Electronic commerce or ecommerce is a term for any type of business, or commercial transaction, that involves the transfer of information across the Internet. It covers a range of different types of businesses, from consumer based retail sites, through auction or music sites, to business exchanges trading goods and services between corporations. It is currently one of the most important aspects of the Internet to emerge. E-Commerce allows consumers to electronically exchange goods and services with no barriers of time or distance. Electronic commerce has expanded rapidly over the past five years and is predicted to continue at this rate, or even accelerate. In the near future the boundaries between "conventional" and "electronic" commerce will become increasingly blurred as more and more businesses move sections of their operations onto the Internet.
Electronic commerce emerged in the early 1990s, and its use has increased at a rapid rate. Today, the majority of companies have an online presence. In fact, having the ability to conduct business through the Internet has become a necessity. Everything from food and clothes to entertainment and furniture can be purchased online. Two familiar examples of electronic commerce companies are eBay and Amazon. Both of these companies allow consumers to purchase a variety of goods and services online from businesses and other consumers, while eBay also hosts online auctions. Consumers on these sites typically have numerous payment options, as well as choices for how their products are delivered.
Historical Development of E-Commerce
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. 1979: Michael Aldrich demonstrates the first online shopping system. 1981: Thomson Holidays UK is the first business-to-business online shopping system to be installed. 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. 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 and Mrs Snowball, 72, is the first online home shopper 1984: In April 1984, CompuServe launches the Electronic Mall in the USA and Canada. It is the first comprehensive electronic commerce service. 1989: In May 1989, Sequoia Data Corp. Introduced Compumarket The first internet based system for e-commerce. Sellers and buyers could post items for sale and buyers could search the database and make purchases with a credit card. 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer. 1992: Book Stacks Unlimited in Cleveland opens a commercial sales website (www.books.com) selling books online with credit card processing. 1993: Paget Press releases edition No. 3 of the first app store, The Electronic AppWrapper 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. 1994: Ipswitch IMail Server becomes the first software available online for sale and immediate download via a partnership between Ipswitch, Inc. and OpenMarket. 1994: "Ten Summoner's Tales" by Sting becomes the first secure online purchase through NetMarket. 1995: The US National Science Foundation lifts its former strict prohibition of commercial enterprise on the Internet. 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 NetRadio start broadcasting. 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: The use of Excalibur BBS with replicated "Storefronts" was an early implementation of electronic commerce started by a group of SysOps in Australia and replicated to global partner sites. 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web. 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. 1999: Global e-commerce reaches $150 billion 2000: Complete Idiot's Guide to e-commerce released on Amazon 2000: The dot-com bust. 2001: Alibaba.com achieved profitability in December 2001. 2002: eBay acquires PayPal for $1.5 billion. 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. 2003: Bossgoo B2B marketplace established in China. 2004: DHgate.com, China's first online b2b transaction platform, is established, forcing other b2b sites to move away from the "yellow pages" model. 2007: Business.com acquired by R.H. Donnelley for $345 million. 2009: Zappos.com acquired by Amazon.com for $928 million. 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. 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. 2012: Zalora Group was founded and started operations around Asia. 2014: Overstock.com processes over $1 million in Bitcoin sales. India's e-commerce industry is estimated to have grown more than 30% from 2012 to $12.6 billion in 2013. US e-commerce and Online Retail sales projected to reach $294 billion, an increase of 12 percent over 2013 and 9% of all retail sales. Alibaba Group has the largest Initial public offering ever, worth $25 billion. 2015: Amazon.com accounts for more than half of all e-commerce growth, selling almost 500 Million SKU's in the US. 2016: Amazon.com aided more than 10,000 sellers to generate more than $1 million of annual sales . 2016: Walmart buys Jet.com for $3.3 billion 2017: On march Amazon.com acquired Souq.com the bigest e-commerce website in Middle East ( Egypt, KSA and UAE).
- Business to consumer (B2C) – Transactions happen between businesses and consumers. In B2C ecommerce, businesses are the ones selling products or services to end-users (i.e. consumers). Online retail typically works on a B2C model. Retailers with online stores such as Walmart, Macy’s, and IKEA are all examples of businesses that engage in B2C ecommerce.
- Business to business (B2B) – As its name states, B2B ecommerce pertains to transactions conducted between two businesses. Any company whose customers are other businesses operate on a B2B model. Examples include Xero, an online accounting software for small businesses, ADP, a payroll processing company, and Square, a payments solution for SMBs.
- Consumer to business (C2B) – Consumer to business ecommerce happens when a consumer sells or contributes monetary value to a business. Many crowdsourcing campaigns fall under C2B ecommerce. Soma, a business that sells eco-friendly water filters is one example of a company that engaged in B2C ecommerce. Back in 2012, Soma launched a Kickstarter campaign to fund the manufacturing of their product. The project was successful, and Soma went on to raise $147,444.
- Consumer to consumer (C2C) – As you might have guessed, C2C ecommerce happens when something is bought and sold between two consumers. C2C commonly takes place on online marketplaces such as eBay, in which one individual sells a product or service to another.
- Government to business (G2B) – G2C transactions take place when a company pays for government goods, services, or fees online. Examples could be a business paying for taxes using the Internet.
- Business to government (B2G) – When a government entity uses the Internet to purchases goods or services from a business, the transaction may fall under B2G ecommerce. Let’s say a city or town hires a web design firm to update its website. This type of deal may be considered a form of B2G.
- Consumer to government (G2C) – Consumers can also engage in B2C ecommerce. People paying for traffic tickets or paying for their car registration renewals online may fall under this category.
Specialized Forms of Ecommerce
On some platforms, ecommerce has shown the promise of explosive growth. Two such examples are:
- Mcommerce: Mcommerce is short for "mobile commerce." The rapid penetration of mobile devices with Internet access has opened new avenues of ecommerce for retailers.
- Fcommerce: Fcommerce is short for "Facebook commerce." The immense popularity of Facebook provides a captive audience to transact business.
Benefits of E-Commerce
E-commerce can provide the following benefits over non-electronic commerce:
- Reduced costs by reducing labour, reduced paper work, reduced errors in keying in data, reduce post costs
- Reduced time. Shorter lead times for payment and return on investment in advertising, faster delivery of product
- Flexibility with efficiency. The ability to handle complex situations, product ranges and customer profiles without the situation becoming unmanageable.
- Improve relationships with trading partners. Improved communication between trading partners leads to enhanced long-term relationships.
- Lock in Customers. The closer you are to your customer and the more you work with them to change from normal business practices to best practice e-commerce the harder it is for a competitor to upset your customer relationship.
- New Markets. The Internet has the potential to expand your business into wider geographical locations.
Future of Ecommerce
The ecommerce industry is expected to continue growing. According to N Channel, in the US, brick and mortar retailers generate $3.9 trillion in sales while ecommerce generates $294 billion. Over time, ecommerce will continue to take away market share from brick and mortar retailers as it has been doing over the past few years. This is good news for those looking to start online stores as sales will only continue to go up, though competition will also increase in the space. Ecommerce will also likely evolve over the years creating a more augmented or virtual reality experience for shoppers. Stores may eventually include features to help customers ‘virtually’ try on clothing to ensure it fits their shape while allowing them to see what it would look like on. Shoppers may be able to ‘try’ on makeup using their laptop or phone’s camera.