Dictionary:

e-commerce

  (ē'kŏm'ərs)

Commerce that is transacted electronically, as over the Internet.

A type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business.

Investopedia Says:
ECommerce has allowed firms to establish a market presence, or to enhance an already larger market position, by allowing for a cheaper and more efficient distribution chain for their products or services. One example of a firm having successfully used eCommerce is Chapters, which not only has physical stores, but an online store where the customer can buy books, CDs and DVDs.

Related Links:
E-tailing has changed the way consumers do nearly everything. Do you know how to pick the best retailer? Choosing The Winners In The Click-And-Mortar Game

Buying and selling on the Internet. Also called e-commerce, it has three subcategories: business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C).

Business transactions conducted via electronic means; most often referring to Internet-based relationships between customers and vendors, but also including CD-ROM catalogs; also called internet marketing. The Internet, direct marketing's newest channel, has provided an unprecedented opportunity on a global basis for businesses to interact with, reach out to, and be accessible by their customers without limitations with respect to physical location or time zone. E-commerce practitioners utilize the Internet to disseminate company or product information, generate leads, take orders, and build customer databases. CD-ROM catalogs permit the distribution of vast amounts of personalized product information via a cost efficient medium. Business-to-business sales are expected to dominate e-commerce by 2003 reaching $1.3 trillion, whereas consumer sales are projected to be $108 billion. Electronic commerce may be adopted more readily by buyers of services and products such as software, information, and photos, because these items can be both sold and distributed over the Internet.

The buying and selling of goods and services on the Internet, especially the World Wide Web. In practice, this term and a new term, "e-business," are often used interchangeably. For on-line retail selling, the term e-tailing is sometimes used. It is also called e-commerce for short, on-line commerce, Internet commerce, e-business, or Cyberspace commerce. E-commerce can be divided into: (1) e-tailing or "virtual storefronts" on Web sites with on-line catalogs, sometimes gathered into a "virtual mall." The gathering and use of demographic data through Web contacts; (2) Electronic Data Interchange (EDI), the business-to-business exchange of data; (3) e-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters); (4) business-to-business buying and selling; and (5) the security of business transactions.

"No single force embodies our electronic transformation more than the evolving medium known as the Internet. Internet technology is having a profound effect on the global trade in services," according to a White House paper in 1997. Electronic commerce is estimated to have been in the range of $63 billion in 1999 and is expected to soar to $1,444 trillion by 2003 (For rester Research, 1999). Electronic commerce is a broad term describing business activities with as sociated technical data that are conducted electronically. It is an entire set of different, digitally enabled activities that are progressively replacing the more traditional brick-and-mortar commercial functions. While the wider phenomenon of "electronization of economic activities" encompasses the digitalization of all processes of economic wealth generation—including economic analysis, production, storage, information provisioning, marketing, and so on—it is the area of sales and related processes facilitated by electronic media that have been popularly termed "electronic commerce." Consequently within the more general phenomenon of digitalization of modern life, we find its most important component electronic commerce.

New Ways of Doing Business

Corporate, not-for-profit, and governmental sys tems are incorporating many increasingly digitalized processes that are leading to astounding productivity gains in the world economy because these processes are becoming less expensive, less time consuming, and more useful ("Why the Productivity Revolution," 2000). For example, a directory-assistance call formerly required an operator, look-up in paper-based directories, and a localized search. Now it involves a national (or international) computer database, voice synthesis, and automatic connection. Furthermore, the process has been expanded; one can do reverse searches through the Internet that will point to the owner of a telephone number, link this to one's telephone bill, and not involve any individual as the service provider. Thousands of "system processes" are undergoing this type of mutation, leading to cheaper, less time-consuming, and expanded types of services. Figure 1 shows several components of the business process (e.g., marketing) and electronic commerce tools (e.g., Web banners) that are structurally changing ways of doing business.

The marketing, advertising, and care triad are the core of the phenomenon. One-to-one marketing (whereby large customer databases link much information about clients, thus creating very efficient leads) is linked to very tailored advertising: The firm knows the client when he or she is connected to the Internet, and it fires off a series of individually targeted banners catering very closely to the client's needs. These advertising banners can explore the geography of the client at that moment (for example, if in a car, the closest gas station, drug store, or sports bar), linkages among products or recent purchase (bought a computer, needs parts and software), personal factors (getting married, needing a dress, birthday, death in the family), and other factors. The e-care part of the triad is the emerging process of the new organization. Technologically rich products need superior, technologically based support. E-care—a mix of e-mail, Web based support, and, when essential, phone sup port—is cheaper and more powerful if properly done than the traditional means. Organizations are finding that the same stringent standards of traditional care must be applied in the e-organization.

The electronic commerce revolution is in its initial phases and will progressively take over all processes either directly or indirectly. The distinction between "snail" commerce and e-commerce will disappear, with all processes be coming either digital or aided by digital supporting processes. The pace of this transformation is what differentiates winning from losing competitors, industries, and investors. The intrinsic nature of the product and processes, as well as the dynamics and resistance to change of corporations and industries, will determine the pace of change and the gains in productivity. Together with the telephone, railroads, and electricity, the Internet is one of the major agents of change of modern life.

Two major factors affect the speed of change in terms of product: (1) bitability and (2) e-commoditization. A product is bitable or not. If it can be transmitted over the Internet, the product (or service) is bitable. Software, information, remote support services, banking, bro kerage, and insurance, for example, fall into this category. If a product is bitable it does not ultimately have to be physically delivered, although it may take some time to acquire sufficient bandwidth or get consumers used to the idea. The e-commoditization factor is more complex. An e-commodity is an item that one does not need to touch, see, try on, try out, taste, or squeeze before buying. Clearly high-fashion clothes, cars, foods, meats, vegetables, and girlfriends tend not to fall into this category. On the other hand, this is very much a question of attitude and need. Busy executives will forgo the examination of food items for the convenience of having them at home when they arrive there. Once a teenager has tried on an item of brand-name clothing for size, it becomes a commodity, since sizes tend to be quality controlled. A buyer who lives in a very remote location may consider an item to be a commodity because the cost of its examination does not warrant extensive travel—and, in the case of clothes, they can be altered. Ultimately, bitable goods and bitable commodity goods present the highest potentials for e-commerce.

Research predicts that there will be a wide range of business expansion on the Internet. This is reflected on Figure 2, which incorporates a series of predictions from four different organizations.

Travel and apparel are expected to be the largest B2C (business to consumer) areas. At the same time, the volumes of B2B (business to business) trade are expected to be six to ten times larger than B2C, but with much narrower margins.

Emerging Principles of Electronic Commerce

An entirely new set of principles of commerce is emerging. First is the realization that a Malthusian physical world is giving way to a place where information is abundant and eyeballs limited. Second is the realization that paradoxes exist because of technology, and that giving things away for free, not protecting software against privacy, and paying for visitors, may be the paradigms of the e-world. Third, the meaning of the words competitor and industry are changing. In the faceless world of the Internet, one's current and future customers and suppliers are both one's competitors and one's allies. Fourth, industries are blending and changing, and affiliation agreements allow for the creation of entire product cycles without the ownership of inventory or production facilities. Finally, pricing models are changing; hybrids of fixed pricing, auctions, variable pricing, contingent pricing, and name-your-price pricing are emerging and creating new business models. While technology gets most of the credit, actually successes are usually based on the triad of: (1) technology, (2) business model innovation, and (3) a family of facilitating (profitable) services. (See Figure 3)

The B2B sector of e-commerce will present both vertical and horizontal models. In the vertical model, the firm will focus on an industry and develop great industry expertise in order to develop its markets. In the horizontal model the firm will focus on one type of product or service and offer it across industries (e.g., Internet payroll services). The B2B sector is intrinsically different from B2C. Buyers are well informed, possess many resources and can negotiate based on volume. Brand name is much less of a consideration than price, quality, delivery time, and reliability. Three different models have emerged for B2B transactions: (1) the e-catalog model for situations in which there are many different items at distributed locations and the price is fixed (e.g., auto parts); (2) the auction model, in which products are not standardized and there are great differences in the perceptions of value (e.g., auctions of used capital plant products); and (3) the commodity auction model, in which there are not too many variations on the type of product and there are large buyers and sellers (e.g., natural gas, pork bellies, coffee, etc.).

Electronic commerce is progressively and irreversibly changing the face of many businesses because of three dominant phenomena: (1) disintermediation, whereby one party to a transaction is eliminated (e.g., brokers in on-line trading); (2) re-intermediation, whereby a new electronic intermediary comes between the seller and the buyer (e.g., electronic booksellers that take orders and farm them out to providers that have the book in stock); and (3) cannibalization, whereby businesses progressively give up their traditional brick-and-mortar ventures for the superior electronic model (e.g., traditional pharmacies opening on-line drug stores).

Problems in Search of Solutions

The e-commerce juggernaut is not without its dangers and shortcomings. It is drastically affecting traditional firms that cannot continue to do business according to the traditional economic model. For example, a stock brokerage firm that on average charged $90 per trade cannot compete with $10 on-line trades; if any adaptations meet with strong resistance, the organization could be dooming itself to extinction. The security weaknesses of the e-commerce infrastructure have been well publicized: Viruses, security intrusions, and inability to provide services because of volume attacks are not phenomena that will disappear. A continuous struggle is evolving among facilitating technologies, intrinsic technological dangers, and the management of these factors.

Privacy issues present a different set of challenges. The same technology that facilitates business activities and provides wonderful services is also a major threat to individual freedom. Large databases linking information about economic activity from different sources (purchases, banking activity, medical records) provide great economic advantages by making marketing more efficient, loans more targeted, and medical information ubiquitous. They also create great dangers for privacy potentials for abuse. Doubleclick.com, a marketing analysis technology firm, tracks customer activities in Web sites. Its click-path analysis allows firms to understand customer behavior and improve their offerings. However they have 11,000 clients, and linking together the buyers' profiles from these sites is considered to be far too intrusive by many people. Complaints have been filed with the Federal Trade Commission and boycotts proposed. As a response, Doubleclick lured bigger profile "primary" officers for its board."

Solutions, however, are not as straightforward as they might seem. Making certain actions illegal can actually create arbitrage opportunities and extraordinary advantages for Internet players. Because gambling rules are strict in the United States, electronic casinos are created in cooperative havens in the Bahamas: A legal obstacle in the United States is a business opportunity for another country. When restrictions are placed on the use and content of databases in Germany, offshore database havens appear immediately. When Web-site censorship appears in China, free-Chinese Web sites are constructed. Telephone systems are monitored and taxed by PTTs, supranational satellite telephone networks are being created.

Consequently, easy fixes are not possible and new methods of establishing order, efficiency, and decency will have to be created. Because the Internet is truly a supranational entity, nations need to band together to maintain order and efficiency and reasonableness in cyberspace. The same economic factors that allow for arbitrage can also be used for self-policing and monitoring of the e-commerce environment. To benefit fully from this medium, companies/entities and nations must have payment-clearing solutions, customs solutions, and access to the large markets of the economy. Rogue countries can be excluded from the payment-clearing chains; rogue companies behaving in unacceptable ways can be boycotted and excluded from any affiliation and linking deals. Self-policing seals such as the American Institute of Certified Public Accountants' (AICPA) Web Trust and SysTrust products, inspections, and certificates can be used for monitoring and supervision. International information structures, involving many cooperating organizations, can be on the alert for rogue behavior and spearhead a drive to create reasonable and unbiased rules. Technology can be used to monitor and detect money laundering, illegal product flows, and information trafficking. But such monitoring must be carefully conceived and supervised, because it could turn into a "Big Brother" type of behavior. Most important of all is not to succumb to the easy temptation of creating restrictive and ill-thought-out laws of the sort that legislators tend to create when some local scandal occurs.

Bibliography

American Institute of Certified Public Accountants and Canadian Institute of Chartered Accountants. (1999). SysTrust (TM/SM) Principles and Criteria for Systems Reliability.

American Institute of Certified Public Accountants. (updated annually). CPA WebTrust: Practitioner's Guide for Business to Consumer Electronic Commerce.

Forrester Research. (1999, November).

Kilmer, William E. (1999). Getting Your Business Wired: Using Computer Networking and the Internet to Grow your Business. New York: AMACOM.

Rosen, Anita. (2000). The e-Commerce Question and Answer Book: A Survival Guide for Business Managers. New York: American Management Association.

U.S. Government's Framework for Electronic Commerce, The. (1997, July 1). The White House, http://www.ecommerce.gov/framewrk.htm#BACKGROUND.

"Why the Productivity Revolution Will Spread." (2000). Business Week. February 14. http://www.businessweek.com.

[Article by: MIKLOS A. VASARHELYI]

For more information on e-commerce, visit Britannica.com.

Electronic Commerce, or e-commerce, is the conduct of business by electronic means. Following this general definition, e-commerce began soon after Samuel Morse sent his first telegraph message in 1844, and it expanded across the sea when another message, containing share price information from the New York stock market, linked Europe and North America in 1858. By 1877, Western Union, the dominant telegraph company, moved $2.5 million worth of transactions annually among businesses and consumers, and news companies led by Reuters sold financial and other information to customers around the world. The telephone permitted electronic voice transactions and greatly extended the reach of retail companies like Sears, whose mail-and telephone-order catalog helped to create genuine national firms.

In the twenty-first century, e-commerce referred more specifically to transactions between businesses (B2B e-commerce) and between businesses and consumers (B2C e-commerce) through the use of computer communication, particularly the Internet. This form of electronic commerce began in 1968, when what was called Electronic Data Interchange permitted companies to carry out electronic transactions. However, it was not until 1984 that a standardized format (known as ASC X12) provided a dependable means to conduct electronic business, and it was not until 1994 that Netscape introduced a browser program whose graphical presentation significantly eased the use of computer communication for all kinds of computer activity, including e-commerce.

To take advantage of the widespread adoption of the personal computer and the graphical browser, Jeff Bezos in 1995 founded Amazon.com to sell books and eventually a full range of consumer items over the Internet. Amazon went public in 1997 and in 2000 earned $2.76 billion in revenue, though its net loss of $417 million troubled investors. Other booksellers followed quickly, notably Barnes and Noble, whose web subsidiary—begun in 1997—also experienced rapid revenue growth and steep losses. One of the most successful e-commerce companies, eBay, departed from traditional retail outlets by serving as an electronic auction site or meeting place for buyers and sellers, thereby avoiding expensive warehousing and shipping costs. Its earnings derive from membership and transaction charges that its participants pay to join the auction. The company's profit of $58.6 million in 2000 made it one of the few to show a positive balance sheet. Other notable consumer e-commerce firms like the "name your own price" company Priceline.com and the online stock trading company E*TRADE suffered significant losses. Despite the backing of the New York Times, the financial news site The Street.com also failed to live up to expectations and eliminated most of its staff. Others did not manage to survive, notably the online-community firm theglobe.com, which received strong startup support in 1998, and Value America, which sold discounted general merchandise and enjoyed the backing of Microsoft's cofounder Paul Allen and the FedEx corporation.

The business-to-business form of e-commerce fared better in 2000 and 2001, although a faltering economy lowered expectations. B2B e-commerce evolved with the development of the Internet. One of the leading B2B firms, i2 Technologies, was founded in 1988 as a business software producer to help companies manage inventories electronically. As the Internet expanded, the role of i2 grew to include the procurement and management of all the elements required to produce finished goods. Successful in this endeavor, its revenue grew to $1.1 billion and its profit to $108 billion in 2000. Another form of B2B e-commerce involves managing a market for firms in specific industries. VerticalNet, founded in 1995, links producer goods and services markets, earning money on commissions it receives for deals struck using its electronic marketplace. Other market-creating firms focus on specific products. These include Pantellos in the utilities industry, ChemConnect in chemicals, and Intercontinental Exchange for oil and gas. Concerned about this trend, manufacturers began creating their own electronic purchasing markets, the largest of which, Covisint, was founded in 2000 by General Motors, Ford, and Daimler Chrysler. In its first year of operation, the company managed the purchasing of $129 billion in materials for the automobile industry. Other B2B companies have concentrated on the services sector, with consulting (Sapient) and advertising (DoubleClick) somewhat successful, and health services (Healthion/WebMD) less so.

By 2001, electronic commerce had not grown to levels anticipated in the late 1990s. In addition to a decline in economic growth, there remained uncertainties, particularly in relation to the consumer sector. Buyers were slower than expected to change habits and make the shift from going to a store to shopping on a computer. Concerns about privacy and security remained, although some progress was made in setting national and international regulations. Businesses remained reluctant to guarantee strict privacy protection because selling information about customers was a valuable part of the e-commerce business. Nevertheless, business-to-business sales continued to grow and companies that developed their electronic sales divisions slowly over this period and carefully integrated their e-commerce and conventional business practices appeared to be more successful. Forecasters remained optimistic, anticipating the $657 billion spent worldwide on e-commerce in 2000 to double in 2001 and grow to $6.8 trillion by 2004.

Bibliography

Frank, Stephen E. NetWorth: Successful Investing in the Companies that Will Prevail through Internet Booms and Busts. New York: Simon and Schuster, 2001.

Lessig, Lawrence. Code and Other Laws of Cyberspace. New York: Basic, 1999.

Schiller, Dan. Digital Capitalism: Networking the Global Market System. Cambridge, Mass.: MIT Press, 1999.

Standage, Tom. The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth Century's Online Pioneers. New York: Walker, 1998.

—Vincent Mosco

Electronic Commerce

• E Commerce Nerd Making Sense of Making Money Online

Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown dramatically since the wide introduction of the Internet. A wide variety of commerce is conducted in this way, including things such as electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (EDI), automated inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

A small percentage of electronic commerce is conducted entirely electronically for "virtual" items such as access to premium content on a website, but most electronic commerce eventually involves physical items and their transportation in at least some way.

E-commerce or electronic commerce is generally considered to be the sales aspect of e-business.

History

Early signification

The meaning of the term "electronic commerce" has changed over the last 30 years. Originally, "electronic commerce" meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT), where both were introduced in the late 1970s, for example, to send commercial documents like purchase orders or invoices electronically.

The 'electronic' or 'e' in e-commerce refers to the technology/systems; the 'commerce' refers to traditional business models. E-commerce is the complete set of processes that support commercial business activities on a network. In the 1970s and 1980s, this would also have involved information analysis. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of e-commerce. However, from the 1990s onwards, this would include enterprise resource planning systems (ERP), data mining and data warehousing. Perhaps the earliest example of many-to-many electronic commerce in physical goods was the Boston Computer Exchange, a marketplace for used computers, launched in 1982. The first online information marketplace, including online consulting, was likely the American Information Exchange, another pre-Internet online system, introduced in 1991.

Activities

In the dot com era, it came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web, usually with secure connections (HTTPS, a special server protocol that encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic payment services, like credit card payment authorizations.

Today, it encompasses a very wide range of business activities and processes, from e-banking to offshore manufacturing to e-logistics. The ever growing dependence of modern industries on electronically enabled business processes gave impetus to the growth and development of supporting systems, including backend systems, applications and middleware. Examples are broadband and fibre-optic networks, supply-chain management software, customer relationship management software, inventory control systems and financial accounting software.

Web development

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. Subsequently, between 1998 and 2000, a substantial number of businesses in the United States and Western Europe developed rudimentary web sites.

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.

The emergence of e-commerce also significantly lowered barriers to entry in the selling of many types of goods; accordingly many small home-based proprietors are able to use the internet to sell goods. Often, small sellers use online auction sites such as eBay, or sell via large corporate websites like Amazon.com, in order to take advantage of the exposure and setup convenience of such sites.

$259 billion of online sales including travel are expected in 2007 in USA, a 18 percent increase from the previous year, as forecasted by the "State of Retailing Online 2007" report from the National Retail Federation (NRF) and Shop.org.^[1]

Success factors

In many cases, an e-commerce company will survive not only based on its product, but by having a competent management team, good post-sales services, well-organized business structure, network infrastructure and a secured, well-designed website. A company that wants to succeed will have to perform two things: Technical and organizational aspects and customer-oriented. Following factors will make business of companies succeed in e-commerce:

Technical and organizational aspects

1. Sufficient work done in market research and analysis. E-commerce is not exempt from good business planning and the fundamental laws of supply and demand. Business failure is as much a reality in e-commerce as in any other form of business.
2. A good management team armed with information technology strategy. A company's IT strategy should be a part of the business re-design process.
3. Providing an easy and secured way for customers to effect transactions. Credit cards are the most popular means of sending payments on the internet, accounting for 90% of online purchases. In the past, card numbers were transferred securely between the customer and merchant through independent payment gateways. Such independent payment gateways are still used by most small and home businesses. Most merchants today process credit card transactions on site through arrangements made with commercial banks or credit cards companies.
4. Providing reliability and security. Parallel servers, hardware redundancy, fail-safe technology, information encryption, and firewalls can enhance this requirement.
5. 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.
6. Constructing a commercially sound business model.
7. 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 as either specialist or generalist if properly programmed.)
8. 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).
9. Setting up an organization of sufficient alertness and agility to respond quickly to any changes in the economic, social and physical environment.
10. Providing an attractive website. The tasteful use of colour, graphics, animation, photographs, fonts, and white-space percentage may aid success in this respect.
11. Streamlining business processes, possibly through re-engineering and information technologies.
12. Providing complete understanding of the products or services offered, which not only includes complete product information, but also sound advisors and selectors.

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. (Of course, customers can, and occasionally do, research a brick-and-mortar store online before visiting it, so this distinction does not hold water in every case.)

Customer experience

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. This implies that all product information is available, cross-sell information, advise for product alternatives, and supplies & accessory selectors.
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.

Problems

Product suitability

Certain products or services appear more suitable for online sales; others remain more suitable for offline sales. While credit cards are currently the most popular means of paying for online goods and services, alternative online payments will account for 26% of e-commerce volume by 2009 according to Celent.^[2]

Many successful purely virtual companies deal with digital products, (including information storage, retrieval, and modification), music, movies, office supplies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, eBay and Paypal. Other successful marketers such as use Drop shipping or Affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real inventory. Examples include numerous sellers on eBay.

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.

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 fulfill 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. ^{[citation needed]}

There are also many disadvantages of e-commerce, one of the main ones is fraud. This is where your details (name, bank card number, age, national insurance number) are entered into what look to be a safe site but really it is not. These details can then be used to steal money from you and can be used to buy things on line that you are completely unaware of until it is too late. If this information is leaked into the wrong hands, people are able to steal your identity, and commit more fraud crimes under your name.

Products less suitable 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. Also, the recycling program Cheapcycle sells goods over the internet, but avoids the low value-to-weight ratio problem by creating different groups for various regions, so that shipping costs remain low.

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:

• 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, mainly 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.
• Poorly designed, bug-infested e-Commerce web sites that frustrate online shoppers and drive them away.
• Inconsistent return policies among e-tailers or difficulties in exchange/return.

See also

• Drop shipping

References

1. ^ Online sales spike 19 percent. CNN (May 14 2007).
2. ^ Celent Report: According to figures published by Celent 25 May 2006.

• Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). e-Business and e-Commerce Infrastructure. McGraw-Hill. ISBN 0-07-247875-6. 
• Frieden, Jonathan D. & Roche, Sean Patrick (2006-12-19), "E-Commerce: Legal Issues of the Online Retailer in Virginia", Richmond Journal of Law & Technology 13 (2), <http://law.richmond.edu/jolt/v13i2/article5.pdf>
• 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, The Penguin Press, 246 pages. ISBN 1-59420-077-7. 
• Seybold, Pat (2001). Customers.com. Crown Business Books (Random House). ISBN 0-609-60772-3. 

External links

Wikibooks has a book on the topic of

The Information Age

Wikibooks has a book on the topic of

E-Commerce and E-Business

• An early survey of electronic commerce from The Economist
• Practical eCommerce
• Ecommerce Times
• North American Consumer Project on Electronic Commerce (NACPEC)
• Internet Retailer Newszh-yue:網上買賣

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