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Electronic commerce, commonly known as e-commerce or eCommerce, is a type of industry where the buying and selling of products or services is conducted over electronic systems such as the Internet and other computer networks. 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 collection systems. 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.
E-commerce can be divided into:
- E-tailing or "virtual storefronts" on websites with online catalogs, sometimes gathered into a "virtual mall"
- Buying or Selling on various websites and/or online marketplaces
- The gathering and use of demographic data through Web contacts and social media
- Electronic Data Interchange (EDI), 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
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 Laboratory and 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 Télécom 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 and Mrs Snowball, 72, is the first online home shopper5
- 1984: In April 1984, CompuServe launches the Electronic Mall in the USA and Canada. It is the first comprehensive electronic commerce service.6
- 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.7
- 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.8
- 1992: Terry Brownell launches a fully graphical, iconic navigated Bulletin board system online shopping using RoboBOARD/FX.citation needed
- 1993: Paget Press releases edition No. 3 of the firstcitation needed AppStore, The Electronic AppWrapper9
- 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.10
- 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.11
- 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.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.1819
- 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
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
- Online shopping and order tracking
- Online banking
- Online office suites
- Shopping cart software
- Electronic tickets
The major different types of e-commerce are:
- Business-to-Business (B2B):
B2B e-commerce is simply defined as e-commerce between companies. This is the type of e-commerce that deals with relationships between and among businesses. About 80% of e-commerce is of this type, and most experts predict that B2B e-commerce will continue to grow faster than the B2C segment. The B2B market has two primary components: e-frastructure and e-markets.
- Business-to-Consumer (B2C):
Business-to-consumer e-commerce, or commerce between companies and consumers, involves customers gathering information; purchasing physical goods (i.e., tangibles such as books or consumer products) or information goods (or goods of electronic material or digitized content, such as software, or e-books); and, for information goods, receiving products over an electronic network. It is the second largest and the earliest form of e-commerce.
- Business-to-Government (B2G):
Business-to-government e-commerce or B2G is generally defined as commerce between companies and the public sector. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations. This kind of e-commerce has two features: first, the public sector assumes a pilot/leading role in establishing e-commerce; and second, it is assumed that the public sector has the greatest need for making its procurement system more effective. Web-based purchasing policies increase the transparency of the procurement process (and reduces the risk of irregularities). To date, however, the size of the B2G e-commerce market as a component of total e-commerce is insignificant, as government e-procurement systems remain undeveloped.
- Consumer-to-Consumer (C2C):
Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or consumers. This type of e-commerce is characterized by the growth of electronic marketplaces and online auctions, particularly in vertical industries where firms/businesses can bid for what they want from among multiple suppliers. It perhaps has the greatest potential for developing new markets.
- Mobile Commerce (m-commerce):
M-commerce (mobile commerce) is the buying and selling of goods and services through wireless technology-i.e., handheld devices such as cellular telephones and personal digital assistants (PDAs). Japan is seen as a global leader in m-commerce. As content delivery over wireless devices becomes faster, more secure, and scalable, some believe that m-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions. This may well be true for the Asia-Pacific where there are more mobile phone users than there are Internet users.
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 Stearing 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,27 and the Australian Competition and Consumer Commission28 regulates and offers advice on how to deal with businesses online,29 and offers specific advice on what happens if things go wrong.30
In the United Kingdom, The FSA (Financial Services Authority)32 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 2012.33
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-Commerce34 channels are often seen as the current 2013 poster children of electronic I-Commerce.
In 2010, the United Kingdom had the biggest e-commerce market in the world when measured by the amount spent per capita.35 The Czech Republic is the European country where ecommerce delivers the biggest contribution to the enterprises´ total revenue. Almost a quarter (24%) of the country’s total turnover is generated via the online channel.36
Among emerging economies, China's e-commerce presence continueswhen? 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.37 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 38
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. 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.39 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 nowwhen? 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 transportationcitation 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.4041
In 2012, ecommerce sales topped $1 trillion for the first time in history.42
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.43
|This section does not cite any references or sources. (June 2013)|
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 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.
- Alternative Payments
- Mobile commerce
- Comparison of shopping cart software
- Digital economy
- Electronic bill payment
- Electronic money
- E-commerce credit card payment system
- List of free and open source eCommerce software
- Non-store retailing
- Online marketplace
- Paid content
- Payments as a service
- Payment card
- Social commerce
- Virtual economy
- Wire transfer
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