FREE ESSAY ON ECOMMERCE

ECOMMERCE

E-Commerce
With the astonishing growth of the Internet, many companies are finding new and exciting
ways to expand upon their business opportunities. There are very few
successful companies that do not use computers in their everyday business activities,
which also means there are few companies that do not use e-commerce. 
To emphasize the point that the effect of the Internet is so widespread in today's
business communities, one online article stated that more than 100000 companies have
Internet addresses, and 20000 companies have home pages on the Internet as of February
1999 (DataQuest, 1999). These numbers have more than tripled since 1995, and the trend
shows no signs of slowing. 
But what exactly is e-commerce? To most casual Internet surfers, e-commerce means online
shopping and workaholics pointing their web browser to Amazon.com to order an emergency
present because they forgot someone's birthday again (Weiss, 1999). As we will soon find
out, this is far from the case. Simply put, e-commerce is the exchange of business
information between two or more organizations. An example of this would be buying and
selling products or services over the Internet. E-commerce became very popular, soon
after it proved to be an efficient means to conduct long distance transactions. 
The purpose of this report is to discuss some of the advantages and disadvantages
e-commerce, as well as examining its potential for the future of business. Electronic
commerce, or e-commerce has developed very rapidly in the last few years and has left
some people wondering what it is all about. Most people think e-commerce is just about
buying and selling things over the Internet, said Wareham (Wareham, 2000). 
E-commerce is a broad term describing the electronic exchange of business data between
two or more organizations computers. Some examples might be the electronic filing of your
income tax return, on-line services like Prodigy, and on-line billing for services or
products received. E-commerce also includes buying and selling any item over the
Internet, electronic fund transfer, smart cards, and all other methods of conducting
business over digital networks. The primary technological goal of e-commerce is to
integrate businesses, government agencies, and contractors into a single community with
the ability to communicate with one another across any computer platform (Edwards,
1998).
Electronic commerce was built on a foundation that was started more than 125 years ago
with Western Union's money transfer as an example of telegraph technology. In the early
1900's the advent of credit cards as a payment system revolutionised the process of
automated commerce functions. In the mid 1980's the introduction of the ATM card was the
latest improvement to electronic commerce. 
The Internet was conceived in 1969 when the Department of Defence began funding the
research of computer networking. The Internet, as a means for commerce, did not become
reality until the 1990's. Before this time, it was mainly a tool for the army, and a
research device for some American universities. Its popularity grew when it proved to
become a fast and efficient means to conduct long distance transactions, as well as an
effective way to distribute information. 
Economic impact clearly, E-commerce will change the face of business forever. Companies
that are thousands of miles away can complete business transactions in a matter of
seconds as well as exchange information. As one online article explained: Dell Computers
sells more than $14 million worth of computer equipment a day from its web site. By
taking their customer service department to the web Federal Express began saving $10,000
a day. 
The Internet provides businesses with the opportunity to sell their products to millions
of people, in 24 hours a day (Baxton, 1999). Figure #1 shows the amount of revenues
generated by the on the Internet dating back to 1996 as well as estimating possible
revenues through the year 2002. With 1998, revenue equaling almost 74 billion dollars and
experts predicting that it will climb to as much as 1,234 billion dollars by the year
2002, anyone can see that e-commerce is the wave of the future.
Figure #1- Internet generated revenues in US dollars. Source: NUA Internet Surveys
Without a doubt, the Internet is ushering in an era of sweeping change that will leave no
business or industry untouched. In just three years, the Net has gone from a playground
for nerds into a vast communications and trading centre where some 90 million people swap
information or do deals around the world. Imagine: It took radio more than 30 years to
reach 60 million people, and television 15 years. Never has a technology caught fire so
fast. (Edwards, 1998)
The number one advantage that e-commerce possesses is speed. The Internet and World Wide
Web give businesses opportunities to exchange messages or complete transactions almost
instantaneously. Even with the slowest connections, doing business electronically is much
faster than traditional modes. With increased speeds of communication, the delivery time
is expedited and that makes the whole transaction from start to finish more efficient. 
Additionally, you can find practically any product available for sale on the Internet, as
one author put it from books and compact disks (from www.amazon.com) to French bread
(available from www.sourdoughbread.com), (Buskin, 1998). 
Even more significant is the fact that information appearing on the Internet can be
changed extremely rapidly. This gives business owners the ability to inform customers of
any changes to the service that you are offering. This also allows for you to update
marketing and promotional materials as often and as frequently as you would like. 
The second advantage of the electronic commerce is the opportunity it offers to save on
costs. By using the Internet, marketing, distribution, personnel, phone, postage and
printing costs, among many others, can be reduced. You can start doing business in
cyberspace for as little as $100. Most businesses will spend more than this but compared
to the cost of opening a physical store, the savings are tremendous. These funds can then
be diverted to marketing and advertising of your product or service. Cyberspace knows no
national boundaries. That means you can do business all over the world as easily as you
can in your own neighbourhood. Since the Internet connects everyone in cyberspace,
information is transmitted at the speed of sound or the speed of light, depending on your
connection. Either way, distance becomes meaningless, which makes you able to link to
anyone on the globe and anyone on the globe can link to you. The ability to provide links
makes doing business on the Internet attractive to customers in any part of the world. 
Using the web to provide customer support is an excellent vehicle to help build the
reliability and effectiveness of your product or service. The ability to provide on-line
answers to problems through email or an provide an archive section of frequently asked
questions 24 hours a day, 365 days a year, builds customer confidence and retention. In
fact, a whole series of IBM E-commerce commercials were based on this one single point.
The Internet tends to be a more personal environment. People expect to get a real person
when they send mail. This can work to your advantage as a small start-up company, or when
you are a large corporation. No matter what business you are involved in, an online-help
feature is an extraordinary advantage to have. 
A potential source of trouble is customer concerns with privacy and security. Anything
sent over the Internet is sent through several different computers before it reaches its
destination. The concern regarding Internet security and privacy is that unscrupulous
hackers can capture credit card or checking account data as it is transferred or break
into computers that hold the same information. Security on the Internet is much like
security for your home. There is a point when the effort outweighs the advantages. 
As with your home you usually stop adding security features when you feel safe. Making a
customer feel safe is what is important in doing business on the Internet. Even though no
one can guarantee 100% security of transferring financial information over the Internet,
e-commerce is still safer than using credit cards at an actual store or restaurant, or
paying for something with the use of a 1-800 number (unknown author, 1999). 
In addition, every time you throw away a credit card receipt you could make yourself
powerless to fraud. But how do we, as consumers, know this for sure? What precautions do
e-commerce websites take to avoid such problems? The answer is simple: encryption. Ever
since the 2.0 versions of Netscape Navigator and Microsoft Internet Explorer,
transactions can be encrypted using Secure Sockets Layer (SSL), an Internet protocol that
creates a secure connection to the server, protecting the information as it travels over
the Internet. SSL uses public key encryption, one of the strongest encryption methods
around. 
A way to tell that a Web site is secured by SSL is when the URL begins with https instead
of http. Browser makers and credit card companies are also promoting an additional
security standard called Secure Electronic Transactions (SET). SET encodes the credit
card numbers that sit on vendors' servers so that only banks and credit card companies
can read the numbers. Obviously no e-commerce system can guarantee 100-percent protection
for your credit card, but you are less likely to get your pocket picked online than in a
real store (Weiss, 1999). 
E-commerce is based on the assumption that the participants will pay for what they buy.
There has been a noted reluctance among Internet users to actually pay, particularly for
the digital goods and services. As a result, much of the current business on the Internet
is funded using business models other than user-pays, primarily advertising and
sponsorship. If a company is selling something, then they need to find a way to accept
payment that is not only convenient for them, but most importantly, convenient for the
customers. 
Setting up a simple web site can be very inexpensive, but if you are unsure of how to go
about creating one, a simple web site thus may not be so simple. Moreover if you do not
know what you are doing, your site will definitely not be effective. A functional web
site with online ordering requires expertise in four different areas. If a business owner
does not have HTML, CGI scripting, ODBC, and special programs for online clearing options
experience, they may want to consider outsourcing. Outsourcing is the use of a third
party service company to provide the missing pieces to complete the total functionality
of the business. This is a cost-effective way to allow a site to get up and running much
faster and concentrate on the product or service rather than getting overwhelmed with the
technical challenges (DeCourey, 1999). 
Finally, a possible disadvantage to e-commerce is not having a strong organizational
commitment. A functional web site that is going to be successful will soon need
additional resources in technology and skills. E-commerce is evolving at a very rapid
rate and the business owner must be willing to evolve with it. Newer and more advanced
technology will cost more, but should be supplemented by additional revenues. 
Furthermore, the company must be willing to change the entire business or start a new one
when they can see the need for change. Yahoo started as a commercial operation in 1995,
with a simple, if enormous, list of Web sites to help people navigate the Web. But like
the Web itself, Yahoo is changing fast. The once amazing ability to search the entire
World Wide Web became outdated in a Net instant, so Yahoo, at the tender age of two
years, began reinventing itself as a place to trade stocks, make travel reservations, and
conduct commerce (Hof, 1998). 
Rest assured the future of e-commerce is intact and ever changing. Like electricity,
antibiotics, or the car, the Internet is a revolutionary technology (France, 1999). It is
quite evident that e-commerce is only gaining speed. As one article stated, the growth of
e-commerce would not diminish, it will become such a pervasive influence on how a
company works that all functions within an organization will have a stake in their
e-commerce strategy (Wareham, 2000). With Internet traffic doubling every 100 days the
digital economy is alive and growing. The huge growths of virtual communities are causing
shifts in economic power from large corporations to smaller businesses. Virtual
communities erode the marketing and sales advantages of large companies. A small company
with a better product and better customer service can use these communities to challenge
larger competitors—something it probably could not do in the real world
(CommerceNet, 1999). 
With many of the technological advances in the banking, on-line trading and retail
industries, e-commerce will soon become the foundation of our life just as radio,
telephone and television have in the past. Technology has a place in everyone's
day-to-day activities and soon e-commerce will be a major factor in the decisions we have
to make. 
Remember, e-commerce is more complex than just buying that special someone's birthday
present. E-commerce, along with the Internet, is an outlet for business. It is a way for
the new man to compete with the proven giants in the industry. An example of this would
be the launch of Wal-Marts new web site intended to compete with industry monster
Amazon.com. Their new business venture allows Wal-Mart to go outside its usual corporate
sphere for Web-savvy talent geared for dot.com commerce, such as engineers, programmers
and marketers. It also provides them with the necessary Web-wampum "V" such as options,
warrants and shares that are essential to attracting top talent (Veverka, 2000). Simply
put, the Internet and the use of e-commerce provides many opportunities for even the
smallest of businesses to compete with large corporations, in essence leveling the
playing field. 
With the steady growth of the Internet, and the fact that every year more and more
families are plugging in and surfing the web, can a company survive without the use of
the Internet and e-commerce? Probably, but not for long. The Internet and e-commerce are
here to stay, so businesses can either change with the times, or get left behind. The
choice is theirs to make. 
Bibliography
References
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