Page 64 - Electronic Commerce

Introduction to Electronic Commerce

INTERNATIONAL NATURE OF
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ELECTRONI C C OMMERCE

Because the Internet connects computers all over the world, any business that engages in
electronic commerce instantly becomes an international business, with exposure to
potential customers in other countries and cultures. When companies use the Web to
improve a business process, they are automatically operating in a global environment. The
first wave of electronic commerce was dominated by U.S. businesses. In the second wave,
European and Asian businesses expanded online.
In the third wave, a rapidly increasing proportion of online business activity is based
outside the United States. Countries with large populations such as China, India, and
Brazil, have seen enormous recent growth in both the number of people who have
Internet access and the number of online businesses. The proliferation of handheld
devices that are capable of connecting individuals to the world of electronic commerce
has greatly increased the size of potential markets for companies operating in these
countries. In 2013, for the first time, the United States was not the country with the
highest value of B2C online sales. The rapid growth of sales by companies in China gave
that country the top spot. Figure 1-13 shows the proportions of online B2C sales that arise
in the main geographic regions of the world.

Europe
Rest of world
17%
29%

25%
29%
China United States

Source: Internet Retailer reports of Goldman Sachs and Forrester Research estimates,
http://www.internetretailer.com/trends/sales/
FIGURE 1-13 Proportion of online B2C sales by geographic region, 2013

Notwithstanding the rapid growth in China and other Asian countries, online
markets are currently growing at the most rapid pace in Europe, with sales expected to
double by 2016. Although much of the online sales activity in each of the world regions
depicted in the figure occurs within its originating region, a substantial proportion of all
online business today occurs across international boundaries. The key issues that a
company faces when it conducts international commerce include trust, culture,
language, government, and infrastructure. These topics are covered in the following
sections. The related issues of international law and currency conversion are covered in
Chapter 7.

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