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Encyclopedia > E commerce

Electronic commerce, EC, e-commerce or ecommerce consists primarily of the distributing, buying, selling, marketing, and servicing of products or services over electronic systems such as the Internet and other computer networks. The information technology industry might see it as an electronic business application aimed at commercial transactions. It can involve electronic funds transfer, supply chain management, e-marketing, online marketing, online transaction processing, electronic data interchange, automated inventory management systems, and automated data-collection systems. It typically uses electronic communications technology such as the Internet, extranets, e-mail, Ebooks, databases, and mobile phones. It has been suggested that Product marketing be merged into this article or section. ... In economics and marketing, a service is the non-material equivalent of a good. ... A computer network is a system for communication between computers. ... [[[[[[Information technology]]]]]] (IT) or Information and communication(s) technology (ICT) (also Infocomm, esp. ... Electronic business, or e-business, may be defined broadly as any business process that relies on an automated information system. ... It has been suggested that Bullwhip Effect be merged into this article or section. ... E-marketing is a type of marketing that can be defined as achieving objectives through the use of electronic communications technology such as Internet, e-mail, Ebooks, database, and mobile phone. ... It has been suggested that Internet marketing be merged into this article or section. ... Electronic Data Interchange (EDI) is the computer-to-computer exchange of structured information, by agreed message standards, from one computer application to another by electronic means and with a minimum of human intervention. ... An extranet is a private network that uses Internet protocols, network connectivity, and possibly the public telecommunication system to securely share part of a businesss information or operations with suppliers, vendors, partners, customers or other businesses. ...


According to Forrester Research (as cited in Kessler, 2003), electronic commerce generated sales worth US $12.2 billion in 2003. Forrester logo. ... The United States dollar is the official currency of the United States. ... 2003 is a common year starting on Wednesday of the Gregorian calendar, and also: The International Year of Freshwater The European Disability Year Events January events January 1 Luíz Inácio Lula Da Silva becomes the 37th President of Brazil. ...

Contents


Historical development

The meaning of the term "electronic commerce" has changed over time. Originally, "electronic commerce" meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI, introduced in the late 1970s) to send commercial documents like purchase orders or invoices electronically. Electronic Data Interchange (EDI) is the computer-to-computer exchange of structured information, by agreed message standards, from one computer application to another by electronic means and with a minimum of human intervention. ... A Purchase Order (abbreviated PO) is a commercial document issued by a buyer to a seller, indicating the products, quantities and agreed prices for products or services that the seller will provide to the buyer. ... An invoice is a commercial document issued by a seller to a buyer, indicating the products, quantities and agreed prices for products or services that the Seller has already provided the Buyer with. ...


Later it came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web via secure servers (note HTTPS, a special server protocol which encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic pay services, like credit card payment authorizations. The World Wide Web (WWW or simply the Web) is a global information space which people can read-from and write-to via a large number of different Internet-connected devices. ... https is a URI scheme which is syntactically identical to the http: scheme normally used for accessing resources using HTTP. Using an https: URL indicates that HTTP is to be used, but with a different default port and an additional encryption/authentication layer between HTTP and TCP. This system was... In computing, a protocol is a convention or standard that controls or enables the connection, communication, and data transfer between two computing endpoints. ... In cryptography, encryption is the process of obscuring information to make it unreadable without special knowledge. ... Shopping cart software is software used in e-commerce to simulate a shopping cart. ... Credit cards An array of various credit cards. ...


When the Web first became well-known among the general public in 1994, many journalists and pundits forecast that e-commerce would soon become a major economic sector. However, it took about four years for security protocols (like HTTPS) to become sufficiently developed and widely deployed (during the browser wars of this period). Subsequently, between 1998 and 2000, a substantial number of businesses in the United States and Western Europe developed rudimentary Web sites. A rough estimation of the usage share of major web browsers by layout engines over time. ...


Although a large number of "pure e-commerce" companies disappeared during the dot-com collapse in 2000 and 2001, many "brick-and-mortar" retailers recognized that such companies had identified valuable niche markets and began to add e-commerce capabilities to their Web sites. For example, after the collapse of online grocer Webvan, two traditional supermarket chains, Albertsons and Safeway, both started e-commerce subsidiaries through which consumers could order groceries online. Dot-com (also dotcom or redundantly dot. ... Webvan was an online credit and delivery grocery business that went bankrupt in 2001. ... A typical Albertsons store. ... Safeway is a brand name used by several supermarket chains around the world: Safeway Inc. ...


As of 2005, e-commerce has become well-established in major cities across much of North America, Western Europe, and certain East Asian countries like South Korea. However, e-commerce is still emerging slowly in some industrialized countries, and is practically nonexistent in many Third World countries. 2005 (MMV) was a common year starting on Saturday of the Gregorian calendar. ... For the Jamaican reggae band, see Third World (band). ...


Electronic commerce has unlimited potential for both developed and developing nations, offering lucrative profits in a highly unregulated environment.


Success factors in e-commerce

Technical and organizational aspects

In many cases, an e-commerce company will survive not only based on its product, but by having a well-organized business structure and a secure, well-designed website. Such factors include:

  1. Providing an easy and secure way for customers to order. Credit cards are the most popular means of sending payments on the internet, accounting for 90% of online purchases. Card numbers are transferred securely between the customer and merchant through independent payment gateways.
  2. Providing reliability and security. Parallel servers, hardware redundancy, fail-safe technology, information encryption, and firewalls can enhance this requirement.
  3. Providing a 360-degree view of the customer relationship, defined as ensuring that all employees, suppliers, and partners have a complete view, and the same view, of the customer. However, customers may not appreciate the big brother experience.
  4. Constructing a commercially sound business model. If this key success factor had appeared in textbooks in 2000, many of the dot.coms might not have gone into bankruptcy.
  5. Engineering an electronic value chain in which one focuses on a "limited" number of core competencies -- the opposite of a one-stop shop. (Electronic stores can appear either specialist or generalist if properly programmed.)
  6. Operating on or near the cutting edge of technology and staying there as technology changes (but remembering that the fundamentals of commerce remain indifferent to technology).
  7. Setting up an organization of sufficient alertness and agility to respond quickly to any changes in the economic, social and physical environment.
  8. Providing an attractive website. The tasteful use of colour, graphics, animation, photographs, fonts, and white-space percentage may aid success in this respect.
  9. Streamlining business processes, possibly through re-engineering and information technologies.

Naturally, the E-commerce vendor must also perform such mundane tasks as being truthful about its product and its availability, shipping reliably, and handling complaints promptly and effectively. A unique property of the Internet environment is that individual customers have access to far more information about the seller than they would find in a brick-and-mortar situation. A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. ... A Payment Gateway is an e-commerce service that authorizes payments for e-businesses and online retailers. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... Parallel computing is the simultaneous execution of the same task (split up and specially adapted) on multiple processors in order to obtain results faster. ... Hardware is the general term that is used to describe physical artifacts of a technology. ... Redundancy, in general terms, refers to the quality or state of being redundant, that is: exceeding what is necessary or normal, containing an excess. ... Fail-Safe (or Fail Safe for the 2000 version) is the title of: A 1962 novel by Eugene Burdick and Harvey Wheeler. ... By the mid 20th century humans had achieved a level of technological mastery sufficient to leave the surface of the planet for the first time and explore space. ... In cryptography, encryption is the process of obscuring information to make it unreadable without special knowledge. ... In computing, a firewall is a piece of hardware and/or software which functions in a networked environment to prevent some communications forbidden by the security policy, analogous to the function of firewalls in building construction. ... See: relational model personal relationship mathematical relationship, including: inverse relationship direct relationship relation (mathematics). ... Authoritarianism describes a form of government characterized by strict obedience to the authority of the state, which often maintains and enforces social control through the use of oppressive measures. ... A business model (also called a business design) is the mechanism by which a business intends to generate revenue and profits. ... Dot-com (also dotcom or redundantly dot. ... The value chain was described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance, New York, NY The Free Press. ... A companys core competency is the one thing that it can do better than its competitors. ... Cutting edge is a term used to describe the creations of the small number of persons or groups who are at the frontier of progress in a field, especially science. ... By the mid 20th century humans had achieved a level of technological mastery sufficient to leave the surface of the planet for the first time and explore space. ... An organization or organisation (read more about -ize vs -ise) is a formal group of people with one or more shared goals. ... 12 frames per second is the typical rate for an animated cartoon. ... A business process is a recipe for achieving a commercial result. ... reengineering (or re-engineering) is the radical redesign of an organizations processes, especially its business processes. ... [[[[[[Information technology]]]]]] (IT) or Information and communication(s) technology (ICT) (also Infocomm, esp. ...


Customer-Oriented

A successful e-commerce organization must also provide an enjoyable and rewarding experience to its customers. Many factors go into making this possible. Such factors include:

  1. Providing value to customers. Vendors can achieve this by offering a product or product-line that attracts potential customers at a competitive price, as in non-electronic commerce.
  2. Providing service and performance. Offering a responsive, user-friendly purchasing experience, just like a flesh-and-blood retailer, may go some way to achieving these goals.
  3. Providing an incentive for customers to buy and to return. Sales promotions to this end can involve coupons, special offers, and discounts. Cross-linked websites and advertising affiliate programs can also help.
  4. Providing personal attention. Personalized web sites, purchase suggestions, and personalized special offers may go some of the way to substituting for the face-to-face human interaction found at a traditional point of sale.
  5. Providing a sense of community. Chat rooms, discussion boards, soliciting customer input and loyalty programs (sometimes called affinity programs) can help in this respect.
  6. Owning the customer's total experience. E-tailers foster this by treating any contacts with a customer as part of a total experience, an experience that becomes synonymous with the brand.
  7. Letting customers help themselves. Provision of a self-serve site, easy to use without assistance, can help in this respect.
  8. Helping customers do their job of consuming. E-tailers and online shopping directories can provide such help through ample comparative information and good search facilities. Provision of component information and safety-and-health comments may assist e-tailers to define the customers' job.

This article needs to be cleaned up to conform to a higher standard of quality. ... A vendor is one who sells something. ... In economics and marketing, a service is the non-material equivalent of a good. ... This article needs to be cleaned up to conform to a higher standard of quality. ... Look up Trade in Wiktionary, the free dictionary Trade centers on the exchange of goods and/or services. ... This article needs to be cleaned up to conform to a higher standard of quality. ... In marketing, sales promotion is one of the four aspects of promotion. ... See also Coupon (bond) In marketing a coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. ... Discounts and allowances are modifications to the basic price. ... This article or section is missing references or citation of sources. ... POS must not be confused with EFT/POS and POS Terminal used in Electronic payment POS or PoS is an acronym for point-of-sale (or point of purchase). ... This article needs a complete rewrite for the reasons listed on the talk page. ... A chat room is an online forum where people can chat online (talk by broadcasting messages to people on the same forum in real time). ... Gaia Online, the largest English language forum-based community as of April 2005 — powered by a modified version of phpBB. An Internet forum is a facility on the World Wide Web for holding discussions, or the web application software used to provide the facility. ... It has been suggested that Loyalty program cashback be merged into this article or section. ... Original corporate Apple Computer logo, created by Rob Janoff; used 1976 to 1998. ... Consumerism is a term used to describe the effects of equating personal happiness with purchasing material possessions and consumption. ... An e-tailer is an online retailer who leverages the efficiency of the Internet to improve a customers buying experience. ... Internet shopping directories are website who list stores and organize using categories according to products they sell. ... A search engine is a program designed to help find information stored on a computer system such as the World Wide Web, inside a corporate or proprietary network or a personal computer. ... In general, a things components are its parts; the things that compose it. ... Warning signs, such as this one, can improve safety awareness. ...

Problems

Even if a provider of E-commerce goods and services rigorously follows these seventeen "key factors" to devise an exemplary e-commerce strategy, problems can still arise. Sources of such problems include:

  1. Failure to understand customers, why they buy and how they buy. Even a product with a sound value proposition can fail if producers and retailers do not understand customer habits, expectations, and motivations. E-commerce could potentially mitigate this potential problem with proactive and focused marketing research, just as traditional retailers may do.
  2. Failure to consider the competitive situation. One may have the capability to construct a viable book e-tailing business model, but lack the will to compete with Amazon.com.
  3. Inability to predict environmental reaction. What will competitors do? Will they introduce competitive brands or competitive web sites? Will they supplement their service offerings? Will they try to sabotage a competitor's site? Will price wars break out? What will the government do? Research into competitors, industries and markets may mitigate some consequences here, just as in non-electronic commerce.
  4. Over-estimation of resource competence. Can staff, hardware, software, and processes handle the proposed strategy? Have e-tailers failed to develop employee and management skills? These issues may call for thorough resource planning and employee training.
  5. Failure to coordinate. If existing reporting and control relationships do not suffice, one can move towards a flat, accountable, and flexible organizational structure, which may or may not aid coordination.
  6. Failure to obtain senior management commitment. This often results in a failure to gain sufficient corporate resources to accomplish a task. It may help to get top management involved right from the start.
  7. Failure to obtain employee commitment. If planners do not explain their strategy well to employees, or fail to give employees the whole picture, then training and setting up incentives for workers to embrace the strategy may assist.
  8. Under-estimation of time requirements. Setting up an e-commerce venture can take considerable time and money, and failure to understand the timing and sequencing of tasks can lead to significant cost overruns. Basic project planning, critical path, critical chain, or PERT analysis may mitigate such failings. Profitability may have to wait for the achievement of market share.
  9. Failure to follow a plan. Poor follow-through after the initial planning, and insufficient tracking of progress against a plan can result in problems. One may mitigate such problems with standard tools: benchmarking, milestones, variance tracking, and penalties and rewards for variances.
  10. Becoming the victim of organized crime. Many syndicates have caught on to the potential of the Internet as a new revenue stream. Two main methods are as follows: (1) Using identity theft techniques like phishing to order expensive goods and bill them to some innocent person, then liquidating the goods for quick cash; (2) Extortion by using a network of compromised "zombie" computers to engage in distributed denial of service attacks against the target Web site until it starts paying protection money.

This article needs to be cleaned up to conform to a higher standard of quality. ... Competition is the act of striving against another force for the purpose of achieving dominance or attaining a reward or goal, or out of a biological imperative such as survival. ... A business model (also called a business design) is the mechanism by which a business intends to generate revenue and profits. ... Amazon. ... Original corporate Apple Computer logo, created by Rob Janoff; used 1976 to 1998. ... Price war is a term used in business to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reductions. ... A skill is an ability, usually learned, to perform actions. ... Organizational structure is the way in which the interrelated groups of an organization are constructed. ... In project management, a critical path is the sequence of project network terminal elements with the longest overall duration, determining the shortest time to complete the project. ... Critical Chain Project Management (CCPM) is based on methods and algorithms developed in 1997 by Eliyahu M. Goldratt. ... PERT network chart for a seven-month project with five milestones (10 through 50) and six activities (A through F). ... To meet Wikipedias quality standards, this article or section may require cleanup. ... Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. ... A plan is a proposed or intended method of getting from one set of circumstances to another. ... Organized crime is crime carried out systematically by formal criminal organizations. ... Identity theft (or identity fraud) is committing a crime, tort or other harmful act by deliberately assuming the identity (or some part or parts thereof) of someone other than the person doing the harmful act. ... This phishing attempt, disguised as an official email from a (fictional) bank, attempts to trick the banks members into giving away their account information by confirming it at the phishers linked website. ... Extortion is a criminal offense, which occurs when a person obtains money, behaviour, or other goods and/or services from another by wrongfully threatening or inflicting harm to this person, reputation, or property. ... This article or section is in need of attention from an expert on the subject. ...

Product suitability

Certain products/services appear more suitable for online sales; others remain more suitable for offline sales. Many successful purely virtual companies deal with digital products, including information storage, retrieval, and modification, music, movies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, eBay and Paypal. Google Inc. ... eBay Inc. ... PayPal is an Internet business which allows the transfer of money between email users and merchants, avoiding traditional paper methods such as checks/cheques and money orders. ...


Virtual marketers can sell some non-digital products and services successfully. Such products generally have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers. Items which can fit through a standard letterbox - such as music CDs, DVDs and books - are particularly suitable for a virtual marketer, and indeed Amazon.com, one of the few enduring dot-com companies, has historically concentrated on this field. Letterboxing is the practice of copying widescreen film to video formats while preserving the original aspect ratio. ... Amazon. ... Dot-com (also dotcom or redundantly dot. ...


Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets -- in such cases, e-commerce solutions in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number.


Purchases of pornography and of other sex-related products and services fulfil the requirements of both virtuality (or if non-virtual, generally high-value) and potential embarrassment; unsurprisingly, provision of such services has become the most profitable segment of e-commerce. Pornographic movies Pornography (from Greek πορνη prostitute and γραφία written material) (also informally referred to as porn or porno) is the representation of the human body or human sexual behaviour with the goal of sexual arousal, similar to, but distinct from, erotica, though the two terms are often used interchangeably. ... Look up Sex in Wiktionary, the free dictionary. ...


Products unsuitable for e-commerce include products that have a low value-to-weight ratio, products that have a smell, taste, or touch component, products that need trial fittings - most notably clothing - and products where colour integrity appears important. Nonetheless, Tesco.com has had success delivering groceries in the UK, albeit that many of its goods are of a generic quality, and clothing sold through the internet is big business in the U.S.


Acceptance

Consumers have accepted the e-commerce business model less readily than its proponents originally expected. Even in product categories suitable for e-commerce, electronic shopping has developed only slowly. Several reasons might account for the slow uptake, including: Consumers are individuals or households that consume goods and services generated within the economy. ...

  • Concerns about security. Many people will not use credit cards over the Internet due to concerns about theft and credit card fraud.
  • Lack of instant gratification with most e-purchases (non-digital purchases). Much of a consumer's reward for purchasing a product lies in the instant gratification of using and displaying that product. This reward does not exist when one's purchase does not arrive for days or weeks.
  • The problem of access to web commerce, particularly for poor households and for developing countries. Low penetration rates of Internet access in some sectors greatly reduces the potential for e-commerce.
  • The social aspect of shopping. Some people enjoy talking to sales staff, to other shoppers, or to their cohorts: this social reward side of retail therapy does not exist to the same extent in online shopping.

To meet Wikipedias quality standards, this article or section may require cleanup. ... Credit cards An array of various credit cards. ... Please wikify (format) this article as suggested in the Guide to layout and the Manual of Style. ... Diffusion is the process by which a new idea or new product is accepted by the market. ... A sector is a part of a whole. ... Shopping is the purchase of goods and services from retailers. ... Retail therapy is an unofficial term for purchases made by a person with the primary purpose being to improve the buyers mood or disposition. ... Online shopping is the process consumers go through to purchase products or services over the internet. ...

Suppliers offering services to electronic commerce practitioners

Financial

iBill is an internet billing company. ... Moneybookers is a UK-based fund-transfer company, resembling PayPal, which allows people to send and receive money via e-mail. ... PayPal is an Internet business which allows the transfer of money between email users and merchants, avoiding traditional paper methods such as checks/cheques and money orders. ... WebMoney is a form of electronic money and online payment system (transactions are conducted through WebMoney Transfer). ... Yahoo! Inc. ...

Software

Profile ATG (Art Technology Group, Inc. ... eMeta Corporation is a leading provider of access control, subscription management and ecommerce software for media, entertainment and software companies. ... NetSuite Inc. ... osCommerce (for “Open Source Commerce”) is an e-commerce and online store-management software program. ... A free open source shopping cart system for e-commerce. ... To meet Wikipedias quality standards, this article or section may require cleanup. ...

Entities using electronic commerce

Amazon. ... eBay Inc. ... Exostar is a commercial e-business trading exchange for the aerospace and defence industry created by BAE Systems, Rolls-Royce, Boeing, Lockheed Martin and Raytheon. ... Rediff. ... Smarthome is a wholly owned subsidiary of SmartLabs Inc. ... Nuvvo costs nothing to use, has google ads and gets a percentage if you charge students and they offer a commercial enterprise edition, on-demand e-learning system uses proprietary software designed for individual instructors. ... uShip, Inc. ... Goldbar is a company that provides e-commerce and business automation services and is more commonly known for its shopping cart software. ...

See also

Bricks and clicks is a business strategy or business model in e-commerce by which a company attempts to integrate both online and physical presences. ... Business-to-business electronic commerce (B2B) typically takes the form of automated processes between trading partners and is performed in much higher volumes than business-to-consumer (B2C) applications. ... Business-to-consumer electronic commerce (B2C) is a form of electronic commerce in which products or services are sold from a firm to a consumer. ... Please wikify (format) this article as suggested in the Guide to layout and the Manual of Style. ... In economics, disintermediation is the removal of intermediaries in a supply chain: cutting out the middleman. Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. ... eTrading, also called e-Trading, is how people in the financial services industry refer to electronic trading - i. ... Electronic business, or e-business, may be defined broadly as any business process that relies on an automated information system. ... E-marketing is a type of marketing that can be defined as achieving objectives through the use of electronic communications technology such as Internet, e-mail, Ebooks, database, and mobile phone. ... The term Internet fraud refers to any type of fraud scheme that uses email, web sites, chat rooms or message boards to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions or to transmit the proceeds of fraud to financial institutions or to other connected with the scheme. ... Management (from Old French ménagement the art of conducting, directing, from Latin manu agere to lead by the hand) characterises the process of leading and directing all or part of an organization, often a business, through the deployment and manipulation of resources (human, financial, material, intellectual or intangible). ... It has been suggested that Product marketing be merged into this article or section. ... The online auction business model is one in which participants bid for products and services over the internet. ... A product feed is a file containing information about the products listed on your site. ... Reintermediation can be defined as the reintroduction of an intermediary between end users (consumers) and a producer. ... Secure electronic transaction (SET) is a standard protocol for securing credit card transactions over insecure networks, specifically, the Internet. ... Example graph of web traffic at Wikipedia in December 2004 Web traffic is the amount of data sent and received by visitors to a web site. ...

References

  • Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). e-Business and e-Commerce Infrastructure. McGraw-Hill. ISBN 0-07-247875-6.
  • Kessler, M. (2003). More shoppers proceed to checkout online. Retrieved January 13, 2004
  • Nissanoff, Daniel (2006). FutureShop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want, Hardcover, 246 pages, The Penguin Press. ISBN 1-594-20077-7.
  • Seybold, Pat (2001). Customers.com. Crown Business Books (Random House). ISBN 0-609-60772-3.

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