E-COMMERCE

ITS IMPORTANCE FOR DEVELOPMENT OF BUSINESS IN THE DIGITAL AGE

Definition : Electronic commerce, commonly written as e-commerce, is the trading or facilitation of trading in products or services using computer networks, such as the Internet.

Definition : 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 for at least one part of the transaction's life-cycle, although it may also use other technologies such as e-mail.

Origins: In the late 1960s the U.S. Defense Department developed a secure and robust communications network (ARPANET) linking organisations engaged in defence research, which was designed to be able to continue functioning even if part of it was damaged, e.g. by nuclear attack. During the 1970s ARPANET became increasingly used by academics for sharing research material and eventually evolved into the worldwide network of inter-connected networks known as the Internet (or simply the 'net)

Origins: In 1989 Tim Berners Lee proposed the World Wide Web (WWW or web) while working at CERN, the Swiss based scientific organisation for research into subnuclear physics. Berners Lee initially envisaged a text based global hypertext system enabling fast and efficient communication between scientists located around the world and released the first text based browser in January 1992.

Origins: The 1990s saw the advent of affordable desktop computers together with the emergence of Microsoft's Windows as the dominant personal computer (PC) operating system. Its point-and-click graphical interface utilised a set of (supposedly) universally understandable icons to represent tasks such as file management and printing.

Origins: September 1992 saw the release of Mosaic. Developed by Marc Andreesen and others at the National Center for Supercomputing Applications at the University of Illinois, Mosaic was the first web browser with a graphical interface. The web started to become the familiar face of the Internet providing easy access to a wealth of text, images, animation, sound and video.

Growth and Evolution: Matthew Gray, of the Massachusetts Institute of Technology, estimated there were a mere 130 web sites in June 1993, which had risen to 650,000 by January 1997. Leading search engine Google now claims to index 1,346,966,000 web pages. Global Reach placed the worldwide number of Internet users at 369,400,000 in Sept 2000. The Electronic Telegraph quoted a survey by MMXI Europe in July 2000, which found that nearly one in five people in Britain uses the Internet from home. Many more have access to the 'net at work or school, or from public libraries and Cybercafes

Growth and Evolution: The largely academic roots of Cyberspace meant the commercial exploitation of the 'net was initially viewed with hostility. In 1994 two Arizona lawyers, Laurence Canter and Martha Siegal, posted advertisements to a large number of newsgroups offering legal help to foreigners seeking U.S. work permits. Their act caused outrage, resulting in thousands of complaints including death threats.

Growth and Evolution: Since then attitudes have changed with most users accepting most forms of 'net advertising as a means of paying for the huge amount of valuable free content available, just as television advertising pays for the programmes. However, the non-commercial ethos of the web remains evident in the vast quantity of valuable content which is still freely available, including daily newspapers such as the Times and the entire contents of the Encyclopaedia Britannica. This is significant for the contemporary e-commerce enterprise.

Security: E-commerce currently offers secure server and encryption technology as a solution to the security risks associated with transmitting data through Cyberspace. Encryption involves encoding information into a form that only the intended recipient can interpret. The commonly used public key encryption involves two keys for each user; a public one, made freely available, and a private one known only to the user.

Security: Sensitive information (e.g. a credit card number) is encoded using the intended recipient's public key before transmission, even if intercepted by a hacker it is thus useless without the corresponding private key (Whittle, pp 99-103]). In addition to utilizing secure technology for processing transactions and storing user data it is also necessary to inform users that such measures have been implemented, for further discussion.

Security: The ease with which individuals may represent themselves misleadingly also gives cause for concern. Before entering a credit card number consumers demand reassurance they are dealing with a legitimate supplier that will meet its side of the bargain rather than a confidence trickster operating an online fraud. Digital certificates, issued by a trusted third party, may provide authentication of an online trader's identity.

Case Study: Amazon.com:

Amazon, one of the best-known e-commerce successes, was founded in 1995 by Jeff Bezos as an on-line bookstore. Amazon has since diversified into areas including videos, software and toys. In addition to the usual search options Amazon encourages visitors to submit their own reviews of its offerings, allowing potential buyers to benefit from the findings of others.

Case Study: Amazon.com: Its database makes recommendations based on previous purchases - the virtual equivalent of your friendly local bookseller - and its patented "one-click" technology provides a simple and effective means of ordering.Amazon backs up its excellent Cyber-presence with a reputation for fulfilment and delivery. Whilst it is not the cheapest e-tailer, according to the Economist 66% of its sales go to repeat customers.

Case Study: Amazon.com:

Despite its apparent success Amazon has yet to record a profit. According to the E-commerce Times the company has debts of more than $2 billion and a second quarter loss of $58 million announced in July 2001 was reported as good news by BBC Business.

The Future: E-commerce has experienced phenomenal growth in the last five years both in terms of the number of participants and the variety and sophistication of features which e-tailers can use to promote their product. Continuing improvements in communications technology and access devices coupled with an ever richer array of software tools which designers can employ to convey their message across the 'net suggest the impact of e-commerce is set to increase unabated for the foreseeable future.

The Future: The momentum acquired thus far is likely to inspire innovative solutions to remaining problems such as security issues and representational difficulties.As intelligent agents become more sophisticated and more widely deployed it would appear that profit through artificially high prices will cease to be feasible.

The Future: Merchants of near-identical goods and services will need to provide some form of added value to their core purpose in order to differentiate themselves from their competitors and earn a share of the market. For those that can successfully achieve this the potential rewards are enormous.

The Future: E-commerce promises to liberate business, consumers and workers alike but is set to impact widely on the existing economy forcing traditional businesses to adapt and creating numerous opportunities for new entrants.