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                                                                         CHAPTER II 
                                                       THEORETICAL FRAMEWORK 
                               
                               
                              2.1. Internet and E-Commerce 
                                        Today, internet is not something new and exclusive. Most people are familiar 
                              with the words of the internet, either just listen or know, even as the user. According 
                              to  Laudon  &  Traver,  the  definition  of  Internet  is  an  interconnected  network  of 
                              thousands of networks and millions of computers (sometimes called host computers 
                              or just hosts) that linking businesses, educational institutions, government agencies, 
                              and individuals (Laudon & Traver, 2014, p. 98). In simple words, the definition of 
                              Internet is a worldwide network of computer networks built on common standards. 
                              Today’s Internet has evolved the last 50 or so years. The history of the Internet can be 
                              segmented into three phases as can we see in Figure 2.1. 
                                             Innovation                    Institutionalization             Commercialization
                                             1961 - 1974                       1975 - 1995                      1995 - Now
                                                                                                                                           
                                                       Figure 2.1 Stages in The Development of The Internet. 
                                                               Source: (Laudon & Traver, 2014, p. 100) 
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                                    We also can say that Internet as big infrastructure that connect mainframe 
                           computer and their users. People in the world can connect each other by using the 
                           Internet. As the author mentioned before, the development and growth of the Internet 
                           and its underlying technology has already influence of human life with services such 
                           as e-mail, apps, newsgroup, shopping, research, instant messaging, music, videos, and 
                           news. Those services are making the Internet identical with term of online because 
                           people can access those services throughout 24 hours. No matter if the rest of world 
                           asleep or even the sales office closed. Similar in tourism industry, all of traveling 
                           activities become easier than before. 
                                    E-commerce is the use of the Internet, the Web, and apps to transact business. 
                           More  formally,  digitally  enabled  commercial  transactions  between  and  among 
                           organizations and individuals (Laudon & Traver, 2014, p. 50). In its development, as 
                           we can see in Figure 2.1, the Internet entered the commercialization stages since 1995 
                           until  now.  There  are  eight  unique  features  of  e-commerce  technology  that  both 
                           challenge traditional business thinking and explain why we have so much interest in 
                           e-commerce.  They  are  ubiquity,  global  reach,  universal  standards,  richness, 
                           interactivity,    information     density,    personalization/customization,        and    social 
                           technology (Laudon & Traver, 2014, p. 50).  
                                    A brief explanation about each of the dimensions of e-commerce technology 
                           as following:  
                           1.   Ubiquity 
                                Ubiquity  is  a  synonym  for  omnipresence.  In  other  words,  ubiquity  can  be 
                                interpreted as everywhere. In traditional/conventional travel agent business, we 
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                                 need a physical office we visit in order to transact. A physical sales office has 
                                 limitation  in  coverage  area,  hours  of  operation,  and  human  resources.  E-
                                 commerce by its ubiquity, a travel agent is available just about everywhere, at all 
                                 times. 
                            2.   Global Reach 
                                 E-commerce  technology  allows  commercial  transactions  to  cross  cultural, 
                                 regional, and national boundaries far more conveniently and cost-effectively than 
                                 in  traditional  commerce. Thus, an online travel agent got the opportunities to 
                                 reach out travelers who will travel to Indonesia from international market.  
                            3.   Universal Standards 
                                 Standards,  means  the  technical  standards  of  the  Internet  for  conducting  e-
                                 commerce  that  shared  by  all  nations  around  the  world.  With  e-commerce 
                                 technologies, it is possible to easily find many of the suppliers, prices or other 
                                 information, such as, hotel/hostel availability with promo price.  
                            4.   Richness 
                                 It refers to richness of information to the complexity and content of a message. 
                                 The  Internet  has  the  potential  for  offering  considerably  more  information 
                                 richness  than  traditional  media  such  as  printing  presses,  radio,  and  television 
                                 because it is interactive and can adjust the message to individual users. Travel 
                                 agent can put all of its products through online on its website.  
                            5.   Interactivity 
                                 It means technology allows for two-ways communication between merchant and 
                                 consumer and among consumers. This e-commerce feature allowed online travel 
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                                 agent to interact with its customer about the product, price, discount/promo, or 
                                 term  and  condition.  Also,  the  technology  allow  consumer  to  share  the 
                                 information of online travel agent to other consumers, such as sharing by social 
                                 media.  
                            6.   Information Density 
                                 Information density is the total amount and quality of information available to all 
                                 market participants, consumers, and merchant alike. E-commerce technologies 
                                 reduce information collection, storage, processing, and also communication cost. 
                                 At the same time, these technologies greatly increase the currency, accuracy, and 
                                 usefulness of information.  
                            7.   Personalization/Customization 
                                 E-commerce  technologies  permit  personalization.  Merchants  can  target  their 
                                 marketing  messages  to  specific  individuals  by  adjusting  the  message  to  a 
                                 person’s name, interest, and past purchases. The e-commerce technologies also 
                                 permit  customization.  It  means  to  change  the  delivered  products  or  services 
                                 based on a user’s preferences or prior behavior.  
                            8.   Social Technology 
                                 In a way quite different from all previous technologies, e-commerce technologies 
                                 have  evolved  to  be  much  more  social  by  allowing  users  to  create  and  share 
                                 content with a worldwide community.  
                                     Those  unique  dimensions  of  e-commerce  technologies  suggest  many 
                            possibilities for marketing and selling – a powerful set of interactive, personalized, 
                            and rich messages are available for delivery to segmented, targeted audiences. E-