Transcript Document

IT and global ecommerce:
The shape of things to come
Bagus Nurcahyo
[email protected]
Programme of Study of Marketing Management
Undergraduate Programme of Business & Entrepreneurship
Gunadarma University
IT and global ecommerce: The shape of things to
come
I. The shape of the “new” economy
• Internet indicators
II. Ecommerce trends
• Drivers of ecommerce
• Components of a virtual economy
III. What’s on the horizon?
• Technical trends
• Social trends
http://www.ucomics.com/tomtoles/viewtt.htm
I. The shape of the “new” economy
Commerce layer
Intermediary layer
Applications infrastructure layer
Infrastructure layer
The Internet Economy Indicators http://www.internetindicators.com/
Infrastructure layer
This layer includes the wires, boxes, and code that make
up the physical structure of the net
Telecommunications companies: AT&T, Ameritech,
SWBell
Internet Service Providers: AOL-Time Warner,
Mindspring
Internet backbone carriers: Qwest, MCI, WorldCom
“Last mile” access companies: Insight
Communications, Smithville Telephone Co
Manufacturers of end-user networking equipment:
Cisco, Corning
This layer generated $142.8 billion in revenues in the
first half of 2000, (11.2% growth between 1st and 2nd
quarters)
1st quarter revenues grew 69.3% over 1st quarter
1999
2nd quarter revenues grew 57.4% over 2nd quarter
1999
Over 932,000 work in this layer (2000)
1st quarter employment grew almost 52% over 1st
quarter 1999
2nd quarter growth was 37.7% over 2nd quarter 1999
This layer is the platform for growth for the remainder of
the Internet economy
Applications infrastructure layer
This layer involves the companies producing the software
products and services that enable Web transactions:
Yahoo Store, Oracle, SAP, Microsoft
It includes transaction intermediaries: Paypal, Microsoft
It also includes consultants and service companies that
design, build and maintain all types of web sites: Scient,
Viant, Razorfish, IXL
The work occurring at this layer is a fundamental basis for
e-commerce and other functionality on the Internet
Most of the activity on this and the previous layer is b-2-b
This layer grew 14.7% between the 1st and 2nd quarters
of 2000, generating $72.8 billion in revenues.
1stQ revenues grew 62.3% over 1stQ 1999
2ndQ revenues increased by 51.9% over 2ndQ 1999
1stQ employment grew over 62 % over 1stQ 1999
2ndQ employment increased by 52% over 2ndQ 1999
Over 740,000 work in this layer (first half of 2000)
growing just under 4% between the 1st and 2ndQ
This layer has the lowest revenue per employee at
$52,554 for the second quarter of 2000.
This figure is affected by consulting activities
Intermediary layer
The businesses are predominantly Internet pure-play
They do not generate revenues directly from
transactions (unlike layer #4 companies)
Revenues are generated through advertising,
subscription fees, and commissions
Many companies are
pure Web content providers: ClickZ, Commercenet
market makers: VerticalNet, Ebay
market intermediaries: eSteel, Trip.com
This group of companies is likely to have a significant
impact over time on the efficiency and performance of
electronic markets
This layer grew 34.5% between the 1st and 2ndQ 2000,
generating almost $64 billion in the first half of 2000
1stQ revenues grew 63.8% in relation to 1stQ 2000
2ndQ revenues increased 84.6% over 2ndQ 1999
Employs 468,689 (fewest individuals of any layers)
1stQ employment grew just 5.5% over 1stQ 1999
2ndQ employment growth was 3.2% over 2ndQ 1999
This layer has low growth rates because infrastructure
investments and automated processes can be leveraged
to produce revenue.
Travel booking services
Revenue per employee is the 2nd highest at $78,312 for
2ndQ
Commerce layer
Companies in this layer conduct web-based commerce
transactions
Some are pure play: Amazon, Egghead
It also includes bricks and clicks etailers: Barnes and
Noble, Gateway
Some are OEMs: Dell
Companies may be engaged in B2B as well as B2C online
sales
Many sell both to consumers and to businesses of all
sizes
This layer grew 11 % between the 1st/2ndQ 2000,
generating over $127 billion in revenues in the first half of
2000.
1stQ revenues grew 66.7% over 1stQ 1999
2ndQ revenues were 57.8% higher than 2ndQ 1999
This layer has the highest employment of any of the
layers, topping 1 million in the first half of 2000
Employment growth between 1st/2ndQ was just over 1%
1stQ employment grew 12.6% compared with 1stQ 1999
2ndQ employment growth was 8.2% over 2ndQ 1999
Revenue per employee for the 2ndQ was about $65,000
What this means: key findings from the 2000 Internet
Indicators study
The internet economy as a whole added 612,375 jobs in
the first half of 2000 and directly supports three million
workers
It is projected to produce $830 billion in revenues in
2000, a 58%increase over 1999
“Dot coms” are a small part of the internet economy
Only 9.6%of the firms studied are "dot coms" with
95% or more of their revenue from the net
Employment in internet economy companies is growing
much faster (10%) than the jobs in the overall economy
(6.9%)
http://www.internetindicators.com/keyfindings.html
Most internet economy jobs are not IT
http://www.internetindicators.com/keyfindings.html
Internet Economy Indicators
Annual Employee Figures by Layer and Total Internet Economy
1998
1999
Growth
Layer 1 - Infrastructure
527,037
778,602
48%
Layer 2 - Application
513,125
681,568
33%
Layer 3 - Intermediaries
290,856
340,673
17%
Layer 4 - Internet Commerce
577,937
726,735
26%
The Internet Economy
(after removing overlap)
1,819,716 2,476,122
36%
http://www.internetindicators.com/key_findings_june_00.html
Internet Economy Indicators
Annual Revenue and Growth Summary by Layer and Total Internet
Economy (millions)
1998
1999
Growth
Layer 1 - Infrastructure
$117,143 $197,853
68%
Layer 2 - Application
$71,615
$101,304
41%
Layer 3 - Intermediary
$63,629
$96,809
52%
Layer 4 - Internet Commerce
$99,813
$171,473
72%
The Internet Economy
(after removing overlap)
$322,530 $523,923
62%
http://www.internetindicators.com/key_findings_june_00.html
Ecommerce is expected to grow worldwide
Internet Economy companies generated almost one of
every five dollars in revenue from the Internet
18.5% of the companies’ revenues were generated
from the Web
17 million US households will be shopping online by
the end of this year, with online retail sales expected to
top USD 20.2 billion (Forrester Research)
56% of US companies will sell their products online
this year, up from 24% in 1999. (NUA)
Small businesses who use the net have grown 46%
faster than those that do not (American City Business
Journals)
http://www.thestandard.com/powerpoint/101600met5_cou.ppt
http://www.thestandard.com/powerpoint/101600met5_cou.ppt
The internet has become an indispensable revenue
stream
One in every five dollars in revenue is generated
from the internet
The internet economy is highly productive
Revenue per employee increasing 11.5% through
the first two quarters of 2000
The internet intermediary layer grew an impressive
34.5% between the first and second quarters of 2000
This layer generated almost $64 billion in revenues
in the first half of the year.
IT and global ecommerce: The shape of things to
come
I. The shape of the “new” economy
• Internet indicators
II. Ecommerce trends
• Drivers of ecommerce
• Components of a virtual economy
III. What’s on the horizon?
• Technical trends
• Social trends
II. What’s happening now?
Technical: The infrastructure necessary to support
ecommerce is almost in place
The hardware and software is becoming more
powerful and is dropping in price
Economic: We are beginning to understand the
economics of networking and ecommerce
There are many experiments underway, particularly in
B-to-B and B-to-C ecommerce
Social: The net is redefining the marketplace
It is becoming interactive and information routinely
flows both ways
The conventional distinction between buyer and seller
is blurring on the web
People are not passive and see themselves as content
providers (broadcasters)
Legal: The legal and regulatory environment is in flux
One current policy battle is over taxation and the
definition of the “nexus” of business
Another is over privacy
Technological drivers of ecommerce
Intelligent devices
using
Software for
collaborative work
supporting
Multimedia data creation
and delivery
over
An open network
Getting the infrastructure into place: the last mile is a
“pot of gold”
Telcos, ISPs, the cable company, and satellite/wireless
services are competing to bring the net into the home
The pipes that carry data across the net are high
pressure fire hoses
The line that goes into your home is a straw
Who will connect to the home and how will they do it?
Copper wire
Wireless
Fiber optics
Satellite
TV cable
Wall plug
The last mile is still a problem
Industry Standard Metrics Report 3.15.00
Telecos want to use their infrastructure to provide net to
the home
Much net traffic is carried over their pipes anyway
They want to become content and service providers,
not merely conduits
They want to support a variety of applications (and
have put in 95,000 miles of fiber in the last
decade)
They correctly see competition from cable companies
and ISPs who want to offer a range of services (banking,
bill paying, eshopping)
Telcos are developing network architecture to remain
players in development of net infrastructure
They own NAPs in Chicago, NYC, Washington DC, and
San Francisco
They provide network access for those who want to
get to the backbone (ISPs, local phone co.)
Also, they want to provide net access services to
individuals and organizations
This places them in direct competition with ISPs
They are waiting to be allowed to provide content and
services
This places them in direct competition with AOL
ISPs are maintaining their foothold in the home
Estimates vary, but ~20 million people have accounts
with ISPs (out of ~32.6 million who own modems)
ISPs can be “gateways” or “full service”
Gateways are physical entry points to the net
PSI, UUNet, and Kiva are gateway ISPs
Full service ISPs provide content and services to
business, schools, libraries and homes
AOL, Compuserve, Prodigy are full service ISPs
ISPs can be local, regional, or international
Kiva is local, Panix is regional
PSI, UUNET (owned in part by Microsoft) and ANS
(owned by AOL) are international
These are large public data networks which are not
part of the telco infrastructure
They compete on speed, reliability and access and
points of presence (PoPs)
They connect to the Internet through the NAPs or
through a CIX router
Economic: business drivers of ecommerce
Product promotion and customization through the
direct connection to consumers
Developing and exploiting new sales channels
(products, information, advertising, transactions)
Reduced costs of business transactions through a
public shared infrastructure
Reducing time to market for certain types of products
Improving customer relationships with intelligent
systems for service and support
And:
Improving marketing and targeted advertising through
the collection of detailed customer information
New corporate branding and image creation
Using the net for R&D and product development
Developing of new business models based on
characteristics of the new marketplace
Ecommerce business activities:
Internal email messaging
Online publishing of corporate documents
Online searching for documents, projects, information
Managing corporate finance and personnel systems
Manufacturing logistics management
Supply chain management for inventory, warehousing,
distribution
Ordering processing management to suppliers and
customers
Order tracking
IT and global ecommerce: The shape of things to
come
I. The shape of the “new” economy
• Internet indicators
II. Ecommerce trends
• Drivers of ecommerce
• Components of a virtual economy
III. What’s on the horizon?
• Technical trends
• Social trends
IV. Where is it going?:
Ecommerce will generate $3.2 trillion globally by 2003
(5% of global sales revenue) (Forrester Research, 1998)
Business-to-business ecommerce generates 2-3X the
revenues of business-to-consumer ecommerce
Global B2B ecommerce will reach $8.5 trillion in 2005
This market was worth $433 billion (2000) and will be
worth $919 billion (2001), $1.9 trillion (2002), $3.6
trillion (2003), $6 trillion (2004). (Gartner Group, 2001)
Mid sized companies using online procurement can
reduce purchasing costs by over 70%, saving almost
$2 million annually (Aberdeen Group, 2001)
B2B sales may have accounted for 90 percent of all
ecommerce activity in the US in 1999 (US Census
Bureau, 2001)
US mobile phone users will spend more time on the
wireless Web than making phone calls by 2010
The average user will spend 75 hrs/yr browsing the
Web in 2010, up from 1.6 hrs/yr (2001), and 11.4 hours
(2004) (Meyers Research, 2001)
Sales of Internet appliances were disappointing last year
but will grow from $219 million (2000) to $1.3 billion (2005)
(Cahners In-Stat, 2001)
25% of US Internet users have purchased groceries
online but only 11% have done so in the past 3 months
(Gomez Research. 2001)
1/3 of US citizens will file taxes over the net in 2001
The IRS expects 35.3 million people to file taxes online
(a 20% increase over 2000) (Gartner Group, 2001)
Total online retail sales for 2000 in the US were $28
billion, up from $17.3 billion (1999) and $7.7 billion (1998)
(US Census Bureau, 2001)
The worldwide corporate elearning market will exceed
t$23 billion by 2004 (IDC, 2001)
Almost 95% of US local governments either have a
website or plan to have one in place within a year
(International City/Council Management Association ,
2001)
Most physicians connect to the Internet on a daily basis
and 42% work in practices that have websites (Harris
Interactive, 2001)
The number of US companies billing online will triple to
26% (2002) and increase to 35% (2004) (Gartner Group,
2001)
Show me the money
Industry Standard Metrics Report 2.1.00
Show me where the money is
Industry Standard Metrics Report 2.1.00
The future of B-to-B
Industry Standard Metrics Report 2.1.00
The future of B-to-C
Industry Standard Metrics Report 2.1.00
Ecommerce in US households: 1996-2002
Jupiter Communications. (1998)
http://www.jup.com/digest/980116/stat.shtml
A potential reordering of the global economy
Competitive advantage to companies that are
successful early adopters of ecommerce
This will be true in nations with government economic
and regulatory support for ecommerce
Nations with highly trained labor forces will benefit from
distributed value chain
Businesses have to place ecommerce in a larger context
than traditional commerce
How can they exploit the digital product marketplace?
Dell claims that the efficiencies of web based
marketing give them a 6% profit advantage
Redesign business processes to take advantage of the
rapid and real time information and data exchange on
the net
Develop a secure and widely acceptable framework for
digital business contracts
Consumers will develop new behaviors and will:
Routinely check prices globally
Engage in real-time negotiation with multiple sellers
creating a more dynamic and fast moving marketplace
for certain products
Make more considered purchasing decisions based on
more and better information
Publicly share experiences with others about products,
customer support, and companies
There will be a shift towards an “economy of attention”
Basic assumption: attention is an intrinsically scarce
resource
Information <--> Attention (a two way flow)
There is competition for attention
Capturing attention can lead to action
The problem is how to capture and keep it
Obtaining attention is a source of wealth
Portal advertising costs bear this out
The components of a virtual economy
Virtual
players
The
net
Virtual
products
Virtual
processes
Virtual players
People, organizations, or automated agents with an
online presence
Virtual products
Digitized objects/services: currency, text, multimedia,
tickets, reservations, electric usage, pay-for-view,
smart houses
Virtual processes
Participants interact digitally, interactively, and in real
time (online ordering/payment; JIT
inventory control;
customized advertising)
Virtual intermediaries
Provide essential services: certification, authentication,
quality assurance, copyright clearance, distribution
Education brokers: bringing instructors and students
together online
Market organizers: establish meeting places for buyers
and sellers (auctions...)
Personalized service providers: shoppers, information
filtering, travel agent, financial services
The evolution of the virtual firm
Assumes that they exist in an environment where
transaction costs are low
They do not have to be based in a single geographic
location
Business processes can be distributed globally
take place on the net
The value chain is digital
and
Also:
Products can be delivered through a digital web of
business relationships with producers, financiers,
distributors, consumers
Producers, suppliers, warehouses, managers,
administrator, subcontractors are all linked through an
extranet
Many functions can be easily outsourced (accounting,
personnel management, training, public relations)
Convergence in ecommerce
Products, processes, and infrastructure all converge in
the global digital marketplace
Product: audio, video, still images, text are all in the
same digital format
Process: multiple uses from a virtual process make
other processes redundant
Consumer feedback is used for product
marketing, sales, pricing, and service
change,
Infrastructure: during the next few years, digital
interactive services of all types are expected to converge
Telephone, cable, microwave, satellite are all moving
into the same arena and losing their monopolies
Television, computers, radio, pagers, and cellular
telephones are expected to share functionality and
attributes
You can watch WebTV and TV on your computer
Mcommerce
300 million people use mobile telephones globally
This outstrips the number using PCs
This is estimated to grow to one billion by 2003
Mobile phones will be as common as television sets
Drivers of mcommerce
The fast transfer of data on mobile networks
Standard protocols delivering Internet-like services on
smaller screens
The personal nature of mobile telephones
By 2004, the annual value of business transacted over
mobile networks may reach $13 billion
This will by ~7 % of all e-commerce transactions
Technical underpinnings
Growth depends on "true third-generation networks”
Two problems are network speed and data streaming
Current technologies are too slow
The UMTS (Universal Mobile Telephone System)
standard will raise data transfer rate to 2 megabits per
second
This is one-fifth of the bandwidth available on the
standard Ethernet in today’s offices
GPRS (General Packet Radio System) will allow packet
switching
Protocols to enable mcommerce
WAP (Wireless Application Protocol) and iMode
These take into account the constraints of wireless
communications
Limited bandwidth and end-system processing
A constrained user interface
Each platform defines a standard markup language that
permits an application’s user interface to be specified
independently of the end device
The delivery of these services is independent of the
underlying networking technology
Applications based on these protocols can be used on
different networks
Wireless access allows mobile interactive services to be
more personalized than traditional Internet applications
Mobile telephones are carried by their owners
everywhere and kept switched on most of the time
In Europe mobile users aren’t charged for incoming
calls
There is access to wireless services wherever there is a
network presence
People can keep tabs on time-critical information
They can receive news, stock market reports, auction
notifications or urgent messages
Personalization is also enhanced by tracking and
identification capabilities of the technology
Wireless-network operators - at least those using the
GSM standard - are uniquely able to determine the
identity of a user
Most mobile telephones are not usually shared, and
have a personal-identification number to protect the
owner
This means that the telephone itself can be used as a
means of identification
This allows easy verification for purchasing
Also, operators can detect a user’s exact location,
enabling a whole range of new applications
This also raises interesting privacy concerns
Things to do
Overcome the limitations and asymmetries of the
infrastructure
Implement hardware and software to fully exploit
bandwidth, especially to the last mile
Provide “universal access” at reasonable cost
Provide secure frameworks for B-to-B and B-toC
transactions
Integrate electronic payment into the buying process
And:
Develop a secure and reliable system for
banking: emoney exchange and transfer
electronic
Develop a system for microtransactions
Build a consumer marketplace
Convert browsers into buyers
Develop new approaches to web site design that
encourage purchasing
Develop new business models for this CME
Bagus Nurcahyo,Dr.
Programme of Study of Marketing Management,
Undergraduate Programme of Business &
Entrepreneurship, Gunadarma University,
Margonda Raya St. No. 100, Pondok Cina, Depok,
Phone: 021-78881112 ext 456
Mobile: 08161112590
Official site: http://bagus.gunadarma.ac.id
Web Blog: http://gus-nur69.wordpress.com
E-mail: [email protected]
[email protected]