Introduction
Commerce is the process through which “goods and services are exchanged for money” (Oelkers 12). Thus the process involves three parties namely buyers, sellers, and the manufacturers of the goods and services. Commerce is characterized by several elements which include the product, marketing, order processing, customer services, and delivery of goods. These elements have changed over the years due to the varying needs of the sellers, buyers, and manufacturers. Technological changes and changing business environments have also led to changes in the above factors. For example, in the past, the market was typically a store where goods were bought. However, today mobile phone numbers are also considered to be markets since they can be used to locate and buy goods and services. The changes in the elements of commerce are attributed to business, technology, and social factors. This has led to the introduction of e-commerce. The history of eCommerce will be discussed in this paper. The shifts in technology, social systems, and business systems that encourage the use of eCommerce will also be discussed.
The Meaning of Ecommerce
Ecommerce is the process through which the “exchange of goods and services for money is facilitated by electronic systems such as the internet” (Alderete 467). Ecommerce is usually done through a website that has been nominated by the sellers. The nominated website has all the information concerning the goods and the services in terms of their prices, description, and their quality. The website also offers information on payment and shipment options. The businesses that use eCommerce usually offer their customer services through the website (Alderete 468). Ecommerce is sometimes supported by third-party companies such as transporters since the buyers are usually not in a position to pick their goods at the time of purchase. Third-party financial institutions can also be involved to facilitate the payment process. Such institutions include internet money transfer companies such as Alert-pay. Ecommerce is used in different industries which include supply chain systems, banking, and retail industry. Ecommerce is referred to as “business to business (B2B) when the transactions are conducted between businesses” (Alderete 480). It is referred to as “business to customer (B2C) when the transactions happen between the business and the customers” (Alderete 481).
History of Ecommerce
The invention of e-commerce is largely attributed to the advancement in information and communication technology. The use of eCommerce began in the 1970s (Oelkers 23). At that time, eCommerce was a business process that facilitated the transfer of documents such as local purchase orders and invoices from one location to the other. It did not involve the exchange of commodities. The documents and other business information were transferred electronically. Following improvements in communication technology, eCommerce also included other services such as “electronic data interchange (EDI) and electronic funds transfer (EFT)” (Oelkers 24).
In the 1980s eCommerce was widely used in the banking sector to facilitate efficient transfer of information relating to banking transactions (Valikangas and Seron 145). The process was also used to automate banking processes such as withdrawals, deposits, and processing customers’ inquiries. This led to the introduction of systems such as automatic teller machines (ATM), credit cards, and telephone banking (Valikangas and Seron 146). In the airline industry, eCommerce was used to process reservations.
In the 1990s, eCommerce was mainly used to process business transactions in the manufacturing and service industry. This involved the transfer of the relevant business information that facilitated the transactions. Thus e-commerce involved processes such as “data mining, data warehousing, and enterprise resource planning” (Dinesh, Loveleen, and Daniel 117).
In 1991 the World Wide Web (www) was invented to facilitate the sharing of information on various issues through the internet (Oelkers 25). The use of eCommerce as a process for exchanging goods and services owes its origin to the introduction of the World Wide Web. This is because the WWW allowed the sellers and the buyers to share all the information that was necessary to facilitate the buying and selling process. However, the use of the WWW to facilitate commercial or business transactions was delayed until 1994 when security measures were introduced (Oelkers 25). The security measures made it possible to prevent cases of fraud. At the beginning of the year 2000, eCommerce was widely used in developed countries, especially in Europe, the US, and Asia as a process of “exchanging goods and services for money” (Valikangas and Seron 150). Today, nearly all businesses are involved in eCommerce to process at least part of their transactions.
Factors that Facilitate the Use of Ecommerce
Technology
The advancement in information and communication technology is the main factor that is responsible for the development and use of eCommerce. This is because eCommerce relies on the effective and efficient transfer of information between buyers, sellers, and manufacturers. Advancement in technology has helped in improving the process of sharing business information through the following ways. First, the use of internet technology has greatly been improved especially with the invention of WWW as well as the internet browser. This makes it possible to access information from any part of the world. Second, advancement in internet technology in the 20th century has led to the introduction of broadband technology. Broadband technology has greatly reduced the cost of using the internet thus encouraging the use of eCommerce (Lindic, Dalah and Ribere 132). The introduction of fiber optic technology has further reduced the cost of using the internet. Besides, it has greatly increased the speed at which information can be transferred through the internet. This means that businesses can reduce the amount of time that is need to process transactions and the costs of such transactions by adopting eCommerce. Third, technological advancements have led to the production of cheap computers. Besides, mobile phones that facilitate access to the internet are currently in wide use. Since these gargets are owned by majority in the population, sellers can best reach their customers through eCommerce. Finally, the on-going research in information and communication technology indicates that the use of internet will be more popular in the future. This means that advancement in technology will encourage the use of eCommerce in the future.
Societal Shifts
Social factors relate to the changing life styles of the buyers and the sellers and this will encourage the use of eCommerce in the future due to the following reasons. First, the consumers are becoming more interested in shopping systems that allow them to access a wide variety of goods as well as comparing prices (Michael 306). However, this process is expensive and time consuming if it is done manually. The use of internet allows the consumers to view the goods sold by various sellers and also compare prices at low costs and within a very short time (Michael 307). Second, in the modern world time is the main constrain to everyone. Thus customers expect to spend the least time possible in shopping. Online sales through internet allows customers to buy goods instantly and thus save on time. Third, individualism is increasingly becoming a common phenomenon in most societies. Consequently, customers prefer to do their shopping from the comfort of their homes or offices as compared to visiting malls (Michael 310). Finally, online shopping is cheap as compared to visiting malls since transportation costs are reduced. These trends are likely to continue thus promoting the use of eCommerce in the future.
Business
The modern business environment is characterized by intense competition and high costs of operation. Businesses have adopted e-commerce in response to the above challenges and this can be explained as follows. First, companies are able serve the global market by using online sales systems (Lindic, Dalah and Ribere 136). This saves them the costs of establishing branches in the overseas markets. Second, companies are able to increase their sales since customers can also view and purchase related goods that are being advertised on the sales website (Michael 311). Third, e-commerce has enabled businesses to involve their customers in the business process. For example, eCommerce enables customers to “tract the shipment of their goods” (Michael 323). Ecommerce involves marketing through the internet (e-marketing). E-marketing enables companies to expand their market share since the adverts can reach very many people at the same time. E-marketing is also cheap since the company can use popular websites such as facebook, twitter and Google at very low cost (Lindic, Dalah and Ribere 134). The adverts placed in such websites are only paid for when customers click on them. Finally, businesses are becoming keener on the quality of their customer services in order to ensure customer loyalty (Valikangas and Seron 152). Ecommerce enables businesses to improve the quality of their customer services since they can respond immediately and appropriately to the needs of the customers. Since businesses are always interested in cost saving strategies, they are likely to continue using eCommerce.
Conclusion
From the above discussion, it is evident that eCommerce was introduced in response to the changing business environment and customers’ needs (Lindic, Dalah and Ribere 131). These changes are reflected in the business, technological and societal shifts that have occurred over the years. The success of eCommerce is mainly attributed to advancements in information and communication technology (Dinesh, Loveleen and Daniel 121). The use of eCommerce is likely to be more popular in future due to on-going research on information and communication technology. Businesses are likely to continue using eCommerce since it enables them to lower costs and increase their market share as discussed above. Ecommerce is currently recording significant growth especially in the developed economies. For example, the US “eCommerce and online sales totaled $ 73 billion in 2010 and this represented a 7% increase” (Alderete 467) as compared to the sales in 2009. Companies like dell are selling 25% of their merchandise through the internet (eCommerce) on a daily basis (Alderete 478). This indicates that the use of eCommerce is likely to be more popular in the future.
Works Cited
Alderete, Maria. “From traditional trasactions to B2B: a contrast theoretical analysis.” Journal of Theoretical and Applied Electronic Commerce Research 5 (2010): 450-489.
Dinesh, Sharma, Gaur Loveleen and Okunbor Daniel. “Image compression and feature extraction using Kohonen’s self-organizing map neural network.” Journal fo Strategic Ecommerce 32 (2007): 107-144.
Lindic, Jaka, Peter Dalah and Vincent Ribere. “Deploying information technology for organization innovation.” The Journal of Strategic Information System 10 (2010): 130-139.
Michael, Herget. “Emperical evidence.” Journal of Strategic Ecommerce 31(2010): 300-410.
Oelkers, Dotty. Ecommers. New York: Thomas Learning, 2001.
Valikangas, Liisa and Guju Seron. “Of managers, ideas and jesters, and the role of information technology.” The Journal of Strategic Information System 19 (2010): 145-153.