Page 253 - Encyclopedia of Business and Finance

eobf_E 7/5/06 3:00 PM Page 230

Electronic Commerce

Electronization of business

B2B Purchasing
Purchasing Open EDI
Extranets
Manufacturing

Tracking
Sale
Payment
Pre-sale-care Web-based
VRS Credit card
Auto Responder Web-based E-cash
Cash register
Inventory Shopping carts Micropayments
Click paths
E-Catalog
Individual targeting E-Catalog
Spamming
Marketing
Virtual communities Delivery
Customer party lines
Bitable
Non-bitable Tracking
Advertising
Auditing
Web advertising
Customization
Banners Continuous Continuous
E-care Tech support ERPSs Automatic Confirmation
Lead follows New Paradigms
Help desk

Figure 1

And e-commerce, which encompasses both business human imagination itself. It serves not just as a medium
to business (B2B) and business to consumer (B2C), is no for the communication of information, but for bringing
longer a purely U.S. phenomenon. For example, Internet together like-minded people with a degree of transparency
sales in the United Kingdom in 2004 totaled £71.1 billion and economy never contemplated before. The above
in 2004, an increase of 81 percent from 2003, while pur- works on the assumption that many heads are better than
chases by consumers totaled £18.1 billion in 2004, a one: that information that is aggregated through evolu-
tripling in three years. On the other hand, the European tion is more than the sum of its parts. The same is true of
Union had notably less e-commerce activity, when one e-commerce. At its most basic, e-commerce is simply an
excludes the United Kingdom. Thus contrast the thriving “electronic storefront” that replicates the printed catalog
business to consumer growth in the United Kingdom and of the pre–Internet age. At its most innovative, though, e-
the United States with the astonishingly low numbers in commerce makes full use of the power of the Internet to
the first quarter of 2003—in France of just 75 million create a unique type of commerce that has never existed
euros and in Spain of a mere 40 million euros. Obviously before.
the story of e-commerce is one of mixed success, which The quintessential example of the latter is eBay
indicates that the barriers to its growth are no longer tech- (http://www.ebay.com), which began, as its name sug-
nological, but the economic, legal, social, and perhaps gests, as an online extension of the familiar American tra-
even cultural infrastructure needed to support it. dition of the garage sale. But it rapidly grew to become an
As this illustrates, the basis of e-commerce is the institution because of the realization that this was a mech-
extraordinary power of the Internet as a transformative anism for people with even the most esoteric tastes to
force not just on business and the economy, but of the meet and exchange with each other for profit in a way that

230 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION