E-Commerce

Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations inelectronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.

Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the seller's computer usually via the internet. There is no intermediary service. The sale and purchase transaction is completed electronically and interactively in real-time such as Amazon.com for new books. If an intermediary is present, then the sale and purchase transaction is called electronic commerce such as eBay.com.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions.

E-commerce can be divided into:

• E-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes gathered into a "virtual mall"
• The gathering and use of demographic data through Web contacts
• Electronic Data Interchange (EDI), the business-to-business exchange of data
• E-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters)
• Business-to-business buying and selling
• The security of business transactions.

E-tailing or 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 custom information and ordering, and multimedia prospects, the Web is 

rapidly becoming a multibillion dollar source of revenue for the world's businesses. A number of 

businesses already report considerable success. As early as the middle of 1997, Dell 

Computers reported orders of a million dollars a day. By early 1999, projected e-commerce 

revenues for business were in the billions of dollars and the stocks of companies deemed most 

adept at e-commerce were skyrocketing. Although many so-called dotcom retailers 

disappeared in the economic shakeout of 2000, Web retailing at sites such as Amazon.com, 

CDNow.com, and CompudataOnline.com continues to grow.

Market Research

In early 1999, it was widely recognized that because of the interactive nature of the Internet, 

companies could gather data about prospects and customers in unprecedented amounts -

through site registration, questionnaires, and as part of taking orders. The issue of whether data 

was being collected with the knowledge and permission of market subjects had been raised. 

(Microsoft 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. EDI involves data exchange among parties that know each other well and make 

arrangements for one-to-one (or point-to-point) connection, usually dial-up. EDI is expected to 

be replaced by one or more standard XML formats, such as ebXML.

E-Mail, Fax, and Internet Telephony

E-commerce is also conducted through the more limited electronic forms of communication 

called e-mail, facsimile or fax, and the emerging use of telephone calls over the Internet. Most of 

this is business-to-business, with some companies attempting to use e-mail and fax for 

unsolicited ads (usually viewed as online junk mail or spam) to consumers and other business 

prospects. An increasing number of business Web sites offer e-mail newsletters for 

subscribers. A new trend is 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.

Business-to-Business Buying and Selling

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.

The Security of Business Transactions

Security includes authenticating business transactors, 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. Among the most widely-used security 

technologies is the Secure Sockets Layer (SSL), which is built into both of the leading Web 

browsers.

Online Shopping

Online shopping is the process whereby consumers directly buy goods or services from a seller in real-time, without an intermediary service, over the Internet. If an intermediary service is present the process is called electronic commerce. An online shop, eshop, e-store, internet shop, webshop, webstore, online store, or virtual store evokes the physical analogy of buying products or services at abricks-and-mortar retailer or in a shopping mall. The process is called Business-to-Consumer (B2C) online shopping. When a business buys from another business it is called Business-to-Business (B2B) online shopping. Both B2C and B2B online shopping are forms ofe-commerce.

Online Marketplace

Online marketplace (or online ecommerce marketplace) refers to a type of ecommerce site where product and inventory information is provided by multiple third parties, whereas transactions are processes by the marketplace operator. Online marketplaces have become a driver of new business for online merchants that leverage them as channels for increased sales. Online marketplaces are the primary type of multichannel ecommerce.

In an online marketplace, consumer transactions are processed by the marketplace operator, which functions as the merchant of record, and then delivered and fulfilled by the participating retailers, wholesalers or dropshippers. Marketplaces offer a variety of products and provide consumers with the convenience of purchasing such products from a single location. Marketplaces generally provide better prices, greater selection and higher levels of availability than traditional online retailers.

Types of Online Marketplaces

Online marketplaces are classified according to the following parameters: vertical/horizontal and branded/non-branded.

An example of a horizontal marketplace is Buy.com, where products in a variety of categories are presented; an example of a vertical marketplace is mydeco.com's KitchenShop, where product only from a single vertical are offered.

A branded marketplace is a marketplace where merchants selling the products are branded; a non-branded marketplace is one where the consumer only sees the price, but not the name of the merchant that will deliver their purchase