revenue through online
Primary Goal productivity in business
transactions.
processes.
DIFFERENCE BETWEEN E-
COMMERCE AND E-BUSINESS?
DIFFERENCE BETWEEN
E-COMMERCE AND
DIGITAL MARKETING
E-Commerce: Refers to the buying and selling of goods or
services online through platforms like websites, apps, or
marketplaces. It involves transactions, logistics, and
customer service
Example: Amazon, Shopify, or any online store
Digital Marketing: Encompasses the strategies and
tactics used to promote products or services online. It
focuses on attracting, engaging, and retaining customers
using various digital channels.
Example: Social media ads, email marketing, SEO, and PPC
campaigns
INTERNET
USERS AND
PENETRATION
Country Internet Internet
Users Penetration
USA 331 Million 97.1%
China 1.09 Billion 76.4%
India 752 Million 52.4%
Pakistan 111 Million 45.7%
WHY SHOULD WE
STUDY E-
COMMERCE?
• Rapid Market Growth: E-commerce is growing at an
unprecedented rate globally, making it a highly relevant
field with ample career opportunities

• Access to Global Markets: E-commerce allows

businesses to reach customers around the world, breaking
down geographic barriers

• Shift to Digital: As more consumers shop online,

understanding e-commerce helps you stay ahead in a
digital-first economy

• Technological Advancements: E-commerce is constantly

WHY SHOULD WE
STUDY E-
COMMERCE?
• Convenient and Flexible Career: E-commerce careers can
offer flexibility in work location, as many positions, including
remote roles, are available in the industry

• Increased Consumer Behavior Insights: E-commerce

provides rich data on customer preferences, helping businesses
personalize experiences and improve sales

• Growth of Mobile Commerce: With the rise of mobile

shopping, e-commerce has a strong focus on mobile-friendly
platforms, opening up opportunities in mobile app development
and optimization
WHY SHOULD WE
STUDY E-
COMMERCE?
• Online Payment Systems: E-commerce involves working with
various payment systems, including mobile payments,
cryptocurrencies, and digital wallets, creating a dynamic area to
explore

• Social Media Integration: The integration of social media

with e-commerce is changing how products are marketed and
sold, opening new avenues in digital marketing and social
commerce

• Entrepreneurial Opportunities: E-commerce allows anyone

with an idea and a product to start a business with relatively low
WORLD WIDE WEB
(THE WEB)?
• The Web is an information system operating on the
Internet
• It was the "killer app" that made the Internet
commercially appealing
• Developed in the early 1990s, it is newer than the
Internet
• Provides access to trillions of web pages indexed by
search engines
• Web pages use HTML and can include text, graphics,
animations, and more
• Pre-Web Internet focused on text, file transfers, and
remote computing
MOBILE
PLATFORMS

• The mobile platform has become a significant part of

Internet infrastructure

• These platform provides the ability to access the Internet

from a variety of mobile devices such as smartphones,
tablets, and ultra-lightweight laptop computers such as
Google’s Chromebook via wireless networks or cellphone
service
READING
ASSIGNMENT FOR
SUMMARY

• Write down the summary of “T i k T o k: C r e a t

o r s a n d t h e C r e a t o r E c o n o m y” on
Page # 1-5 in the Book
UNIQUE FEATURES
OF E-COMMERCE
UNIQUE FEATURES
OF E-COMMERCE
• Prior to the development of e-commerce, the marketing
and sale of goods was a mass-marketing and salesforce–
driven process

• Marketers viewed consumers as passive targets of

advertising campaigns and branding “blitzes” intended
to influence their long-term product perceptions and
immediate purchasing behavior

• Consumers were trapped by geographical and social

boundaries, unable to search widely for the best price
and quality
UNIQUE FEATURES
OF E-COMMERCE
• Information about prices, costs, and fees could be
hidden from the consumer, creating profitable
information asymmetries for the selling firm

• Information Asymmetry happens when one

party in a transaction knows more about the relevant
information than the other

• For example, when you're buying a used car, the seller

might know about hidden problems with the car that
you can't see. This imbalance in knowledge can create
unfair advantages
UNIQUE FEATURES
OF E-COMMERCE
• In traditional retail (before online marketplaces became
common), sellers often set one fixed price for everyone
(a national price)

• This was because it was costly and difficult to change

prices frequently—these costs were called menu costs
(like the expense of reprinting menus at a restaurant to
reflect new prices)

• Because it was hard to adjust prices for different customers

or locations, businesses focused on producing large
quantities of a single product that worked for everyone,
without much customization or flexibility
UNIQUE FEATURES
OF E-COMMERCE
• Think about how we shop online today. Prices can
change frequently based on demand, location, or even
personal data (like your browsing history). This is
dynamic pricing—a modern contrast to the older system
of fixed, one-size-fits-all pricing
UNIQUE FEATURES
OF E-COMMERCE
UBIQUITY
• In traditional commerce, a marketplace is a physical place
you visit in order to transact

• For example, television and radio typically motivate the

consumer to go someplace to make a purchase

• E-commerce, in contrast, is characterized by its ubiquity: It is

available just about everywhere and at all times

• It liberates the market from being restricted to a physical

space and makes it possible to shop from your desktop, at
home, at work, or even from your car
UNIQUE FEATURES
OF E-COMMERCE
GLOBAL REACH
• E-commerce technology permits commercial transactions to
cross cultural, regional, and national boundaries far more
conveniently and cost-effectively than is true in traditional
commerce

• As a result, the potential market size for e-commerce

merchants is
• roughly equal to the size of the world’s online population
(more than 4.5 billion in 2022)

• More realistically, the Internet makes it much easier for

startup e-commerce merchants within a single country to
UNIQUE FEATURES OF E-
COMMERCE
UNIVERSAL STANDARDS
• E-commerce uses universal technical standards shared
globally, unlike traditional technologies that vary by country

• Universal standards lower market entry costs for merchants

and reduce search costs for consumers

• A single global marketspace simplifies price discovery by

displaying prices and product details for everyone

• E-commerce enables worldwide comparison of suppliers,

prices, and delivery terms in one platform, a potential for
UNIQUE FEATURES
OF E-COMMERCE
RICHNESS
• Information richness measures the complexity and content
of a message in communication
• Traditional markets are rich in information through face-to-
face interactions and visual/hearing cues
• Before the web, there was a trade-off: larger audiences
meant less rich messaging
• E-commerce increases richness by being interactive and
tailoring messages to individual users
• E-commerce allows selling complex goods and services to a
broader audience, mimicking face-to-face experiences
UNIQUE FEATURES
OF E-COMMERCE
INTERACTIVITY
• Technology that allows for two-way communication between
merchant and consumer and among consumers

• Traditional television or radio, for instance, cannot enter into

conversations with viewers or listeners, ask them questions
UNIQUE FEATURES OF
E-COMMERCE
INFORMATION DENSITY
• E-commerce increases information density, providing more
accurate, timely, and high-quality data to consumers and
merchants
• It reduces the cost of collecting, storing, processing, and
communicating information, making it more accessible and
affordable
• E-commerce reduces information asymmetry, increasing
price and cost transparency, which makes markets more
competitive
• Enhanced information allows merchants to differentiate
products by cost, brand, and quality, targeting diverse
UNIQUE FEATURES OF E-
COMMERCE
PERSONALIZATION AND
CUSTOMIZATION
• E-commerce enables personalization, tailoring marketing
messages to individuals based on their name, interests, and
purchase history
• Personalization occurs rapidly, often within milliseconds, and
is followed by targeted advertisements
• Customization allows products or services to be adjusted
based on user preferences or prior behavior
• The interactive nature of e-commerce facilitates real-time
collection of consumer data during purchases
• This capability enhances the relevance and appeal of both
marketing messages and product offerings
UNIQUE FEATURES OF E-COMMERCE
SOCIAL TECHNOLOGY: USER-
GENERATED CONTENT (UGC),
CREATORS, AND SOCIAL NETWORKS
• E-commerce technologies enable users to create and share
content globally, fostering new and strengthened social
networks

• Unlike traditional media's one-to-many model, e-commerce

supports a many-to-many communication models

• Users can now both create and program their content

consumption, transforming the media landscape
UNIQUE FEATURES OF E-COMMERCE
SOCIAL TECHNOLOGY: USER-
GENERATED CONTENT (UGC),
CREATORS, AND SOCIAL NETWORKS
• User-generated content (UGC) like videos, podcasts, and
digital art plays a significant role in online content

• The creator economy supports over 200 million creators with

platforms, tools, and systems for monetization and fan
engagement
TYPES OF
E-COMMERCE
BUSINESS TO
CONSUMERS (B2C)
• B2C e-commerce refers to businesses selling goods,
services, and content directly to individual consumers online

• This type of e-commerce has grown rapidly since 1995 and

is the most common form encountered by consumers

• The B2C category includes various business models, such as

online retailers, service providers, content providers, and
social networks
TYPES OF
E-COMMERCE
BUSINESS TO
CONSUMERS (B2C)
• Different B2C models, including market creators and portals,
are analyzed in-depth across chapters in the source material

• B2C e-commerce in the U.S. is expected to grow by over

10% annually, indicating significant future potential

• Pakistan: Revenue in the e-commerce Market is projected to

reach US$5,911.00m (5.91 BN) in 2025
• Revenue is expected to show an annual growth rate (CAGR
2025-2029) of 3.22%, resulting in a projected market volume
of US$6,711.00m (6.71 BN) by 2029
TYPES OF
E-COMMERCE
BUSINESS TO
BUSINESS (B2B)
• B2B e-commerce involves businesses selling goods or services
to other businesses and is the largest e-commerce sector

• In 2022, U.S. B2B e-commerce transactions were projected to

reach $8.5 trillion, with total B2B exchanges (online and
offline) at $16 trillion

• B2B e-commerce still has significant growth potential within

the broader business exchange market

• The two primary B2B models are e-commerce marketplaces

TYPES OF
E-COMMERCE
CONSUMERS TO
CONSUMERS (B2C)
• C2C e-commerce enables consumers to sell to one another
through online platforms, known as market makers or platform
providers
• Consumers handle product listing and rely on the platform for
cataloging, discovery, and transaction processing
• Pioneering platforms like eBay, Etsy, and Craigslist now face
competition from Amazon, Facebook Marketplace, and newer
entrants like Poshmark and ThredUp
• On-demand services such as Uber and Airbnb also function
TYPES OF
E-COMMERCE
MOBILE
CONSUMERS (B2C)
• M-commerce involves using mobile devices like smartphones
and tablets for online transactions
• It enables a wide range of activities such as purchases, travel
bookings, and financial services via cellular and wireless
networks
• M-commerce revenues are projected to reach $500 billion in
2022, with retail m-commerce growing 12% annually between
2022 and 2026
• Growth factors include more screen space, responsive design,
TYPES OF
E-COMMERCE
LOCAL E-COMMERCE
• Local e-commerce targets consumers based on their
geographic location, connecting them to nearby businesses
• It uses online marketing to drive foot traffic to physical stores
or engage local services
• Local e-commerce is part of the mobile, social, local e-
commerce trend, focusing on convenience and location-based
services
• The sector is fueled by the popularity of on-demand services
like Uber, Food-Panda, and DoorDash
TYPES OF
E-COMMERCE
SOCIAL E-COMMERCE
• Social e-commerce integrates e-commerce with social
networks and online relationships
• It is closely linked to m-commerce, with mobile devices driving
its growth
• Growth factors include online recommendations from trusted
friends and integrated social commerce tools like Buy buttons
and Shopping tabs

• Social media platforms like Facebook, Instagram, and TikTok

are key players in social e-commerce development