E-commerce is defined as the industry where the buying and selling of products takes place online or over electronic systems. There are many sub-categories of E-commerce including: mobile commerce, electronic funds transfer, Internet marketing, and data collection systems are just a few examples. E-commerce can also take place over the telephone, on mobile devices, and through email (such as with an email transfer of money). As many of today’s business compete internationally, e-commerce is a convenient and efficient way to allow potential customers to purchase their goods and services from anywhere in the world. The use of e-commerce allows businesses to make transactions faster.
The history of E-commerce began in 1979, when Michael Aldrich invented online shopping¹. In 1984, CompuServe launched the Electronic Mail in the USA and Canada; this was the first comprehensive electronic commerce service in the world¹. In 1992, the first ever website was created to sell products. It was www.books.com and was run by Book Stacks unlimited¹. In 2000, the dot-com burst occurred, where many online E-commerce companies failed². The expansion of mega-corporations continues to the present day, where companies are valued in excess of 20 billion dollars.
Some business applications of E-commerce include: international and domestic payment systems, group buying software, instant messaging, online shopping and order tracking, teleconferencing, and electronic ticket sales. Business applications are how organizations apply E-commerce to reach customers and generate sales.
Amazon.com is one of the best examples of a successful E-commerce website. Amazon.com is completely based online with no brick-and-mortar stores. Amazon also manufactures its own brand of e-reader, called the Kindle. Amazon acts as a middleman between manufacturers and buyers. Finally, Amazon is completely international, crossing many boarders and selling products to individuals in many countries.
There are many benefits to buying and selling items and services through E-commerce. It allows the businesses to overcome geographical location issues, gain new customers through search engine optimization, lower costs (sales representatives do not have to be hired), and provide comparison shopping to show that the product or service is superior or different. There are also some negatives to conducting business through E-commerce: goods and services bought online are slow to reach the customer, customers cannot see or touch the objects they are buying, and questions of the security of personal information come into question.
There are seven types of e-commerce businesses:
1. Exclusively online: businesses that only offer their products online
2. Mail order: businesses that have a website for transactions and a catalogue
3. Big ‘bricks and clicks’: business that have lots of physical stores (bricks) and a website for purchasing goods (clicks)
4. Boutique ‘bricks and clicks’: business that have a few physical stores (bricks) and a website for purchasing goods (clicks)
5. Marketplace: businesses that use larger website domains to advertise and sell their products (through, for example, websites like Amazon and eBay)
6. Niche marketplace: businesses with similar products that come together and sell their goods in a marketplace to make it easier for the customers to access them.
7. Multichannel: business that have multiple physical stores, catalogues and a website for purchasing goods (ex. JCrew). This type of e-commerce business is the most difficult to run.
1. Tkacz, Ewaryst; Kapczynski, Adrian (2009). Internet - Technical Development and Applications. Springer. p. 255
2. Origins of the Crash: The Great Bubble and Its Undoing, Roger Lowenstein, Penguin Books, 2004, page 114-115.