Unit I Web Assignment

BBA 3331, Introduction to E-commerce 1

Course Learning Outcomes for Unit I Upon completion of this unit, students should be able to:

1. Discuss components of the online business model. 1.1 Classify the major types of e-commerce. 1.2 Demonstrate how e-commerce differs from e-business.

Course/Unit Learning Outcomes

Learning Activity

1.1 Unit Lesson Chapter 1, pp. 3–33 Unit I Web Assignment

1.2 Unit Lesson Unit I Web Assignment

Reading Assignment Chapter 1: The Revolution Is Just Beginning, pp. 3–33

Unit Lesson Unit I provides a historical perspective of e-commerce and the Internet. E-commerce goes back to the early 1990s, and its beginning was a turning point in the way we use and view the Internet. Significant technological milestones along the way have propelled e-commerce and the transformation of the Internet to new levels of interaction between the World Wide Web and its users. Let’s begin with a few historical facts. Stallings (1999) reported that researchers working for the Advanced Research Project Agency (ARPA) in 1967 conceived the concept of network communications between two computers. By 1969, researchers managed to have two computers communicate using the Transmission Control Protocol/Internet Protocol (TCP/IP) over a 50 Kbps modem. This project gave life to what it was called ARPANET, a military network (Stallings, 1999). By 1978, a nongovernmental network was created by the National Science Foundation to connect to U.S. universities (Dean, 2013). Due to the fast-paced development of nongovernmental, Internet-based networks, ARPANET was decommissioned in 1990. The Internet should not be confused with the World Wide Web; they are two distinct concepts. These two terms are frequently used interchangeably; however, they are two different notions. Laudon and Traver (2018) provide a succinct distinction between the two: “The Internet is a worldwide network of computer networks, and the Web is one of the Internet’s most popular services, providing access to billions of web pages” (p. 8).

UNIT I STUDY GUIDE

Introduction to E-commerce

CORE CONCEPTS

“The Internet is a worldwide network of computer networks, and the Web is one of the Internet’s most popular services, providing access to billions of web pages” (Laudon & Traver, 2018, p. 8).

Core concepts (Laudon & Traver, 2018, p. 8)

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The Internet is the combination of many different interconnected networks, large and small, which make up the infrastructure that we know as the Internet. This worldwide infrastructure uses the TCP/IP, which was established during the early days of ARPANET. In the early days, these networks ran different protocols, but TCP/IP proved to be effective and popular. The Internet has come a long way—from using four connected computers used at the inception of ARPANET, to reaching over 300,000 users in 1990, and then reaching at least three billion users by 2015 (Schneider, 2017). The World Wide Web, or the web as it is referred to today, is the manner in which the world shares information in many different forms including web pages, multimedia, and text-based documents. The web offers an easy-to-use mechanism or interface, which makes it possible for individuals who are not Internet or computer experts to use the web to access information around the world (Schneider, 2017). This user-friendly interface is now known as the web browser. Examples of web browsers today include Microsoft Internet Explorer, Google Chrome, and Mozilla Firefox. The Internet of Things (IoT) A common notion is that individuals connect to one another via the Internet using computers. However, other devices such as mobile phones and tablets also allow users to connect to one another using the Internet. Schneider (2017) pointed out that the connection of devices not used by individuals is increasing exponentially. Devices such as environmental controls, lighting devices, security devices (e.g., cameras, motion sensors) used in heavily populated urban areas, and other Internet-aware controls used in critical sectors (e.g., the power grid, transportation systems) are now connected to the Internet. These devices talk to other systems and to each other using the Internet. Since the Internet is used as a vehicle of communication, this subset of the Internet has been labeled as the Internet of Things or IoT. The IoT will become an important concept as we progress through the course. The Birth of E-commerce In 1995 the launch of Amazon (amazon.com) marked the unofficial birth of e-commerce (Statista, 2018). America Online or AOL and Prodigy had been around for quite some time before that, offering online transactions; however, it was not until Amazon arrived that anyone really took notice. Before Amazon, the online retail market seemed to be inconsequential. It was not so threatening. In fact, Barnes & Noble and other retailers originally used Amazon as their e-commerce platform; however, Amazon was not considered a legitimate threat to the marketplace even though it was slowly taking over many product categories from brick-and-mortar retailers. The impact Amazon had on traditional retailers in the early 2010s began to worry many, and by 2014, Amazon had become the e-commerce leader of the online retail market in the United States (Statista, 2018). The concept of e-commerce did not catch on until many barriers were removed by technology. It took many years for online shopping to become commonplace. In the minds of most shoppers, it was easier to visit brick- and-mortar stores to purchase goods and services. Technology facilitated the reduction and, in most cases, the elimination of shopper barriers. Concerns, such as security and reliability, and amenities, such as simplicity and convenience, helped propel e-commerce (Wallace, 2017). The timeline below shows the significant milestones that were noteworthy to the advancement of e- commerce.

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There are various types of e-commerce, and each has a unique audience and market. Laudon and Traver (2018) identified the types described below.

1. Business-to-consumer (B2C): The Internet has facilitated the ability for businesses to market and sell directly to consumers without a middleman. Examples of B2C businesses include Amazon, Walmart (walmart.com), a babysitting business, and a pet grooming service.

2. Business-to-business (B2B): This is similar to B2C but is directed to other businesses. An example of a B2B market includes a legal business, such as LegalZoom (legalzoom.com), which sells their services to other businesses. Many businesses out there operate as both B2C and B2B; an example of the latter is Home Depot (homedepot.com), which sells directly to consumers but also to other businesses such general contractors.

3. Consumer-to-consumer (C2C): This is an online business model that facilitates transactions between consumers. This business model minimizes costs of goods and services and keeps margins high for sellers and prices low for buyers. Examples of C2C websites are eBay (ebay.com), Craigslist (craigslist.com), and Swappa (swappa.com). Sellers usually pay a modest fee to the providers of the platform (websites) to use their services, usually as a flat fee or a percentage of the sale.

4. Mobile e-commerce (M-commerce): Mobile commerce enables consumers to conduct transactions on-the-go using mobile devices such as a tablet, smartphone, or wearable device such as a smart watch. Examples of m-commerce include mobile banking, which allows consumers to check balances or transfer money wherever they may be. In 2015, mobile payment applications surfaced, which allows users to pay for goods and services using their mobile devices. Mobile payment systems include Apple Pay and Google Wallet.

5. Social e-commerce: The term social e-commerce was first coined by Yahoo. This business model is still in its infancy, but it is expanding. This business model relies on correctly gauging consumers’ social makeup and product or service expectations. An example of social e-commerce is Kickstarter (kickstarter.com), which is a website where consumers not only take part in the business process, but their presence is critical for the business to function. Other social e-commerce sites include Facebook (facebook.com) and Snapchat (app).

6. Local e-commerce: This business model is geared toward local retail marketing and takes consumers’ geographical locations into consideration. This is possibly due to the proliferation of mobile devices with geo-location services. As an example, a local bicycle shop’s online store can be optimized for a web search engine (e.g., Google) to produce results based on the geographical location of potential customers in the area.

Timeline of milestones for e-commerce (Laudon & Traver, 2018)

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E-Business Quite often, the terms of e-commerce and e-business get used equally, but they are not the same. Laudon and Traver (2018) define e-business as a firm’s use of Internet technology for transactions and processes for the improvement of the business. Unlike e-commerce, where the exchange of money using digital means takes place, e-business encompasses all aspects of running a company’s online operations, including the sale of goods and services; marketing; procurement; and communication with vendors, partners, and customers. E-business involves e-commerce, but e-business is a greater part of a firm’s activities. According to Laudon and Traver (2018), “E-business applications turn into e-commerce precisely when an exchange of value occurs” (p. 9). Conclusion The retail industry has seen a significant change in customer and business purchasing habits. The industry experienced a turning point when, in 2015, the National Retail Federation (NRF) reported that 102 million consumers purchased goods in brick-and-mortar establishments, and 103 million shopped online (Allen & Reynolds, 2015). E-commerce is now pervasive in our society. Laudon and Traver’s (2018) research shows that the Internet/web achieved a 53% share of U.S. households in a matter of 10 years. Today, e-commerce has reached about 96% penetration in U.S. consumers, showing unprecedented growth (Wallace, 2017).

References Allen, K. G., & Reynolds, T. (2015, November 29). Thanksgiving weekend shopping brings big in-store and

online crowds, according to NRF survey [Press release]. Retrieved from https://nrf.com/media/press- releases/thanksgiving-weekend-shopping-brings-big-store-and-online-crowds-according-nrf

Dean, T. (2013). Network+ guide to networks (6th ed.). Boston, MA: Cengage Learning. Laudon, K. C., & Traver, C. G. (2018). E-Commerce 2017: Business, technology, society (13th ed.). Boston,

MA: Pearson Education. Schneider, G. P. (2017). Electronic commerce (12th ed.). Boston, MA: Cengage Learning. Stallings, W. (1999). Data and computer communications (6th ed.). Upper Saddle River, NJ: Prentice Hall. Statista. (2018). Annual revenue of Amazon web services from 2013 to 2016 (in million U.S. dollars) [Graph].

Retrieved from https://www.statista.com/statistics/233725/development-of-amazon-web-services- revenue/

Wallace, T. (2017, December 3). Ecommerce trends: 147 stats revealing how modern customers shop in

2017 [Blog post]. Retrieved from https://www.bigcommerce.com/blog/ecommerce-trends/