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Chapter 10 E-commerce: Digital Markets, Digital Goods 403

10.1 E-COMMERCE AND THE INTERNET

B ought an iTunes track lately, streamed a Netflix movie to your home

TV, purchased a book at Amazon, or a diamond at Blue Nile? If so
you’ve engaged in e-commerce. In 2012, an estimated 184 million
Americans went shopping online, and 150 million purchased
something online as did millions of others worldwide. And although most
purchases still take place through traditional channels, e-commerce continues
to grow rapidly and to transform the way many companies do business. In
2012, e-commerce consumer sales of goods, services, and content will reach
$363 billion, about 9 percent of all retail sales, and it is growing at 15 per-
cent annually (compared to 3.5 percent for traditional retailers) (eMarketer,
2012a). In just the past two years, e-commerce has expanded from the desk-
top and home computer to mobile devices, from an isolated activity to a new
social commerce, and from a Fortune 1000 commerce with a national audi-
ence to local merchants and consumers whose location is known to mobile
devices. The key words for understanding this new e-commerce in 2013 are
“social, mobile, local.”

E-COMMERCE TODAY

E-commerce refers to the use of the Internet and the Web to transact business.
More formally, e-commerce is about digitally enabled commercial transac-
tions between and among organizations and individuals. For the most part,
this means transactions that occur over the Internet and the Web. Commercial
transactions involve the exchange of value (e.g., money) across organizational
or individual boundaries in return for products and services.
E-commerce began in 1995 when one of the first Internet portals, Netscape.
com, accepted the first ads from major corporations and popularized the idea
that the Web could be used as a new medium for advertising and sales. No one
envisioned at the time what would turn out to be an exponential growth curve for
e-commerce retail sales, which doubled and tripled in the early years. E-commerce
grew at double-digit rates until the recession of 2008–2009 when growth slowed to

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