Electronic commerce: 2001 vs 2011

When I take up teaching of Electronic Commerce (EC) this year (2011), I have the impression that 2011 is a year of watershed in EC. This is not obvious to my students, and I need to justify my viewpoint more explicitly. To start with, I referred to Michael Porter's article "Strategy and  the Internet" in Harvard Business Review, 2001 March. In this article, Porter argued that his famous theories of 5-Force Model and Value Chain analysis published in 1980 remained relevant for anaylyzing ecommerce in 2001 and that many dotc-com businesses failed because their strategies were seriously flawed. Porter also pointed out a few major observations: (a) very often Internet complemented business models practised by companies; business model/ practice cannibalization were not common at all; (b) there were lots of distorted market signals, for examples, in the form of cost, revenue and share price distortions; sustainable competitive advantages have to be established that respect business logic as explained in strategy management literature, notably Porter's writings in this subject domain.

This is not a place for me to explain all the ideas behind in the form of detailed lecture notes. I want to point out a few contemporary developments (2011) in Electronic Commerce theories and practices that, together, create a watershed in EC practices, the implications of which will become clearer as time goes by. They are:

a. Industry convergence negates the idea of distinctive industry which is a key concept in 5-Force Model analysis; strategy management theories such as hypercompetition and business ecosystem explicitly give up the idea of a clearly delimited industry boundary. Industry convergence, including digital convergence, is common these days.
b. The prevailing social media-based virtual environment has made a tremendous impact on the PEST (ie political, economic, social and technological) environment in many parts of the world which is also more globalized. One has to note the revolutions in North Africa, in which social media played a vital role. Social networking has had major impacts on people's life styles, including consumer behaviours in societies. Social networking activities generate lots of digital data that need to be analyzed to uncover valuable customer knowledge from these resources on a quite real0-time basis.
c. The PEST environment has also been much affected by the 2008 financial crisis and the natural disasters in different parts of the world, e.g. Japan. The environment in 2011 is very different from 2010. Talking about EC, EC in BRIC and Africa is now not a minor topic (as was in 2001), but a key topic in EC in 2011. EC in developing countries is different from that in developed countries.
d. Advancement in IT such as cloud computing, PC tablets and smartpones, social networking and location-based services, etc are interacting with each other to create a very different EC environment that enables many businesses to change rules of the games now and in the near future.

I am not arguing that EC practices, eBusiness (EB) models and the underlying Internet technologies are very totally new; however, as business phenomena to study, all these prevailing EC practices and in the near future are innovative, thus I consider there is a EC watershed in 2011. In 2011, we are still figuring  out ways to cope with EC phenomena, e.g. how to measure ROI on social networking-based marketing intiatives, how to apply EC to serve the consumers in the bottom of the pyramid markets in emerging countries and how to develop relevant marketing tactics in the social media-based virtual business ecosystem.

My view on EC watershed does not invalidate our existing EC/ EB theories. Transaction cost theory, core competence model, and, Porter's theories, etc remain power conceptual models to study EC/EB in 2011. However, they need to be critically reviewed and reconfigured by us to conduct proper EC/EB analysis in 2011. Learning these EC/EB theories from intelligent theorists improve our intellectual/ analytical capability so that we will not apply these theories in a rigid way. By studying these theories in the past and more updated theories made available to us from time to time, e.g. Marketing 3.0, we should be able to cope with business and social challenges arsing from the major changes taking place in EC/EB in 2011 and beyond.

Though our external environment and EC practices have been moulded by various forces/drivers that have been around for quite some time, quite a number of dramatic events, both natural and man-made, have taken place in 2011 (up to August). When all the EC and non-EC forces interact together, this creates buttefly effects and open up new possibilities in EC innovations. Due to this, I think 2011 is a watershed in EC.

Further readings:

1. Social media 2011: http://www.youtube.com/watch?v=uxzQPmrkCyM&feature=related
2. Mobile technology 2011: http://www.youtube.com/watch?v=orPYB741sqY&feature=related