WHAT IS ELECTRONIC COMMERCE? (E-commerce)

Even today, some considerable time after the so called ‘dot com/Internet revolution’, electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology. There has been and continues to be much publicity and discussion about e-commerce. Library catalogs and shelves are filled with books and articles on the subject. However, there remains a sense of confusion, suspicion and misunderstanding surrounding the area, which has been exacerbated by the different contexts in which electronic commerce is used, coupled with the myriad related buzzwords and acronyms. This book aims to consolidate the major themes that have arisen from the new area of electronic commerce and to provide an under- standing of its application and importance to management. In order to understand electronic commerce it is important to identify the different terms that are used, and to assess their origin and usage.

According to the editor-in-chief of  International Journal of Electronic Commerce, Vladimir Zwass, ‘Electronic commerce is sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks’.1 He maintains that in its purest form, electronic commerce has existed for over 40 years, originating from the electronic transmission of messages during the Berlin airlift in 1948.2 From this, electronic data interchange (EDI) was the next stage of e-commerce development. In the 1960s a cooperative effort between industry groups produced a first attempt at common electronic data formats. The formats, however, were only for purchasing, transportation and finance data, and were used primarily for intraindustry trans- actions. It was not until the late 1970s that work began for national Electronic Data Interchange (EDI) standards, which developed well into the early 1990s.EDI is the electronic transfer of a standardized business transaction between a sender and receiver computer, over some kind of private network or value added network (VAN). Both sides would have to have the same application software and the data would be exchanged in an extremely rigorous format. In sectors such as retail, automotive, defense and heavy manufacturing, EDI was developed to integrate information across larger parts of an organization’s value chain from design to maintenance so that manufacturers could share information with designers, maintenance and other partners and stakeholders. Before the widespread uptake and commercial use of the Internet, the EDI system was very expensive to run mainly because of the high cost of the private networks. Thus, uptake was limited largely to cash-rich multinational corporations using their financial strength to pressure and persuade (with subsidies) smaller suppliers to implement EDI systems, often at a very high cost. By 1996 no more than 50,000 companies in Europe and 44,000 in the USA were using EDI, representing less than 1 per cent of the total number of companies in each of the respective continents. According to Zwass, electronic commerce has been redefined by the dynamics of the Internet and traditional e-commerce is rapidly moving to the Internet.

With the advent of the Internet, the term e-commerce began to include:

c     Electronic trading of physical goods and of intangibles such as

information.

c     All the steps involved in trade, such as on-line marketing, ordering

payment and support for delivery.

c     The electronic provision of services such as after sales support or on-line

legal advice.

             c      Electronic support for collaboration between companies such as collaborative

                          on-line design and engineering or virtual business consultancy teams.

Some of the definitions of e-commerce often heard and found in publications and the media are:

Electronic Commerce (EC) is where business transactions take place via telecommunications networks, especially the Internet.

Electronic commerce describes the buying and selling of products, services, and information via computer networks including the Internet.

Electronic commerce is about doing business electronically.

E-commerce, e-commerce, or electronic commerce is defined as the conduct of a financial transaction by electronic means.

The wide range of business activities related to e-commerce brought about a range of other new terms and phrases to describe the Internet phenomenon in other business sectors. Some of these focus on purchasing from on-line stores on the Internet. Since transactions go through the Internet and the Web, the terms          I-commerce   (Internet commerce), e-commerce and even  Web-commerce have been suggested but are now very rarely used. Other terms that are used for on-line retail selling include  e-tailing, virtual-stores   or cyber stores. A collection of these virtual stores is sometimes

gathered into a ‘virtual mall’ or ‘cybermall’.