E-commerce

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V
T
E
Electronic commerce, commonly known as E-commerce or eCommerce, is trading in products
or services conducted via computer networks such as the Internet. Electronic commerce draws
on technologies such as mobile commerce, electronic funds transfer,supply chain
management, Internet marketing, online transaction processing, electronic data
interchange (EDI), inventory management systems, and automated data collectionsystems.
Modern electronic commerce typically uses the World Wide Web at least at one point in the
transaction's life-cycle, although it may encompass a wider range of technologies such as e-
mail, mobile devices, social media, and telephones as well.
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 business
transactions. This is an effective and efficient way of communicating within an organization and
one of the most effective and useful ways of conducting business. It is aMarket entry
strategy where the company may or may not have a physical presence.
E-commerce can be divided into 7 subsections:
Etail or "virtual storefronts" on websites with online catalogs, sometimes gathered into a
"virtual mall"
Buying or selling on websites and/or online marketplaces
The gathering and use of demographic data through web contacts and social media
Electronic data interchange, the business-to-business exchange of data
E-mail and fax and their use as media for reaching prospective and established customers
(for example, with newsletters)
Business-to-business buying and selling
The security of business transactions
Contents
[hide]
1 Timeline
2 Business applications
3 Governmental regulation
4 Forms
5 Global trends
6 Impact on markets and retailers
7 Distribution channels
8 See also
9 References
10 Further reading
11 External links
Timeline[edit]
A timeline for the development of e-commerce:
1971 or 1972: The ARPANET is used to arrange a cannabis sale between students at
the Stanford Artificial Intelligence Laboratoryand the Massachusetts Institute of Technology,
later described as "the seminal act of e-commerce" in John Markoff's book What the
Dormouse Said.
[1]

1979: Michael Aldrich demonstrates the first online shopping system.
[2]

1981: Thomson Holidays UK is first business-to-business online shopping system to be
installed.
[3]

1982: Minitel was introduced nationwide in France by France Tlcom and used for online
ordering.
1983: California State Assembly holds first hearing on "electronic commerce" in Volcano,
California.
[4]
Testifying are CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone, and
Pacific Telesis. (Not permitted to testify is Quantum Technology, later to become AOL.)
1984: Gateshead SIS/Tesco is first B2C online shopping system
[5]
and Mrs Snowball, 72, is
the first online home shopper
[6]

1984: In April 1984, CompuServe launches the Electronic Mall in the USA and Canada. It is
the first comprehensive electronic commerce service.
[7]

1984: California becomes first US state to enact an Electronic Commerce Act defining basic
consumer rights online.
[citation needed]

1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using
a NeXT computer.
[8]

1992: Book Stacks Unlimited in Cleveland opens a commercial sales website
(www.books.com) selling books online with credit card processing.
1992: St. Martin's Press publishes J.H. Snider and Terra Ziporyn's Future Shop: How New
Technologies Will Change the Way We Shop and What We Buy.
[9]

1992: Terry Brownell launches a fully graphical, iconic navigated Bulletin board
system online shopping usingRoboBOARD/FX.
[citation needed]

1993: Paget Press releases edition No. 3 of the first
[citation needed]
AppStore, The Electronic
AppWrapper
[10]

1994: Netscape releases the Navigator browser in October under the code
name Mozilla. Netscape 1.0 is introduced in late 1994 with SSL encryption that made
transactions secure.
1995: The US National Science Foundation lifts its former strict prohibition of commercial
enterprise on the Internet.
[11]

1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, Product Manager
for CompuServe UK, from W H Smith's shop within CompuServe's UK Shopping Centre is
the UK's first national online shopping service secure transaction. The shopping service at
launch featured W H Smith, Tesco, Virgin Megastores/Our Price, Great Universal Stores
(GUS), Interflora, Dixons Retail, Past Times, PC World (retailer) and Innovations.
1995: Jeff Bezos launches Amazon.com and the first commercial-free 24-hour, internet-only
radio stations, Radio HK and NetRadiostart broadcasting. Dell and Cisco begin to
aggressively use Internet for commercial transactions.
[citation needed]
eBay is founded by
computer programmer Pierre Omidyar as AuctionWeb.
1996: IndiaMART B2B marketplace established in India.
1996: ECPlaza B2B marketplace established in Korea.
1996: Sellerdeck, formerly Actinic, the UK's first PC/LAN e-commerce platform
established.
[citation needed]

1998: Electronic postal stamps can be purchased and downloaded for printing from the
Web.
[12]

1999: Alibaba Group is established in China. 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.
2001: Alibaba.com achieved profitability in December 2001.
2002: eBay acquires PayPal for $1.5 billion.
[13]
Niche retail
companies Wayfair 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.
2004: DHgate.com, China's first online b2b transaction platform, is established, forcing other
b2b sites to move away from the "yellow pages" model.
[14]

2007: Business.com acquired by R.H. Donnelley for $345 million.
[15]

2009: Zappos.com acquired by Amazon.com for $928 million.
[16]
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.
[17]

2010: Groupon reportedly rejects a $6 billion offer from Google. Instead, the group buying
websites went ahead with an IPO on 4 November 2011. It was the largest IPO since
Google.
[18][19]

2011: Quidsi.com, parent company of Diapers.com, acquired by Amazon.com for $500
million in cash plus $45 million in debt and other obligations.
[20]
GSI Commerce, a company
specializing in creating, developing and running online shopping sites for brick and mortar
businesses, acquired by eBay for $2.4 billion.
[21]

2012: US eCommerce and Online Retail sales projected to reach $226 billion, an increase of
12 percent over 2011.
[22]

2012: US eCommerce and Online Retail holiday sales reach $33.8 billion, up 13 percent.
[23]

2014: Overstock.com processes over $1 million in Bitcoin sales.
[24]
Indias e-commerce
industry is estimated to have grown more than 30% from a year earlier to $12.6 billion in
2013.
[25]

Business applications[edit]


An example of an automated online assistant on a merchandising website.
Some common applications related to electronic commerce are:
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
Social networking
Governmental regulation[edit]
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.
[26]
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.
[27]
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.
[28]

Internationally there is the International Consumer Protection and Enforcement Network
(ICPEN), which was formed in 1991 from an informal network of government customer fair trade
organisations. The purpose was stated as being to find ways of co-operating on tackling
consumer problems connected with cross-border transactions in both goods and services, and to
help ensure exchanges of information among the participants for mutual benefit and
understanding. From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a
portal to report complaints about online and related transactions with foreign companies.
There is also Asia Pacific Economic Cooperation (APEC) was established in 1989 with the
vision of achieving stability, security and prosperity for the region through free and open trade
and investment. APEC has an Electronic Commerce Steering Group as well as working on
common privacy regulations throughout the APEC region.
In Australia, Trade is covered under Australian Treasury Guidelines for electronic
commerce,
[29]
and the Australian Competition and Consumer Commission
[30]
regulates and offers
advice on how to deal with businesses online,
[31]
and offers specific advice on what happens if
things go wrong.
[32]

Also Australian government e-commerce website
[33]
provides information on e-commerce in
Australia.
In the United Kingdom, The FSA (Financial Services Authority)
[34]
is the competent authority for
most aspects of the Payment Services Directive (PSD). The UK implemented the PSD through
the Payment Services Regulations 2009 (PSRs), which came into effect on 1 November 2009.
The PSR affects firms providing payment services and their customers. These firms include
banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc.
The PSRs created a new class of regulated firms known as payment institutions (PIs), who are
subject to prudential requirements. Article 87 of the PSD requires the European Commission to
report on the implementation and impact of the PSD by 1 November 2012.
[35]

Forms[edit]
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 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.
Aside from traditional e-Commerce, m-Commerce as well as the nascent t-
Commerce
[36]
channels are often seen as the current 2013 poster children of electronic I-
Commerce.
Global trends[edit]
In 2010, the United Kingdom had the biggest e-commerce market in the world when measured
by the amount spent per capita.
[37]
The Czech Republic is the European country where
ecommerce delivers the biggest contribution to the enterprises total revenue. Almost a quarter
(24%) of the countrys total turnover is generated via the online channel.
[38]

Among emerging economies, China's e-commerce presence continues to expand every year.
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.
[39]
China's cross-border e-commerce is also growing rapidly. E-commerce transactions
between China and other countries increased 32% to 2.3 trillion yuan ($375.8 billion) in 2012 and
accounted for 9.6% of China's total international trade.
[40]
In 2013, a cross-border E-commerce
platform, buyeasi.com Chinese: ; pinyin: Kujng tng), was launched as part of
the Shanghai Free Trade Zone. Products on the site, which is monitored by the General
Administration of Customs, are sold by vendors who have conducted record-filing with the
customs authorities, thereby avoiding the risk of fake products and lowering product prices
through the use of bonded warehouses.
[41]

Other BRIC countries are witnessing the accelerated growth of eCommerce as well. In Russia,
the total ecommerce market is projected to total somewhere between 690 billion rubles ($23
billion) and 900 billion rubles ($30 billion) in 2015, at 2010 values. This will equal 5% of total retail
volume in Russia. Longer-term, the market size of Russian e-commerce could reach $50 billion
by 2020. Ecommerce players need to understand unique insights about trust factor, online
payments and language peculiarities to penetrate the Russian market. Brazil's eCommerce is
growing quickly with retail eCommerce sales expected to grow at a healthy double-digit pace
through 2014. By 2016, eMarketer expects retail ecommerce sales in Brazil to reach $17.3
billion.
[42]
India's ecommerce growth, on the other hand, has been slower although the country's
potential remains solid considering its surging economy, the rapid growth of internet penetration,
English language proficiency and a vast market of 1.2 billion consumers (although perhaps only
50 million access the internet through PCs and some estimate the most active group of e-
commerce customers numbers only 2-3 million). E-commerce traffic grew about 50% from 2011
to 2012, from 26.1 million to 37.5 million, according to a report released by Com Score. Still
much of the estimated 14 billion dollars in 2012 ecommerce was generated from travel sites.
eCommerce is also expanding across the Middle East. Having recorded the world's fastest
growth in internet usage between 2000 and 2009, the region is home to more than 60 million
internet users. Retail, travel and gaming are the region's top eCommerce segments, in spite of
difficulties such as the lack of region-wide legal frameworks and logistical problems in cross-
border transportation
[citation needed]
. E-Commerce has become an important tool for small and large
businesses worldwide, not only to sell to customers, but also to engage them.
[43][44]

In 2012, ecommerce sales topped $1 trillion for the first time in history.
[45]

Mobile devices are playing an increasing role in the mix of eCommerce. Some estimates show
that purchases made on mobile devices will make up 25% of the market by 2017.
[46]
According to
Cisco Visual Networking Index,
[47]
in 2014 the amount of mobile devices will outnumber the
number of world population.
Multichannel Selling is also worth mentioning, when it comes to e-commerce. As stated in E-
commerce trends for 2014, multichannel selling is relatively young but though has already
managed to become a key driver for promotion of small business companies unable to compete
with media giants in Google. The essence of it lies in equipping a few shopping platforms like
Amazon or Nextag for goods promotion.
Impact on markets and retailers[edit]
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 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.
[48]

Individual or business involved in e-commerce whether buyers or sellers rely on Internet-based
technology in order to accomplish their transactions. E-commerce is recognized for its ability to
allow business to communicate and to form transaction anytime and anyplace. Whether an
individual is in the US or overseas, business can be conducted through the internet. The power
of e-commerce allows geophysical barriers to disappear, making all consumers and businesses
on earth potential customers and suppliers. E-bay is a good example of e-commerce business
individuals and businesses are able to post their items and sell them around the Globe.
[49]

Distribution channels[edit]

This section does not cite any references or sources. Please help improve
this section byadding citations to reliable sources. Unsourced material may
be challenged and removed.(June 2013)
E-commerce has grown in importance as companies have adopted pure-click and brick-and-
click channel systems. We can distinguish pure-click and brick-and-click channel system adopted
by companies.
Pure-click or pureplay companies are those that have launched a website without any
previous existence as a firm.
Bricks-and-clicks companies are those existing companies that have added an online site for
e-commerce.
Click-to-brick online retailers that later open physical locations to supplement their online
efforts.
[50]