Electronic commerce, commonly known as e-commerce or eCommerce, or e-business 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 extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web 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. (http://en.wikipedia.org/wiki/E-Commerce (Accessed - 16/09/2010: 10:00am)
A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most 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.
1.2 Brief history of ecommerce
The term e-commerce was originally conceived to describe the process of conducting business transactions electronically using technology from the Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These technologies, which first appeared in the late 1970’s, allowed for the exchange of information and the execution of electronic transactions between businesses, typically in the form of electronic purchase orders and invoices. EDI and EFT were the enabling technologies that laid the groundwork for what we now know as e-commerce. Throughout the 1980’s, the proliferation of credit cards, ATM machines and telephone banking was the next step in the evolution of electronic commerce. Starting in the early 90’s, e-commerce would also include things such as enterprise resource planning (ERP), data warehousing and data mining.
It wasn’t until 1994 that e-commerce (as we know it today) really began to accelerate with the introduction of security protocols and high speed internet connections such as DSL, allowing for much faster connection speeds and faster online transaction capability. Industry “experts” predicted explosive growth in e-commerce related businesses. In response to these expert opinions, between 1998 and 2000, a substantial number of businesses built out their first rudimentary e-commerce websites. The definition of e-commerce began to change in 2000 though, the year of the dot-com collapse when thousands of internet businesses folded. Despite the epic collapse, many of the worlds’ most established traditional brick-and-mortar businesses were emboldened with the promise of e-commerce and the prospect of serving a global customer base electronically. The very next year, business to business transactions online became one of the largest forms of e-commerce with over $700 billion dollars in sales. Many of the dot-com collapses “first-mover” failures served their offline competitors very well, providing evidence of what not to do in building a viable online business.
1.3 E-Commerce Pioneers
The birth of companies such as eBay and Amazon (launched in 1994) really began to lead the way in e-commerce. Both eBay and Amazon were among the first to establish prominent e-commerce brands. The most prominent e-commerce categories today are computers, books, office supplies, music, and a variety of electronics. Amazon.com, Inc., founded by Jeff Bezos, was the original e-commerce pioneer and certainly the most recognizable. In the beginning, Amazon’s business model required massive investment in warehousing, delivery and fulfillment capability and took years for Amazon to gain profitability. But finally in 2003, almost 10 years after launching the...