The Revolution is Just Beginning

1. The Revolution is Just Beginning How is e-commerce different from e-business?

2. Is Facebook the new face of e-commerce? • Facebook has over 1.11 billion active users • More than 50% of active users log on daily • 169 million active users in the US • Average user has 130 friends • More than 75% users outside US • International audience third in size only to Google and Yahoo • FB positioned to be the embodiment of new kind of e-commerce called, “social e-commerce.” • FB is poised to become • Largest social search • Largest online content network • Largest social online ad network • The most privacy invading service on the Internet

3. Facebook and Privacy Concerns • Facebook was recently reported to have been tracking members even when they were logged out of Facebook through cookies. • Tracking without users’consent or knowledge not proper • Facebook states their mission is to “make the world more open and connected.” • New applications can potentially lead to more breaches • Timeline – a feature to help people share their life stories with friends online (currently Beta testing) • Ticker – • OpenGraph – users can hear and see the music and movies their friends like

4. OpenGraph • Partnered with Netflix and Spotify and others • Users will be able hear the music or look at films friends have stated a preference for in their profile • Spotify feels this higher level of involvement will make users twice as likely to pay for music. • Users simply move the curser over their friends images to hear/listen • Most users are unaware that any track you listen to is automatically shared with your FB friends … resulting in backlash against Spotify and FB

5. Facebook and the Future • The face of e-commerce to come? • A hornet’s nest of social and business controversies. • Goldman Sachs recently valued FB at $50B, but recent private trades have increased value to $87.5B (Apple $342.9B – iPhone now best selling product and enables access to FB) • Privacy record the worst amongst any of the large Internet companies • Subject to periodic user revolts • Increasing competition from smaller networks promising users complete control over personal information

6. Social E-Commerce • More than just showing ads for products and having users click their way off site to purchase something • More than using FB to promote a company’s wares • More than a search engine displaying ads • All these things listed above and more … • Example – Walt Disney Company released a FB app called “Disney Tickets Together” • Allowed users to buy TS3 tickets without leaving FB … just give Disney access to your personal information profile, enter a zip code and a list of nearby theaters and show times appears …

7. Walt Disney Company’s FB App • Option to invite FB friends as well as friends without FB accounts to the TS3 page • Success – over 5 million people “like” TS3 and large groups of tickets sold • Unique aspect • Transaction took place without leaving FB • FB evolving into an e-commerce platform like Amazon or eBay

8. How do you learn about new products? • Traditionally … • Friends • Relatives • Neighbors • colleagues • i.e., your social network • Mass media advertising plays a role but social networks play a key role for early adopters • We tend to consumer the same products our friends consume, listen to the same music, use the same service providers • The world is changing and we are doing our “social networking” on the Internet via sites like FB

9. How do you acquire the Products? • Social Network friend introduces you to a music track • You could ask where they bought it, use Google or another search engine OR what if it was available on FB without ever leaving the site? • FB benefits because you stay on site and FB can offer and introduce you to more products and services • How does this stay in line with the initial FB mission?

10. Facebook Emerges as a “social search” • The introduction to new products can lead to your friends recommendations on patronage • Expansion possible of recommendation on related networks as well • The FB search engine is based on your social networks and the members of your network • Ultimately every time you purchase a product or search information for a product your friends are notified • You assume an “influencer” role in a decision making process for your friends • The key is how well FB can invade its user’s privacy!!

11. Invasion of Privacy • FB and its founder, Mark Zuckerberg have tried to persuade users to give up their privacy and reveal details • Persuasion has not been effective. • Privacy is “no longer cool” • No Privacy policy replaced the “only friends will see profile” • Google search your name • FB Beacon Program (2007) • Automatically inform participating advertisers about user preferences • Negative feedback caused FB to abandon plan • December 2009 • FB released a privacy statement encouraging members to share information • Privacy is an “evolving social norm” what?? • April 2010 • Social Plug-Ins – implemented by outside websites • User hits “like” button and friends will know about it

12. SO who cares about Privacy? • In 1/2010 Zuckerburg declared the “age of privacy had come to an end” • Have social norms changed? Or is this wishful thinking of advertisers? • December 2009 – without user’s consent FB publishing name, profile gender • Pandora music selections automatically shared with friends and the entire Internet • May 2010 – bowing to intense pressure from foreign governments and Congress and privacy advocates, new privacy policy released

13. Privacy Policies • Privacy policies put billions of dollars at stake • Advertising and transaction fees • “Privacy Destruction” models involve users voluntarily posting information (or deceived) • Privacy was first confronted in the Roman Republic in 542 B.C. .. Limits held in all most major governments • FB flip flopped! • Since 2007 FB controls user content with less warning and control given to users

14. Privacy • “Like” Buttons • Alert friends browsing and purchasing from third party advertisers (like abandoned Beacon Program) • 2010 FB began dispersing information to Yelp, MS and Pandora without consent of users • MoveOn.org initially resisted the Beacon program and gained 50,000 members in 10 days • FB allowed “opt in” to appease users - a sham since Fandango, Blockbuster, Hotwire were all receiving information! 500,000 users joined online resistance  FB conducted an online survey regarding privacy Result – you own your information – new privacy policy required users to wade through 170 information categories 5/2010 – another apology for complicated process Resulted in Congressional interest FTC investigating FB policies

15. Competition • FB refuses to make “no sharing” the default option • Hopes to catch users not paying attention to “share” information • Smaller social networks such as Pip.io and OneSocialWeb, Crabgrass and Elgg are hoping to attract FB users

16. 1994-2010 E-Commerce (1st 30 seconds) • 1994 • E-commerce did not exist as we know it • By 2010 consumers spent $256 billion and businesses spent $3.6 trillion on services and products • 2010 • E-commerce had been reinvented TWICE! • Late 1990s period of business vision, experimentation and inspiration • Retrenchment, reevaluation resulted in the e-collapse in 2000-2001 • Market value fell by 90%

17. 1994-2011 • By 2001 many ready to write off e-commerce and predicted stagnating growth • WRONG! • 2002-2008 retail e-commerce grew at over 25% yearly • Transition again • Social network based model of e-commerce “social e-commerce intertwining with FB, Twitter, Photobucket, YouTube • Traditional Amazon style model continues alongside this new evolution • Why significant – viewership down for TV networks and cable, newspapers shriveling, magazines struggling

18. 2010 E-Commerce – The Revolution is beginning • Online consumer sales grew 12.7% • Traditional retail 2.5% • Growth in US via increased spending by existing buyers • Trust in buying more expensive “high touch” items such as electronics, apparel, furnishings • 221 million (2010) vs. 211 (2009) million online • 70% households online • 78% Internet users online daily • 62% send email • 49% use search engine • 43% get news • 38% social networking • 26% banking • 23% watch videos • 17% Wikipedia!

19. 2010 • 133 million have purchased online • Another 29 million conducted information search • Demographic profile is expanding • B2B - $3.6 trillion (30%) of total B2B • Internet technology gains depth and power 68% US households have DSL or broadband • 83 million have mobile access to Internet

20. Trends in E-Commerce 2010-2011 (Business) • New Social e-commerce emerging based on social networking and supported by advertising • FB 750 million users world wide • Twitter 145 million Tweeple • Consumer goods finding online markets • First wave of e-commerce transformed music, air travel, brokerages • 2nd Wave • Marketing/advertising, telecommunications, entertainment, real estate, bill payment • Small business entering using platforms of Apple, FB, Amazon, Google

21. 2010-2011 • Technology • Mobile applications and access on iPhones, Blackberries and other smartphones, netbooks and the iPad rivaling the PC platform • 250,00 apps in the Apple Store enabling the delivery of products and services • Computing and networking increasingly affordable • Cloud computing and Web services expand B2B • Realtime advertising • Global access 25% online • Society • 34 gigabytes daily consumption by the average American (increasing) • Traditional media losing subscribers • Explosive growth in online viewing • Social networking increasingly popular in all demos • China and India growth at 15-20% yearly • Virtual lives continue to grow as does self publishing

22. E-Commerce • The use of the Internet and the WWW to transact business • Commercial transactions refer to the exchange of value • No value, no commerce • E-Business • Digital enabling of transactions and processes within a firm, involving information systems under the control of the firm • E-Commerce • Involves transactions across entities

23. 8 Unique Features of E-Commerce Technology • Ubiquity • available everywhere at all times • Global Reach • Universal Standards i.e., Internet/technical standards • Richness • video, audio, text messaging • Interactivity • Technology works through the interaction with the user ( 2 way) • Information density • Reduces information costs and raises quality • Personalization/Customization • Social technology • User content generation and social networking

24. Web 2.0 – Play My Version • Users create, edit and distribute the content of others • Share preferences, bookmarks, online personas; • Participate in virtual lives and build online communities • Examples • Twitter – 140 character messages • 1,000% growth a year • YouTube –Google owned ($1.65B purchase) • 2 billion video streams daily • Photobucket • Posting and sharing photos, videos, emails, IM • One click shares to FB, MySpace • 100 million worldwide users

25. Web 2.0 – Play My Version • iPhones • 50 million sold by 2010 • Supports mobile versions of Web 2.0 applications • iPad • True platform for web commerce • Google • 179 million unique US visitors monthly • Wikipedia • Sharing of knowledge worldwide • Collaboratively edited, 3.4 million articles in English • 365 million unique visitors • Digg • Enables users to tag and share Web pages, vote on what like best, popular promoted to front page • WordPress • Create a blog or Website on the Web • Open Source product – free of charge written by a collaboration of volunteers

26. Types of E-Commerce • Business to Consumer E-Commerce • $255 billion in 2010 • Consumer to Consumer E-Commerce • eBay, Craigslist, $80 billion • B2B E-Commerce • $3.6 trillion in 2010 • Peer to Peer E-Commerce • Share files and computer resources • Mobile Commerce (M Commerce) • Wireless digital devices • Smart phones exploding the market and demand for high speed access

27. Growth of the Internet and the Web • The push behind the growth and significance is based upon the developments of the Web and the Internet • The Internet is a worldwide network of computer networks built on common standards. • The Internet (1960s) connected a small # of mainframes… now the largest network including over 1 billion computers • Links businesses, educational institutions, governmental agencies, individuals

28. Growth of the Internet and the Web • Internet hosts with domain names growth since1993 • Less than 10 million to 732 million in 245 countries as of 2010 (Internet Systems Consortium, 2010) • Diffusion of other technologies • Radio – 38 years for 30% share of hh • TV 17 years • Internet/Web – 53% in 10 yrs • WWW most popular service that runs on the Internet infrastructure • Killer application that made the Internet commercially appealing • Web developed in the early 90’s. • The billions of Web pages are indexed by Google, Yahoo! and other search engines

29. Spider Webs, Bow Ties, Scale Frees Networks and the Deep Web • Google id’d over 1 trillion web pages in 2008, by 2010 over 2 trillion • This constitutes a fraction of the Web universe • Hyperlinks allow the “Small World Theory” for social networks to play out .. Every human being connected by six degrees of separation  (Kevin Bacon!) • Web “small world theory” states that every Web page is separated by any other by just 19 clicks • IBM researchers found the Web not like a spider web but a bow tie • SCC – strongly connected component • Right side of bow tie is a set of 44 million OUT pages you could get to from center but could not return to the center from • OUT pages are corporate intranet and other Web site pages designed to trap you in a site when you land • Left side had 44 million IN pages from which you could get to the center but not travel to from the center • 43 million pages are “tendrils” do not link in or out from the center • 16 million pages disconnected from everything • UM found the Web significantly changed shape from 2005-2010 • Consolidation of the backbone of telecommunications providers and applications (90% of web traffic will be video by 2014).

30. B2b vs b2c E-Commerce • B2B E-commerce is about 10 times the size of B2C E-commerce. • By 2014 B2B is projected to reach $5.2 trillion • Fostered the development of thousands of entrepreneurial start ups, however, will most likely go the way of radio or automobiles and consolidate • B2C commerce is still a small part of overall $3.9 trillion retail market (slightly over 6%) • Current projections show all over B2C e-commerce by 2013 will still be less than Walmart’s 2008 revenue • However with double digit growth anticipated e-commerce should rise to 20% overall retail by 2020

31. Spider Webs, Bow Ties, Scale Frees Networks and the Deep Web • In reality the “small world theory” and the idea the Web connections will grow exponentially are not really supported • 75% chance that there is no path from one randomly chosen page to another  • Traffic moves along a very small number of super highways • The Deep Web • Google’s English language crawler does not crawl Chinese web sites and vice versa .. • Crawlable Web of 2 trillion pages or more is just apart of the larger unknown deep web • Possibly a trillion more pages that are proprietary or not linked to other pages • To be successful in e-commerce must stay connected … • Deeppeep.org looking at deep web