E-Commerce Notes #6

Phases of development of e-commerce:

E-commerce phases can be broadly classified

E-Commerce I - Period of explosive growth (1995-2000)

E-Commerce II - Current Era (beginning 2001)

Vision behind E-Commerce I  :

• Existence of internet : availability of PCs, LAN
• Starting of Bertrand market: It’s a market where price, cost, quality  info. Is equally distributed, where infinite set of suppliers compete against one-another. Merchants have direct access to all relevant market info. Worldwide. 
• Development of shopping  bot : It’s a program that automatically searches web for best prices and delivery times.
• Cost of searching fell : There was a limit that end of wasteful ad campaigns which were meant to ….
•  Reduction of info. Asymmetry 
• Dis-Intermediation : Implies disappearance of market middleman, i.e. displacement of market middleman who traditionally are intermediaries between producer and the consumer by a new direct relationship between manufacturers and content originators with their customers. E.g. distributor, wholesaler, etc. 
• Friction free commerce : A vision of commerce in which info. was equally distributed, transaction cost are low, price are dynamically adjusted to reflect actual demand. Intermediaries and unfair competitors are eliminated. Usage of communication tech. which are universal, powerful but inexpensive. 
• First movers : E-comm I was a blessing for first-movers. The entrepreneurs a firm that is first to the market in a particular area and that moves up quickly to get a market share. Establishing a large customer base quickly, building brand names early and most benevolent.