The e-commerce revolution
By Christopher Ram
December 19, 1999
The birth and evolution of electronic commerce have become a major driver of worldwide economic growth and the daily lives of people everywhere have been touched by this phenomenon. It has been reported that there are 56.2 million computers connected to the internet and that the amount of commerce conducted over the internet is projected to exceed US$1 trillion in the next few years. This transformation has been led by the private sector, but increasingly government policies and attitudes towards e-commerce have played an indispensable role in shaping the outcomes.
Not coincidentally, the growth of electronic commerce has been fuelled by amazing advances in the area of information technology and expansion of its many applications. The definition of e-commerce has evolved at the same rate as its growth and encompasses many areas of activity.
What is e-commerce?
E-commerce (electronic commerce) is much more than selling on the internet - it is about conducting business electronically. While Amazon.com (the world's largest bookstore which is not a physical store and does not stock a single book) has typified in the public's mind the essence of e-commerce, e-commerce includes the intranet, using internet technologies and standards within the organisation, extranet by which specified external third parties are allowed access to the intranet, and the more popular internet to which the world has access.
Business to consumer e-commerce, also referred to as e-business and more recently e-tailing has come into vogue as the term of choice for online retail selling. Some of the key elements of e-commerce are:
* E-tailing or 'virtual storefronts' on websites with online catalogues, sometimes gathered into a 'virtual shopping mall.'
* The gathering and use of demographic data through web contacts.
* Electronic Data Interchange (EDI), the business-to-business exchange of data.
* The use of e-mail as a communications medium for marketing
* Business-to-business buying and selling.
* The security of business transactions.
The virtual storefront and the virtual mall
As a place for direct retail shopping, with its 24-hour availability, a global reach, the ability to interact and provide customer information and ordering and multimedia prospects, the web is rapidly becoming a multibillion dollar source of revenue for the world's businesses. Many are already reporting considerable success and projected e-commerce revenues are in the billions of dollars with the value of companies deemed most adept at e-commerce skyrocketing. Yet Amazon.com referred to above, despite its phenomenal turnover, is still to turn a profit.
Almost everything is available on the internet and established so-called bricks and mortar businesses have been forced to develop 'web strategies' since competition has sprung up in every area of activity. It is now common for businesses that have previously relied on face-to-face customer interaction to have e-commerce websites and many businesses now attempt to coordinate in-store and web-store retail approaches. Meanwhile, new businesses based entirely on web sales are springing up daily and are giving birth to an increasingly younger and younger crop of multi-millionaires.
Businesses now realise that they can expand their reach worldwide because of the interactive nature of the internet. They now gather data about prospects and customers in unprecedented amounts through site registration, questionnaires, and when taking orders. This approach has given rise to privacy concerns and the issue has been raised whether data were being collected with the knowledge and permission of market subjects. The software behemoth, Microsoft has referred to its policy of data collection as "profiling" and a proposed standard has been developed that allows internet users to decide who can have what personal information.
Electronic Data Interchange (EDI)
EDI is the exchange of business data using an understood data format. It predates today's internet and involves data exchange among parties that know each other well and make arrangements for one-to-one (or point-to-point) connection, usually via some form of dial-up technology.
E-commerce is also conducted through the more limited electronic forms of communication called e-mail, facsimile or fax, and the recent emerging use of telephone calls over the internet. While most of this is still business-to-business, increasingly companies are using on-line junk mail called 'spam' to e-mail and fax unsolicited ads to consumers and other business prospects. A growing number of business websites offer e-mail newsletters for subscribers or 'opt-in' e-mail in which web users voluntarily sign up to receive e-mail, usually sponsored or containing ads, about product categories or other subjects they are interested in.
Thousands of companies that sell products to other companies have discovered that the web provides not only a 24-hour-a-day showcase for their products but a quick way to reach the right people in a company for more information.
Security of web transactions
Electronic commerce has challenged the business community to find ways to further the promise of the technology while protecting people against a new breed of high-tech criminal that the internet has spawned. Security issues include authenticating those requesting goods or services, controlling access to resources such as web pages for registered or selected users, encrypting communications, and, in general, ensuring the privacy and effectiveness of transactions. Secure Electronic Transactions (SET) is an emerging industry standard, and significant sums have been invested in this area of technology in recognition of its importance.
The internet means that anyone with a computer and modem can open a storefront and even the smallest business can take advantage of the unprecedented access to global markets that the internet affords. In Guyana, businesses should attempt to take advantage of the internet's geographical reach and potential for profit. Some areas include:
* Virtual trade shows that help small companies promote sales to overseas markets.
* The ability of small and medium-sized businesses to access sales and teaming opportunities via the internet.
* Online services to provide products, information and other resources to businesses.
The United States is in the forefront of promoting e-Commerce in developing countries, although Guyana is not one of the countries in which it is operating a programme.The State Department, USAID, the Commerce Department, the FCC and other government agencies are working with host governments, multilateral organizations, and the private sector to implement specific projects that respond to the country's commercial (Guinea, South Africa and Mozambique), educational (South Africa and Uganda), health (South Africa) and social needs.
Consumer protection must always be of paramount importance in any business environment. However it is an extremely difficult and complex issue where the pace of change both in the technology and the marketplace frequently outstrips the ability of governments to anticipate the perils of a fast growing field. The private sector must play a vital leadership role but the legal or jurisprudential challenges of e-commerce have already rendered existing legal models redundant.
The robust projections for the growth of electronic commerce are unlikely to hold true unless on-line business can be conducted on the web with confidence. Expanding the digital economy means assuring shoppers that their communications and transactions are confidential and secure, their personal data protected, that they will get what they pay for, and that the underlying infrastructure is stable no matter where they shop on the internet. Bolstering consumer confidence means strengthening regulatory mechanisms and enforcing existing law.
Governments will have to ensure effective consumer protection on-line by encouraging industry self-regulation and the aggressive prosecution of fraudulent practices and misleading advertising in the on-line marketplace under existing consumer protection laws. For centuries the legal systems of modern societies have been based on locus but the new cyberspace frequently makes the exercise of statutory authority over unacceptable or unscrupulous practices or conduct exceedingly difficult. Thus, one of the greatest e-commerce policy challenges will be how to adjust our existing domestic and international telecommunications and legal regimes to this new reality.
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