Electronic commerce

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Electronic commerce, commonly known as e-commerce, eCommerce or e-comm, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.

A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.

Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the seller's computer usually via the internet. There is no intermediary service. The sale and purchase transaction is completed electronically and interactively in real-time such as Amazon.com for new books. If an intermediary is present, then the sale and purchase transaction is called electronic commerce such as eBay.com.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions.

Contents

[edit] History

[edit] Early development

Originally, electronic commerce was identified as the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK.

From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.

In 1990, Tim Berners-Lee invented the WorldWideWeb web browser and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. Commercial enterprise on the Internet was strictly prohibited by NSF until 1995.[1] Although the Internet became popular worldwide around 1994 with the adoption of Mosaic web browser, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.

[edit] Timeline

[edit] Business applications

An example of an automated online assistant on a merchandising website.

Some common applications related to electronic commerce are the following:

[edit] Governmental regulation

In the United States, some electronic commerce activities are regulated by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive.[10] Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers’ personal information.[11] As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.

The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.[12]

[edit] Forms

Contemporary electronic commerce involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce.

On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An individual can go online to purchase anything from books or groceries, to expensive items like real estate. Another example would be online banking, i.e. online bill payments, buying stocks, transferring funds from one account to another, and initiating wire payment to another country. All of these activities can be done with a few strokes of the keyboard.

On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are very hot and pressing issues for electronic commerce.

[edit] Global Trends in E-Retailing and Shopping

Business models across the world also continue to change drastically with the advent of eCommerce and this change is not just restricted to USA. Other countries are also contributing to the growth of eCommerce. For example, the United Kingdom has the biggest e-commerce market in the world when measured by the amount spent per capita, even higher than the USA. The internet economy in UK is likely to grow by 10% between 2010 to 2015. This has led to changing dynamics for the advertising industry[13]

Amongst emerging economies, China's eCommerce presence continues to expand. With 384 million internet users,China's online shopping sales rose to $36.6 billion in 2009 and one of the reasons behind the huge growth has been the improved trust level for shoppers. The Chinese retailers have been able to help consumers feel more comfortable shopping online.[14]

[edit] Impact on markets and retailers

Economists have theorized that e-commerce ought to lead to intensified price competition, as it increases consumers' ability to gather information about products and prices. Research by four economists at the University of Chicago has found that the growth of online shopping has also affected industry structure in two areas that have seen significant growth in e-commerce, bookshops and travel agencies. Generally, larger firms have grown at the expense of smaller ones, as they are able to use economies of scale and offer lower prices. The lone exception to this pattern has been the very smallest category of bookseller, shops with between one and four employees, which appear to have withstood the trend.[15]

[edit] E-commerce types

E-commerce types represent a range of various schemas of transactions which are distinguished according to their participants.

[edit] Distribution Channels

E-commerce has grown in importance as companies have adopted Pure-Click and Brick and Click channel systems. We can distinguish between pure-click and brick and click channel system adopted by companies.

[edit] See also

[edit] Notes

  1. ^ Kevin Kelly: We Are the Web Wired magazine, Issue 13.08, August 2005
  2. ^ Tkacz, Ewaryst; Kapczynski, Adrian (2009). Internet - Technical Development and Applications. Springer. pp. 255. ISBN 978-3642050183. http://books.google.com/books?id=a9_NJIBC87gC&dq. Retrieved 2011-03-28. "The first pilot system was installing in Tesco in the UK (first demonstrated in 1979 by Michael Aldrich)." 
  3. ^ "eBay acquires PayPal". eBay. http://investor.ebay.com/releasedetail.cfm?ReleaseID=84142. 
  4. ^ "Press Release". Domain Name Wire. http://domainnamewire.com/2007/07/26/rh-donnelley-acquires-businesscom-for-345m/. 
  5. ^ "Press Release". TechCrunch. http://techcrunch.com/2009/07/22/amazon-buys-zappos/. 
  6. ^ "Press Release". Reuters. October 27, 2009. http://www.reuters.com/article/idUSBNG53538820091027/. 
  7. ^ "Press Release". MSNBC. http://www.msnbc.msn.com/id/40499923/ns/business-us_business/. 
  8. ^ "Forecast of eCommerce Sales in 2011 and Beyond". Forrester Research, Inc.. http://www.fortune3.com/blog/2011/01/ecommerce-sales-2011/. 
  9. ^ "Press Release". MarketWatch. http://www.marketwatch.com/story/amazon-buys-diaperscom-parent-in-545-mln-deal-2010-11-08/. 
  10. ^ "Advertising and Marketing on the Internet: Rules of the Road". Federal Trade Commission. http://www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.shtm. 
  11. ^ "Enforcing Privacy Promises: Section 5 of the FTC Act". Federal Trade Commission. http://www.ftc.gov/privacy/privacyinitiatives/promises.html. 
  12. ^ "H.R. 6353: Ryan Haight Online Pharmacy Consumer Protection Act of 2008". Govtrack. http://www.govtrack.us/congress/bill.xpd?bill=h110-6353&tab=summary. 
  13. ^ "news". Guardian.co.uk. http://www.guardian.co.uk/technology/2010/oct/28/net-worth-100bn-uk/. 
  14. ^ "China's migration to eCommerce". Forbes.com. January 18, 2010. http://www.forbes.com/2010/01/18/china-internet-commerce-markets-equities-alibaba.html/. 
  15. ^ "Economics focus: The click and the dead". The Economist: p. 78. July 3–9, 2010. http://www.economist.com/node/16478931. 

[edit] References

[edit] External links

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