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E L E C T R O N I C   C O M M E R C E :   V E R S I O N  2.0

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NOTICES:	Congratulations to the Fall 2001 class for an excellent semester. eCommerce will return next year.

 

L E C T U R E   N O T E S
August 30, 2001

[ materials ]

Major Topics:

I      The Status of eCommerce

II    What is "new" about eCommerce?

III    Specific Examples (and legal issues)

 

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I.     The Status of eCommerce

(1) define the scope of eCommerce:

includes both "purely online" as well as supporting (infrastructure, etc.) and hybrid (retail products) industries.

(2) the Internet ecosystem (Morgan Stanley)

front end versus back end

[ diagram ]

 

(3) Some characteristics of eCommerce today (Morgan Stanley)

• about 300+ million people "online"; growth rate is slowing, however (Why?) (Morgan Stanley: predicts 350% growth to 1.4 B)
  
  
• the "Internet leaders" are still growing fast
  
  
• Internet advertising and marketing is still relatively cheap and underutilized
  
  
• new applications -- especially communications -- will drive more growth
  
  
• leaders are likely to get stronger, though all growth rates will be slower

 

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II.      What is New About eCommerce?

Ward Hanson: look at early days of radio, in the 1920s

RCA: formed to create a radio network in 1921
Market was viewed as competition with cables, especially underwater. (A one-to-one model.)

But then people started buying receivers, and listening to the radio station in town. (Exponential growth.)
Growth was driven by: hype, euphoria, media coverage, excitement.
Next problem: what is the business model?

Advertising turns out to become the business model of choice. (Note: may be changing today.)
The advertising business model has a specific characteristic: consolidation. (Why?)
Note the rise of the network system for radio: why did this happen?

Have we found the dominant business model for the "web" yet? (If advertising, should we sell our stocks?)

Legal issues:

       if advertising leads to consolidation, where will the future legal questions lie?

      if advertising is bad for eCommerce (is it?), should the legal system (regulation, etc.) be used to change it?

 

Steve Jurvetson: eCommerce Trends

The death of the vertically-integrated retailer.
The rise of the shopping agent economy.
The horizontal model of eCommerce.

Shift in power to the consumer / buyer.
extreme price competition
tracking/modeling of consumer preferences
individualized experience

The Restructuring of Business
Global horizontal relationships
interconnected networks

Legal issues:

      what happens when eCommerce becomes horizontally-organized?

      are brands (Trademarks) less or more important?

      how might he traditional retailers respond?

 

Reality Check

The demise of Internet advertising: Why?
Limited medium (little/no sound or video, small images)
Limited familiarity -- nobody has figured out how to make it work well
Too much accountabilities?

Bright Spots for Advertising
targeting and profiling (but consider the privacy issues).
paid placements (search engines, reviews, etc.) What are the strategies / risks here?

 

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III.       Specific Examples (and Legal Issues):

Wine.com [www.wine.com]

eBay [www.ebay.com]

PayPal [www.paypal.com]

DealTime [www.dealtime.com]

World Wide Gamble [www.worldwidegamble.com]

Covisint [ www.covisint.com ]

Priceline [ www.priceline.com ]

 

 

 

C O P Y R I G H T   ©   2001   R.   P O L K   W A G N E R.

C O P Y R I G H T   ©   2001   R.   P O L K   W A G N E R.