Page 30 - Introduction to Electronic Commerce and Social Commerce

1.2 The Electronic Commerce Field: Growth, Content, Classification, and a Brief History 7

EC Organizations 1.2 THE ELECTRONIC COMMERCE
FIELD: GROWTH, CONTENT,
Purely physical organizations (companies) are referred to CLASSIFICATION, AND A BRIEF
as brick-and-mortar (or old economy) organizations, HISTORY
whereas companies that are engaged only in EC are consid-
ered virtual (pure-play) organizations. Click-and-mortar
According to the U.S. Census Bureau (2016), e-commerce
(click-and-brick) organizations are those that conduct sales in 2015 accounted for over 50% of total sales of all
some EC activities, usually as an additional marketing chan-
manufacturing activities in the United States, over 25% of
nel. Gradually, many brick-and-mortar companies are chang- merchant wholesalers, 7.5% of all retailing (vs. 4.7% in
ing to click-and-mortar ones (e.g., GAP, Target).
2011), and 2% of all sales in selected service industries. The
grand total of EC in 2015 has been $4000 billion as seen in
Figure 1.1. Notice the sharp increase in manufacturing com-
Electronic Markets and Networks pared to other sectors. In addition, note that EC is growing
much faster than the total of all commerce by about 16–17%
EC can be conducted in an electronic market (e- marketplace), annually. For a more detailed breakdown, see the U.S. Census
an online location where buyers and sellers conduct commer-
Bureau (2013) report as well as Plunkett et al. (2015).
cial transactions such as selling goods, services, or informa- There is a clear trend that online retail sales are taking
tion. Any individual can also open a private market selling
business from traditional retailers. For example, Wilfred
products or services online. Electronic markets are connected (2014) reported that during the 2013 holiday shopping sea-
to sellers and buyers via the Internet or to its counterpart
son online shopping grew 10% a year versus 2.7% of tradi-
within organizations, an intranet. An intranet is a corporate tional retailers. Today, even more people buy online.
or government internal network that uses Internet tools, such
According to Ecommerce Europe, September 5, 2012,
as Web browsers and Internet protocols. Another computer European online retail sales will double to €323 billion by 2018.
environment is an extranet, a network that uses Internet tech-
nology to link intranets of several organizations in a secure
manner (see Online Tutorial T2). The Content and Framework
of E-Commerce
SECTION 1.1 REVIEW QUESTIONS Classifying e-commerce aids understanding of this diversi-

fied field. In general, selling and buying electronically can be
1. Define EC and e-business. either business-to-consumer (B2C) or business-to-business
2. Distinguish between pure and partial EC. (B2B). Online transactions are made between businesses
3. Define click-and-mortar and brick-and-mortar organizations. and individual consumers in B2C, such as when a person
4. Define electronic markets. purchases a coffee at store.starbucks.com or a computer at
5. Define intranets and extranets. dell.com (see Online File W1.1). In B2B, business transactions

Figure 1.1 E-commerce as
percent of total value:
(2005–2013)
(Source: Census.gov/estats,
accessed March 2016)