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: https://www.markinblog.com/ecommerce-statistics/

3
Global Retail E-commerce Sales
9

7
US Dollars (Trillion)

0
2021 2022 2023 2024 2025 2026

Source: https://www.forbes.com/advisor/business/ecommerce-statistics/

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: https://www.statista.com/statistics/534123/e-
*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: https://www.markinblog.com/ecommerce-statistics/
6
Global Social Commerce Sales
3.5

2.5
US Dollars (Billion)

1.5

0.5

0
2022 2023 2024 2025 2026

Source: https://www.forbes.com/advisor/business/ecommerce-statistics/

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: https://www.markinblog.com/ecommerce-statistics/
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: https://www.markinblog.com/ecommerce-statistics/
9
Top Five Reasons for Online Buying
60

50

40
Percentage

30

20

10

s
ts

t
y
y

ou
w
er

lic
n

vie
ou
l iv

po

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is c

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/d
ee

tu

sy
Us
ns

re
Fr

Ea
o

sy
up

Ea
Co

Source: https://www.markinblog.com/ecommerce-statistics/
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: https://www.markinblog.com/ecommerce-statistics/

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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: https://www.markinblog.com/ecommerce-statistics/
12
Top E-commerce Companies (June 2022)
based on Market Capitalisation
1200

1000
US Dollars (Billion)

800

600

400

200

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US
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uo
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nt
od
ib

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JD

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us

nd
os

Pi
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Source: https://www.statista.com/statistics/245340/leading-large-cap-e-commerce-companies-market-cap/

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: https://www.forbes.com/advisor/business/ecommerce-statistics/

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Popular E-commerce Platforms – Market Share

Others

PrestaShop

OpenCart

Ecwid

SquareSpace eCommerce

WooCommerce

Shopify

0 10 20 30 40 50 60 70
Percentage

Source: https://www.markinblog.com/ecommerce-statistics/

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Shopify
https://www.youtube.com/watch?v=wM-NT6hcw48
https://www.youtube.com/watch?v=u-Qfdn44rB4
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.

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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.

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 Different types of E-commerce
Business Consumer
(organization) (individual)

Business B2B B2C

(organization) (e.g. Alibaba) (e.g. Amazon.com)

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.

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Examples
n B2C: www.amazon.com
q virtual store
n C2C: www.eBay.com
q auction system/service
n C2B: www.priceline.com (changed now)
q demand collection
q reverse auction
n B2B: www.alibaba.com
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?

27
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., Amazon.com,
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., Amazon.com
n Subscription-based e.g., your ISP

Please read the reference for further information.

Reference: http://digitalenterprise.org/models/models.html

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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.

34
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.

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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, Node.js 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

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Framework for this subject

Applications

Web
Web System Programming/ Security Payment Others
Development

Business Model

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