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Chapter 10 E-commerce: Digital Markets, Digital Goods 405

• About 122 million Americans now access the Internet using a smartphone
such as an iPhone, Droid, or BlackBerry. Mobile e-commerce has begun a
rapid growth based on apps, ring tones, downloaded entertainment, and
location-based services. Mobile commerce will add up to about $11.7 billion
in 2012 (roughly double 2010’s revenue). Amazon sold an estimated $1.5
billion in retail goods to mobile users in 2011. In a few years, mobile phones
will be the most common Internet access device. Currently half of all mobile
phone users access the Internet using their phones.
• On an average day, an estimated 158 million adult U.S. Internet users go
online. About 114 million send e-mail, 114 million use a search engine, and
87 million get news. Around 93 million use a social network, 46 million do
online banking, 54 million watch an online video, and 33 million look for
information on Wikipedia (Pew Internet & American Life Project, 2012).
• B2B e-commerce-use of the Internet for business-to-business commerce and
collaboration among business partners expanded to more than $4.1 trillion.

The e-commerce revolution is still unfolding. Individuals and businesses
will increasingly use the Internet to conduct commerce as more products
and services come online and households switch to broadband telecommu-
nications. More industries will be transformed by e-commerce, including
travel reservations, music and entertainment, news, software, education, and
finance. Table 10.1 highlights these new e-commerce developments.

WHY E-COMMERCE IS DIFFERENT

Why has e-commerce grown so rapidly? The answer lies in the unique nature of
the Internet and the Web. Simply put, the Internet and e-commerce technologies
are much more rich and powerful than previous technology revolutions like
radio, television, and the telephone. Table 10.2 describes the unique features
of the Internet and Web as a commercial medium. Let’s explore each of these
unique features in more detail.

Ubiquity
In traditional commerce, a marketplace is a physical place, such as a retail
store, that you visit to transact business. E-commerce is ubiquitous, meaning
that is it available just about everywhere, at all times. It makes it possible
to shop from your desktop, at home, at work, or even from your car, using
smartphones. The result is called a marketspace—a marketplace extended
beyond traditional boundaries and removed from a temporal and geographic
location.
From a consumer point of view, ubiquity reduces transaction costs—the
costs of participating in a market. To transact business, it is no longer necessary
that you spend time or money traveling to a market, and much less mental
effort is required to make a purchase.

Global Reach
E-commerce technology permits commercial transactions to cross cultural and
national boundaries far more conveniently and cost effectively than is true in
traditional commerce. As a result, the potential market size for e-commerce
merchants is roughly equal to the size of the world’s online population
(estimated to be more than 2 billion).
In contrast, most traditional commerce is local or regional—it involves local
merchants or national merchants with local outlets. Television, radio stations

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