Page 38 - Electronic Commerce

Introduction to Electronic Commerce

The Second Wave of Electronic Commerce, 2004–2009
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The first wave of electronic commerce was predominantly a U.S. phenomenon. Web pages
were primarily in English, particularly on commerce sites. The second wave was
characterized by an expanding international scope, with sellers beginning to do business
in other countries and languages. Language translation and currency conversion were two
impediments to rapid global expansion of electronic commerce in its second wave. You
will learn more about the issues that occur today in global electronic commerce later in
this chapter, in Chapter 7, which concerns legal issues, and in Chapter 11, which
concerns online payment systems.
In the first wave, easy access to start-up capital led to an overemphasis on creating
new large enterprises to exploit electronic commerce opportunities. Investors were
excited about electronic commerce and wanted to participate, no matter how much it
cost or how weak the underlying ideas were. In the second wave, established companies
began using their own internal funds to finance gradual expansion of electronic commerce
opportunities. These measured and carefully considered investments are helping
electronic commerce grow more steadily, though more slowly.
The Internet technologies used in the first wave, especially in B2C commerce, were
slow and inexpensive. Although businesses typically had broadband connections, most
consumers connected to the Internet using dial-up modems. The increase in broadband
connections in homes is a key element in the B2C component of the second wave. In
2004, the number of U.S. homes with broadband connections began to increase rapidly.
Most industry estimates showed that about 12 percent of U.S. homes had broadband
connections in early 2004. By 2009, those estimates were ranging between 70 and 80
percent. Other countries, such as South Korea, began to subsidize their citizens’ Internet
access, which led to an even higher rate of broadband usage.
The increased use of home Internet connections to transfer large audio and video files
is generally seen as the reason large numbers of people spent the extra money required to
obtain a broadband connection during the second wave. The increased speed of
broadband not only makes Internet use more efficient, but it also can alter the way people
use the Web. For example, a broadband connection allows a user to watch movies and
television programs online—something that is impossible to do with a dial-up connection.
This opens up more opportunities for businesses to make online sales. It also changes the
way that online retailers can present their products to Web site visitors. Although business
customers, unlike retail customers, have had fast connections to the Internet for many
years, the increasing availability of wireless Internet connections increased the volume
and nature of B2B electronic commerce during the second wave. For example, salespeople
using laptop computers could stay in touch with customers, prepare quotes, and check on
orders being fulfilled from virtually anywhere. You will learn more about different types of
connections in Chapter 2 and how connection speed can affect consumers’ online
shopping experiences in Chapters 3 and 4.
Electronic mail (or e-mail) was used in the first wave as a tool for relatively
unstructured communication. In the second wave, both B2C and B2B sellers began using
e-mail as an integral part of their marketing and customer contact strategies. You will
learn about e-mail technologies in Chapter 2 and e-mail marketing in Chapter 4.

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