The development of electronic commerce

E-commerce is one of the most growing phenomena of our days. The paper illustrates the
importance of electronic commerce and its aspects.
First part of the review will describe the term “electronic commerce” and its implication
in our lives. One purpose is to establish what has been revealed in other academic contexts as a
basis for the findings of my study.
Another purpose is to attempt to outline the factors which contribute to the significance
of electronic commerce to the world economy today, such as the rapid growth of the Internet, its
ability to facilitate cross-border trade, and its ability to reduce transaction costs.
The term “electronic commerce” generally refers to contracts and payments made using
computers and other electronic equipment. The term further includes both business-to-business
and business-to-consumer transactions (Maggs 2001).
Firms have embraced electronic commerce as a means of doing business, either because
they see it as a way to improve efficiency, grow market share, expand into new markets, or
because they view it as essential for survival (Ferguson, Finn, Hall 2004).
The newer concept of electronic commerce is the use of on-line networks to promote or
sell different kind of products or services [1]. It is also the process of using electronic methods
and procedures with information technology as a tool, to conduct all forms of business activity.
Electronic commerce uses different technologies and forms such as electronic funds
transfer, electronic banking and trading, electronic data interchange, electronic mail, video-
conferences, electronic cataloguing and multimedia communications and all other forms of
sending electronic data messages between companies. (Mitchell)
This concept has been widely used in the market now, since last few years and almost
each and every company is coming out with this new formula to stay in the market. Almost each
and every superstore has their web site and facility to their customers to buy products online.
As a fact, the first e-commerce took place in 1886, when a telegraph operator was able to
obtain a shipment of watches that was refused by the local jeweler. Using the telegraph, he sold
all the watches to fellow operators and railroad employees. Within a few months, he made

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enough money to quit his job and start his own store. The young man's name was Richard Sears.
His company later became Sears, Roebuck (The Columbia Electronic Encyclopedia 2007).
As indicated by Moraru (2001) research, e-commerce is like any other business,
developing a business over the Internet requires many of the same major activities as starting any
other business.
You should do some basic business planning. After all, you need a product. You may
need funding to get your business going. You need customers. You need to market products to
your customers. You need strong customer service. You need to manage purchases by customers,
finances, staff and other resources.
Unfortunately for some people or companies, not all products are very compatible to
sales over the Internet, but there are some features unique to e-commerce. Not all products are
real compatible to be sold over the Internet. For example, they may require face-to-face selling.
And also you need to make sure that, because your product may be advertised to the world, that
you remain in control of your ideas, or "intellectual property".
The major different types of e-commerce are: business-to-business (B2B); business-to-
consumer (B2C); business-to-government (B2G); consumer-to-consumer (C2C); and mobile
commerce (m-commerce) (Andam 2003).
Business-to-business e-commerce is simply defined as e-commerce between companies.
This is the type of e-commerce that deals with relationships between and among businesses.
About 80% of e-commerce is of this type, and most experts predict that B2B ecommerce will
continue to grow faster than the B2C segment.
Business-to-consumer e-commerce, or commerce between companies and consumers,
involves customers gathering information; purchasing physical goods or information goods; and,
for information goods, receiving products over an electronic network.
Business-to-government e-commerce is generally defined as commerce between
companies and the public sector. It refers to the use of the Internet for public procurement,
licensing procedures, and other government-related operations.
Consumer-to-consumer e-commerce is simply commerce between private individuals or
consumers. This type of e-commerce is characterized by the growth of electronic marketplaces
and online auctions.

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 M-commerce (mobile commerce) is the buying and selling of goods and services through
wireless technology, handheld devices such as cellular telephones and personal digital assistants
(PDAs). Japan is seen as a global leader in m-commerce.
Mitchell (2001) affirms in his article that commercial transactions can be broken into
three stages: (1) advertising and searching, (2) ordering and payment, and (3) delivery. Common
conceptions of electronic commerce involve business-to-consumer or business-to-business
interaction at one or more of these three stages.
A number of trends are evident in relation to electronic commerce that will affect the
world economy (Botescu, 2007). One of them, the value and number of digital products (e.g.
music, books and videos delivered electronically rather than physically) is likely to continue to
increase. Communications technologies are gradually converging. If this trend continues,
previously separate technologies such as the telephone, television and the Internet may
eventually be considered part of a single communications network.
The Internet is continuing to affect consumer behavior. Consumers are spending more
time and money online, and the value of their online purchases is increasing as they gain
experience with online shopping.
Also, very important is that transactions using notes and coins will continue to decline in
favor of transactions using digital money.
Although electronic commerce involves new technology, at its heart, it is simply another
means of conducting international commercial transactions. Most countries have previously
decided that such transactions should be dealt with in the WTO (World Trade Organization).
WTO provides a system of transparent, predictable and enforceable rules (WTO Secretariat
1998). The proven effectiveness of the WTO makes it a key player in the regulation of electronic
commerce.
The next part of this paper will describe the factors which contribute to the significance
of electronic commerce to the world economy. First, he World Wide Web has lately dominated
the Internet through use of commercial Web browsers and search engines. The Internet is of such
critical importance to the world economy today that it necessarily dominates any discussion of
electronic commerce (Mitchell 2001).

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 Also it offers greater possibilities for commercial interaction than do telephones or faxes,
and has dramatically changed the way that information is exchanged and business conducted.
The Internet facilitates production and distribution across borders.
Electronic commerce increases the range of services that can be traded internationally.
The dramatic increases in both online retail sales and advertising revenues are the most visible
evidence of a much broader growth in electronic commerce in the global economy.
Another factor which contributes to the significance of electronic commerce is that
e-commerce has the ability to reduce transaction costs. Michael Porter (2001) has argued that
e-commerce can allow economic actors to significantly reduce their transaction costs. Electronic
commerce has the potential to generate benefits beyond those of trade liberalization on its own.
Benefits for suppliers and vendors include reduced transaction costs, reduced barriers to market
entry, more rapid product innovations, and economies of scale.
These three factors have certainly altered the conditions in many preexisting markets for
goods and services.
As electronic commerce matures and develops, it will undoubtedly play an increasingly
important role in the world economy. The safest prediction about the future direction of
technology is that it will be unexpected.
The impact of e-commerce on the global economy is far-reaching. It is having a profound
and radical effect on businesses throughout the world, leveling the playing field for businesses
outside the traditional economic powerhouses in many ways. Because people can shop online,
without ever leaving their homes, and shop at any shop that has an online commerce site no
matter where the business is located, global commerce is more competitive and has less barriers
to entry than ever before.
Online marketing allows e-commerce businesses to reach a larger target market more
effectively. No longer are businesses marketing only to the people who can drive to their stores;
now, anyone who fits the target profile, anywhere in the world, can be targeted through effective
online marketing techniques.
Developed countries, including the US and the EU, are pressing for liberalization of
e-commerce trade as soon as possible, and thus prefer to negotiate e-commerce rules under the
GATT [2].The US succeeded in getting other WTO members to agree to an informal moratorium
on internet tariffs until they come to some kind of agreement on how to classify e-commerce.

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 According to Andam (2003), in the near future, it's likely that traditional shopping
through brick and mortar locations will transform even more radically, becoming secondary to
the online experience or possibly disappearing altogether.

References

Articles
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1. Maggs, Gregory E. (2001) Regulating electronic commerce, The George Washington
University Law School, 1-5
2. Moraru, Mihai, E-commerce, Romanian Economic and Business Review – Vol. 3, No.4,
44-49
3. Ferguson, Colin; Finn, Frank; Hall, Jason (2005) Electronic commerce
investments, the resource-based view of the firm, and firm market value, International Journal of
Accounting Information Systems, 5-28
4. Mitchell, Andrew D. (1998), Electronic Commerce, Legal Studies Research
Paper No. 353, Melbourne Law School, 1-10
5. World Trade Organization Secretariat, Electronic Commerce and the Role of the WTO
6. Graham, Mark (2008), Warped Geographies of Development: The Internet and
Theories of economic Development, The Author Journal Compilation, 771-789
7. Andam, Zorayda Ruth (2003) e-Commerce and e-Business, e-Asian Task Force,
5-20
8. OECD (1998), Measuring Electronic Commerce: International Trade in
Software, OECD Digital Economy Papers, No. 36, OECD Publishing, 4-30
9. Brousseau, E.; Marzouki, M.; Méadel C. (2008), Governance of Electronic
Commerce in
Consumer and Business Markets, Cambridge University Press, 1-17
10. Srinivasan, Sayee (1999), Electronic Trading Network and Electronic
Commerce, Optimark Technologies, Inc., 1-20
11. OECD (1998) , Measuring Electronic Commerce, OECD Digital Economy
Papers, No.39, OECD Publishing, 4-33
12. Botescu, Ion (2007), Efectele comerţului electronic, Universitatea Ovidius
Constanţa, Facultatea de Ştiinţe Economice, 156-162
13. Nicodim, Liliana (2007), Aspectele etice în comerţul electronic, Universitatea
Ovidius Constanţa, Facultatea de Ştiinţe Economice, 179-182

Books
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 1. Schneider, Gary P. (2009), Electronic Commerce: Eight Edition, Cengage Learning, 23-
47
Yokoo, Makoto (2008), Electronic Commerce: Theory and Practice, Springer, 15-32
Kalakota, Ravi; Whinston, Andrew B. (1997), Electronic commerce: a manager’s guide, Addison
Wesley Publishing Cpmpany, Inc., 3-11
Chaffey, Dave (2007), E-business and e-commerce management: strategy, implementation, and
practice, Third Edition, Prentice Hall, 3-45

Links
[1] http://www.wisegeek.com/what-is-e-commerce.htm
[2] http://www.cid.harvard.edu/cidtrade/issues/ecommerce.html
http://www.wto.org/english/news_e/pres98_e/pr96_e.htm