"E-Commerce lies at the heart of my vision for building a modern knowledge-driven economy" - Tony Blair.
The concept of ECommerce first came about in the early 1970s with the development of ECommerce applications such as the innovation of Electronic Funds Transfer (EFT). Electronic Funds Transfer allowed funds to be sent electronically from one organisation to another. However, this was limited to large, corporate businesses and financial institutions. Next in line came Electronic Data Interchange (EDI) which allowed not only large, corporate businesses and financial institutions to send funds electronically, but also allowed manufacturers, retailers, services and many other types of businesses to electronically transfer routine documents. Many other ECommerce applications such as stock trading and travel reservation systems evolved out of Electronic Data Interchange until finally the commercialisation of the Internet brought about the introduction of ECommerce (Turban, 2004, p.8).
Beginning life in 1969, the Internet was primarily used by a largely technical audience of U.S government agencies, academic researchers and scientists. However, in the early 1990s, when the Internet began to commercialise and users began to participate in the WWW, a large number of 'dot-coms' or 'Internet start-ups' appeared. The main reason for this rapid expansion was the development of new networks, protocols and ECommerce software. The other main reason for the birth of ECommerce was the increase in competition and other business pressures (Turban, 2004, pp.8-9).
Schneider (2003, p.4) defines ECommerce as "business activities conducted using electronic data transmission technologies, such as those used on the Internet and the WWW". It involves buying, selling, transferring or exchanging products, services and/or information via computer networks and is a major distribution channel for goods, services and managerial and professional jobs.
E-Commerce is often confused with E-business, with many people believing the two terms are interchangeable, when in fact this is incorrect. As opposed to E-Commerce, E-businesses create strategic opportunities and competitive advantage by adding value for customers and improving efficiency through the use of Internet and information technologies. E-Business deals with the models and strategies of the business itself. E-Commerce is a result of E-business, and deals with the technology-mediated physical transactions and exchanges between parties as well as electronically based intra- or inter-organisational activites that facilitate such exchanges. (See e-commerce characteristics following perspectives.)
According to Turban (2004, p.3), ECommerce can be defined from many perspectives. These perspectives are:
Communications - ECommerce is the delivery of goods, services, information, or payments over computer networks or by any other electronic means.
Commercial (trading) - ECommerce provides the capability of buying and selling products, services and information on the Internet and via other online services.
Business Process - ECommerce is doing business electronically by completing business processes over electronic networks.
Service - ECommerce is a tool that addresses the desire of governments, firms, consumers, and management to cut service costs while improving the quality of customer service and increasing the speed of service delivery.
Learning - ECommerce is an enabler of online teaching and education in schools, universities, and other organisations, including businesses.
Collaboration - ECommerce is the framework for inter-organisational and intra-organisational collaboration.
Community - ECommerce provides a gathering place for community members to learn, transact and collaborate.
In addition to these perspectives, E-Commerce can be characterised by several attributes, as detailed further in the QUT School of International Business, McGrawHill/QUT Custom published “Introduction to e-business� (2004) textbook:
• It is about the exchange of digitized information between parties. Between individuals or organisations, this information exchange can be represented by “communications between two parties, coordination of the flow of goods and services, or transmission of electronic orders.� (p. xiii)
• It is technology-enabled. The crux of e-commerce, “e� being anything electronic, not only the Internet/computers. Essentially this means transactions can be managed using technology, as opposed to strictly human interaction.
• It is technology-mediated. This refers to the change from the “marketplace� to the “marketspace� and the fact that computers and machines initially manage customers and their expectations, rather than being done through human-to-human contact.
• It includes intra- and interorganisational activities that support the exchange. This means that e-commerce relates not only to relations with external parties – customers, suppliers, partners, competitors and markets – but also how they “operate internally in managing activities, processes and systems.� (p. xiii)
ECommerce is constantly changing economies, markets and industry structure, products and services and their flow. This includes changing consumer segmentation, consumer values and consumer behaviour. However, ECommerce has always had a major impact on society and politics and in particular the way we view the world and ourselves in it (Turban, 2004, p.3). During the last few years, ECommerce has brought about successful virtual companies such as ebay.com. EBAy is the world's number one online auction site in which people can buy and sell almost anything they want, within reason. EBay allows shoppers to browse items from the comfort of their homes or offices, at any time of the day or night (School of Advertising, Marketing and Public Relations, 2003, p.6).
When conducting business electronically, it is important to realise that there are four major catagories of E-Commerce. These are business-to-consumer (B2C),business-to-business (B2B), consumer-to-consumer (C2C – may also be referred to as Peer-2-Peer) and consumer-to-business (C2B) (School of International Business, 2004, p.xiv). . Business-to-consumer involves online transactions being made between businesses and individual consumers such as the selling of products and services. Business-to-business involves businesses making online transactions with other businesses (Thanasankit, 2003, p.152). Consumer-to-consumer or Peer-to-peer is characterised by exchanges that “involve transactions between and among consumers� (School of International Business, 2004, p.xiv) (the most well-known and prevalent example being eBay), and these exchanges can include third-party involvement, who facilitates and provides the infrastructure, place and governance for these transactions/exchanges. (These are also known as Online Market Makers.) Finally, consumer-to-business transactions occur when consumers band together to present themselves as a buyer group in a C2B relationship. Offline, the best example of this is Union Shopper and online SpeakOut.com. These groups may be economically or socially motivated.
E-Commerce and its four distinct categories make up what is known as virtual communities or online communities. Virtual communities are groups of "people with similar interests who interact with one another using the Internet" (Turban, 2004, p.692). Virtual communities exist as various forms, including Usernet newsgroups, chat rooms, Web sites and more. Essentially, virtual communities exist to serve the exchange of services, information, and to a lesser extent, goods. Within the world of E-Commerce, exists what is known as E-Learning. E-Learning is the online delivery of information for purposes of education, training or knowledge management.
Although E-Commerce is still not widely used (according to the U.S. Department of Commerce, about 31% of American Internet users in 2001 purchased goods online), it is playing an increasingly prevalent role in the lives of consumers, particularly those already using the Internet. Doing business on the Web requires most of the same activities and components needed to successfully conduct business in the offline arena. There are six key components of running an e-commerce store or business: placement, merchandise and audience size, presentation, payment, security and fulfillment.
Placement: There is no perceived distance between websites, which means that a website must be highly visible and easily found. (School of International Business, 2004, p.75)
Merchandise and audience size: Just like a bricks-and-mortar store, a website must be evaluated and managed to a point that ensures the store is large enough to accommodate its customers and products. Normal stores must have adequate parking – e-commerce stores need adequate bandwidth, processing power and data storage capacity. (School of International Business, 2004, p.76)
Presentation: This includes a variety of components that add or detract from a store’s or product’s appeal to customers. For e-commerce stores, primarily this refers to the user-interface and customer service.
Payment: The main payment concern among first time Internet shoppers is the concept of the “virtual�. Sometimes it may seem like your money will just disappear, lost in the space that is the World Wide Web. E-commerce encourages payment transactions which do not require physical funds (like cash) but instead involve only data transfer (credit/debit cards). (School of International Business, 2004, p.82)
Security: “The unique nature of the threats to e-commerce companies requires new technologies and systems to provide a secure transaction environment.� (School of International Business, 2004, p.85) Tying in with many payment issues, the security of websites can never be 100% assured, however several technologies can be employed to help reduce the risk of information being compromised when conducting e-commerce transactions.
Fulfillment: Issues surrounding fulfillment of e-commerce transactions are very similar to that of mail/phone-order catalogues. The burden of delivery is on the merchant, as goods cannot be simply shipped off in bulk to distribution channels – they must be individually packed and delivered to customers. (School of International Business, 2004, p.91)
Why do so many people turn to ECommerce? Why have so many virtual communities formed? The answer to these questions is simply that ECommerce has so many benefits. According to Turban (2004, p.16) "few innovations in human history encompass as many benefits as ECommerce does". Not only does ECommerce provide benefits to organisations, but also to consumers and society. And while E-Commerce is spreading as quickly as the uptake of the Internet itself, the biggest limitation for pure-play (PDF) E-Commerce is still the fact that the only customers you have, are the ones online.
It is also important to consider the legal and ethical issues associated with ECommerce. Legal issues can be distinguished from ethical issues by the fact that with legal issues, laws are enacted by governments and developed through case precedents. Laws are strict legal rules governing the acts of citizens and if a citizen breaks the law, they have done something illegal and can be held liable for punishment by the legal system. On the other hand, ethical issues deal with what is considered to be right and wrong. However, what is unethical is not necessarily illegal. Instead "ethics are supported by common agreement in a society as to what is right and wrong, but they are not subject to legal sanctions (except when they overlap with activities that are also illegal)" (Turban, 2004, p.644).
E-Commerce is important to many businesses, particularly those who cannot afford to invest in a bricks and mortar store. For small businesses, or those who are forced to conduct business from home, the growth of e-commerce has furthered access to a large, global and ever-growing market of Internet users who are happily buying (and selling) online. As eBay goes to show, just about anyone can ‘set up shop’ online and run a successful business. Any form of e-business or e-commerce – technology mediated – transactions will only continue to expand and converge the marketplace, make buying and selling easier and more convenient, and give greater ‘power of knowledge and information’ to every consumer.
ECommerce has had a major influence on people today. It has influenced the way in which people communicate, learn, buy and sell and the list goes on. According to Turban (2004, p.10) "today's predictions about the future size of ECommerce, provided by respected analysts such as AMR Research, Emarketer.com and Forrester, vary". The total online shopping and B2B transactions in the United States for 2004 were estimated to be in the range of $3 to $7trillion. The number of Internet users worldwide is predicted to reach 750 million by 2008. Experts predict that almost 50% of these 750 million Internet users will shop online by that time. Not only will ECommerce growth come from B2C, but also B2B and newer applications such as e-government, e-learning, business-to-employee and c-commerce.
Is it also predicted that a single chain of E-Commerce will eventually emerge. This means that the supply chain which makes transactions possible will converge to form a subset of B2B, B2C, C2C and B2C, intimately linking categories of E-Commerce in “a broader network of supply and demand.� (School of International Business, 2004, p. xv)
The future for ECommerce is looking positive. The growth of the field will continue in the foreseeable future (Turban, 2004, p.10).
For further information, please access the following sub-topics:
1.ECommerce_-_Benefits
2.ECommerce_-_Legal and Ethical Issues
3.ECommerce_-_E-Learning
4.ECommerce_-_Virtual_Communities
5.ECommerce_-_Business2Consumer
1.ECommerce_-_Consumer2Consumer
2.ECommerce_-_Business2Business
3.ECommerce_-_Security
4.ECommerce_-_Payment
5.ECommerce_-_Fulfillment
ECommerce_-_Reference List and Bibliography
E-Commerce is also related to many other topics in the Wiki Encyclopedia and other outside Web resources. Please click on all the highlighted links for further information.
See:
E-Business
EBay
Melanie Mackrodt 15:59, 9 Sep 2004 (EST)
Catherine Cherry 01:33, 10 Sep 2004 (EST)
