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Evolution of E-Commerce

E-Commerce I:  Period of explosive growth in e-commerce beginning in 1995 & ending in 2000

Vision & Forces behind  E-commerce I:1995-2000

1.  Internet -> PC -> LAN
2.  Start of Bertrand market where price,cost,quality of information is equally distributed where infinite set of suppliers compete against one another.  Merchant have direct access to all relevant market information world wide
3.  Use of Shopping Bot: Program automatically searches entire web for best prices and delivery times.
4. Cost of searching customer fall -reducing wastage of advertisement.
5. Reducing information asymmetry
6. Dis-inter mediation: Disappearance of  market middle man [Distribution ,whole seller who are intermediates]

"Displacement of market middle man who traditionally are intermediaries between producers and consumers by a new direct relationship between manufacturers and content originators with their customers.

Essential Features

1.  Friction- Free Commerce:  A vision of commerce in which information is equally distributed,transaction cost are low,price can be dynamically adjusted to reflect actual demand,intermediaries decline and unfair competetive advantage are eliminated.

2.  First Movers : A firm that to market in a particular area & that moves quickly to get market share establishing large customer base quickly,build brand name recognition early and who move quickly to get market share.

3. Network Effect -  occurs where users receive value from the fact that everyone else uses the same tool or product. Such effect occurs when all participant receive value from fact that every one else uses same tool and product such as a common operating system

  • Technology driven

  • Revenue growth emphasis

  • Venture capital financing

  • ungoverned

  • Entrepreneurial

  • Dis-intermediation

  • Perfect market

  • Pure Online Strategies

  • Fist Mover Advantage


    • E-Commerce II:  Current era of e-commerce beginning in 2001




    1. Business Driven

    2. Earning & Profit Emphasis

    3. Traditional Financing

    4. strong regulation and governance

    5. large Traditional Firms

    6. Strengthening Inter-mediation

    7. Imperfect Market

    8. Brands and Network Effect 

    9. Mixed Click  and brick strategies 

    10. Strategic follower strength

      11. The crash in the stock market valies from E-Commerce I companies through out 2000 was due to many reasons.

      1. Enormous information technology capital expenditure
      2. Challenges of Y2K
           Change from 1999 to 2000 was threat to computer system 
      In early  2000 it became clear that telecommunication industry had built excess capacity in high soeeed fibre optic network. Price wars were breaking out in telecomunication market, earning in this sector fell dramatically with many smaller firms getting bankrupt and were not able to pay debt.
      3.  1999 E-Commerce christmas season did nort provide much sales growth at all showing e-commerce is not that easy. Some .com retailers like eToys.com could not deliver in a timely fashion hurting B2C credibility.
      4. The valuations of  .com and technology has risen so high that even supporters were questioning whether earning will be more than price or not.  Dilemia whether they will ever turn profitable or not.
      5. Stock market crash - Led to reassessment of prospects of e-commerce technology and methods of achieving business success.

      As a result of thos outbreak E-commerce II started in Jan 2001 with key features like

      1. Stunning technologies 
      2. Enhancement and Strengthening of E-commerce digital infrastructure




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