Electronic Commerce

Electronic commerce, also known as “e-commerce,” refers to the marketing, distribution, sale, and exchange of products and services via the Internet and encompasses a multitude of Web-based (often called “virtual”) commercial transactions. Through e-commerce, funds are transferred, supply chains are managed, and data are collected. E-commerce depends on and is the result of the application of new technologies to traditional forms of business. The commercial transactions that result are considered virtual or simulated—in contrast with traditional, or “real,” brick-and-mortar transactions—because they take place invisibly. The e, for “electronic,” reflects the technological systems that facilitate commerce, and e-commerce thus entails the complete network of systems and processes that enable commercial transactions to take place electronically via the Internet.

E-commerce is a vehicle through which businesses reach out to a virtual marketplace of customers united by need, desire, and/or mere curiosity. It enables firms to transcend barriers such as time and geography and thereby allows businesses to reach a broader audience than might otherwise be possible. It also provides businesses with the opportunity to collect massive amounts of information about their stakeholders—particularly their customers. Finally, use of the Internet by firms enables them to exercise significant control over operations and marketing.

At the same time, e-commerce can serve as a Pandora's box for firms, for there are just as many, if not more, obstacles as there are opportunities for businesses as they operate in the virtual world. Because the Web is largely unregulated, the Net creates an illusion of freedom for businesses and individuals and lulls them into the idea that conventional business practices and the law no longer apply. Businesses and individuals have sometimes discovered the hard way that customary business practices are important and that the law and the public can be unforgiving when people feel violated by online transactions.