E-Commerce

Types of E-Commerce

For thousands of years, commerce has involved a buyer and a seller exchanging goods or services, usually for money, in what is known as a transaction. Buyer, seller, funds, and goods still feature in e-commerce, but the transaction is carried out over the Internet, the buyer and seller may be on opposite sides of the planet, and the buyer probably gets to see the goods for the first time only when they are finally delivered. The basis of e-commerce is therefore transaction processing, a computerized method of handling the purchase of goods and the exchange of funds from buyer to seller.

Commercial Web sites vary greatly in sophistication. For example, in Internet retailing, or “e-tailing,” the least sophisticated approach is simply to use a Web site as a catalogue, providing photographs of products and addresses of stores and perhaps a telephone-order hotline through which products can be bought directly. A more committed form of e-tailing involves setting up a site as a virtual store, completely separate from and in addition to an existing store network. Online orders may be processed by one of the existing stores and shipped using an existing mail-order network. The ultimate form of e-tailing is based on Web sites that act as virtual stores, make no use of an existing store network, and run according to entirely different business models. E-tail transactions are conducted online, and warehouses and transportation systems are set up specifically to cope with them. E-tailing is an example of business-to-consumer (B2C) e-commerce. The other main type of e-commerce, which is expected to be much more valuable overall, is business-to-business (B2B).

Selling goods is only one type of e-commerce. Another popular type involves selling information (“content”) over the Web; many online newspapers, for example, sell back issues of their articles this way. Perhaps the best-established business model for e-commerce involves giving things away for free to attract customers to a Web site that pays its way through advertising or by selling other products. Yahoo! was the pioneer of this approach, currently giving free access to its Web directory, news, email, chat rooms, photograph albums, and many more services and subsidising them through a combination of advertising and paid services such as domain-name sales.

It was widely predicted that e-commerce would revolutionize the commercial world by putting buyers directly in touch with sellers, thus cutting out intermediaries (middlemen) in a shake-up sometimes known as disintermediation. But it has also spurred entirely new business models, including the rise of the “infomediary,” who uses the geographical reach of the Web to link people together in a way that has never previously been possible. Examples include National Transportation Exchange, which uses the Internet to link haulage companies together so they can pool resources and eliminate wasted journeys (such as trucks traveling empty on their back hauls), and [Page 163]http://Lastminute.com, which offers products such as late-availability flights at significant discounts.

...