E-COMMERCE

History of E-Commerce

Origins of commerce

Origins of commerce predate recorded history.

Commerce is based on the specialization of skills.

Instead of performing all services and producing all goods independently, people rely on each other for the goods and services they need.

Example: In early times, the local shaman would cast a spell or intercede with the gods in exchange for food and tools. This is called barter.

Traditional commerce

Money has replaced bartering, but the basic mechanics of commerce remain the same: one member of society creates something of value that another member of society desires.

Commerce is a negotiated exchange of valuable objects or services between at least two parties and includes all activities that each of the parties undertakes the complete

the transaction.

E-Commerce

QVC, the shopping channel whose Web subsidiary iQVC opened last September, argues that it has been doing electronic commerce for the past 11 years by broadcasting on cable TV and taking orders over the phone. But the kind of e-commerce that everyone is interested in right now refers to systems that let money change hands over the Internet.

Business transactions over the telephone, credit cards, automatic teller machines are all precursors of electronic commerce. But not until the implementation of Electronic Data Interchange (EDI) in the 70s did true e-commerce come into being. With EDI business transactions could be performed over networks between computers, cutting out the need for any paper-based documentation or human intervention. EDI was developed as a way for large companies to communicate efficiently with their suppliers, allowing for the exchange of purchase orders, invoices, and payments over private internal networks called Value-Added Networks (VANs).

Only the largest, most forward thinking companies took advantage of this technology, partly because of the expense involved, and partly because of the newness of the concept. Another barrier to the widespread usage of EDI was the absence of data formatting standards, so a number of standards bodies were created all over the world in an attempt to define the messaging needs of various industries. Ultimately, the complexity and cost of Electronic Data Interchange seemed to doom e-commerce to the fringes of the business world.

Until, of course, the Internet came along. Because it was easy to use and inexpensive, the Internet made communication through a global network of computers possible for all types of companies, as well as non-profit organizations, educational institutions, and even individuals. The Internet was originally conceived as a communication tool rather than a means of facilitating business transactions, so most companies began utilizing it as a way to inform customers, partners, and vendors about their products, services, or business methodology.

But that is quickly changing. More and more companies, large and small, are realizing that the Internet is ideal for not only informing people, but in facilitating ordering, purchasing, and payment. Even though the Internet has brought the cost of e-commerce down considerably since the early days of EDI, not to mention the ease of use, some companies are still shying away from spending money on technology that is still relatively new. Furthermore, because the security issues of making financial transactions over the Net are still not worked out, some companies are waiting for a standardized security system to be put in place before they make their move.

The history of e-commerce is still quite brief, with most of the major changes and advancements having occurred in the past four or five years. Those who want to be involved in the early stages had better move fast.

FASA, the Federal Acquisition Streamlining Act of 1994, mandates the use of Electronic Commerce (EC) technologies by federal government agencies. Electronic Commerce is the paperless exchange of routine business information using Electronic Data Interchange (EDI) and other technologies, including Electronic Mail (E-Mail), electronic bulletin boards (EBBs), facsimile machines (faxes), Electronic Funds Transfer (EFT). FACNET utilizes EDI to advertise procurement requirements and to collect supplier bids for review. Subsequently, purchase orders and other related documents can be transmitted between federal government agencies and their suppliers

Electronic Commerce Not New

Banks have used electronic funds transfers (EFTs), also called wire transfers, for decades.

Businesses have been engaging in electronic data interchange (EDI) since the 1960’s. EDI occurs when one business transmits computer readable data in a standard format to another business.

Drawbacks to mass adoption by business was high cost of implementation; expensive, proprietary software, hardware, leased telephone lines.

Present

Want to buy a toy for your child? A stereo for your car? A car? How about purchase a ticket to Acapulco, reserve a hotel room on the beach, or arrange a deep-sea diving expedition? Then go online. With a computer, an Internet connection, and a Web browser, you can buy, reserve, or arrange just about anything from the comfort of your own home. No more writing away for catalogs or brochures, scrambling around looking for phone numbers, paying for expensive long-distance calls, or sending checks in the mail. Everything is right at your fingertips, and it costs no more than a local call. But while customers can buy just about anything these days on the Web, they still don't have the choice and variety that they do in the real world. That's because the majority of businesses still aren't offering their goods and services for sale over the Internet. Most national companies do have Web sites that describe themselves and their products, much as a print brochure would, and even smaller, local companies are hurrying to establish a Web presence. Yet universal electronic commerce remains a dream.

Some companies are reluctant to sell online because they think it's expensive, the technology is too complicated, making financial transactions is risky, or their customers simply aren't interested in shopping online. One by one, though, these excuses are being challenged by advances in the field of e-commerce, which are making the process more and more inexpensive, easy, and safe. And as far as the notion that people don't want to shop online goes, all you've got to do is look at the numbers. Odyssey, a market research firm, reports that 7 million households made an online purchase during the last six months of 1997, compared to 3.2 million a year earlier. Forrester Research reports that shoppers spent $2.4 billion on the Net in 1997, compared to $600 million in 1996. They predict that figure will double in 1998.

Beyond the numbers, the excitement over e-commerce is palpable. Everyday there are articles in the media predicting great things for business on the Internet. More and more companies are taking the plunge and selling their products online. And technological advancements in the field are coming fast and furiously. If there's one thing that's certain about the present state of e-commerce, it's that it won't stay the same for long.