E–Commerce

Introduction

As we enter the electronic age, an obvious question is whether these commercial transactions and business functions can be carried out electronically. In general, this means that no paperwork is involved, nor is any physical contact necessary. This is often referred to as electronic commerce (e-commerce). The earliest example of e-commerce is electronic funds transfer This allows financial institutions to transfer funds between one another in a secure and efficient manner. Later, electronic data interchange (EDI) was introduced to facilitate inter business transactions. However, early EDI systems were typically operated over special networks that are complex to set up and costly to administer. For these reasons, EDI has not been as widely deployed as expected. With the advent of internet technologies and advanced cryptographic techniques, it is now feasible to implement e-commerce over a public network – the Internet. The development of the World Wide Web (www) greatly accelerates the development of e-commerce and expands its scope to cover different types of applications. In this chapter, we will give an introduction to e-commerce by discussing some primary concepts, advantages, and frameworks.

Some interesting comments on e-commerce:

E-commerce is the smartest way of doing business. You ask your customers to do the work for you such as filling in the order forms, checking the order status and downloading the product themselves so that you can save huge costs and manpower. Furthermore, they do not make any complaints and even think that you have done excellent work for them. Can you think of anything smarter than this? E-commerce is changing the traditional way of measuring business performance. People no longer look at the profit and loss account any more. Instead, the future value of a company becomes the major concern. As long as an e-commerce business “makes sense” (it does not need to “make cents”), it may still be backed by numerous investors. Many e-commerce companies are “burning money”. There has even been the invention of a new term called “burn rate” to measure how “well” a company manages its e-commerce business. In order to survive, the business focus is not “how to make money quickly” but “how to burn money slowly”. In both traditional commerce and e-commerce, companies and investors care about earning per share (EPS), but in a totally different way In traditional commerce, investors care whether the EPS of a company is positive. In e-commerce, they care whether the EPS is negative. If the EPS is too positive, it may indicate that the company is too conservative (i.e., not aggressrve enough). E-commerce is about focus. Many dotcoms (e-commerce companies are usually called dotcoms) sell only one product and infact the company name may also be the product name. E-commerce relies heavily on IP: Innovation and People or Investment and Partnership.