E-Commerce

E-commerce, defined as economic transactions (and related activities) conducted using networked communications technologies such as the Internet, has transformed the global economic landscape. E-commerce primarily consists of four different categories: business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), and consumer-to-business (C2B). Although attention has long focused on the first two categories, technological advancements coupled with entrepreneurial spirit have seen C2C make headway in recent years, as witnessed by the popularity—and profitability—of ventures such as eBay. Although the early years of e-commerce was characterized by the dot-com craze, the subsequent dot-com bust has shown that the success of an e-venture is probably contingent on innovativeness augmented by a sound business model and tempered by caution. Regardless of the sobering [Page 255]lessons from the early years, e-commerce is here to stay, as evidenced by both the number of online users who indulge in commercial transactions as well as the sheer volume of financial activity. Several surveys indicate that more than 100 million Web users shop online, with total e-commerce transactions expected to reach $316 billion in 2010, according to a report from Forrester Research available at http://www.shop.org, an online association for retailers.

Given the number of teenagers and young adults who have assimilated the Internet into their everyday lives, it is not surprising that marketers and advertisers have identified this group as an influential segment in dictating their marketing decisions. Some survey data from Harris Interactive suggests that online spending by members of Generation Y (8 to 21 years old) ranges in the billions of dollars, and online spending among 18-to-24-year-olds is four times as much as online spending by adults (see http://shop.org). Other reports suggest that teens and young adults' online spending was expected to touch the $5 billion mark in 2005, and that their online research influenced more than $20 billion in offline spending. Indeed, by 2008 the typical teenager is expected to spend approximately $400 in online purchases annually. Teenagers are reported to be especially influential in purchasing decisions pertaining to consumer electronics and music.

Several e-retailers have realized the importance of the youth market and have attempted to identify specific themes that most appeal to this segment. Industry experts deem several factors to be critical to tapping the youth market. Suggestions range from developing separate websites for young and adult audiences—as already practiced by such outlets as Macy's and Pottery Barn—as well as marketing to these audiences in venues that are most likely to draw them (e.g., social networking sites such as http://facebook.com). In addition, young audiences are generally known to respond favorably to the deployment of multimediaenriched features on sites. Finally, both industry-driven beliefs and empirical evidence from academic research indicate that offering customized or personalized products and services—offerings that are delivered based on an individual's unique likes and desires—may well be the next frontier in e-commerce. In terms of barriers to e-commerce among youth, invasion of privacy and lack of access to credit cards may be some of the most important impediments that marketers have to deal with. Nevertheless, with technology advancing at a rapid pace and with a sizable proportion of youngsters spending a substantial amount of time online, this segment will continue to exert a major influence on the continuing evolution of e-commerce.

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