E-commerce is any business related transactions partially or totally carried out by electronic medium especially on internet using Open networks or Closed network.The most important feature accountable for the success of internet is electronic commerce that allows people to buy or sell anything they want at anytime of the day or night (24/7).The process of advancement in Information Technology to evolve into a business transaction is the e-commerce history.
During prehistoric period before invention of electricity, transactions of all the business were done face to face or via letters. Later on this was substituted by telegraph, telephones and in mid 1980’s by fax machines. As large companies invested vastly in researching in order to develop more reliable electronic means of transaction, old technology was replaced by new technologies that were more consistent and spread much faster than the previous technology.
To interchange data and to carry out business deals electronically in 1960’s Electronic Data Interchange (EDI) was formulated. Initially e-commerce was facilitating business transactions electronically mostly using technology such as EDI (electronic data interchange) and EFT (electronic funds transfer) to send business documents such as purchase orders or invoices. Previously in 1970’s and 1980’s it also involved data analysis.
There have been several key steps in the history of e-commerce. The first step came from the development of the Electronic Data Interchange (EDI). EDI is a set of standards developed in the 1960’s to exchange business information and do electronic transactions. At first there was several different EDI formats that business could use, so companies still might not be able to interact with each other. However, in 1984 the ASC X12 standard became stable and reliable in transferring large amounts of transactions.
The next major step occurred in 1992 when the Mosaic web-browser was made available, it was the first ‘point and click’ browser. The Mosaic browser was quickly adapted into a downloadable browser, Netscape, which allowed easier access to electronic commerce. The development of DSL was another key moment in the development to of e-commerce. DSL allowed quicker access and a persistent connection to the Internet. Christmas of 1998 was another major step in the development of e-commerce. AOL had sales of 1.2 billion over the 10 week holiday season from online sales. The development of Red Hat Linux was also another major step in electronic commerce growth. Linux gave users another choice in a platform other then Windows that was reliable and open-source. Microsoft faced with this competition needed to invest more in many things including electronic commerce.
Napster was an online application used to share music files for free. This application was yet another major step in e-commerce. Many consumers used the site and were dictating what they wanted from the industry. A major merger, in early 2000, between AOL and Time Warner was another major push for electronic commerce. The merger, worth $350 million, brought together a major online company with a traditional company. In February 2000 hackers attacked some major players of e-commerce, including Yahoo, ebay and Amazon. In light of these attacks the need for improved security came to the forefront in the development of electronic commerce.
It is predicted that that revenues, up until 2006, will grow 40% to 50% yearly. Expectations of higher prices as well as larger profits for e-commerce business are also present. Also, we will see a larger presence by experienced traditional companies, such as Wal-Mart, on the Internet. It is believed companies in general will take this mixed strategy of having stores online and offline in order to be successful. It can be seen that there will be a large growth in Business-to-Consumer (B2C) e-commerce, which is online businesses selling to individuals. However, even though B2C electronic commerce may be the most recognizable there are different varieties.
Today the largest electronic commerce is Business-to-Business (B2B). Businesses involved in B2B sell their goods to other businesses. In 2001, this form of e-commerce had around $700 billion in transactions. Other varieties growing today include Consumer-to-Consumer (C2C) where consumers sell to each other, for example through auction sites. Peer-to-Peer (P2P) is another form of e-commerce that allows users to share resources and files directly.
Evolution of E-Commerce
E-Commerce was birth out of the World-Wide-Web (WWW). Although many people use the terms WWW and Internet interchangeably, the WWW is just one of the many services available on the Internet. The aspect of the WWW actually is a relatively new aspect of the Internet. While the Internet was developed in the late 1960s, the WWW came into existence more than a decade ago - in the early 1990s. Since then, however, it has grown phenomenally to become the most widely used service on the Internet.
Although the Web has made online shopping possible for many businesses and individuals, in a broader sense, e-commerce has existed for many years. For decades, banks have been using electronic funds transfer (EFT, also called wire transfer), which are electronic transmissions of account exchange information over private communication networks.
Businesses also have been engaging in a form of electronic commerce, known as electronic data interchange, for many years. Electronic Date Interchange (EDI) occurs when business transmits computer-readable data in a standard format to another business. In the 1960s, businesses realized that many of the documents they exchange related to the shipping of goods - such as invoices, purchase orders, and bills of lading - and included the same set of information for almost every transaction. They also realized that they were spending a good deal of time and money entering these data into their computers, printing paper forms, and then re-entering the data on the other side of the transaction. Although the purchase order, invoice, and bill of lading for each transaction contained much of the same information such as item numbers, descriptions, prices and quantities - each paper form had its own unique format for presenting that information. By creating a set of standard formats for transmitting that information electronically, businesses were able to reduce errors, avoid printing and mailing costs, and eliminate the need to re-enter the data.
ELEMENTS OF TRADITIONAL COMMERCE (seller side)
1. Conduct market research to identify customer needs.
2. Create product or service that will meet customer's needs.
3. Advertise and promote product or service.
4. Negotiate a sale transaction, including:
- Delivery logistics
- Inspection, testing and acceptance
5. Ship goods and Invoice customer
6. Receive and process customer payments
7. Provide after-sales support, maintenance and warranty service.
There are more activities than business processes in the traditional procedure. There are also more incompatible systems which the EDI does not communicate well with different Operating systems.
Electronic Commerce has brought the solution to this problem and drastically altered the structure and process for business transactions across networks.
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