22 C H A P T E R 1 T h e R e v o l u t i o n I s J u s t B e g i n n i n g
Mobile E-commerce (M-commerce)
mobile e-commerce Mobile e-commerce, or m-commerce, refers to the use of mobile devices to enable
(m-commerce) online transactions. Described more fully in Chapter 3, m-commerce involves the use
use of mobile devices to of cellular and wireless networks to connect laptops, smartphones such as the iPhone,
enable online transactions
Android, and BlackBerry, and tablet computers such as the iPad to the Internet. Once
connected, mobile consumers can conduct transactions, including stock trades, in-store
price comparisons, banking, travel reservations, and more. Mobile retail purchases
are expected to reach almost $40 billion in 2013 (almost double that of 2012) and to
grow rapidly in the United States over the next five years (eMarketer, Inc., 2013a).
Local E-commerce
local e-commerce Local e-commerce, as its name suggests, is a form of e-commerce that is focused on
e-commerce that is focused engaging the consumer based on his or her current geographic location. Local mer-
on engaging the consumer chants use a variety of online marketing techniques to drive consumers to their stores.
based on his or her current Local e-commerce is the third prong of the social, mobile, local e-commerce wave, and
geographic location is expected to grow in the United States from $3.6 billion in 2011 to an estimated $4.4
billion in 2013 (eMarketer, Inc., 2012b).
Figure 1.5 illustrates the relative size of all of the various types of e-commerce.
Growth of the Internet, Web, and Mobile Platform
The technology juggernauts behind e-commerce are the Internet, the Web, and increas-
ingly, the mobile platform. We describe the Internet, Web, and mobile platform in
Internet some detail in Chapter 3. The Internet is a worldwide network of computer networks
worldwide network of built on common standards. Created in the late 1960s to connect a small number of
computer networks built mainframe computers and their users, the Internet has since grown into the world’s
on common standards largest network. It is impossible to say with certainty exactly how many computers
and other wireless access devices such as smartphones are connected to the Internet
worldwide at any one time, but the number is clearly more than 1 billion. 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 [Link] domain,
which is a special part of the DNS namespace that resolves IP addresses into domain
names.) In July 2013, there were almost 1 billion Internet hosts in over 245 countries,
up from just 70 million in 2000 (Internet Systems Consortium, 2013).
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
World Wide Web (the for the Internet/Web to achieve a 53% share of U.S. households once a graphical user
Web) interface was invented for the Web in 1993.
provides easy access to The World Wide Web (the Web) is one of the most popular services that runs
Web pages on the Internet infrastructure. The Web was the original “killer app” that made the
E-commerce: The Revolution Is Just Beginning 23
FIGURE 1.5 THE RELATIVE SIZE OF DIFFERENT TYPES OF
E-COMMERCE
B2B e-commerce dwarfs all other forms of e-commerce; mobile, social, and local e-commerce, although
growing rapidly, are still relatively small in comparison to “traditional” e-commerce.
Internet commercially interesting and extraordinarily popular. The Web was devel-
oped 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. You can find an exceptionally wide range
of information on Web pages, ranging from 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 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, colorful multimedia 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 even 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
24 C H A P T E R 1 T h e R e v o l u t i o n I s J u s t B e g i n n i n g
pages, and also because the size of the Web universe is unknown. Google has identified
over 30 trillion unique URLs, up from 1 trillion in 2008, although many of these pages
do not necessarily contain unique content. Today, it is likely that Google indexes at
least 120 billion Web pages, if not more. In addition to this “surface” or “visible” Web,
there is also the so-called “deep Web” that is reportedly 1,000 to 5,000 times greater
than the surface Web. The deep Web contains databases and other content that is not
routinely indexed by search engines such as Google. 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 is the newest “latest and greatest” development in Internet
mobile platform infrastructure. The mobile platform provides the ability to access the Internet from
provides the ability to a variety of mobile devices such as smartphones, tablets, and other ultra-lightweight
access the Internet from a laptop computers via wireless networks or cell phone service. In 2013, there are over
variety of highly mobile 363 million mobile devices in the United States that can be connected to the Internet
devices such as smart- (more than 1 device for each person in the United States), and that number is expected
phones, tablets, and other
to grow to almost 400 million by 2017 (eMarketer, Inc., 2013b). Figure 1.6 illustrates
ultra-lightweight laptop
the rapid growth of mobile Internet access.
computers
Read Insight on Technology: Will Apps Make the Web Irrelevant? for a look at the chal-
lenge that apps and the mobile platform pose to the Web’s dominance of the Internet
ecosphere.
Origins and Growth of E-commerce
It is difficult to pinpoint just when e-commerce began. There were several precursors
to e-commerce. In the late 1970s, a pharmaceutical firm named Baxter Healthcare
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 environ-
ment. The 1980s saw the development of Electronic Data Interchange (EDI) standards
that permitted firms to exchange commercial documents and conduct digital com-
mercial transactions across private networks.
In the B2C arena, the first truly large-scale digitally enabled transaction system
was deployed in France in 1981. The Minitel was a French videotext system that
combined a telephone with an 8-inch screen. By the mid-1980s, more than 3 million
Minitels were deployed, and more than 13,000 different services were available,
including ticket agencies, travel services, retail products, and online banking. The
Minitel service continued in existence until December 31, 2006, when it was finally
discontinued by its owner, France Telecom.
However, none of these precursor systems had the functionality of the Internet.
Generally, when we think of e-commerce today, it is inextricably linked to the Inter-
net. For our purposes, we will say e-commerce begins in 1995, following the appear-
ance of the first banner advertisements placed by AT&T, Volvo, Sprint, and others on
[Link] in late October 1994, and the first sales of banner ad space by Netscape
and Infoseek in early 1995. Since then, e-commerce has been the fastest growing form
of commerce in the United States.
E-commerce: The Revolution Is Just Beginning 25
Figure 1.6 Mobile Internet Access in the United States
Continued growth in the number of people using mobile phones and tablets to connect to the Internet will
provide a significant stimulus to mobile e-commerce.
SOURCES: Based on data from eMarketer, Inc., 2013c, 2013d, 2013e.
26 C H A P T E R 1 T h e R e v o l u t i o n I s J u s t B e g i n n i n g
Insight on Technology
Will Apps Make the Web Irrelevant?
Nowadays, it’s hard to recall a In June 2011, the amount of time users spent
time before the Web. How did we on apps overtook the amount of time users spent
get along without the ability to pull on desktops and the mobile Web for the first time.
up a Web browser and search for any Consumers have gravitated to apps for several
item, learn about any topic, or play just reasons. First, smartphones and tablet comput-
about any type of game? Though the Web has ers enable users to use apps anywhere, instead of
come a remarkably long way from its humble being tethered to a desktop or having to lug a heavy
beginnings, many experts claim that the Web’s laptop around. Of course, smartphones and tablets
best days are behind it, and that there’s a new enable users to use the Web too, but apps are often
sheriff in town: apps. Opinions vary widely over more convenient and boast more streamlined,
the future role of the Web in a world where apps elegant interfaces than mobile Web browsers.
have become an ever larger portion of the Internet Not only are apps more appealing in certain
marketspace. In 10 years, will Web browsers be ways to consumers, they are much more appealing
forgotten relics, as we rely entirely on apps to do to content creators and media companies. Apps
both our work and our play on the Internet? Will are much easier to control and monetize than
the Web and apps coexist peacefully as vital cogs Web sites, not to mention they can’t be crawled by
in the Internet ecosystem? Or will the app craze Google or other services. On the Web, the average
eventually die down as tech users gravitate back price of ads per thousand impressions is falling,
towards the Web as the primary way to perform and after twenty years, many content providers
Internet-related tasks? are still mostly struggling to turn the Internet into
Apps have grown into a disruptive force ever a profitable content delivery platform. Much of
since Apple launched its App Store in 2008. The software and media companies’ focus has shifted
list of industries apps have disrupted is wide- to developing mobile apps for this reason.
ranging: communications, media and entertain- These trends are why some pundits boldly
ment, logistics, education, and healthcare. The proclaim that “the Web is dead,” and that the
average U.S. consumer spends over 2 and a shift from the Web to apps has only just started.
half hours per day on smartphones and tablets, These analysts believe that the Internet will be
80% of which is spent within apps. Despite not used to transport data, but individual app inter-
even existing prior to 2008, apps account for faces will replace the Web browser as the most
$25 billion in revenues, and the app economy common way to access and display content. Even
is continuing to show robust growth, suggesting the creator of the Web, Tim Berners-Lee, feels
it is nowhere near saturated. Not only that, but that the Web as we know it is being threatened.
the growth is not coming from more users trying That’s not a good sign.
the same small number of apps. Consumers are But there is no predictive consensus about
trying new apps all the time, leaving plenty of the role of the Web in our lives in the next decade
room for new app developers to innovate and and beyond. Many analysts believe the demise of
create best-selling apps. the Web has been greatly exaggerated, and that
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