Electronic commerce
Encyclopedia
Electronic commerce, commonly known as e-commerce, eCommerce or e-comm, refers to the buying and selling of product
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...

s or services over electronic systems such as the Internet and other computer network
Computer network
A computer network, often simply referred to as a network, is a collection of hardware components and computers interconnected by communication channels that allow sharing of resources and information....

s. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer
Electronic funds transfer
Electronic funds transfer is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems....

, supply chain management
Supply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...

, Internet marketing
Internet marketing
Internet marketing, also known as digital marketing, web marketing, online marketing, search marketing or e-marketing, is referred to as the marketing of products or services over the Internet...

, online transaction processing
Online transaction processing
Online transaction processing, or OLTP, refers to a class of systems that facilitate and manage transaction-oriented applications, typically for data entry and retrieval transaction processing...

, electronic data interchange
Electronic Data Interchange
Electronic data interchange is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e...

 (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web
World Wide Web
The World Wide Web is a system of interlinked hypertext documents accessed via the Internet...

 at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail
E-mail
Electronic mail, commonly known as email or e-mail, is a method of exchanging digital messages from an author to one or more recipients. Modern email operates across the Internet or other computer networks. Some early email systems required that the author and the recipient both be online at the...

, mobile devices and telephones as well.

A large percentage of electronic commerce is conducted entirely in electronic form for virtual
Virtual
The term virtual is a concept applied in many fields with somewhat differing connotations, and also, differing denotations.The term has been defined in philosophy as "that which is not real" but may display the salient qualities of the real....

 items such as access to premium content on a website, but mostly electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers are now electronically present on the World Wide Web
World Wide Web
The World Wide Web is a system of interlinked hypertext documents accessed via the Internet...

.

Electronic commerce that takes place between businesses is referred to as business-to-business
Business-to-business
Business-to-business describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer...

 or B2B. B2B can be open to all interested parties (e.g. commodity exchange
Commodity exchange
Commodity exchange may refer to:* Commodities exchange, any exchange where various commodities and derivatives products are traded.* Commodity markets, for the markets trading on commodities in general....

) or limited to specific, pre-qualified participants (private electronic market
Private electronic market
A private electronic market uses the Internet to connect a limited number or pre-qualified buyers or sellers in one market. PEMs are a hybrid between perfectly open markets A private electronic market (PEM) uses the Internet to connect a limited number or pre-qualified buyers or sellers in one...

). Electronic commerce that takes place between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...

. Online shopping is a form of electronic commerce where the buyer is directly online to the seller's computer usually via the internet. There is often no intermediary service involved, and the sale or purchase transaction is completed electronically and interactively in real-time. However in some cases, an intermediary may be present in a sale or purchase transaction, or handling recurring or one-time purchase transactions for online games.

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.

Early development

Originally, electronic commerce was identified as the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI)
Electronic Data Interchange
Electronic data interchange is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e...

 and Electronic Funds Transfer (EFT)
Electronic funds transfer
Electronic funds transfer is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems....

. These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of e-commerce was the airline reservation system typified by Sabre in the USA and Travicom in the UK.

From the 1990s onwards, electronic commerce would additionally include enterprise resource planning
Enterprise resource planning
Enterprise resource planning systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application...

  systems (ERP), data mining
Data mining
Data mining , a relatively young and interdisciplinary field of computer science is the process of discovering new patterns from large data sets involving methods at the intersection of artificial intelligence, machine learning, statistics and database systems...

 and data warehousing.

In 1990, Tim Berners-Lee
Tim Berners-Lee
Sir Timothy John "Tim" Berners-Lee, , also known as "TimBL", is a British computer scientist, MIT professor and the inventor of the World Wide Web...

 invented the WorldWideWeb
WorldWideWeb
WorldWideWeb, later renamed to Nexus to avoid confusion between the software and the World Wide Web, was the first web browser and editor. When it was written, WorldWideWeb was the only way to view the Web....

 web browser
Web browser
A web browser is a software application for retrieving, presenting, and traversing information resources on the World Wide Web. An information resource is identified by a Uniform Resource Identifier and may be a web page, image, video, or other piece of content...

 and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet/www. Commercial enterprise on the Internet
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...

 was strictly prohibited by NSF until 1995. Although the Internet became popular worldwide around 1994 with the adoption of Mosaic
Mosaic (web browser)
Mosaic is the web browser credited with popularizing the World Wide Web. It was also a client for earlier protocols such as FTP, NNTP, and gopher. Its clean, easily understood user interface, reliability, Windows port and simple installation all contributed to making it the application that opened...

 web browser, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web
World Wide Web
The World Wide Web is a system of interlinked hypertext documents accessed via the Internet...

. Since then people began to associate a word "ecommerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.

Timeline

  • 1979: Michael Aldrich
    Michael Aldrich
    —Michael Aldrich is an English inventor, innovator and entrepreneur. In 1979 he invented online shopping to enable online transaction processing between consumers and businesses, or between one business and another, a technique known later as e-commerce...

     invented online shopping
  • 1981: Thomson Holidays
    Thomson Holidays
    Thomson Holidays is a UK based travel operator and part of TUI Travel PLC. The company was founded as part of the Thomson Travel Group in 1965 following the acquisition of three package holiday travel agencies and the airline Britannia Airways by Roy Thomson...

    , UK is first B2B online shopping
  • 1982: Minitel
    Minitel
    The Minitel is a Videotex online service accessible through the telephone lines, and is considered one of the world's most successful pre-World Wide Web online services. It was launched in France in 1982 by the PTT...

     was introduced nationwide in France
    France
    The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

     by France Telecom
    France Télécom
    France Telecom S.A. is the main telecommunications company in France, the third-largest in Europe and one of the largest in the world. It currently employs about 180,000 people and has 192.7 million customers worldwide . In 2010 the group had revenue of €45.5 billion...

     and used for online ordering.
  • 1984: Gateshead
    Gateshead
    Gateshead is a town in Tyne and Wear, England and is the main settlement in the Metropolitan Borough of Gateshead. Historically a part of County Durham, it lies on the southern bank of the River Tyne opposite Newcastle upon Tyne and together they form the urban core of Tyneside...

     SIS/Tesco
    Tesco
    Tesco plc is a global grocery and general merchandise retailer headquartered in Cheshunt, United Kingdom. It is the third-largest retailer in the world measured by revenues and the second-largest measured by profits...

     is first B2C online shopping and Mrs Snowball, 72, is the first online home shopper
  • 1985: Nissan UK sells cars and finance with credit checking to customers online from dealers' lots.
  • 1987: Swreg
    Swreg
    SWREG Inc is a US payment processing company serving primarily software and service publishers.SWREG's products provide software and shareware authors a method of selling products online, with features such as direct software download and electronic license delivery. SWREG offers multiple payment...

     begins to provide software and shareware authors means to sell their products online through an electronic Merchant account
    Merchant account
    A merchant account is a type of bank account that allows businesses to accept payments by debit or credit cards. A merchant account is established under an agreement between an acceptor and a merchant acquiring bank for the settlement of credit card and/or debit card transactions...

    .
  • 1990: Tim Berners-Lee
    Tim Berners-Lee
    Sir Timothy John "Tim" Berners-Lee, , also known as "TimBL", is a British computer scientist, MIT professor and the inventor of the World Wide Web...

     writes the first web browser, WorldWideWeb
    WorldWideWeb
    WorldWideWeb, later renamed to Nexus to avoid confusion between the software and the World Wide Web, was the first web browser and editor. When it was written, WorldWideWeb was the only way to view the Web....

    , using a NeXT
    NEXTSTEP
    NeXTSTEP was the object-oriented, multitasking operating system developed by NeXT Computer to run on its range of proprietary workstation computers, such as the NeXTcube...

     computer.
  • 1992: Terry Brownell launches first fully graphical, iconic navigated Bulletin board system
    Bulletin board system
    A Bulletin Board System, or BBS, is a computer system running software that allows users to connect and log in to the system using a terminal program. Once logged in, a user can perform functions such as uploading and downloading software and data, reading news and bulletins, and exchanging...

     online shopping using RoboBOARD/FX
    RoboBOARD/FX
    RoboBOARD/FX was first introduced by Hamilton TeleGraphics Inc, written by the owner Seth Hamilton in 1992.At a time where BBS Software were merely using ANSI art interfaces RoboBOARD started a revolution...

    .
  • 1994: Netscape releases the Navigator browser in October under the code name Mozilla
    Mozilla
    Mozilla is a term used in a number of ways in relation to the Mozilla.org project and the Mozilla Foundation, their defunct commercial predecessor Netscape Communications Corporation, and their related application software....

    . Pizza Hut
    Pizza Hut
    Pizza Hut is an American restaurant chain and international franchise that offers different styles of pizza along with side dishes including pasta, buffalo wings, breadsticks, and garlic bread....

     offers online ordering on its Web page. The first online bank opens. Attempts to offer flower delivery and magazine subscriptions online. Adult materials also become commercially available, as do cars and bikes. Netscape
    Netscape Navigator
    Netscape Navigator was a proprietary web browser that was popular in the 1990s. It was the flagship product of the Netscape Communications Corporation and the dominant web browser in terms of usage share, although by 2002 its usage had almost disappeared...

     1.0 is introduced in late 1994 SSL encryption that made transactions secure.
  • 1995: Jeff Bezos launches Amazon.com
    Amazon.com
    Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...

     and the first commercial-free 24 hour, internet-only radio stations, Radio HK and NetRadio
    NetRadio
    NetRadio was a Minneapolis, Minnesota-based company founded by Scott Bourne and radio veteran Scot Combs in 1994. NetRadio helped pioneer online radio and was the world's first Internet-only radio network. NetRadio began using RealAudio 1.0 in November of 1995 to stream their music...

     start broadcasting. Dell and Cisco
    Cisco Systems
    Cisco Systems, Inc. is an American multinational corporation headquartered in San Jose, California, United States, that designs and sells consumer electronics, networking, voice, and communications technology and services. Cisco has more than 70,000 employees and annual revenue of US$...

     begin to aggressively use Internet for commercial transactions. eBay
    EBay
    eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...

     is founded by computer programmer Pierre Omidyar as AuctionWeb.
  • 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.
  • 1998: Alibaba Group is established in China. And it leverage China's B2B and C2C, B2C(Taobao
    Taobao
    Taobao is a Chinese language web site for online shopping, similar to eBay, Rakuten and Amazon, operated in the People's Republic of China by Alibaba Group....

    ) market by its Authentication System.
  • 1999: Business.com
    Business.com
    Business.com is a business search engine and web directory and pay per click advertising network. It includes Work.com, a business-to-business community publishing platform where experts share advice on common business topics in the form of how-to guides....

     sold for US $7.5 million to eCompanies, which was purchased in 1997 for US $149,000. The peer-to-peer filesharing software Napster
    Napster
    Napster is an online music store and a Best Buy company. It was originally founded as a pioneering peer-to-peer file sharing Internet service that emphasized sharing audio files that were typically digitally encoded music as MP3 format files...

     launches. ATG Stores
    ATG Stores
    ATG Stores is the trade name for Allied Trade Group, Inc., an e-commerce company which began in 1999 with the launch of its first website, Lighting Universe...

     launches to sell decorative items for the home online.
  • 2000: The dot-com bust.
  • 2001: Alibaba.com achieved profitability in December 2001.
  • 2002: eBay
    EBay
    eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...

     acquires PayPal
    PayPal
    PayPal is an American-based global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders....

     for $1.5 billion. Niche retail companies Wayfair
    Wayfair
    Wayfair is a U.S.-based multinational e-commerce company. The company—formerly known as CSN Stores—began in 2002 selling furniture online, and now sells many other home goods, luggage, toys, shoes, and jewelry...

     and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
  • 2003: Amazon.com
    Amazon.com
    Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...

     posts first yearly profit.
  • 2004: DHgate.com
    DHgate.com
    DHgate.com is a business-to-business e-Commerce website connecting Chinese suppliers with buyers overseas where users can order products directly through the site...

    , China's first online b2b transaction platform, is established, forcing other b2b sites to move away from the "yellow pages" model.
  • 2007: Business.com
    Business.com
    Business.com is a business search engine and web directory and pay per click advertising network. It includes Work.com, a business-to-business community publishing platform where experts share advice on common business topics in the form of how-to guides....

     acquired by R.H. Donnelley
    R.H. Donnelley
    Dex One Corporation provides online, mobile and print search marketing via their DexKnows.com website, print yellow pages directories and pay-per-click ad networks in the U.S.-History:...

     for $345 million.
  • 2009: Zappos.com
    Zappos.com
    Zappos.com is an online shoe and apparel shop currently based in Henderson, Nevada.In July 2009, the company announced it would be acquired by Amazon.com in an all-stock deal worth about $1.2 billion. Since its founding in 1999, Zappos has grown to be the largest online shoe store.-Inception:Zappos...

     acquired by Amazon.com
    Amazon.com
    Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...

     for $928 million. Retail Convergence, operator of private sale website RueLaLa.com, acquired by GSI Commerce
    GSI Commerce
    GSI Commerce is an eBay company specializing in creating, developing and running online shopping sites for brick and mortar brands and retailers....

     for $180 million, plus up to $170 million in earn-out payments based on performance through 2012.
  • 2010: Groupon
    Groupon
    Groupon is a deal-of-the-day website that features discounted gift certificates usable at local or national companies. Groupon was launched in November 2008, the first market for Groupon was Chicago, followed soon thereafter by Boston, New York City, and Toronto...

     reportedly rejects a $6 billion offer from Google
    Google
    Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...

    . Instead, the group buying websites plans to go ahead with an IPO in mid-2011.
  • 2011: Online payment and recurring billing services provider Vindicia
    Vindicia
    Vindicia is a B-to-B-to-C cloud computing, SaaS marketing, billing and CRM platform company headquartered in Belmont, California, USA that provides digital merchants with an online recurring billing and subscription management platform. Vindicia works with digital leaders selling subscriptions or...

    , developer of the CashBox
    Cashbox
    Cashbox can mean:*A box for keeping cash in; a safe or cash register*CashBox is a SaaS Marketing, Billing, Ecommerce and marketing automation / CRM solution used by digital leaders -- like Atari, Blizzard, Bloomberg, Cisco, Cryptic, Intuit, Magmic , Mind Candy , Outspark, Peanut Labs, Symantec and...

     SaaS billing solution, is named the 20th fastest growing company in Silicon Valley.
  • 2011: US eCommerce and Online Retail sales projected to reach $197 billion, an increase of 12 percent over 2010. Quidsi.com, parent company of Diapers.com
    Diapers.com
    Diapers.com, founded in 2005 by Marc Lore and Vinit Bharara in Montclair, NJ, is the largest online specialty retailer for baby products. Initially founded as 1-800 Diapers, the company set out delivering consumables, such as diapers, wipes, and formula, to parents with free 1-2 day shipping and a...

    , acquired by Amazon.com
    Amazon.com
    Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...

     for $500 million in cash plus $45 million in debt and other obligations. GSI Commerce
    GSI Commerce
    GSI Commerce is an eBay company specializing in creating, developing and running online shopping sites for brick and mortar brands and retailers....

    , a company specializing in creating, developing and running online shopping sites for brick and mortar businesses, acquired by eBay
    EBay
    eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...

     for $2.4 billion.

Business applications

Some common applications related to electronic commerce are the following:
  • Document automation
    Document automation
    Document automation is the design of systems and workflow that assist in the creation of electronic documents. These include logic based systems that use segments of pre-existing text and/or data to assemble a new document. This process is increasingly used within certain industries to assemble...

     in supply chain
    Supply chain
    A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...

     and logistics
    Logistics
    Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...

  • Domestic and international payment system
    Payment system
    A payment system is a system used for transferring money. What makes it a "system" is that it employs cash-substitutes; traditional payment systems are negotiable instruments such as drafts and documentary credits such as letter of credits. With the advent of computers and electronic...

    s
  • Enterprise content management
    Enterprise content management
    Enterprise Content Management is a formalized means of organizing and storing an organization's documents, and other content, that relate to the organization's processes...

  • Group buying
    Group buying
    Group buying, also known as collective buying, offers products and services at significantly reduced prices on the condition that a minimum number of buyers would make the purchase...

  • Automated online assistants
  • Instant messaging
    Instant messaging
    Instant Messaging is a form of real-time direct text-based chatting communication in push mode between two or more people using personal computers or other devices, along with shared clients. The user's text is conveyed over a network, such as the Internet...

  • Newsgroups
  • Online shopping and order tracking
  • Online banking
    Online banking
    Online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.-Features:...

  • Online office suites
  • Shopping cart software
    Shopping cart software
    Shopping cart software is software used in e-commerce to assist people making purchases online, analogous to the American English term 'shopping cart'...

  • Teleconferencing
  • Electronic ticket
    Electronic ticket
    An electronic ticket is a digital ticket. It may be issued by an airline, in road, urban or rail public transport, and in entertainment.-Airline ticket:...

    s

Governmental regulation

In the United States, some electronic commerce activities are regulated by the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...

 (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy
Privacy
Privacy is the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively...

. The CAN-SPAM Act of 2003
CAN-SPAM Act of 2003
The CAN-SPAM Act of 2003 , signed into law by President George W. Bush on December 16, 2003, establishes the United States' first national standards for the sending of commercial e-mail and requires the Federal Trade Commission to enforce its provisions...

 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act
Federal Trade Commission Act
The Federal Trade Commission Act of 1914 started the Federal Trade Commission , a bipartisan body of five members appointed by the president of the United States for seven-year terms. This commission was authorized to issue “cease and desist” orders to large corporations to curb unfair trade...

 regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers’ personal information. As result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.

The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act
Controlled Substances Act
The Controlled Substances Act was enacted into law by the Congress of the United States as Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970. The CSA is the federal U.S. drug policy under which the manufacture, importation, possession, use and distribution of certain...

 to address online pharmacies
Online pharmacy
Online pharmacies, Internet pharmacies, or Mail Order Pharmacies are pharmacies that operate over the Internet and send the orders to customers.Online or internet pharmacies might include:...

.

Forms

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.

Global trends

Business models across the world also continue to change drastically with the advent of eCommerce and this change is not just restricted to USA. Other countries are also contributing to the growth of eCommerce. For example, the United Kingdom has the biggest e-commerce market in the world when measured by the amount spent per capita, even higher than the USA. The internet economy
Internet Economy
The internet economy conducts business through markets whose infrastructure is based on the Internet and World-Wide Web. An Internet economy differs from a traditional economy in a number of ways, including: communication, market segmentation, distribution costs, and price.- Internet economy...

 in UK is likely to grow by 10% between 2010 to 2015. This has led to changing dynamics for the advertising industry

Amongst emerging economies, China's eCommerce presence continues 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. E-Commerce has become an important tool for businesses worldwide not only to sell to customers but also to engage them.

Impact on markets and retailers

Economists have theorized that e-commerce ought to lead to intensified price competition
Competition (economics)
Competition in economics is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services...

, 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 have grown at the expense of smaller ones, as they are able to use economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...

 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.

Distribution channels

E-commerce has grown in importance as companies have adopted Pure-Click and Brick and Click
Bricks and clicks
Bricks and clicks is a business model by which a company integrates both offline and online presences, sometimes with the third extra flips...

 channel systems. We can distinguish between pure-click and brick and click channel system adopted by companies.
  • Pure-Click companies are those that have launched a website without any previous existence as a firm. It is imperative that such companies must set up and operate their e-commerce websites very carefully. Customer service is of paramount importance.
  • Brick and Click companies are those existing companies that have added an online site for e-commerce. Initially, Brick and Click companies were skeptical whether or not to add an online e-commerce channel for fear that selling their products might produce channel conflict with their off-line retailers, agents, or their own stores. However, they eventually added internet to their distribution channel portfolio after seeing how much business their online competitors were generating.

See also

  • Comparison of shopping cart software
    Comparison of Shopping Cart Software
    The following is a comparison of the features of various shopping cart software packages available. Some of the shopping cart software packages are extensible through a third-party application. As such, the features listed below may not encompass all possible features for a given shopping cart...

  • Digital economy
    Digital economy
    A digital economy is an economy based on electronic goods and services produced by an electronic business and traded through electronic commerce...

  • Dot-com company
    Dot-com company
    A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...

  • e-Government
  • Electronic money
    Electronic money
    Electronic money is money or scrip that is only exchanged electronically. Typically, this involves the use of computer networks, the internet and digital stored value systems...

  • List of free and open source eCommerce software
  • Multichannel ecommerce
    Multichannel ecommerce
    Multichannel ecommerce consists of selling products or services through third party retail partners. Multichannel ecommerce can be differentiated from traditional retail distribution partnerships in that the manufacturer usually maintains a single product management system that electronically...

  • Non-store retailing
    Non-Store Retailing
    Non-store retailing is the selling of goods and services outside the confines of a retail facility. It is a generic term describing retailing taking place outside of shops and stores...

  • Online marketplace
    Online marketplace
    Online marketplace refers to a type of ecommerce site where product and inventory information is provided by multiple third parties, whereas transactions are processes by the marketplace operator. Online marketplaces have become a driver of new business for online merchants that leverage them as...

  • Paid content
    Paid content
    Paid content is the non-free electronic commerce of digital content and information goods in digital media. Examples of digital media are, for example, the Internet, the World Wide Web or mobile media...

  • Virtual economy
    Virtual economy
    A virtual economy is an emergent economy existing in a virtual persistent world, usually exchanging virtual goods in the context of an Internet game...



External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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