Electronic commerce

From Wikipedia, the free encyclopedia

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. It is more than just buying and selling products online. It also includes
the entire online process of developing, marketing, selling, delivering, servicing and paying for
products and services. 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
 1 History
o 1.1 Early development
o 1.2 Timeline
 2 Business applications
  3 Governmental regulation
 4 Forms
 5 Global Trends in E-Retailing and Shopping
 6 Impact on markets and retailers
 7 E-commerce types
 8 Distribution Channels
 9 See also
 10 Notes
 11 References
 12 External links

History
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.

Timeline

 1979: Michael Aldrich invented online shopping[2]

 1981: Thomson Holidays, UK is first B2B online shopping[citation needed]
 1982: Minitel was introduced nationwide in France by France Telecom and used for
online ordering.
 1984: Gateshead SIS/Tesco is first B2C online shopping and Mrs Snowball, 72, is the
first online home shopper[citation needed]
  1985: Nissan UK sells cars and finance with credit checking to customers online from
dealers' lots.[citation needed]
 1987: Swreg begins to provide software and shareware authors means to sell their
products online through an electronic Merchant account.[citation needed]
 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT
computer.
 1994: Netscape releases the Navigator browser in October under the code name Mozilla.
Pizza Hut offers online ordering on its Web page. The first online bank opens. Attempts
to offer flower delivery and magazine subscriptions online. Adult materials also become
commercially available, as do cars and bikes. Netscape 1.0 is introduced in late 1994 SSL
encryption that made transactions secure.
 1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-
only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to
aggressively use Internet for commercial transactions. eBay is founded by computer
programmer Pierre Omidyar as AuctionWeb.
 1998: Electronic postal stamps can be purchased and downloaded for printing from the
Web.
 1998: Alibaba Group is established in China. And it leverage China's B2B and C2C,
B2C(Taobao) market by it's Authentication System.
 1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in
1997 for US $149,000. The peer-to-peer filesharing software Napster launches. ATG
Stores launches to sell decorative items for the home online.
 2000: The dot-com bust.
 2002: eBay acquires PayPal for $1.5 billion.[3] Niche retail companies CSN Stores and
NetShops are founded with the concept of selling products through several targeted
domains, rather than a central portal.
 2003: Amazon.com posts first yearly profit.
 2007: Business.com acquired by R.H. Donnelley for $345 million.[4]
 2009: Zappos.com acquired by Amazon.com for $928 million.[5] Retail Convergence,
operator of private sale website RueLaLa.com, acquired by GSI Commerce for $180
million, plus up to $170 million in earn-out payments based on performance through
2012.[6]
 2010: Groupon reportedly rejects a $6 billion offer from Google. Instead, the group
buying websites plans to go ahead with an IPO in mid-2011.[7]
 2011: US eCommerce and Online Retail sales projected to reach $197 billion, an increase
of 12 percent over 2010.[8] Quidsi.com, parent company of Diapers.com, acquired by
Amazon.com for $500 million in cash and plus $45 million in debt and other obligations.
[9]

Business applications
An example of an automated online assistant on a merchandising website.Some common
applications related to electronic commerce are the following:

 Document automation in supply chain and logistics

  Domestic and international payment systems
 Enterprise content management
 Group buying
 Automated online assistants
 Instant messaging
 Newsgroups
 Online shopping and order tracking
 Online banking
 Online office suites
 Shopping cart software
 Teleconferencing
 Electronic tickets

Governmental regulation
The examples and perspective in this United States may not represent a worldwide view of the
subject. Please improve this article and discuss the issue on the talk page. (March 2011)

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]

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.

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]

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]

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

 Business-to-Business (B2B)
 Business-to-Consumer (B2C)
 Business-to-Employee (B2E)
 Business-to-Government (B2G) (also known as Business to Administration or B2A)
 Business-to-Machines (B2M)
 Business-to-Manager (B2M)
 Consumer-to-Business (C2B)
 Consumer-to-Consumer (С2C)
 Citizen-to-Government (also known as Consumer-to-Administration or C2A)
 Government-to-Business (G2B)
  Government-to-Citizen (G2C)
 Government-to-Employee (G2E)
 Government-to-Government (G2G)
 Manager-to-Consumer (M2C)
 Peer-to-Peer (P2P)

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.

 Pure-Click companies are those that have launched a website without any previous
existence as a firm. It is imperative that such companies must set up and operate their e-
commerce websites very carefully. Customer service is of paramount importance. Ex:
AMAZON.com
 Brick and Click companies are those existing companies that have added an online site
for e-commerce. Initially, Brick and Click companies were skeptical whether or not to
add an online e-commerce channel for fear that selling their products might produce
channel conflict with their off-line retailers, agents, or their own stores. However, they
eventually added internet to their distribution channel portfolio after seeing how much
business their online competitors were generating. Ex: futurebazaar.com