Maf 635 E Commerce

PART 1 CHAPTER 1 The diversity Is full starting time CHAPTER 2 E- mer green goddesstile scheme duty Models and Concepts Introduction to E- doctor C H A P T E R 1 The diversity Is dear origin LEARNING OBJECTIVES recentlyr practice this chapter, you exit be able-bodied to secure e- commercialisedisedisedism and detect how it differs from e- employment. Identify and describe the unusual experiences of e- profession engine room and discuss their blood signifi bearce. draw and quarter the major typecasts of e- occupation.Discuss the origins and increment of e-commerce. Understand the imaginativeness and forces operating during the prime(prenominal) five extensive time of e-commerce, and assess its conquestes, surprises, and failures. Identify s ever soal factors that go a counsel define the beside five age of e-commerce. Describe the major themes infralying the meditate of e-commerce. Identify the major academic disciplines contri scarcee to e-c ommerce re face. A m a z o n a t 1 0 Profitable At Last A mazon. com is champion of the blades n primordial(prenominal) exciting and expositive stories.Started in a garage by Jeff Bezos in 1995, it has since gravel upn to become the fixnst net professionalfit seller, with the advancedest takes of guest satisfaction, the fastest tax income proceeds pass judgment, and fin eithery, after nine twelvemonths, bankable. One of the profit Big 4 companies, on with hayseed, eBay and Google, a couple of(prenominal) would devote thought it possible when virago verboten gain unresolved for product line that an online go forshop would become iodin of the premiere broadly distri neverthelessed sellers in the ground. nonwithstanding viragos ability to maintain operations at a sufficiently bankable take is a fact that celeb consecrates to worry identifyors in 2005.Critics be of twain minds either virago go a port become the online Wal-Mart (and suffer from its Brobdingnagian coat of it salutary as WalMart does) or it leave al mavin fail to take back excellent addition and wampum beca wasting disease it has distribute itself too thin, taken on as well round tormentway lines, and given away too oftentimes tax income to c fraudnts by pass disengage rapture and exceedinglyior att peculiarity to. Supporters, and Bezos himself, reply that virago has become the meshs largest retailer on a r neverthelessue basis by foc utiliseing on the customer, non short- termi argona profits, and that it forget in the long run become unmatched of the most productive by fol sm every(prenominal)-scaleing the identical strategy.virago authoritatively has had a drum roll coaster ride in its ten dollar cadence abbreviated categorys. In celestial latitude 1999, Jeff Bezos graced the c everywhere of Time magazine as its Person of the Year. In the same month, viragos rail line gain grounded a g every go downnment stig matise of $113 per sh ar. In January 2001, virago reported a whopping $1. 411 one trillion zillion billion as its boilers suit loss for the year. Its nervous strain pass water a low of $6 a sh be. virago laid off 1,300 employees, constituting close 15% of its workforce. Questions to the highest degree its long-term viability abounded. Bezos bargaind he would move oer the confederacy profitable in 2 years, exclusively a couple of(prenominal) believed this was possible.But, in 2003, amazon reported soaring sales it come finishedd its prime(prenominal) annual profit ever (ab come in $35 virago. coms start-off nett state of affairs 3 4 CHAPTER 1 The rotation Is adept starting time gazillion), and its inventory toll much than manifold to $25 a sh ar. The good forward-lookings move into 2004 when amazon reported profits of $588 one thousand gazillion on $6. 92 zillion in r change surfaceue. How was virago able to turn close its deport from a $ 1. 4 billion annual loss to a $588 million profitable operation despite the dot. om source grocery store crash and the withdrawal of venture bang-up funding for e-commerce companies? The history of amazon. com, the most long-familiar e-commerce compevery in the unify States, in umteen shipway mirrors the story of e-commerce itself. So, permits take a ne arr look at viragos path to preview legion(predicate) of the issues well be discussing throughout this give. In 1994, Jeff Bezos, and so a 29-year-old senior vice president at D. E. Shaw, a palisade anyey enthronisation bank, read that profit usage was out harvest-feast at 2,300% per year.To Bezos, that prognosticate represented an exceedinglyior opportunity. He quit his job and investigated what products he might be able to c everyplace no-hitly online. He rushyly hit upon bookswith all all oer 3 million in print at any one time, no sensual bookstore could stock to a prominenter extent than a sm all told percentage. A virtual bookstore could domiciliate a much greater selection. He besides felt consumers would feel little fill to actually touch and feel a book before buying it. The comparative dynamics of the book publishing, distributing, and retailing assiduity were in addition favorable.With all over 2, calciferol publishers in the united States, and the dickens largest retailers, Barnes and Noble and Borders, peaking for nevertheless 12% of app destination sales, in that location were no 800-pound gorillas in the commercialise key out. The existence of two large distributors, Ingram Books and Baker and Taylor, meant that amazon would squander to stock solely minimal inventory. Bezos intimately raised(a)(a) several million dollars from private investors and in July 1995, Amazon. com opened for origin on the mesh. Amazon offered consumers four compelling reasons to shop thither (1) selection (a data place of 1. million titles), (2) convenience (sho p anytime, anyplace, with order of magnitude simplified by Amazons patented 1-Click express shopping applied science), (3) think of (high discounts on bestsellers), and (4) utility of process (e-mail and telephone customer support, automated order con debauchedation, tracking and transport tuition, and much). In January 1996, Amazon moved from a shrimpy 400-squ ar-foot office into a 17,000-squ be-foot w ar kin. By the force out of 1996, Amazon had almost 200,000 customers. Its revenues had climbed to $15. 6 million, but the company posted an general loss of $6. 24 million.In May 1997, Amazon went servicemans, raising $50 million. Its initial everyday religious offering documents identified several shipway in which Amazon expected to consent a dispirit approach organize than tralatitiousistic bookstores it would non assume to invest in expensive retail palpable estate, it would call for shrivel upd personnel requirements, and it would not suck to carry ex tensive inventory, since it was relying in large part on book distributors. During 1997, Amazon continued to grow. It served its one-millionth queer customer, lucubrate its Seattle w atomic egress 18ho design, and build a fleck 200,000-squ be-foot scattering relate in Delaw be.By the end of 1997, revenues had expanded to $148 million for the year, but at the same time, losings in uniform manner grew, to $31 million. In 1998, Amazon expanded its product line, for the first time adding medicine CDs and in that locationfore videos and DVDs. Amazon was no longer satisfied with but exchange books. Its calling strategy was at once to become the best place to buy, regu new-fashioned, and twilight apart any product or Amazon at 10 Profitable At Last 5 operate on tap(predicate) online. It also opened sack positions in Great Britain and Germany. Amazon, pundits famous, was planning to be the online Wal-Mart. Revenues for the year increased importantly, to $610 millio n, but the osses also continued to mount, quadrupling to $125 million. The year 1999 was a watershed year for Amazon. Bezoss in represent goal was for Amazon to become the existences Biggest Store. In February, Amazon borrowed over $1 billion, using the funds to finance expansion and cover operating losses. During the year, it added electronics, toys, substructure improvement products, software, and video games to its product lines. It also introduced several commercializeplaces, including Amazon. com Auctions ( exchangeable to that offered by eBay), zShops (online storefronts for small retailers), and sothebys. amazon. om, a joint venture with the sell ho affair Sothebys. To service these overbold product lines, Amazon signifi whoremastertly expanded its wareho function and distribution capabili fetters, adding ogdoad rude(a) distribution centers comprising well-nigh 4 million square feet. By the end of 1999, Amazon had much(prenominal) than doubled its 1998 revenues, a rrangement sales of $1. 6 billion. But at the same time, Amazons losses showed no signs of abating, commiting $720 million for the year. Although Bezos and Amazon were still riding high at the end of December 1999, in hindsight, its possible to say that the manus was on the wall. contend Street analysts, previously impulsive to overlook continuing and mounting losses as long as the company was expanding into impertinent food merchandises and attracting customers, began to wonder if Amazon would ever show a profit. They pointed out that as Amazon strengthened much than and to a greater extent than wareho accustoms brimming with goods, and hired more(prenominal) and more employees (it had 9,000 by the end of 2000), it strayed furtherther and off the beaten track(predicate)ther from its original good rush of existence a virtual retailer with lean inventories, low headcount, and signifi arseholet cost savings over handed-down bookstores.The year 2000 ended on a much i ncompatible note than 1999 for Amazon. No longer the darling of jetty Street, its stock damage had cash in ones chipsen signifi stacktly from its December 1999 high. In January 2001, it struggled to put a positive spin on its monetary go outs for 2000, noting that time it had recorded a astonishing $1. 4 billion loss on revenues of $2. 7 billion, its quarter-quarter loss was slightly less than analysts projections. For the first time, it also announced a target for gainfulness, promising a pro forma operating profit by the fourth quarter of 2001.Few analysts were impressed, pointing out that the method by which Amazon was suggesting its profit be cipher was not in accordance with generally original accounting principles. They also noted that growth had slowed in Amazons core books, symphony, and video business, and profit margins were cut in the faster- outgrowth categories, much(prenominal) as consumer electronics. In 2001 and 2002, Bezos and fellow executives began to implement their strategy for favorableness cut equipment casualtys, offer free shipping, and leverage Amazons investment in al-Qaeda and consumer taints, while lowering cost of operation signifi seattly.By evolving and leveraging the existing business model, Amazon hoped to do what analysts thought was impossible. The slow part of the strategy was driving business revenues higher by offering customers the low possible prices for a broad melt down of goods, providing free shipping for orders greater than $25, and then multiplying sources of revenue. Amazons 6 CHAPTER 1 The transmutation Is good Beginning out markS Amazon Announces Free Cash Flow Surpassed $ five hundred Million for the First Time Customers get together Amazon Prime at an deepen Rate, Amazon. com, February 2, 2006 Amazon. om Form 10-Q for the nine months ended phratry 30, 2005, filed with the Securi railroad ties and permutation Commission on October 27, 2005 Amazon Faces the Challenges of Its Second Decade, by Paul Festa, Cnet in the buffs. com, July 15, 2005 A Retail renewing Turns 10, by Gary Rivlin, bracing York Times, July 10, 2005 Tabs on Tech The profits, by Laurie Kawakami, groin Street l contactr, June 1, 2005 lucre Big Four Worth a Look As Growth Stocks, by James B. Stewart, smother Street Journal, May 4, 2005 Amazon pull in Falls As Rivals Take Toll, by Mylene Mangalindan, Wall Street Journal, April 27, 2005 Amazon. om, Inc. Form 10-K for the fiscal year ended December 31, 2004, filed with the Securities and Exchange Commission on March 11, 2005 Amazon Gets the Last Laugh, by Chip Bayers, Business 2. 0, September 2002. email&160protected and Amazon mart sanction early(a) businesses to bounteously desegregate their network posts into Amazons turn up to sell their branded goods, but use Amazons fulfillment and defrayment infrastructure. Nordstrom, Toys R Us, Gap Inc. , bespeak, and many dissimilar retailers use Amazon to sell their goods and then pay Amazon commissions and fees.Amazon also offers its expertise in clear site soldierying through its Merchant. com broadcast to bailiwick brands such as Target. In the Amazon Marketplace program, individuals are encouraged to sell their use or new goods on Amazons electronic network site even when they contest presently with Amazons sales of the same goods. Amazon reports that sales by third parties now represent 27% of revenues and that it commits as much profit on commissions from opposite(a) vendors as it does from its own sales. great(p) cost proved difficult, but not impossible.In early 2001, Amazon closed two of its eight warehouses and laid off 15% of its workforce. It hired 35-year-old engineer Jeffrey Wilke and a fractional-dozen mathematicians to stick out out how to cut be. The team base a way to redistribute book inventory among the warehouses to squinch shipping be employ Six Sigma smell measures to go down errors in fulfillment consolidated orders f rom almost the country earlier to shipping (adding an trim day to fulfillment of free shipping orders) and save lowered shipping costs by using its own trucks to deliver orders to postal remains centers.Wilke and his team trim back fulfillment costs from 15% of revenue in 2000 down to 10% by 2003. The parturiency contributed to Amazons first ever annual profit in 2003 $35. 3 million on revenues of $5. 26 billion. The results were even better in 2004 a $588. 5 million profit on revenues of $6. 92 billion. Looking back on the final stage ten years, its unclutter that Wall Street and Main Street buzz off differing views on Amazon. Amazon has been a tremendous Main Street e-commerce success story even if it took nine years to get profitable operations.It has changed its business model several times, focused on change the efficiency of its operations, and maintained a lulu commitment to stoping its 49 million customers satisfied. In 2005, Amazon was one of the leadership i n a survey of customer satisfaction with retail net sites, while conventional bricks-and-mortar retailers such as Target and Costco received low marks for their online offerings. regenerate now, Amazon must be counted as an online retailing success story. Few would have predicted this outcome in 1995, or even in 2000.For the succeeding(a), however, Amazon faces strong competitors who keep innovating, such as eBay and Yahoo Shopping. eBay has been profitable from its first day, while Yahoo achieved profitability in 2002. But despite Wall Street critics, Bezos has not changed his original vision in 2005, for event, he announced additive expenditures to increase customer convenience, such as a flat-fee shipping membership program (Amazon Prime). And although Amazons revenues continue to grow, profits in 2005 were down compared to 2004.So the Amazon roller coaster ride continues, and whats or so the nigh curve remains to be figuren. E-commerce The revolution Is and Beginning 7 T 1. 1 he Amazon story is emblematic of the e-commerce environment of the old ten years an early period of business vision, inspiration, and experimentation, followed by the satisfyingization that establishing a undefeated business model establish on those visions would not be easy, which then ushered in a period of retrenchment and reevaluation, lastly leading to a more fine tuned business model that actually produces profits.During the last two years, the fortunes of the ecommerce variety once again have been contrary to what many raft thought would happen after the stock commercialize crash of March 2001, when the stock market value of e-commerce, tele conferences, and other engine room stocks plummeted by more than 90%. After the bubble burst, many populate were quick to write off ecommerce and predicted that e-commerce growth would stagnate, and the net profit consultation itself would plateau. But they were wrong. E-COMMERCE THE REVOLUTION IS unspoilt BEGINN ING The e-commerce revolution is and beginning.For instance Online consumer sales expanded by more than 23% in 2005 to an estimated $142$172 billion (eMarketer, Inc. , 2005a Shop. org and Forrester Re await, 2005). The calculate of individuals online in the United States increased to clxxv million in 2005, up from one hundred 7ty million in 2004 (The total cosmos of the United States is to the highest degree 300 million. ) (eMarketer, Inc. , 2005b U. S. number Bureau, 2005). Of the total 112 million households in the United States, the number online increased to 71 million or 63% of all households (U. S.Census Bureau, 2005 eMarketer, Inc. , 2005b pew Re hunt club Center, 2005). On an average day, 70 million people go online. intimately 140 million send e-mail, 8 million have created a blog, 4 million component part unison on peer-to-peer networks, and 3 million use the mesh to rate a person, product, or service (Pew Re look to Center, 2005 Pew profits &038 Ameri eli cit Life Project, 2004). The number of people who have purchased slightly(prenominal)thing online expanded to roughly 110 million, with supernumerary millions shopping (gathering data) but not buying (Pew Rehunt Center, 2005). The demographic profile of new online shoppers broadened to become more like quotidian American shoppers (Pew Re look to Center, 2005 Fallows, 2004). B2B e-commerceuse of the earnings for business-to-business commerce expanded almost 30% in 2005 to more than $1. 5 million (U. S. portion of physician, 2005). The mesh technology base gained greater depth and power, as more than 42 million households had broadband job or DSL admission charge to the net in 2005about 38% of all households (eMarketer, Inc. , 2005c). 8 CHAPTER 1 The whirling Is however Beginning Initial public offerings (IPOs) takingsed, with 233 IPOs in 2004more than the number of IPOs in 2002 and 2003 combined. The meshing stock group rebounded in value, along with the entir e NASDAQ stock transform, which is primarily composed of technology stocks. The rebound in profit stocks was led by Googles IPO, which raised $1. 67 billion. Googles stock opened at $85 on the first day and has since rocketed to the $300 range (Hoovers, 2005 Rivlin, 2005 Elgin, 2005). These victimizations target many of the themes in the new rendering of this book (see Table 1. 1).More and more people and businesses forget be using the net income to conduct commerce the e-commerce channel go out deepen as more products and services come online more industries giveing be alter by e-commerce, including give way reservations, music and entertainment, word, software, education, and finance net technology will continue to drive these changes as broadband telecommunications comes to more households pure e-commerce business models will be refined hike up to achieve higher levels of profitability and traditional retail brands such as Sears, J.C. Penney, and Wal-Mart will furt her go forward their multichannel, bricks-and-clicks strategies and retain their dominant retail positions. At the societal level, other trends are apparent. The major digital secure owners have increased their pursuit of online file-swapping services states have successfully moved toward taxation of network sales and sovereign nations have expanded their surveillance of, and potency over, meshwork communications and content. In 1994, e-commerce as we now hold out it did not exist.In 2005, fairish ten years later, rough 110 million American consumers are expected to draw about $142$172 billion acquire products and services on the net profits man good blade (eMarketer, Inc. , 2005b Shop. org and Forrester Research, 2005 Rainie, 2005). Although the damage net profit and knowledge domain considerable weathervane are practically used interchangeably, they are actually two very several(predicate) things. The lucre is a valet de chambrewide network of computer networ ks, and the orb Wide clear is one of the nets most everyday services, providing main course to over 8 billion weather vane knaves.We describe two(prenominal) more fully later in this section and in Chapter 3. In 2005, businesses are expected to spend over $1. 5 trillion buying goods and services from other businesses on the weather vane (U. S. Department of Commerce, 2005). From a standing deviate in 1995, this type of commerce, called electronic commerce or e-commerce, has experienced growth rates of well over 100% a year although the rate has slowed and is now emergence at about 25% a year. These trainings have created the first widespread digital electronic markets. Even more staggering than its spectacular initial growth is its future predicted growth.By 2008, analysts estimate that consumers will be consumption around $232 billion and businesses about $3 trillion in online proceeding (eMarketer, Inc. , 2005a 2003 U. S. Department of Commerce, 2005). E-commerce Th e gyration Is Just Beginning 9 TABLE 1. 1 BUSINESS major TRENDS IN E-COMMERCE, 2006 Retail consumer e-commerce continues to grow at double-digit rates. The online demographics of shoppers continues to broaden. Online sites continue to beef up profitability by refining their business models and leveraging the capabilities of the internet. The first wave of e-commerce transformed the business world of books, music, and air travel. In the second wave, eight new industries are facing a similar transformation telephones, movies, television arranging, jewelry, real estate, hotels, bill payments, and software. The breadth of e-commerce offerings grows, curiously in travel, discipline clearinghouses, entertainment, retail apparel, appliances, and home furnishings. Small businesses and entrepreneurs continue to flood into the e-commerce marketplace, often riding on the infrastructures created by manufacture giants such as Amazon, eBay, and Overture. Brand extension through the profit grows as large smasheds such as Sears, J. C. Penney, L. L. Bean, and Wal-Mart pursue integrated, multi-channel bricks-and-clicks strategies. B2B supply chain legal proceeding and collaborative commerce continue to strengthen and grow beyond the $1. 5 trillion mark. TECHNOLOGY Wireless net profit connections (Wi-Fi, Wi-Max, and 3G telephone) grow rapidly. Podcasting takes off as a new media format for distribution of radio and user-generated commentary. The network broadband foundation becomes stronger in households and businesses.Bandwidth prices fall as telecommunications companies re-capitalize their debts. RSS (Really Simple Syndication) grows to become a major new form of user- dateled entropy distribution that rivals e-mail in some actions. Computing and net functional component prices continue to fall dramatically. New Internet- ground models of computing such as . NET and vane services expand B2B opportunities. SOCIETY Self-publishing (user-generated c ontent) and syndication in the form of blogs, wikis and favorable networks grow to form an entirely new self-publishing forum. Newspapers and other traditional media adopt online, interactional models. Conflicts over copyright management and date grow in significance. Over half the Internet user state (about 80 million adults) join a neighborly group on the Internet. Taxation of Internet sales becomes more widespread and accepted by large online merchants. Controversy over content regulation and controls increases. Surveillance of Internet communications grows in significance. Concerns over commercial and govern moral loneliness invasion grow. Internet fraud and abuse occurrences increase. First Amendment rights of free speech and association on the Internet are contestd. Spam grows despite new laws and promised technology fixes. Invasion of personal privacy on the sack up expands as marketers scrape new ways to track users. 10 CHAPTER 1 The Revolution Is Just Begi nning THE FIRST THIRTY SECONDS It is important to agnise that the rapid growth and change that has occurred in the first ten years of e-commerce represents just the beginningwhat could be called the first xxx seconds of the e-commerce revolution.The same technologies that drove the first decennary of e-commerce (described in Chapter 3) continue to evolve at exponential rates. Changes in infralying cultivation technologies and continuing entrepreneurial innovation promise as much change in the next decade as seen in the last decade. The twenty-first century will be the age of a digitally enabled neighborly and commercial life, the outlines of which we can only perceive at this time. It appears liable(predicate) that e-commerce will eventually impact nearly all commerce, or that most commerce will be e-commerce by the year 2050.Business fortunes are makeand lostin periods of rare change such as this. The next five years hold out extraordinary opportunitiesas well as risksfor new and traditional businesses to exploit digital technology for market advantage. For society as a whole, the next few decades offer the possibility of extraordinary gains in social wealth as the digital revolution works its way through large and larger segments of the worlds economy, offering the possibility of high rates of productivity and income growth in an inflation-free environment.This book will help you perceive and understand the opportunities and risks that lie ahead. By the time you finish, you will be able to identify the technological, business, and social forces that have shaped the first era of e-commerce and extend that understanding into the years ahead. WHAT IS E-COMMERCE? e-commerce the use of the Internet and the Web to perform business. More formally, digitally enabled commercial dealingss among and among organizations and individuals Our focus in this book is e-commercethe use of the Internet and the Web to finish business.More formally, we focus on di gitally enabled commercial legal proceeding mingled with and among organizations and individuals. Each of these components of our working definition of e-commerce is important. digitally enabled relationss intromit all legal proceeding mediated by digital technology. For the most part, this means transactions that occur over the Internet and the Web. Commercial transactions take on the rally of value (e. g. , money) across organisational or individual boundaries in return for products and services.Exchange of value is important for understanding the limits of e-commerce. Without an exchange of value, no commerce occurs. THE DIFFERENCE amid E-COMMERCE AND E-BUSINESS in that location is a debate among consultants and academics about the meaning and limitations of both e-commerce and e-business. Some urge that e-commerce encompasses the entire world of electronically establish organizational activities that support a bulletproofs market exchangesincluding a firms entire infor mation transcriptions infrastructure (Rayport and Jaworksi, 2003).Others argue, on the other hand, that e-business encompasses the entire world of indwelling and outside(a) electronically based activities, including e-commerce (Kalakota and Robinson, 2003). E-commerce The Revolution Is Just Beginning 11 portend 1. 1 THE DIFFERENCE amid E-COMMERCE AND E-BUSINESS E-commerce primarily involves transactions that cross firm boundaries. E-business primarily involves the application of digital technologies to business processes inside the firm. We esteem that it is important to befuddle a working distinction between e-commerce and e-business because we believe they parent to various phenomena.For purposes of this schoolbook, we will use the term e-business to refer primarily to the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm. For the most part, in our view, e-business does not allow in commercial tra nsactions involving an exchange of value across organizational boundaries. For example, a companys online inventory control mechanisms are a component of e-business, but such internal processes do not without delay generate revenue for the firm from outside businesses or consumers, as e-commerce, by definition, does.It is true, however, that a firms e-business infrastructure depicts support for online e-commerce exchanges the same infrastructure and accomplishment narrows are involved in both e-business and e-commerce. Ecommerce and e-business systems blur together at the business firm boundary, at the point where internal business systems link up with suppliers or customers, for instance. E-business applications turn into e-commerce deadly when an exchange of value occurs (see Mesenbourg, U. S. Department of Commerce, August 2001 for a similar view).We will examine this intersection further in Chapter 12. e-business the digital enablement of transactions and processes within a firm, involving information systems under the control of the firm WHY STUDY E-COMMERCE? why are there college courses and textual matterbooks on e-commerce when there are no courses or textbooks on TV Commerce, Radio Commerce, Direct get off Commerce, Railroad Commerce, or Highway Commerce, even though these 12 CHAPTER 1 The Revolution Is Just Beginning information dissymmetry any disparity in applicable market information among parties in a transaction echnologies had profound impacts on commerce in the twentieth century and account for far more commerce than e-commerce? The reason, as you shall see, is that e-commerce technology (discussed in detail in Chapters 3 and 4) is different and more powerful than any of the other technologies we have seen in the preceding(a) century. While these other technologies transformed economic life in the twentieth century, the evolving Internet and other information technologies will shape the twenty-first century. Prior to the development f e-commerce, the process of market and marketing goods was a mass- marketing and sales force-driven process. Consumers were viewed as inactive targets of advertising campaigns and branding blitzes intended to coif their long-term product perceptions and immediate purchasing behavior. Selling was conducted in well-insulated channels. Consumers were considered to be pin down by geographicalal and social boundaries, ineffectual to search widely for the best price and quality. development about prices, costs, and fees could be conceal from the consumer, creating profitable information asymmetries for the selling firm. training asymmetry refers to any disparity in pertinent market information among parties in a transaction. It was so expensive to change case or regional prices in traditional retailing (what are called menu costs) that one interior(a) price was the norm, and dynamic price to the marketplace changing prices in real timewas unheard of. E-commerce has challe nged much of this traditional business thinking. Table 1. 2 lists seven unequaled features of e-commerce technology that both challenge traditional business thinking and explain why we have so much interest in e-commerce. seven erratic FEATURES OF E-COMMERCE TECHNOLOGYEach of the dimensions of e-commerce technology and their business significance listed in Table 1. 2 deserves a brief exploration, as well as a comparison to both traditional commerce and other forms of technology-enabled commerce. marketplace physical quad you visit in order to transact 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 conditiond by its ubiquitousness it is on hand(predicate) just about everywhere, at all times.It liberates the market from being restricted to a physical space and makes it possible to shop from your d esktop, at home, at work, or even from your car, using smooth commerce. The result is called a marketspacea marketplace extended beyond traditional boundaries and removed from a temporal and geographic location. From a consumer point of view, ubiquity reduces transaction coststhe costs of participating in a market. To transact, it is no longer essential that you spend time and money travelling to a market. At a broader level, the ubiquity of e-commerce lowers the cognitive energy needful to transact in a marketspace.Cognitive energy refers to the mental effort required to complete a task. Humans generally seek to reduce cognitive energy outlays. When given a choice, benignants will ubiquity available just about everywhere, at all times. marketspace marketplace extended beyond traditional boundaries and removed from a temporal and geographic location E-commerce The Revolution Is Just Beginning 13 TABLE 1. 2 SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY BUSINESS deduction The ma rketplace is extended beyond traditional boundaries and is removed from a temporal and geographic location. Marketspace is created shopping can take place anywhere.Customer convenience is enhanced, and shopping costs are reduced. Commerce is enabled across cultural and national boundaries seamlessly and without modification. Marketspace includes potentially billions of consumers and millions of businesses worldwide. There is one set of technical media standards across the globe. Video, audio, and text marketing messages are integrated into a angiotensin converting enzyme marketing message and consuming experience. Consumers are engaged in a duologue that dynamically adjusts the experience to the individual, and makes the consumer a co-participant in the process of delivering goods to the market.Information processing, storage, and communication costs ignore dramatically, while currency, accuracy, and timeliness improve greatly. Information becomes plentiful, cheap, and complete. Personalization of marketing messages and customization of products and services are based on individual characteristics. E-COMMERCE TECHNOLOGY proportion UbiquityInternet/Web technology is available everywhere at work, at home, and elsewhere via mobile devices, anytime. spheric orbitThe technology r to each onees across national boundaries, around the earth. comprehensive joint standardsThere is one set of technology standards, namely Internet standards.RichnessVideo, audio, and text messages are possible. InteractivityThe technology works through interaction with the user. Information densityThe technology reduces information costs and raises quality. Personalization/CustomizationThe technology allows alter messages to be delivered to individuals as well as groups. choose the path requiring the least effortthe most convenient path (Shapiro and Varian, 1999 Tversky and Kahneman, 1981). Global Reach E-commerce technology permits commercial transactions to cross cultural and n ational boundaries far more conveniently and cost- efficaciously than is true in traditional commerce.As a result, the potential market coat for e-commerce merchants is roughly equal to the size of the worlds online population (over 1 billion in 2005, and growing rapidly, tally to the Computer fabrication 14 CHAPTER 1 The Revolution Is Just Beginning reach the total number of users or customers an e-commerce business can obtain Almanac) (Computer Industry Almanac, Inc. , 2006). The total number of users or customers an e-commerce business can obtain is a measure of its reach (Evans and Wurster, 1997). In contrast, most traditional commerce is topical anaesthetic or regionalit involves local merchants or national merchants with local outlets.Television and radio stations, and newspapers, for instance, are primarily local and regional institutions with limited but powerful national networks that can attract a national audience. In contrast to e-commerce technology, these older com merce technologies do not substantially cross national boundaries to a global audience. Universal Standards One strikingly unusual feature of e-commerce technologies is that the technical standards of the Internet, and therefore the technical standards for conducting e-commerce, are universal standardsthey are allocated by all nations around the world.In contrast, most traditional commerce technologies differ from one nation to the next. For instance, television and radio standards differ around the world, as does cell telephone technology. The universal technical standards of the Internet and e-commerce greatly lower market entry coststhe cost merchants must pay just to drive their goods to market. At the same time, for consumers, universal standards reduce search coststhe effort required to find suitable products.And by creating a single, one-world marketspace, where prices and product descriptions can be cheaply displayed for all to see, price tracey becomes simpler, faster, and more accurate (Bakos, 1997 Kambil, 1997). And users of the Internet, both businesses and individuals, experience network externalitiesbenefits that arise because everyone uses the same technology. With e-commerce technologies, it is possible for the first time in history to easily find many of the suppliers, prices, and oral communication terms of a unique(predicate) product anywhere in the world, and to view them in a coherent, comparative environment.Although this is not necessarily practical today for all or many products, it is a potential that will be exploited in the future. universal standards standards that are shared by all nations around the world Richness rankness the complexness and content of a message Information richness refers to the complexity and content of a message (Evans and Wurster, 1999). Traditional markets, national sales forces, and small retail stores have great richness they are able to provide personal, face-to-face service using aural and visual cues when making a sale.The richness of traditional markets makes them a powerful selling or commercial environment. Prior to the development of the Web, there was a trade-off between richness and reach the larger the audience reached, the less rich the message (see calculate 1. 2). interactivity technology that allows for two-way communication between merchant and consumer Interactivity Unlike any of the commercial technologies of the twentieth century, with the possible exception of the telephone, e-commerce technologies allow for interactivity, meaning they enable two-way communication between merchant and consumer.Television, for instance, cannot ask viewers any interrogative sentences or enter into conversations E-commerce The Revolution Is Just Beginning 15 FIGURE 1. 2 THE CHANGING TRADE-OFF BETWEEN RICHNESS AND REACH E-commerce technologies have changed the traditional tradeoff between richness and reach. The Internet and the Web can deliver, to an audience of millions, ri ch marketing messages with text, video, and audio, in a way not possible with traditional commerce technologies such as radio, television, or magazines. denotation Evans and Wurster, 2000. ith them, and it cannot request that customer information be entered into a form. In contrast, all of these activities are possible on an e-commerce Web site. Interactivity allows an online merchant to engage a consumer in ways similar to a face-to-face experience, but on a much more massive, global scale. Information Density The Internet and the Web vastly increase information densitythe total center and quality of information available to all market participants, consumers, and merchants alike. E-commerce technologies reduce information assembling, storage, processing, and communication costs.At the same time, these technologies increase greatly the currency, accuracy, and timeliness of informationmaking information more serviceable and important than ever. As a result, information becomes m ore plentiful, less expensive, and of higher quality. A number of business consequences result from the growth in information density. In e-commerce markets, prices and costs become more transparent. Price transparency refers to the ease with which consumers can find out the variety of prices in a market cost transparency refers to the ability of consumers to pick out the actual costs merchants pay for products (Sinha, 2000).But there are advantages for merchants as well. Online merchants can discover much more about consumers this allows merchants to segment the market into groups willing to pay different prices and permits them to engage in price distinctionselling the same goods, or nearly information density the total amount and quality of information available to all market participants 16 CHAPTER 1 The Revolution Is Just Beginning the same goods, to different targeted groups at different prices.For instance, an online merchant can discover a consumers esurient interest in expensive exotic vacations, and then effectuate expensive exotic vacation plans to that consumer at a aid price, knowing this person is willing to pay extra for such a vacation. At the same time, the online merchant can pitch the same vacation plan at a lower price to more price-sensitive consumers (Shapiro and Varian, 1999). Merchants also have enhanced abilities to ramify their products in terms of cost, brand, and quality. Personalization/Customization ersonalization the targeting of marketing messages to specific individuals by adjusting the message to a persons name, interests, and past purchases customization changing the delivered product or service based on a users preferences or prior behavior E-commerce technologies permit personalization merchants can target their marketing messages to specific individuals by adjusting the message to a persons name, interests, and past purchases. The technology also permits customization changing the delivered product or service base d on a users preferences or prior behavior. effrontery the interactive disposition of e-commerce technology, much information about the consumer can be gathered in the marketplace at the moment of purchase. With the increase in information density, a great deal of information about the consumers past purchases and behavior can be stored and used by online merchants. The result is a level of personalization and customization unthinkable with existing commerce technologies. For instance, you whitethorn be able to shape what you see on television by selecting a channel, but you cannot change the contents of the channel you have elect.In contrast, the online verson of the Wall Street Journal allows you to select the type of news stories you penury to see first, and gives you the opportunity to be alerted when certain events happen. Now, lets return to the question that motivated this section Why contain e-commerce? The answer is simply that e-commerce technologiesand the digital mark ets that resultpromise to bring about some fundamental, unprecedented shifts in commerce. One of these shifts, for instance, appears to be a large reduction in information asymmetry among all market participants (consumers and merchants).In the past, merchants and manufacturers were able to prevent consumers from learning about their costs, price discrimination strategies, and profits from sales. This becomes more difficult with e-commerce, and the entire marketplace potentially becomes highly price competitive. In addition, the unique dimensions of e-commerce technologies listed in Table 1. 2 also suggest many new possibilities for marketing and sellinga powerful set of interactive, personalized, and rich messages are available for delivery to segmented, targeted audiences.E-commerce technologies make it possible for merchants to know much more about consumers and to be able to use this information more effectively than was ever true in the past. Potentially, online merchants could use this new information to develop new information asymmetries, enhance their ability to brand products, charge premium prices for high-quality service, and segment the market into an endless number of subgroups, each receiving a different price. To complicate matters further, these same technologies make it possible for merchants to know more about other merchants than was ever true in the past.This presents the possibility that merchants might collude on prices quite a than compete and drive boilers suit average prices up. This strategy works especially well when there are just a E-commerce The Revolution Is Just Beginning 17 TABLE 1. 3 major(ip) TYPES OF E-COMMERCE EXAMPLE Amazon. com is a general merchant that sells consumer products to retail consumers. ChemConnect. com is a chemical industry exchange that creates an electronic market for chemical producers and users. eBay. com creates a marketspace where consumers can auction or sell goods directly to other consumers.Gnut ella is a software application that permits consumers to share music with one another directly, without the intervention of a market ecclesiastic as in C2C e-commerce. Wireless mobile devices such as PDAs (personal digital assistants) or cell phones can be used to conduct commercial transactions. TYPE OF E-COMMERCE B2CBusiness-to-Consumer B2BBusiness-to-Business C2CConsumer-to-Consumer P2PPeer-to-Peer M-commerceMobile commerce few suppliers (Varian, 2000b). We examine these different visions of e-commerce friction-free commerce versus a brand-driven imperfect marketplacefurther in Section 1. 2 and throughout the book.TYPES OF E-COMMERCE There are a variety of different types of e-commerce and many different ways to characterize these types. Table 1. 3 lists the five major types of e-commerce discussed in this book. 1 For the most part, we issue different types of e-commerce by the nature of the market relationshipwho is selling to whom. The exceptions are P2P and m-commerce, which are technology-based distinctions. Business-to-Consumer (B2C) E-commerce The most commonly discussed type of e-commerce is Business-to-Consumer (B2C) e-commerce, in which online businesses attempt to reach individual consumers.Even though B2C is comparatively small ($140$ clxx billion in 2005), it has full- big exponentially since 1995, and is the type of e-commerce that most consumers are likely to encounter. Within the B2C category, there are many different types of business models. Chapter 2 has a detailed discussion of seven different B2C business mod1 Business-to-Consumer (B2C) e-commerce online businesses selling to individual consumers Business-to-Government (B2G) e-commerce can be considered yet another type of e-commerce.For the purposes of this text, we subsume B2G e-commerce within B2B e-commerce, viewing the political sympathies as simply a form of business when it acts as a fancy man of goods and/or services. 18 CHAPTER 1 The Revolution Is Just Beginning els portals , online retailers, content providers, transaction brokers, market creators, service providers, and community providers. Business-to-Business (B2B) E-commerce Business-to-Business (B2B) e-commerce online businesses selling to other businesses Business-to-Business (B2B) e-commerce, in which businesses focus on selling to other businesses, is the largest form of e-commerce, with over $1. trillion in transactions in the United States in 2005. There was an estimated $13 trillion in business-to-business exchanges of all kinds, online and offline, in 2002, suggesting that B2B e-commerce has significant growth potential (eMarketer, Inc. , 2003). The supreme size of B2B e-commerce could be huge. There are two primary business models used within the B2B arena Net marketplaces, which include e-distributors, e-procurement companies, exchanges and industry consortia, and private industrial networks, which include single firm networks and industry-wide networks.Consumer-to-Consumer (C2C) E-comm erce Consumer-toConsumer (C2C) e-commerce consumers selling to other consumers Consumer-to-Consumer (C2C) e-commerce provides a way for consumers to sell to each other, with the help of an online market maker such as the auction site eBay. Given that in 2005, eBay generated more than $44 billion in gross merchandise pile around the world, it is probably safe to estimate that the size of the global C2C market in 2006 will be over $50 billion (eBay, 2006).In C2C e-commerce, the consumer prepares the product for market, places the product for auction or sale, and relies on the market maker to provide catalogue, search engine, and transaction-clearing capabilities so that products can be easily displayed, discovered, and paid for. Peer-to-Peer (P2P) E-commerce Peer-to-peer technology enables Internet users to share files and computer resources directly without having to go through a underlying Web server. In peer-to-peers purest form, no intermediary is required, although in fact, mo st P2P networks make use of intermediary super servers to speed operations.Since 1999, entrepreneurs and venture capitalists have attempted to suit various aspects of peer-to-peer technology into Peer-to-Peer (P2P) e-commerce. To date there have been very few successful commercial applications of P2P e-commerce with the notable exception of prohibited downloading of copyrighted music. Napster. com, which was established to aid Internet users in finding and sharing online music files, was the most well-known example of peer-to-peer e-commerce until it was put out of business in 2001 by a series of negative apostrophize decisions.However, other file-sharing networks, such as Kazaa and Grokster, readily emerged to take Napsters place. These networks have also been subjected to legal challenge. For instance, in 2002, the Recording Industry of America, a trade organization of the largest recording companies, filed a federal lawsuit against Kazaa and Grokster for violating copyright l aw by enabling and further members to exchange copyrighted music tracks without allowance to the copyright holders. The Supreme Court issued a decision in the case against the file-sharing networks in June 2005.Read the case study at the end of the chapter for a further look at how file-sharing networks work and the legal issues surrounding them. Peer-to-Peer (P2P) e-commerce use of peer-to-peer technology, which enables Internet users to share files and computer resources directly without having to go through a profound Web server, in e-commerce E-commerce The Revolution Is Just Beginning 19 Mobile Commerce (M-commerce) Mobile commerce, or m-commerce, refers to the use of radio receiver digital devices to enable transactions on the Web.Described more fully in Chapter 3, m-commerce involves the use of wireless networks to connect cell phones, hand-held devices such Blackberries, and personal computers to the Web. Once connected, mobile consumers can conduct transactions, includi ng stock trades, in-store price comparisons, banking, travel reservations, and more. Thus far, m-commerce is used most widely in Japan and atomic number 63 (especially in Scandinavia), where cell phones are more prevalent than in the United States however, as discussed in the next section, m-commerce is expected to grow rapidly in the United States over the next five years. obile commerce (m-commerce) use of wireless digital devices to enable transactions on the Web GROWTH OF THE meshing AND THE vane The technology juggernauts behind e-commerce are the Internet and the World Wide Web. Without both of these technologies, e-commerce as we know it would be impossible. We describe the Internet and the Web in some detail in Chapter 3. The Internet is a worldwide network of computer networks built on common standards.Created in the late 1960s to connect a small number of mainframe computers and their users, the Internet has since grown into the worlds largest network, connecting over 50 0 million computers worldwide. The Internet links businesses, educational institutions, government agencies, and individuals together, and provides users with services such as e-mail, document transfer, newsgroups, shopping, research, instant messaging, music, videos, and news. Figure 1. 3 illustrates one way to measure the growth of the Internet, by looking at the number of Internet hosts with domain names. An Internet host is defined by the Internet software product Consortium, which conducts this survey, as any IP insure that returns a domain name in the in-addr. arpa domain, which is a special part of the DNS namespace that resolves IP addresses into domain names. ) In January 2005, there were over 317 million Internet hosts in over 245 countries, up from a mere 70 million in 2000. The number of Internet hosts has been growing at a rate of around 35% a year since 2000 (Internet Systems Consortium, Inc. , 2005). The Internet has shown extraordinary growth patterns when compared to other electronic technologies of the past.It took radio 38 years to achieve a 30% share of U. S. households. It took television 17 years to achieve a 30% share. Since the invention of a graphical user interface for the World Wide Web in 1993, it took only 10 years for the Internet/Web to achieve a 53% share of U. S. households. The World Wide Web (the Web) is the most popular service that runs on the Internet infrastructure. The Web is the killer application that made the Internet commercially interesting and inordinately popular. The Web was developed in the early 1990s and hence is of much more recent vintage than the Internet.We describe the Web in some detail in Chapter 3. The Web provides easy access to over 8 billion Web pages created in a language called hypertext markup language (HyperText Markup Language). These HTML pages contain informationincluding text, graphics, animations, and other Internet Worldwide network of computer networks built on common standards World Wi de Web (Web) the most popular service that runs on the Internet provides easy access to Web pages 20 CHAPTER 1 The Revolution Is Just Beginning FIGURE 1. 3 THE GROWTH OF THE INTERNET, MEASURED BY modus operandi OF INTERNET HOSTS WITH DOMAIN NAMESGrowth in the size of the Internet 1993-2005 as measured by the number of Internet hosts with domain names. lineage Internet Systems Consortium, Inc. (www. isoc. org), 2005. objectsmade available for public use. You can find an exceptionally wide range of information on Web pages, ranging from the entire catalog of Sears Roebuck, to the entire collection of public records from the Securities and Exchange Commission, to the card catalog of your local library, to millions of music tracks (some of them legal), and videos. The Internet prior to the Web was primarily used for text communications, file transfers, and remote computing.The Web introduced far more powerful and commercially interesting, shot multimedia capabilities of direct releva nce to commerce. In essence, the Web added color, voice, and video to the Internet, creating a communications infrastructure and information storage system that rivals television, radio, magazines, and even libraries. There is no precise measurement of the number of Web pages in existence, in part because todays search engines mightiness only a portion of the known reality of Web pages, and also because the size of the Web universe is unknown.Google, the Webs most popular and perhaps most comprehensive Web search engine, currently E-commerce The Revolution Is Just Beginning 21 FIGURE 1. 4 THE GROWTH OF WEB CONTENT AS MEASURED BY PAGES INDEXED BY GOOGLE The number of Web pages indexed by Google has grown from about 1 billion in 1998 to over 8 billion in 2005. SOURCE Based on data from Google Inc. , 2005. indexes over 8 billion pages. There are also an estimated 600 billion Web pages in the so-called deep Web that are not indexed by ordinary search engines such as Google.Nevertheles s, it would be accurate to say that Web content has grown exponentially since 1993. Figure 1. 4 describes the growth of Web content measured by the number of pages indexed by Google. Read brain wave on Technology Spider Webs, radical Ties, Scale-Free Networks, and the mystifying Web on pages 2223 for the latest view of researchers on the structure of the Web. ORIGINS AND GROWTH OF E-COMMERCE It is difficult to cop just when e-commerce began. There were several precursors to e-commerce.In the late 1970s, a pharmaceutical firm named Baxter health care initiated a primitive form of B2B e-commerce by using a telephone-based modem that permitted hospitals to reorder supplies from Baxter. This system was later expanded during the 1980s into a PC-based remote order entry system and was widely copied throughout the United States long before the Internet became a commercial environment. The 1980s saw the development of electronic Data Interchange (EDI) 22 CHAPTER 1 The Revolution Is Just Beginning penetration ON TECHNOLOGYSPIDER WEBS, BOW TIES, SCALE-FREE NETWORKS, AND THE DEEP WEB The World Wide Web conjures up images of a giant rover mesh where everything is connected to everything else in a stochastic pattern, and you can go from one edge of the web to another by just following the right links. Theoretically, thats what makes the Web different from a typical index systemyou can follow hyperlinks from one page to another. In the small world surmisal of the Web, every Web page is thought to be separated from any other Web page by an average of about 19 clicks.In 1968, sociologist Stanley Milgram invented small-world theory for social networks by noting that every human was separated from any other human by only six degrees of separation. On the Web, the small world theory was back up by early research on a small sampling of Web sites. But recent research conducted collectively by scientists at IBM, Compaq, and AltaVista found something entirely different. T hese scientists used AltaVistas Web crawler Scooter to identify 200 million Web pages and follow 1. 5 billion links on these pages.The researchers discovered that the Web was not like a spider web at all, but rather like a deflect tie (see figure below). The bow-tie Web had a potently connected component (SCC) composed of about 56 million Web pages. On the right side of the bow tie was a set of 44 million OUT pages that you could get to from the center, but could not return to the center from. OUT pages tended to be corporate intranet and other (continued) E-commerce The Revolution Is Just Beginning 23 Web site pages that are designed to trap you at the site when you land.On the left side of the bow tie was a set of 44 million IN pages from which you could get to the center, but that you could not travel to from the center. These were recently created dispatcher pages that had not yet been linked to by many center pages. In addition, 43 million pages were classified as tendrils, pages that did not link to the center and could not be linked to from the center. However, the tendril pages were sometimes linked to IN and/or OUT pages. Occasionally, tendrils linked to one another without passing through the center (these are called tubes).Finally, there were 16 million pages totally disconnected from everything. Further differentiate for the non-random and structured nature of the Web is provided in research performed by Albert-Lazlo Barabasi at the University of Notre Dame. Barabasis team found that far from being a random, exponentially exploding network of 8 billion Web pages, activity on the Web was actually highly strong in very connected super nodes that provided the connectivity to less wellconnected nodes.Barabasi dubbed this type of network a scale-free network and found parallels in the growth of cancers, disease transmission, and computer viruses. As its turns out, scale-free networks are highly vulnerable to destruction. Destroy their super nodes and transmission of messages breaks down rapidly. On the upside, if you are a marketer trying to spread the message about your products, place your products on one of the super nodes and watch the news spread. Or build super nodes like Kazaa did (see the case study at the end of the chapter) and attract a huge audience.Thus, the see of the Web that emerges from this research is quite different from earlier reports. The notion that most pairs of Web pages are separated by a handful of links, almost always under 20, and that the number of connections would grow exponentially with the size of the Web, is not supported. In fact, there is a 75% chance that there is no path from one randomly chosen page to another. With this knowledge, it now becomes clear why the most advanced Web search engines only index about 6 million Web sites, when the overall population of Internet hosts is over 300 million.Most Web sites cannot be found by search engines because their pages are not well-connecte d or linked to the of import core of the Web. another(prenominal) important finding is the identification of a deep Web composed of over 600 billion Web pages that are not indexed at all. The pages are not easily accessible to Web crawlers that most search engine companies use. Instead, these pages are either branded (not available to crawlers and non-subscribers, such as the pages of the Wall Street Journal) or are not easily available from home pages. In the last few years, new search engines (such as the medical search engine Mamma. om) and older ones such as Yahoo have been revised to enable them to search the deep Web. Because e-commerce revenues in part be on customers being able to find a Web site using search engines, Web site managers need to take steps to ensure their Web pages are part of the connected central core, or super nodes of the Web. One way to do this is to make sure the site has as many links as possible to and from other relevant sites, especially to other sites within the SCC. SOURCES Deep Web Research, by Marcus P. Zillman, Llrx. com, July 2005 Momma. om Conquers Deep Web, Mammamediasolutions. com, June 20, 2005 Yahoo Mines the Deep Web, by Tim Gray, Internetnews. com, June 17, 2005 Linked The New intelligence of Networks by Albert-Lazlo Barabasi. Cambridge, MA Perseus Publishing (2002) The Bowtie theory Explains Link Popularity, by John Heard, Searchengineposition. com, June 1, 2000 represent Structure in the Web, by A. Broder, R. Kumar, F. Maghoul, P. Raghaven, S. Rajagopalan, R. Stata, A. Tomkins, and J. Wiener, legal proceeding of the 9th International World Wide Web Conference, Amsterdam, The Netherlands, pages 309320.Elsevier Science, May 2000. 24 CHAPTER 1 The Revolution Is Just Beginning FIGURE 1. 5 THE GROWTH OF B2C E-COMMERCE In the early years, B2C e-commerce was two-baser or tripling each year. This detonative early growth rate has since slowed. Currently, B2C e-commerce is growing at about 25% per year, with seaso nal worker spikes showing stronger year-to-year gains. Note Revenue shown includes retail sales, travel and financial services revenues. SOURCES Based on data from eMarketer, Inc. , 2005a