CHAPTER
Introduction to e-commerce 1
LEARNING OBJECTIVES
● To understand the complexity of e-commerce and its many facets.
● To explore how e-business and e-commerce fit together.
● To identify the impact of e-commerce.
● To recognise the benefits and limitations of e-commerce.
● To use classification frameworks for analysing e-commerce.
● To identify the main barriers to the growth and development of e-commerce in
organisations.
WHAT IS ELECTRONIC 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 pub-
licity and discussion about e-commerce. Library catalogues 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 acro-
nyms. 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.
,4
Introduction
According to the editor-in-chief of International Journal of Electronic Com-
merce, Vladimir Zwass, ‘Electronic commerce is sharing business informa-
tion, 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, transporta-
tion and finance data, and were used primarily for intra-industry 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 standardised 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, defence
and heavy manufacturing, EDI was developed to integrate information
across larger parts of an organisation’s value chain from design to main-
tenance 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 re-defined 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:
● Electronic trading of physical goods and of intangibles such as
information.
● All the steps involved in trade, such as on-line marketing, ordering
payment and support for delivery.
● The electronic provision of services such as after sales support or on-line
legal advice.
, 5
Introduction to e-commerce
● Electronic support for collaboration between companies such as collab-
orative on-line design and engineering or virtual business consultancy
teams.
Some of the definitions of e-commerce often heard and found in publica-
tions and the media are:
Electronic Commerce (EC) is where business transactions take place via
telecommunications networks, especially the Internet.3
Electronic commerce describes the buying and selling of products, services,
and information via computer networks including the Internet.4
Electronic commerce is about doing business electronically.5
E-commerce, ecommerce, or electronic commerce is defined as the conduct
of a financial transaction by electronic means.6
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 Inter-
net and the Web, the terms I-commerce (Internet commerce), icommerce 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’.
WHAT ABOUT E-BUSINESS?
As with e-commerce, e-business (electronic business) also has a number of
different definitions and is used in a number of different contexts. One of
the first to use the term was IBM, in October 1997, when it launched a
campaign built around e-business. Today, major corporations are rethink-
ing their businesses in terms of the Internet and its new culture and capab-
ilities and this is what some see as e-business.
E-business is the conduct of business on the Internet, not only buying and
selling but also servicing customers and collaborating with business partners.
E-business includes customer service (e-service) and intra-business tasks.
E-business is the transformation of key business processes through the use of
Internet technologies. An e-business is a company that can adapt to constant
and continual change.7
Introduction to e-commerce 1
LEARNING OBJECTIVES
● To understand the complexity of e-commerce and its many facets.
● To explore how e-business and e-commerce fit together.
● To identify the impact of e-commerce.
● To recognise the benefits and limitations of e-commerce.
● To use classification frameworks for analysing e-commerce.
● To identify the main barriers to the growth and development of e-commerce in
organisations.
WHAT IS ELECTRONIC 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 pub-
licity and discussion about e-commerce. Library catalogues 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 acro-
nyms. 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.
,4
Introduction
According to the editor-in-chief of International Journal of Electronic Com-
merce, Vladimir Zwass, ‘Electronic commerce is sharing business informa-
tion, 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, transporta-
tion and finance data, and were used primarily for intra-industry 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 standardised 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, defence
and heavy manufacturing, EDI was developed to integrate information
across larger parts of an organisation’s value chain from design to main-
tenance 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 re-defined 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:
● Electronic trading of physical goods and of intangibles such as
information.
● All the steps involved in trade, such as on-line marketing, ordering
payment and support for delivery.
● The electronic provision of services such as after sales support or on-line
legal advice.
, 5
Introduction to e-commerce
● Electronic support for collaboration between companies such as collab-
orative on-line design and engineering or virtual business consultancy
teams.
Some of the definitions of e-commerce often heard and found in publica-
tions and the media are:
Electronic Commerce (EC) is where business transactions take place via
telecommunications networks, especially the Internet.3
Electronic commerce describes the buying and selling of products, services,
and information via computer networks including the Internet.4
Electronic commerce is about doing business electronically.5
E-commerce, ecommerce, or electronic commerce is defined as the conduct
of a financial transaction by electronic means.6
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 Inter-
net and the Web, the terms I-commerce (Internet commerce), icommerce 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’.
WHAT ABOUT E-BUSINESS?
As with e-commerce, e-business (electronic business) also has a number of
different definitions and is used in a number of different contexts. One of
the first to use the term was IBM, in October 1997, when it launched a
campaign built around e-business. Today, major corporations are rethink-
ing their businesses in terms of the Internet and its new culture and capab-
ilities and this is what some see as e-business.
E-business is the conduct of business on the Internet, not only buying and
selling but also servicing customers and collaborating with business partners.
E-business includes customer service (e-service) and intra-business tasks.
E-business is the transformation of key business processes through the use of
Internet technologies. An e-business is a company that can adapt to constant
and continual change.7
