Page 30 - Electronic Commerce

Introduction to Electronic Commerce

keyword bidding model in 2000 and has used it since then to sell small text ads that appear on
5
search results pages.

This approach to selling advertising was, and continues to be, extremely successful. Combined

with the highly relevant search results provided by the page ranking system, it led to Google’s contin-

ued growth. When the company went public in 2004 (raising $1.67 billion), its market valuation was

nearly $23 billion. Today, Google is one of the most successful online companies in the world. The

Web provides a quick path to potential customers for any businessperson with a unique product or

service. Google’s improved page ranking system was available to anyone in the world the day it was

introduced online.

THE E VOLUTION OF ELECTRONIC C OMMERCE

The business phenomenon that we now call electronic commerce has had an interesting
history. From humble beginnings in the mid-1990s, electronic commerce grew rapidly
until 2000, when a major downturn occurred. The popular media published endless news
stories describing how the “dot-com boom” had turned into the “dot-com bust.” Between
2000 and 2003, many industry observers were writing obituaries for electronic commerce.
Just as the unreasonable expectations for immediate success had fueled unwarranted high
expectations during the boom years, overly gloomy news reports colored perceptions
during this time.
Beginning in 2003, electronic commerce began to show signs of a profound rebirth.
Companies that had survived the downturn were not only seeing growth in sales again,
but many of them were showing profits for the first time. As the economy grew, electronic
commerce grew also, but at a faster pace than the overall economy. Thus, electronic
commerce gradually became a larger part of the total economy. In the general economic
recession that started in 2008, electronic commerce suffered far less than most of the
economy. From 2003 through the present, as the general economy has expanded and
contracted, electronic commerce has consistently expanded more in the good times and
contracted less in the bad times than other economic sectors. The next section defines
electronic commerce and describes its evolution from a novelty to its current place as an
important component of global business activity.

Electronic Commerce and Electronic Business
To many people, the term “electronic commerce” means shopping on the part of
the Internet called the World Wide Web (the Web). However, electronic commerce (or
e-commerce) also includes many other activities, such as businesses trading with other

Copyright 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.