Understand why it is important to study e-commerc

L E A R N I N G O B J E C T I V E S
After reading this chapter, you will be able to:
■ Understand why it is important to study e-commerce.
■ Define e-commerce, understand how e-commerce differs from e-business, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.
■ Identify and describe the unique features of e-commerce technology and discuss their business significance.
■ Describe the major types of e-commerce.
■ Understand the evolution of e-commerce from its early years to today.
■ Describe the major themes underlying the study of e-commerce.
■ Identify the major academic disciplines contributing to e-commerce.
Introduction to E-commerce

street corner frantically waving, competing with others, or waiting endlessly for an available
cab to drive by, without knowing when that might happen. Uber’s value proposition for
drivers is that it allows them to set their own hours, work when they like, and put their own
cars to use generating revenue.
Uber is a poster child for “digital disruption.” It is easy to see why Uber has ignited a
firestorm of opposition from existing taxi services around the world. If you’ve paid $1 million
for a license to drive a taxi in New York City, what is it worth now that Uber has arrived?
Answer: less than $200,000. Taxi drivers in London typically spend years learning thousands
of streets and landmarks before they are able to pass the tests necessary to obtain a license
to drive a black cab there. Even governments find Uber to be a disruptive threat. Governments
do not want to give up regulatory control over passenger safety, driver training, nor the
healthy revenue stream generated by charging taxi firms for a taxi license and sales taxes.
Uber’s business model differs from traditional retail e-commerce. Uber doesn’t sell
goods. Instead it has created a smartphone-based platform that enables people who want
a service—like a taxi—to find a provider with the resources, such as a personal automobile
and a driver with available time, to fill the demand. It’s important to understand that
although Uber and similar firms are often called “sharing economy” companies, this is a
misnomer. Uber drivers are selling their services as drivers and the temporary use of their
car. Uber itself is not in the sharing business either: it charges a 25% commission on every
transaction on its platform. Uber is not an example of true “peer-to-peer” e-commerce
because Uber transactions involve an online intermediary: a third party that provides a
platform for, and takes a cut of, all transactions.
Uber has disrupted the traditional taxi business model because it offers a superior,
fast, convenient taxi-hailing service when compared to traditional taxi companies. With a
traditional taxi service, there is no guarantee you will find a cab. Uber significantly reduces
that uncertainty. Uber’s business model is also much more efficient than a traditional taxi
firm. Uber does not own taxis and has no maintenance and financing costs. Uber calls its
drivers “independent contractors,” not employees. Doing so enables Uber to avoid costs
for workers’ compensation, minimum wage requirements, driver training, health insurance,
and commercial licensing.
Quality control would seem to be a nightmare with almost 4 million contract drivers.
But Uber relies on user reviews to identify problematic drivers and driver reviews to identify
problematic passengers. Drivers are evaluated by riders on a 5-point scale. Drivers that fall
below 4.5 are warned and may be dropped if they don’t improve. Customers are also rated
with a 5-point system. Drivers can refuse to pick up troublesome customers, and the Uber
server can delay service to potential customers with low ratings or ban them entirely. Uber
does not publicly report how many poorly rated drivers or passengers there are in its system.
Academic articles have found that in similar on-demand companies, such as Airbnb, there
is a built-in bias for both sellers and buyers to give good reviews regardless of the actual
experience. If you routinely give low reviews to sellers (drivers), they will think you are too
demanding and not service you in the future. If a driver gives low reviews to passengers, they
might not rate you highly in return.
Rather than having a dispatcher in every city, Uber has an Internet-based app service
running on cloud servers located throughout the world. It does not provide radios to its
++
drivers, who instead must use their own smartphones and cell service, which the drivers
pay for. It does not provide insurance or maintenance for its drivers’ cars. Uber has shifted
the costs of running a taxi service entirely to the drivers. Uber charges prices that vary
dynamically with demand: the higher the demand, the greater the price of a ride. Therefore,
it is impossible using public information to know if Uber’s prices are lower than traditional
taxis. Clearly, in high-demand situations they are higher, sometimes 10 times higher, than
a regulated taxi. There is no regulatory taxi commission setting uniform per-mile fares.
Consumers do face some traditional uncertainties regarding availability: during a rainstorm,
a convention, or a sports event, when demand peaks, not enough drivers may be available
at any price.
If Uber is the poster child for the on-demand service economy, it’s also an iconic
example of the social costs and conflicts associated with this kind of e-commerce. Uber has
been charged in many countries with misclassifying its drivers as contractors as opposed to
employees, thereby denying the drivers the benefits of employee status, such as minimum
wages, social security, workers’ compensation, and health insurance. In February 2021,
the UK’s top court ruled that a group of Uber drivers that had sued the company were
entitled to various rights, including minimum wage and other benefits. In March 2021, Uber
announced that it would reclassify its 70,000 UK drivers as “workers” rather than independent
contractors, making the UK the first place Uber has agreed to pay for benefits such as
vacation time and pension contributions. However, further legal action is likely over Uber’s
methods of calculating minimum wage.
Uber has been accused of violating public transportation laws and regulations throughout
the world; abusing the personal information it has collected on users of the service;
seeking
to use personal information to intimidate journalists; failing to protect public safety
by refusing to do adequate criminal, medical, and financial background checks on its drivers;
taking clandestine actions against its chief U.S.-based competitor Lyft in order to disrupt
its
business; and being tone-deaf to the complaints of its own drivers against the firm’s efforts
to reduce driver fees. Uber has been banned in several European cities.
For instance, in
London,
Transport for London (TfL), the regulatory body that governs taxi services in London,
refused in 2017 to renew Uber’s license, based, it said, on concerns about user safety.
Uber was allowed to continue operating while it appealed the ruling, and in June 2018
was granted a 15-month probationary license. Uber then sought a five-year renewal upon
expiration of the probationary license in September 2019 but was once again unsuccessful,
with TfL denying it a license to operate. In September 2020, a judge overturned the ban and
TfL issued a new license for an 18-month period. More significantly, in 2017, the Court of
Justice of the European Union (EU), the European Union’s most powerful court, ruled that
Uber should be treated as a transportation service, subject to all of the existing laws and
regulations of the EU member countries in which it operates that apply to such services,
rather than as a digital platform not subject to such laws and regulations, as Uber had been
attempting to assert. Uber claims that the ruling will not have much impact on it, however,
as it claims that it now operates in accordance with transportation laws and regulations of
most European counties in which it does business.

+++++++
SOURCES: “Uber Grants Vacation
Pay, Pensions to U.K. Drivers in
Change of Job Status,” by Sam
Schechner and Parmy Olsen,” Wall
Street Journal, March 16, 2021;
“Uber Drivers Entitled to Worker
Rights Including Minimum Wage,
U.K. Supreme Court Rules,” by
Sam Schechner, Wall Street Journal,
February 19, 2021; “Uber and
Lyft Drivers in California Sue to
Overturn Prop 22 Ballot Measure,”
by Andrew Hawkins, Theverge.com,
January 12, 2021; “Uber Reports
۱۸% Revenue Decline but Says
Ride-hailing Business Is Picking
Back Up,” by Lora Kolodny, Cnbc.
com, November 5, 2020; “Uber
Granted 18-Month London License
as Judge Overturns Ban,” by Ryan
Browne, Cnbc.com, September
۲۸, ۲۰۲۰; “Uber Acquires Food
Delivery Service Postmates for
$۲.۶۵B,” by Stephanie Mlot,
Pcmag.com, July 6, 2020; “Uber’s
Re-evaluation of Freight Follows
Steep Losses,” by Jennifer Smith,
Wall Street Journal, May 18, 2020;
“Uber Cuts 3,000 More Jobs, Shuts
۴۵ Offices in Coronavirus Crunch,”
by Preetika Rana, Wall Street
Journal, May 18, 2020; “Uber Sees
Path to Profitability After Blow from
Coronavirus,” by Robert Wall, Wall
Street Journal, May 7, 2020; “Form
۱۰-Q for the Quarterly Period
ended March 31, 2020;” Uber
Technologies, Inc., Sec.gov, May 8,
۲۰۲۰; “Form 10-K for the Fiscal
Year Ended December 31, 2019,”
Uber Technologies, Inc., Sec.gov,
March 2, 2020; “Uber Announces
Results for Fourth Quarter and Full
Year 2019,” Uber Technologies,
Inc., Investor.uber.com, February 6,
۲۰۲۰; “Uber Loses License to
Operate in London,” Wall Street
Journal, December 6, 2019; “Uber
Unveils New Safety Features Amid
Scathing Report,” Cbsnews.com,
September 26, 2019; “Culture
Crossover: Uber Impact: The Cost
and Disruption and Monopoly,” by
Somrata Sarkar, Techworld.com,
May 17, 2019; “How the
Promise of a $120 Billion Uber
IPO Evaporated,” by Mike Isaac,
Michael J. de la Merced, and
Andrew Ross Sorkin, New York
Times, May 15, 2019; “MIT Study
Shows How Much Driving for Uber
or Lyft Sucks,” by Natasha Lomas,
Yahoo.com, March 2, 2018; “Uber
Dealt Setback After European
Court Rules It Is a Taxi Service,”
by Liz Alderman, New York Times,
December 20, 2017; “Uber Ban:
Firm to Continue Operating in
London After Filing Appeal,”
by Josie Cox, Telegraph.co.uk,
October 13, 2017; “Here’s All the
Shady Stuff Uber’s Been Accused
of So Far,” by Joe McGauley,
Thrillist.com, March 7, 2017; “An
Uber Shakedown,” Wall Street
Journal, April 24, 2016; “Uber
Settlement Takes Customers for
a Ride,” by Rob Berger, Forbes,
April 22, 2016; “Twisting Words
to Make ‘Sharing’ Apps Seem
Selfless,” by Natasha Singer, New
York Times, August 9, 2015; “The
$۵۰ Billion Question: Can Uber
Deliver?,” by Douglas Macmillan,
Wall Street Journal, June 15, 2015;
“How Everyone Misjudges the
Sharing Economy,” by Christopher
Mims, Wall Street Journal,
May 25, 2015; “The On-Demand
Economy Is Reshaping Companies
and Careers,” The Economist,
January 4, 2015; “The On-Demand
Economy: Workers on Tap,” The
Economist, January 3, 2015.
+++
E v e r y t h i n g o n D e m a n d : T h e “ U b e r i z a t i o n ” o f E – c o m m e r c e 41
+++
Critics also fear the long-term impact of on-demand service firms, because of their
potential for creating a society of part-time, low-paid, temp work, displacing traditionally

۴۲
full-time, secure jobs—the so-called “uberization” of work. As one critic put it, Uber is not
the Uber for rides so much as it is the Uber for low-paid jobs. A study by the MIT Center
for Energy and Environmental Policy Research found that after taking into account costs
such as fuel, insurance, maintenance, and repairs, Uber drivers’ median profit was only
$۳.۳۷ per hour. Uber responds to this fear by claiming that it is lowering the cost of transportation,
making better use of spare human and financial resources, expanding the demand
for ride services, and expanding opportunities for car drivers, whose pay it claims is about
the same as other taxi drivers.
Over the last several years, Uber has been hit by a series of continuing controversies
and scandals, creating a public relations nightmare for the company, and culminating in
the resignation of a number of board members, senior executives, and finally its co-founder
and CEO, Travis Kalanick. It was charged with corporate mismanagement and misconduct
(including using a secret program known as Greyball to track and evade regulators and other
law enforcement officials), workplace discrimination and sexual harassment, and violation of
the privacy of its customers by using its mobile app to track the location of those customers
at all times, even when the app was not in use. In 2019, a Washington Post report raised
serious questions about how Uber handles passenger safety.
But despite the controversy surrounding it, Uber continues to attract drivers, customers,
and additional investors. In May 2019, Uber went public, raising over $8 billion at a
valuation of about $82 billion, which although a staggering amount, was well below the
$۱۲۰ billion value initially floated by its investment bankers. During 2019, Uber’s stock price
declined significantly, losing almost half its value since the IPO. Then came the Covid-19
pandemic. In May 2020, Uber cut almost a quarter of its workforce, announced sweeping
cost-cutting measures, and braced for a very different future than it had anticipated. One
bright spot was its Uber Eats division, which experienced a 50% increase in gross bookings
in the first quarter. Seeking to expand on that opportunity, in July 2020, Uber entered
into an agreement to purchase on-demand food delivery service Postmates for $2.65 billion,
after its previous efforts to purchase Grubhub did not come to fruition. It also said it
remained committed to growing its Uber Freight business, which despite losses, had been
in expansion mode prior to the pandemic, following a similar playbook to that which Uber
had successfully
used to grow its core Uber Rides segment. In the third quarter of 2020,
it raised $500 million in equity to fuel Uber Freight’s growth, at a valuation of $3.3 billion.
Although the pandemic interrupted Uber’s previously announced goal to reach profitability
by the end of 2020, chief executive office Dara Khosrowshahi remains hopeful that that
goal can still be achieved by the end of 2021, which he reiterated in November 2020, as
Uber announced its third quarter 2020 financial results. At that time, Khosrowshahi noted
that although the year had been a tough one, there were now early signs that Uber’s core
businesses would fully recover, with Uber rides reportedly coming back faster than other
forms of transportation.

In 1994, e-commerce as we now know it did not exist. In 2020, just over 25 years
later, around 2.3 billion consumers spent about over $5 trillion, and businesses
almost $27 trillion, purchasing goods and services via a desktop computer or
mobile device. There have been significant changes in the e-commerce environment
during this time period.
The early years of e-commerce, during the late 1990s, were a period of business
vision, inspiration, and experimentation. It soon became apparent, however, that establishing
a successful business model based on those visions would not be easy. There
followed a period of retrenchment and reevaluation, which led to the stock market crash
of 2000–۲۰۰۱, with the value of e-commerce, telecommunications, and other technology
stocks plummeting. After the bubble burst, many people were quick to write off
e-commerce. But they were wrong. The surviving firms refined and honed their business
models, and the technology became more powerful and less expensive, ultimately
leading to business firms that actually produced profits. Between 2002–۲۰۰۷, retail
e-commerce grew at more than 25% per year.
Then, in 2007, Apple introduced the first iPhone, a transformative event that
marked the beginning of yet another new era in e-commerce. In the last 10 years, mobile
devices, such as smartphones and tablet computers, and mobile apps have supplanted
the traditional desktop/laptop platform and web browser as the most common method
for consumers to access the Internet. Facilitated by technologies such as cellular networks,
Wi-Fi, and cloud computing, mobile devices have become advertising, shopping,
reading, and media viewing machines, and in the process, have transformed consumer
behavior yet again. During the same time period, social networks such as Facebook,
Twitter, YouTube, Pinterest, Instagram, and Snapchat, which enable users to distribute
their own content (such as videos, music, photos, personal information, commentary,
blogs, and more), rocketed to prominence. The mobile platform infrastructure also
gave birth to another e-commerce innovation: on-demand services that are local and
personal. From hailing a taxi, to food delivery, to washing your clothes, on-demand
services have created a marketspace that enables owners of resources such as cars, spare
bedrooms, and spare time to find a market of eager consumers looking to buy a service
in a few minutes using their smartphones. Uber, profiled in the opening case, is a leading
example of these on-demand service firms that are disrupting traditional business
models. Today, mobile, social, and local are the driving forces in e-commerce.
But while the evolution of e-commerce technology and business over the past
quarter-century has been a powerful and mostly positive force in our society, it is
becoming increasingly apparent that it also has had, and continues to have, a serious
societal impact, from promoting the invasion of personal privacy, aiding in the dissemination
of false information, enabling widespread security threats, and facilitating
the growth of business titans, such as Amazon, Google, and Facebook, that dominate
their fields, leading to a decimation of effective competition. As a result, it is likely that
the Internet and e-commerce are entering a period of closer regulatory oversight that
may have a significant impact on the conduct of e-commerce as it enters its second
quarter-century.
T h e F i r s t T h i r t y S e c o n d s : W h y Y o u S h o u l d S t u d y E – c o m m e r c e 43

۴۴
۱.۱ THE FIRST THIRTY SECONDS: WHY YOU SHOULD
STUDY E-COMMERCE
The rapid growth and change that has occurred in the first quarter-century of
e-commerce
represents just the beginning—what could be called the first 30 seconds
of the e-commerce revolution. Technology continues to evolve at exponential rates. This
underlying ferment presents entrepreneurs with opportunities to create new business
models and businesses in traditional industries and in the process, disrupt, and in some
instances, destroy existing business models and firms. The rapid growth of e-commerce
is also providing extraordinary growth in career and employment opportunities, which
we describe throughout the book.
Improvements in underlying information technologies and continuing entrepreneurial
innovation in business and marketing promise as much change in the next
decade as was seen in the previous two decades. The twenty-first century will be the age
of a digitally enabled social and commercial life, the outlines of which we can still only
barely perceive at this time. Analysts estimate that by 2023, consumers worldwide will
be spending around $7 trillion and businesses over $32 trillion in digital transactions.
It appears likely that e-commerce will eventually impact nearly all commerce, and that
most commerce will be e-commerce by the year 2050, if not sooner.
Business fortunes are made—and lost—in periods of extraordinary change such
as this. The next five years hold exciting opportunities—as well as significant risks—
for new and traditional businesses to exploit digital technology for market advantage,
particularly in the wake of the Covid-19 pandemic, which is expected to have a broad
and lasting impact on many aspects of life, ranging from how businesses operate, to
consumer behavior, to social and cultural life.
It is important to study e-commerce in order to be able to perceive and understand
the opportunities and risks that lie ahead. By the time you finish this book, you will be
able to identify the technological, business, and social forces that have shaped, and continue
to shape, the growth of e-commerce, and be ready to participate in, and ultimately
guide, discussions of e-commerce in the firms where you work. More specifically, you
will be able to analyze an existing or new idea for an e-commerce business, identify the
most effective business model to use, and understand the technological underpinnings
of an e-commerce presence, including the security and ethical issues raised, as well as
how to optimally market and advertise the business, using both traditional e-marketing
tools and social, mobile, and local marketing.

۱.۲ INTRODUCTION TO E-COMMERCE
In this section, we’ll first define e-commerce and then discuss the difference between
e-commerce and e-business. We will also introduce you to the major technological building
blocks underlying e-commerce: the Internet, Web, and mobile platform. The section
concludes with a look at some major current trends in e-commerce.

I n t r o d u c t i o n t o E – c o m m e r c e 45
WHAT IS E-COMMERCE?
E-commerce involves the use of the Internet, the World Wide Web (Web), and mobile
apps and browsers running on mobile devices to transact business. Although the terms
Internet and Web are often used interchangeably, they are actually two very different
things. The Internet is a worldwide network of computer networks, and the Web is one of
the Internet’s most popular services, providing access to billions of web pages. An app
(shorthand for application) is a software application. The term is typically used when
referring to mobile applications, although it is also sometimes used to refer to desktop
computer applications as well. A mobile browser is a version of web browser software
accessed via a mobile device. (We describe the Internet, Web, and mobile platform more
fully later in this chapter and in Chapters 3 and 4.) More formally, e-commerce can be
defined as digitally enabled commercial transactions between and among organizations
and individuals. Each of these components of our working definition of e-commerce is
important. Digitally enabled transactions include all transactions mediated by digital
technology. For the most part, this means transactions that occur over the Internet, the
Web, and/or via mobile devices. Commercial transactions involve the exchange of value
(e.g., money) across organizational 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 professional literature sometimes refers to e-commerce as digital commerce.
For our purposes, we consider e-commerce and digital commerce to be synonymous.
THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS
There is a debate about the meaning and limitations of both e-commerce and e-business.
Some argue that e-commerce encompasses the entire world of electronically based organizational
activities that support a firm’s market exchanges—including a firm’s entire
information system infrastructure. Others argue, on the other hand, that e-business
encompasses the entire world of internal and external electronically based activities,
including e-commerce.
We think it is important to make a working distinction between e-commerce and
e-business because we believe they refer to different phenomena. E-commerce is not
“anything digital” that a firm does. For purposes of this text, we will use the term
e-business
to refer primarily to the digital enabling 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 include commercial transactions involving an exchange
of value across organizational boundaries. For example, a company’s online inventory
control mechanisms are a component of e-business, but such internal processes do not
directly generate revenue for the firm from outside businesses or consumers, as
e-commerce, by definition, does. It is true, however, that a firm’s e-business infrastructure
provides support for online e-commerce exchanges; the same infrastructure and
skill sets are involved in both e-business and e-commerce. E-commerce and e-business
systems blur together at the business firm boundary, at the point where internal business
systems link up with suppliers or customers (see Figure 1.1). E-business applications
turn into e-commerce precisely when an exchange of value occurs. We will examine this
intersection further in Chapter 12.

++++++++++++++++
e-commerce
the use of the Internet,
the Web, and mobile
apps and browsers
running on mobile devices
to transact business.
More formally, digitally
enabled commercial
transactions between
and among organizations
and individuals
e-business
the digital enabling of
transactions and processes
within a firm, involving
information systems under
the control of the firm

++++++++++++++++
۴۶
TECHNOLOGICAL BUILDING BLOCKS UNDERLYING E-COMMERCE: THE
INTERNET, WEB, AND MOBILE PLATFORM
The technology juggernauts behind e-commerce are the Internet, the Web, and increasingly,
the mobile platform. We describe the Internet, Web, and mobile platform 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 world’s largest network. It is impossible
to say with certainty exactly how many computers and other mobile devices, such as
smartphones
and tablets, as well as other Internet-connected consumer devices, such as
smartwatches, connected TVs, and smart speakers such as Amazon’s Echo, are connected
to the Internet worldwide at any one time, but some experts estimate that as of 2019, there
were anywhere from around 10 billion to 25 billion connected devices already installed
(Fuscaldo, 2020; Maayan, 2020). The Internet links businesses, educational institutions,
government agencies, and individuals together, and provides users with services such as
e-mail, document transfer, shopping, research, instant messaging, music, videos, and news.
One way to measure the growth of the Internet is by looking at the number of
Internet hosts with domain names. (An Internet host is defined by the Internet Systems
Consortium as any IP address 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 2019, there were more than 1 billion Internet hosts in over 245 countries, up
from just 72 million in 2000 (Internet Systems Consortium, 2021).
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. It took only 10 years
for the Internet/Web to achieve a 53% share of U.S. households once a graphical user
interface was invented for the Web in 1993. In the United States, around 290 million

++++++++++++++++++
Internet
worldwide network of
computer networks built
on common standards

E-commerce primarily involves transactions that cross firm boundaries. E-business primarily involves the
application of digital technologies to business processes within the firm.

people of all ages (about 87% of the U.S. population) use the Internet at least once a
month (eMarketer, Inc. 2020a).
The World Wide Web (the Web) is an information system that runs on the Internet
infrastructure. The Web was the original “killer app” that made the Internet commercially
interesting and extraordinarily 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 access to billions of web pages indexed by
Google and other search engines. These pages are created in a language called HTML
(HyperText Markup Language). HTML pages can contain text, graphics, animations, and
other objects. The Internet prior to the Web was primarily used for text communications,
file transfers, and remote computing. The Web introduced far more powerful capabilities
of direct relevance 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 libraries.
There is no precise measurement of the number of web pages in existence, in part
because today’s search engines index only a portion of the known universe of web pages.
Google has identified over 130 trillion individual web pages, up from 30 trillion in 2013,
although many of these pages do not necessarily contain unique content (Schwartz,
۲۰۱۶). In addition to this “surface” or “visible” Web, there is also the so-called deep Web
that is reportedly 500 to 1,000 times greater than the surface Web. The deep Web contains
databases and other content that is not routinely identified by search engines such as
Google (see Figure 1.2). Although the total size of the Web is not known, what is indisputable
is that web content has grown exponentially since 1993.
The mobile platform has become a significant part of Internet infrastructure. The
mobile platform provides the ability to access the Internet from a variety of mobile

+++++++++++++++
World Wide Web
(the Web)
an information system
running on Internet
infrastructure that
provides access to
billions of web pages
mobile platform
provides the ability
to access the Internet
from a variety of
mobile devices such as
smartphones and tablets
++++++++++++++
Over 72% of all Internet users in the United States (about 210 million people) go online using both a desktop/
laptop and mobile device. About 21% (about 60 million) only go online by using a mobile device. Just
۷% (about 20 million) use only a desktop or laptop computer to access the Internet.
SOURCE: Based on data from eMarketer, Inc., 2020a, 2020c, 2020d.
devices such as smartphones and tablets via wireless networks or cell phone service.
Mobile devices are playing an increasingly prominent role in Internet access. In 2020,
about 93% of Americans who accessed the Internet used a mobile device to do so at least
some of the time (eMarketer, Inc., 2020b). Figure 1.3 illustrates the variety of devices
used by Americans to access the Internet in 2020.
The mobile platform is not just a hardware phenomenon. The introduction of
the Apple iPhone in 2007, followed by the Apple iPad in 2010, has also ushered in a
sea-change in the way people interact with the Internet from a software perspective.
In the early years of e-commerce, the Web and web browsers were the only game in town.
Today, in contrast, more Americans access the Internet via a mobile app on a mobile
device than by using a desktop computer and web browser. Insight on Technology: Will
Apps Make the Web Irrelevant? examines the challenge that apps and the mobile platform
pose to the Web’s dominance of the Internet ecosphere in more depth.
MAJOR TRENDS IN E-COMMERCE
Table 1.1 on page 51 describes the major trends in e-commerce in 2020–۲۰۲۱ from a
business, technological, and societal perspective, the three major organizing themes

WILL APPS MAKE THE WEB IRRELEVANT?
Nowadays, it’s hard to recall a time
before the Web. How did we get
along without the ability to go online
to search for an item, learn about a
topic, play a game, or watch a video?
Though the Web has come a remarkably
long way from its humble beginnings, some
experts think that the Web’s best days are
behind it. Opinions vary about the future role
of the Web in a world where apps have become
a dominant force in the Internet ecosystem.
In 10 years, will the Web be a forgotten relic?
Or will the Web and apps coexist peacefully as
vital cogs in the Internet ecosystem? Will the
app craze eventually die down as users gravitate
back toward the Web as the primary way
to perform online tasks?
Apps have grown into a disruptive force
ever since Apple launched its App Store in
۲۰۰۸. The list of industries apps have disrupted
is wide-ranging: communications, media and
entertainment, logistics, education, healthcare,
and most recently, with Uber and Airbnb,
the taxi and hotel industries. Despite not even
existing prior to 2008, in 2019, sales of apps
accounted for over $120 billion in revenues
worldwide, and the app economy is continuing
to show robust growth.
Although usage of apps tends to be highly
concentrated, with nearly 90% of smartphone
app minutes spent on an individual’s top five
apps, consumers are trying new apps all the
time and typically use about 20 different apps
per month, leaving room for new app developers
to innovate and create successful apps.
Users are downloading an increasing number
of apps, with the number reaching 240 billion
worldwide in 2019, according to research firm
App Annie.
In 2014, for the first time ever, Americans
used mobile devices more than desktop computers
to access the Internet. The time U.S. adults
are spending using mobile devices has exploded,
now accounting for about four hours a day. Of the
time spent using mobile devices, almost 90% is
spent using mobile apps and only about 10% using
mobile browsers. In 2020, according to consulting
firm eMarketer, adult mobile Internet users
in the United States spent an average of threeand-
a-half hours a day within apps on their
smartphones and tablet computers compared
to just 25 minutes a day using a mobile browser.
Consumers have gravitated to apps for
several reasons. First, smartphones and tablet
computers enable users to use apps anywhere,
instead of being tethered to a desktop or having
to lug a heavy laptop around. Of course, smartphones
and tablets enable users to use the Web
too, but apps are often more convenient and
boast more streamlined, elegant interfaces than
mobile web browsers.
Not only are apps more appealing in certain
ways to consumers, they are much more
appealing to content creators and media companies.
Apps are much easier to control and
monetize than websites, not to mention they
can’t be crawled by Google or other services.
On the Web, the average price of ads per thousand
impressions is falling, and many content
providers are still mostly struggling to turn the
Internet into a profitable content delivery platform.
Much of software and media companies’
focus has shifted to developing mobile apps for
this reason.
In the future, some analysts believe that
the Internet will be used to transport data, but
individual app interfaces will replace the web
browser as the most common way to access

and display content. Even the creator of the
Web, Tim Berners-Lee, feels that the Web as
we know it is being threatened.
But there is no predictive consensus about
the role of the Web in our lives in the next decade
and beyond. Although apps may be more convenient
than the Web in many respects, the
depth of the web browsing experience trumps
that of apps. The Web is a vibrant, diverse
array of sites, and browsers have an openness
and flexibility that apps lack. The connections
between websites enhance their usefulness
and value to users, and apps that instead
seek to lock users in cannot offer the same
experience. In addition, the size of the mobile
web audience still exceeds that of the mobile
app audience. And when it comes to making
purchases online, using a web browser on a
desktop computer still handily beats mobile
devices. Retail purchases made on desktops/
laptops still account for almost 55% of all online
retail purchases.
Other analysts who are more optimistic
about the Web’s chances to remain relevant in an
increasingly app-driven online marketplace feel
this way because of the emergence of HTML5
and progressive web apps (PWAs). HTML5 is a
markup language that enables more dynamic
web content and allows for browser-accessible
web apps that are as appealing as device-specific
apps. A PWA combines the best elements
of mobile websites and native mobile apps.
A PWA functions and feels like a native app, but
it does not need to be downloaded from an app
store, and so does not take up any of the mobile
device’s memory. Instead, it runs directly in a
mobile web browser, but is able to load instantly,
even in areas of low connectivity. Some people
think that a good PWA can ultimately function
as a total replacement for a company’s mobile
website, native app, and even possibly its desktop
website.
The shift toward apps and away from the
Web is likely to have a significant impact on the
fortunes of e-commerce firms. As the pioneer
of apps and the market leader in apps, smartphones,
and tablet computers, Apple stands
to gain from a shift toward apps, and although
it also faces increasing competition from other
companies, including Google, the established
success of the App Store will make it next to
impossible to dethrone Apple. For instance,
while Google’s Google Play store had more than
double the number of downloads compared
to Apple’s App Store in 2019, the App Store
still made nearly twice the amount of revenue
($۵۴ billion) than Google Play ($29 billion).
Google hopes that PWAs are at least a partial
answer to the problem presented to it by native
apps, because the more activity that occurs on
native apps, which Google cannot crawl, the
less data Google has access to, which impacts
its web-based advertising platform.
Ultimately, most marketers see the future
as one in which the Web and mobile apps work
together, with each having an important role in
serving different needs.

SOURCES: “US Mobile Time Spent 2020,” by Yoram Wurmser, eMarketer, Inc., June 4, 2020; “Desktop/Laptop Retail Ecommerce Sales,” eMarketer,
Inc., May 2020; “App Stores Saw Record 204 Billion App Downloads in 2019, Consumer Spend of $120 Billion,” by Sarah Perez, Techcrunch.com,
January 15, 2020; “State of Mobile 2020,” by App Annie, January 15, 2020; “Apple’s App Store and Google Play Users Spent Over $83 Billion on Mobile
Apps in the Last 12 Months, Globally,” by Saima Salim, Digitalinformationworld.com, January 9, 2020; “۲۰۱۹ Global State of Mobile,” Comscore, Inc.,
December 2019; “Why Progressive Web Apps Are the Future of the Mobile Web: 2020 Research,” by Jason Rzutkiewicz and Jeremy Lockhorn, Ymedialabs.com,
September 19, 2020 “Progressive Web Apps: What They Are and Why They Matter,” by Wilson Kerr, Digitalcommerce360.com, May 28, 2018; “Why Progressive
Web Apps Will Replace Native Mobile Apps,” by Andrew Gazdecki, Forbes.com, March 9, 2018; “Publishers Straddle the Apple-Google, App-Web Divide,” by Katie
Benner and Conor Dougherty, New York Times, October 18, 2015; “How Apps Won the Mobile Web,” by Thomas Claburn, Informationweek.com, April 3, 2014;
“Mobile Apps Overtake PC Internet Usage in U.S.,” by James O’Toole, Money.cnn.com, February 28, 2014; “Is The Web Dead in the Face of Native Apps? Not
Likely, But Some Think So,” by Gabe Knuth, Brianmadden.com, March 28, 2012; “The Web Is Dead. Long Live the Internet,” by Chris Anderson and Michael
Wolff, Wired.com, August 17, 2010; “The Web Is Dead? A Debate,” by Chris Anderson, Wired.com, August 17, 2010.

I n t r o d u c t i o n t o E – c o m m e r c e 51
B U S I N E S S
• The Covid-19 pandemic fuels a surge in retail e-commerce and m-commerce.
• The mobile app ecosystem continues to grow, with almost 2.8 billion people worldwide using mobile apps.
• Social e-commerce, based on social networks and supported by advertising, emerges and continues to grow,
generating an estimated $90 billion worldwide in 2020.
• Local e-commerce, the third dimension of the mobile, social, local e-commerce wave, is also growing, fueled by an
explosion of interest in on-demand services such as Uber, Deliveroo, DoorDash, and others.
• Although global economic activity declined in 2020 due to the pandemic, B2B e-commerce revenues
remained stable and are expected to continue to increase.
• On-demand service firms continue to attract billions in capital and garner multi-billion dollar valuations.
Although companies operating in the travel industry, such as Uber and Airbnb, are severely impacted by the
Covid-19 pandemic, others, such as Instacart and DoorDash, which operate in the grocery and restaurant
delivery areas, grow.
• Mobile advertising continues growing at astronomical rates, accounting for over 70% of all digital ad spending.
• Small businesses and entrepreneurs continue to flood into the e-commerce marketplace, often riding on the
infrastructures created by industry giants such as Apple, Facebook, Amazon, Google, and eBay.
T E C H N O L O G Y
• A mobile computing and communications platform based on smartphones, tablet computers, wearable
devices, and mobile apps becomes a reality, creating an alternative platform for online transactions, marketing,
advertising, and media viewing. The use of mobile messaging services such as Facebook Messenger, WhatsApp,
and Snapchat continues to expand, and these services are now used by almost 45% of the U.S. population.
• Smart speakers such as Amazon Echo and Google Home become increasingly popular, providing an additional
platform for e-commerce.
• Cloud computing completes the transformation of the mobile platform by storing consumer content and
software on “cloud” (Internet-based) servers and making it available to any consumer-connected device, from
the desktop to a smartphone.
• The Internet of Things (IoT), comprised of billions of Internet-connected devices, continues to grow exponentially.
• As firms track the trillions of online interactions that occur each day, a flood of data, typically referred to as
big data, is being produced.
• In order to make sense out of big data, firms turn to sophisticated software called business analytics (or web
analytics) that can identify purchase patterns as well as consumer interests and intentions in milliseconds.
S O C I E T Y
• User-generated content, published online as social network posts, tweets, blogs, and pins, as well as video
and photo-sharing, continues to grow and provides a method of self-publishing that engages millions.
• Social networks encourage self-revelation, threatening privacy, as Facebook comes under fire for allowing
third parties such as Cambridge Analytica, device makers, and app developers to mine its database of user
information without user consent.
• The EU General Data Protection Regulation impacts all companies that operate in any of the EU member
nations.
• Concerns increase about increasing market dominance of Facebook, Amazon, and Google, leading to calls for
government regulation in both the European Union and the United States.
• Conflicts over copyright management and control continue, but there is substantial agreement among online
distributors and copyright owners that they need one another.
• Surveillance of online communications by both repressive regimes and Western democracies grows.
• Concerns over commercial and governmental privacy invasion increase.
• Online security continues to decline as major companies are hacked and lose control over customer information.
• Spam remains a significant problem.
• On-demand service e-commerce produces a flood of temporary, poorly paid jobs without benefits.
TABLE 1.1 MAJOR TRENDS IN E-COMMERCE, 2020–۲۰۲۱

۵۲
From a business perspective, one of the most important trends to note is that all forms
of e-commerce continue to show very strong growth. Retail e-commerce has been growing
worldwide at over 20% a year for the last few years, and in 2020 reached almost $4.3 trillion.
Retail m-commerce is growing at an even faster rate (over 25% a year) and increased to
almost $2.8 trillion in 2020. Social networks such as Facebook, Pinterest, and Instagram
are
enabling social e-commerce by providing advertising, search, and Buy buttons that enable
consumers to actually purchase products. Local e-commerce is being fueled by the explosion
of interest in on-demand services. B2B e-commerce, which dwarfs all other forms, is
also continuing to strengthen and grow. The Covid-19 pandemic which emerged in the first
quarter of 2020 is expected to result in an increased and lasting shift to e-commerce.
From a technology perspective, the mobile platform based on smartphones and
tablet computers has finally arrived with a bang, driving astronomical growth in mobile
advertising, and making true mobile e-commerce a reality. The use of mobile messaging
services such as Facebook Messenger, WhatsApp, and Snapchat has created an alternative
communications platform that is beginning to be leveraged for commerce as
well. Cloud computing is inextricably linked to the development of the mobile platform
by enabling the storage of consumer content and software on cloud (Internet-based)
servers
and making it available to mobile devices as well as desktops. Other major technological
trends include the increasing ability of companies to track and analyze the
flood of online data (typically referred to as big data) being produced. The Internet of
Things (IoT), comprised of billions of Internet-connected devices, continues to grow
exponentially, and will only add to this flood of data in the years to come.
At the societal level, other trends are apparent. The Internet and mobile platform provide
an environment that allows millions of people to create and share content, establish
new social bonds, and strengthen existing ones through social network, photo- and videoposting,
and blogging sites and apps, while at the same time creating significant privacy
issues. Privacy seems to have lost some of its meaning in an age when millions create public
online personal profiles, while at the same time concerns over commercial and governmental
privacy invasion continue to increase. The major digital copyright owners have
increased their pursuit of online piracy with mixed success, while reaching agreements with
the big technology players such as Apple, Amazon, and Google to protect intellectual property
rights. Governments have successfully moved toward taxation of e-commerce sales.
Sovereign nations have expanded their surveillance of, and control over, online communications
and content as a part of their anti-terrorist activities and their traditional interest in
law enforcement. Online security, or lack thereof, remains a significant issue, as new stories
about security breaches, malware, hacking, and other attacks emerge seemingly daily.
۱.۳ UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY
Figure 1.4 illustrates eight unique features of e-commerce technology that both challenge
traditional business thinking and help explain why we have so much interest in
e-commerce. These unique dimensions of e-commerce technologies suggest many new
possibilities for marketing and selling—a powerful set of interactive, personalized, and
rich messages are available for delivery to segmented, targeted audiences.

Prior to the development of e-commerce, the marketing and sale of goods was a
mass-marketing and salesforce–driven process. Marketers viewed consumers as passive
targets of advertising campaigns and branding “blitzes” intended to influence their
long-term product perceptions and immediate purchasing behavior. Companies sold
their products via well-insulated channels. Consumers were trapped by geographical
and social boundaries, unable to search widely for the best price and quality. Information
about prices, costs, and fees could be hidden from the consumer, creating profitable
information asymmetries for the selling firm. Information asymmetry refers to any
disparity in relevant market information among parties in a transaction. It was so
expensive to change national or regional prices in traditional retailing (what are called
menu costs) that one national price was the norm, and dynamic pricing to the marketplace
(changing prices in real time) was unheard of. In this environment, manufacturers
prospered by relying on huge production runs of products that could not be customized
or personalized.
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. Online merchants can use this information to develop new information
asymmetries, enhance their ability to brand products, charge premium prices for highquality
service, and segment the market into an endless number of subgroups, each
receiving a different price. To complicate matters further, these same technologies also
information
asymmetry
any disparity in relevant
market information among
parties in a transaction
FIGURE 1.4 EIGHT UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY
E-commerce technologies provide a number of unique features that have impacted the conduct of business.

۵۴
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 rather
than compete and drive overall average prices up. This strategy works especially well
when there are just a few suppliers (Varian, 2000a). We examine these different visions
of e-commerce further in Section 1.4 and throughout the book.
Each of the dimensions of e-commerce technology illustrated in Figure 1.4 deserves
a brief exploration, as well as a comparison to both traditional commerce and other
forms of technology-enabled commerce.
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 characterized by its ubiquity: it is available
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 desktop, at home, at work, or
even from your car, using mobile e-commerce. The result is called a marketspace—a
marketplace extended beyond traditional boundaries and removed from a temporal and
geographic location.
From a consumer point of view, ubiquity reduces transaction costs—the costs of participating
in a market. To transact, it is no longer necessary that you spend time and money
traveling to a market. At a broader level, the ubiquity of e-commerce lowers the cognitive
energy required 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, humans will choose the path requiring the least effort—the most
convenient path (Shapiro and Varian, 1999; Tversky and Kahneman, 1981).
GLOBAL REACH
E-commerce technology permits commercial transactions to cross cultural, regional,
and national boundaries far more conveniently and cost-effectively than is true in traditional
commerce. As a result, the potential market size for e-commerce merchants is
roughly equal to the size of the world’s online population (an estimated 4 billion in 2020)
(eMarketer, Inc., 2020e). More realistically, the Internet makes it much easier for startup
e-commerce merchants within a single country to achieve a national audience than was
ever possible in the past. 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 local or regional—it involves local
merchants
or national merchants with local outlets. Television, 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 commerce technologies do not easily 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,
marketplace
physical space you visit
in order to transact
ubiquity
available just about
everywhere, at all times
marketspace
marketplace extended
beyond traditional
boundaries and removed
from a temporal and
geographic location
reach
the total number of
users or customers
an e-commerce
business can obtain

U n i q u e F e a t u r e s o f E – c o m m e r c e T e c h n o l o g y 55
are universal standards—they are shared 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 phone technology.
The universal technical standards of e-commerce greatly lower market entry costs—
the cost merchants must pay just to bring their goods to market. At the same time, for
consumers, universal standards reduce search costs—the effort required to find suitable
products. And by creating a single, one-world marketspace, where prices and product
descriptions can be inexpensively displayed for all to see, price discovery becomes simpler,
faster, and more accurate (Banerjee et al., 2016; Bakos, 1997; Kambil, 1997). Users,
both businesses and individuals, also experience network externalities—benefits 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
delivery terms of a specific product anywhere in the world, and to view them in a coherent,
comparative environment. Although this is not necessarily realistic today for all or
even most products, it is a potential that will be exploited in the future.
RICHNESS
Information richness refers to the complexity and content of a message (Evans and
Wurster, 1999). Traditional markets, national sales forces, and 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.
E-commerce technologies have the potential for offering considerably more information
richness than traditional media such as printing presses, radio, and television
because they are interactive and can adjust the message to individual users. Chatting
with an online salesperson, for instance, comes very close to the customer experience
in a small retail shop. The richness enabled by e-commerce technologies allows retail
and service merchants to market and sell “complex” goods and services that heretofore
required a face-to-face presentation by a sales force to a much larger audience.
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 and among consumers.
Traditional television or radio, for instance, cannot ask viewers questions or enter
into conversations with them, or request that customer information be entered into a form.
Interactivity allows an online merchant to engage a consumer in ways similar to
a face-to-face experience. Comment features, community forums, and social networks
with social sharing functionality such as Like and Share buttons all enable consumers to
actively interact with merchants and other users. Somewhat less obvious forms of interactivity
include responsive design elements, such as websites that change format depending
on what kind of device they are being viewed on, product images that change as a mouse
hovers over them, the ability to zoom in or rotate images, forms that notify the user of
a problem as they are being filled out, and search boxes that autofill as the user types.
universal standards
standards that are
shared by all nations
around the world
richness
the complexity and
content of a message
interactivity
technology that allows for
two-way communication
between merchant
and consumer

۵۶
INFORMATION DENSITY
E-commerce technologies vastly increase information density—the total amount and
quality of information available to all market participants, consumers, and merchants
alike. E-commerce technologies reduce information collection, storage, processing, and
communication costs. At the same time, these technologies greatly increase the currency,
accuracy, and timeliness of information—making information more useful and
important than ever. As a result, information becomes more plentiful, less expensive,
and of higher quality.
A number of business consequences result from the growth in information density.
One of the shifts that e-commerce is bringing about is a reduction in information asymmetry
among market participants (consumers and merchants). 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 discover the actual costs merchants pay for products. Preventing consumers from
learning about prices and costs becomes more difficult with e-commerce and, as a result,
the entire marketplace potentially becomes more price competitive (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 discrimination—selling the
same goods, or nearly the same goods, to different targeted groups at different prices.
For instance, an online merchant can discover a consumer’s avid interest in expensive
exotic vacations, and then pitch expensive exotic vacation plans to that consumer at a
premium 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. Merchants also have enhanced abilities to differentiate
their products in terms of cost, brand, and quality.

PERSONALIZATION AND CUSTOMIZATION
E-commerce technologies permit personalization: merchants can target their
marketing messages to specific individuals by adjusting the message to a person’s
name, interests, and past purchases. Today this is achieved in a few milliseconds and
followed by an advertisement based on the consumer’s profile. The technology also
permits customization—changing the delivered product or service based on a user’s
preferences or prior behavior. Given the interactive nature 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
consumer’s past purchases and behavior can be stored and used by online merchants.
The result is a level of personalization and customization unthinkable with traditional
commerce technologies. For instance, you may be able to shape what you see on television
by selecting a channel, but you cannot change the contents of the channel you
have chosen. In contrast, the online version of the Financial Times allows you to select
the type of news stories you want to see first and gives you the opportunity to be alerted
when certain events happen. Personalization and customization allow firms to precisely
identify market segments and adjust their messages accordingly.
information density
the total amount and
quality of information
available to all market
participants
personalization
the targeting of marketing
messages to specific
individuals by adjusting
the message to a
person’s name, interests,
and past purchases
customization
changing the delivered
product or service based
on a user’s preferences
or prior behavior

SOCIAL TECHNOLOGY: USER-GENERATED CONTENT AND SOCIAL
NETWORKS
In a way quite different from all previous technologies, e-commerce technologies have
evolved to be much more social by allowing users to create and share content with a
worldwide community. Using these forms of communication, users are able to create
new social networks and strengthen existing ones.
All previous mass media in modern history, including the printing press, used a
broadcast model (one-to-many): content is created in a central location by experts (professional
writers, editors, directors, actors, and producers) and audiences are concentrated
in huge aggregates to consume a standardized product. The telephone would appear to
be an exception, but it is not a mass communication technology. Instead the telephone
is a one-to-one technology. E-commerce technologies have the potential to invert this
standard media model by giving users the power to create and distribute content on a
large scale, and permit users to program their own content consumption. E-commerce
technologies provide a unique, many-to-many model of mass communication.
Table 1.2 provides a summary of each of the unique features of e-commerce technology
and their business significance.

۱.۴ TYPES OF E-COMMERCE
There are a number of different types of e-commerce and many different ways to characterize
them. For the most part, we distinguish different types of e-commerce by the
nature of the market relationship—who is selling to whom. Mobile, social, and local
e-commerce can be looked at as subsets of these types of e-commerce.
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. B2C
e-commerce includes purchases of retail goods; travel, financial, real estate, and other
types of services; and online content. B2C has grown exponentially since 1995 and is the
type of e-commerce that most consumers are likely to encounter (see Figure 1.5).
Within the B2C category, there are many different types of business models. Chapter
۲
has a detailed discussion of seven different B2C business models: online retailers, service
providers,
transaction brokers, content providers, community providers/social networks,
market creators, and portals. Then, in Part 4, we look at each of these business models in