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E-commerce (electronic commerce) is the activity of
electronically The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons using electronic devices. Electronics uses active devices to control electron flow by amplifier, amplificat ...
buying or selling of
products Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Produc ...
on online services or over the
Internet The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a ''internetworking, network of networks'' that consist ...

Internet
. E-commerce draws on technologies such as
mobile commerce The term mobile commerce was originally coined in 1997 by Kevin Duffey at the launch of the Global Mobile Commerce Forum, to mean "the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless techno ...
,
electronic funds transfer Electronic funds transfer (EFT) is the electronic transfer of money from one bank account A bank account is a financial account maintained by a bank or other financial institution in which the financial transaction A financial transaction ...
,
supply chain management In commerce Commerce is the exchange of goods and services Goods are items that are usually (but not always) tangible, such as pens, salt, apples, and hats. Services are activities provided by other people, who include doctors, lawn ...
,
Internet marketing The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a ''internetworking, network of networks'' that consist ...
,
online transaction processing In online transaction processing (OLTP), information systems typically facilitate and manage transaction-oriented applications. The term "transaction" can have two different meanings, both of which might apply: in the realm of computers or database ...
,
electronic data interchange Electronic data interchange (EDI) is the concept of businesses electronically communicating information that was traditionally communicated on paper, such as purchase orders and invoices. Technical standard A technical standard is an established no ...
(EDI), inventory management systems, and automated
data collection Data collection is the process of gathering and measuring Measurement is the quantification of attributes of an object or event, which can be used to compare with other objects or events. The scope and application of measurement are depend ...
systems. E-commerce is in turn driven by the technological advances of the
semiconductor industry The semiconductor industry is the aggregate of companies engaged in the design A design is a plan or specification for the construction of an object or system or for the implementation of an activity or process, or the result of that plan or ...
, and is the largest sector of the
electronics industry The electronics industry is the economic sector that produces electronic devices. It emerged in the 20th century and is today one of the largest global industries. Contemporary society uses a vast array of electronic devices built in automated or s ...
. E-commerce typically uses the
web Web most often refers to: * Spider web A spider web, spiderweb, spider's web, or cobweb (from the archaic word '' coppe'', meaning "spider") is a structure created by a spider Spiders ( order Araneae) are air-breathing arthropod An ar ...
for at least a part of a transaction's life cycle although it may also use other technologies such as
e-mail upThe email_address.html"_;"title="at_sign,_a_part_of_every_SMTP_email_address">at_sign,_a_part_of_every_SMTP_email_address Electronic_mail_(email_or_e-mail)_is_a_method_of_exchanging_messages_("mail")_between_people_using_electronic_dev ...

e-mail
. Typical e-commerce transactions include the purchase of products (such as books from
Amazon Amazon usually refers to: * Amazons In Greek mythology, the Amazons (Ancient Greek: Ἀμαζόνες ''Amazónes'', singular Ἀμαζών ''Amazōn'') are portrayed in a number of ancient Greek, ancient epic poems and legends, such as the ...
) or services (such as
music download A music download (commonly referred to as a digital download) is the digital music, digital transfer of music via the Internet into a device capable of decoding and playing it, such as a personal computer, portable media player, MP3 player or sma ...
s in the form of
digital distribution Digital distribution (also referred to as content delivery, online distribution, or electronic software distribution (ESD), among others) is the delivery or distribution of digital media content (media), content such as Sound recording and repro ...
such as
iTunes Store The iTunes Store is a software-based online digital media Digital media means any media (communication), communication media that operate with the use of any of various encoded machine-readable data formats. Digital media can be created, v ...

iTunes Store
). There are three areas of e-commerce:
online retailing Online shopping is a form of electronic commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of Product (business), products on online services or over the Internet. The term was coined and first employ ...
,
electronic markets Electronic markets (or electronic marketplaces) are information systems (IS) which are used by multiple separate organizational entities within one or among multiple tiers in economic value chains. In analogy to the market concept which can be vie ...
, and
online auction An online auction (or also electronic auction or e-auction or eAuction) is an auction An auction is usually a process of buying and selling goods In economics Economics () is the social science that studies how people interact with v ...

online auction
s. E-commerce is supported by
electronic business Online Business or e-business is any kind of business or commercial transaction that includes sharing information across the internet. Commerce Commerce is the exchange of goods and services, especially on a large scale. Etymology The Englis ...
. E-commerce businesses may also employ some or all of the following: *
Online shopping Online shopping is a form of electronic commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and eff ...
for retail sales direct to consumers via
web sites A website (also written as web site) is a collection of web page A web page (or webpage) is a hypertext Hypertext is text displayed on a or other with references () to other text that the reader can immediately access. Hyperte ...
and
mobile apps A mobile application, also referred to as a mobile app or simply an app, is a computer program In imperative programming, a computer program is a sequence of instructions in a programming language that a computer can execute or interpret. In d ...

mobile apps
, and
conversational commerce Conversational commerce is e-commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons ...
via
live chat A web chat is a system that allows users to communicate in real-time using easily accessible web interfaces. It is a type of Internet online chat Online chat may refer to any kind of communication Communication (from Latin Latin (, o ...
,
chatbot A chatbot or chatterbot is a software Software is a collection of instructions Instruction or instructions may refer to: Computing * Instruction, one operation of a processor within a computer architecture instruction set * Computer progra ...

chatbot
s, and voice assistants; * Providing or participating in
online marketplace An online marketplace (or online e-commerce marketplace) is a type of e-commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the ...
s, which process third-party business-to-consumer (B2C) or
consumer-to-consumer Consumer to consumer (C2C) markets provide an innovative way to allow customers to interact with each other. Traditional markets require business to customer relationships, in which a customer goes to the business in order to purchase a product or ...
(C2C) sales; * Business-to-business (B2B) buying and selling; * Gathering and using demographic data through web contacts and social media; * B2B
electronic data interchange Electronic data interchange (EDI) is the concept of businesses electronically communicating information that was traditionally communicated on paper, such as purchase orders and invoices. Technical standard A technical standard is an established no ...
; * Marketing to prospective and established
customer In sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, comple ...

customer
s by
e-mail upThe email_address.html"_;"title="at_sign,_a_part_of_every_SMTP_email_address">at_sign,_a_part_of_every_SMTP_email_address Electronic_mail_(email_or_e-mail)_is_a_method_of_exchanging_messages_("mail")_between_people_using_electronic_dev ...

e-mail
or fax (for example, with
newsletter A ''newsletter'' is a printed Printing is a process for mass reproducing text and Printmaking, images using a master form or template. The earliest non-paper products involving printing include cylinder seals and objects such as the Cyrus Cy ...

newsletter
s); * Engaging in pretail for launching new products and services; * Online financial exchanges for currency exchanges or trading purposes.


History and timeline

The term was coined and first employed by Dr. Robert Jacobson, Principal Consultant to the California State Assembly's Utilities & Commerce Committee, in the title and text of California's Electronic Commerce Act, carried by the late Committee Chairwoman Gwen Moore (D-L.A.) and enacted in 1984. A timeline for the development of e-commerce: * 1971 or 1972: The
ARPANET The Advanced Research Projects Agency Network (ARPANET) was the first wide-area packet-switching network with distributed control and one of the first networks to implement the Internet protocol suite, TCP/IP protocol suite. Both technologies ...
is used to arrange a
cannabis ''Cannabis'' () is a genus Genus /ˈdʒiː.nəs/ (plural genera /ˈdʒen.ər.ə/) is a taxonomic rank In biological classification In biology Biology is the natural science that studies life and living organisms, including ...

cannabis
sale between students at the
Stanford Artificial Intelligence Laboratory Stanford University has many centers and institutes dedicated to the study of various specific topics. These centers and institutes may be within a department, within a school but across departments, an independent laboratory, institute or center ...
and the
Massachusetts Institute of Technology Massachusetts Institute of Technology (MIT) is a private Private or privates may refer to: Music * "In Private "In Private" was the third single in a row to be a charting success for United Kingdom, British singer Dusty Springfield, aft ...
, later described as "the seminal act of e-commerce" in
John Markoff John Gregory Markoff (born October 24, 1949) is a journalist best known for his work covering technology at ''The New York Times'' for 28 years until his retirement in 2016, and a book and series of articles about the 1990s pursuit and capture of ...

John Markoff
's book ''
What the Dormouse Said What or WHAT may refer to: * What, an interrogative pronoun An interrogative word or question word is a function word In linguistics Linguistics is the science, scientific study of language. It encompasses the analysis of every aspect of ...

What the Dormouse Said
''. * 1976:
Atalla Technovation Utimaco Atalla, founded as Atalla Technovation and formerly known as Atalla Corporation or HP Atalla, is a security vendor, active in the market segments of data security and cryptography. Atalla provides government-grade end-to-end products in ne ...
(founded by
Mohamed Atalla Mohamed M. Atalla ( ar, محمد عطاالله; August 4, 1924 – December 30, 2009) was an Egyptian-American engineer, physical chemist Physical chemistry is the study of macroscopic The macroscopic scale is the length scale on which ...
) and
Bunker Ramo Corporation Bunker Ramo Corporation was founded by George M. Bunker and Simon Ramo Simon "Si" Ramo (May 7, 1913 – June 27, 2016) was an American engineer, businessman, and author. He led development of microwave and missile technology and is sometimes know ...
(founded by George Bunker and
Simon Ramo Simon "Si" Ramo (May 7, 1913 – June 27, 2016) was an American engineer, businessman, and author. He led development of microwave and missile technology and is sometimes known as the father of the intercontinental ballistic missile (ICBM). He ...
) introduce products designed for secure
online transaction processing In online transaction processing (OLTP), information systems typically facilitate and manage transaction-oriented applications. The term "transaction" can have two different meanings, both of which might apply: in the realm of computers or database ...
, intended for
financial institutions Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entit ...
. * 1979:
Michael Aldrich Michael Aldrich (22 August 1941 – 19 May 2014) was an English inventor, innovator and entrepreneur. In 1979 he invented online shopping to enable online transaction processing between consumers and businesses, or between one business and an ...
demonstrates the first
online shopping Online shopping is a form of electronic commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and eff ...
system. * 1981: Thomson Holidays UK is the first business-to-business (B2B) online shopping system to be installed. * 1982:
Minitel The Minitel was a videotex online service accessible through telephone lines, and was the world's most successful online service prior to the World Wide Web. It was invented in Cesson-Sévigné, near Rennes in Brittany, France. The service was r ...
was introduced nationwide in France by
France Télécom Orange S.A. (), rebranded as Orange, formerly France Télécom S.A., stylized as france telecom, is a French multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Mu ...
and used for online ordering. * 1983:
California State Assembly The California State Assembly is the lower house A lower house is one of two chambers Chambers may refer to: Places Canada: *Chambers Township, Ontario United States: *Chambers County, Alabama *Chambers, Arizona, an unincorporated communit ...
holds first hearing on "electronic commerce" in Volcano, California. Testifying are CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone, and Pacific Telesis. (Not permitted to testify is Quantum Technology, later to become AOL.) California's Electronic Commerce Act was passed in 1984. * 1983: Karen Earle Lile (AKA Karen Bean) and Kendall Ross Bean create e-commerce service in
San Francisco Bay Area The San Francisco Bay Area, popularly referred to as the Bay Area, is a populous region surrounding the San Francisco Bay, San Francisco, San Pablo Bay, San Pablo, and Suisun Bay estuary, estuaries in Northern California. Although the exact bou ...
. Buyers and sellers of pianos connect through a database created by Piano Finders on a
Kaypro Kaypro Corporation was an American home and personal computer manufacturer based out of San Diego in the 1980s. The company was founded by Non-Linear Systems Non-Linear Systems is an electronics manufacturing company based in San Diego S ...
personal computer using
DOS DOS (, ) is a platform-independent acronym for disk operating system which later became a common shorthand for disk-based operating systems on IBM PC compatible IBM PC compatible computers are similar to the original IBM Personal Computer, IB ...

DOS
interface. Pianos for sale are listed on a
Bulletin board system A bulletin board system or BBS (also called ''Computer Bulletin Board Service'', ''CBBS'') is a computer server In computing Computing is any goal-oriented activity requiring, benefiting from, or creating computing machinery. It includes th ...
. Buyers print list of pianos for sale by a
dot matrix printer A dot matrix printer is an impact printer In computing Computing is any goal-oriented activity requiring, benefiting from, or creating computing machinery. It includes the study and experimentation of algorithm of an algorithm (Eucli ...

dot matrix printer
. Customer service happened through a Piano Advice Hotline listed in the
San Francisco Chronicle The ''San Francisco Chronicle'' is a newspaper serving primarily the San Francisco Bay Area The San Francisco Bay Area, popularly referred to as the Bay Area, is a populous region surrounding the , , and in . Although the exact boundaries ...
classified ads and money transferred by a bank
wire transfer Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer Electronic funds transfer (EFT) is the electronic transfer of money from one bank account A bank account is a financial account maintained by a ban ...
when a sale was completed. * 1984:
Gateshead Gateshead () is a large town in North East England and principal settlement of the Metropolitan Borough of Gateshead, situated on the southern bank of the River Tyne. It is connected to Newcastle upon Tyne by seven bridges. The town is known for ...

Gateshead
SIS/
Tesco Tesco plc () is a British multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a ...

Tesco
is first B2C online shopping system and Mrs Snowball, 72, is the first online home shopper * 1984: In April 1984,
CompuServe CompuServe (CompuServe Information Service, also known by its initialism CIS) was an American online service provider, the first major commercial one in the United States – described in 1994 as "the oldest of the Big Three information services ...
launches the Electronic Mall in the US and Canada. It is the first comprehensive electronic commerce service. * 1989: In May 1989, Sequoia Data Corp. introduced Compumarket, the first internet based system for e-commerce. Sellers and buyers could post items for sale and buyers could search the database and make purchases with a credit card. * 1990:
Tim Berners-Lee Sir Timothy John Berners-Lee (born 8 June 1955), also known as TimBL, is an English computer scientist best known as the inventor of the World Wide Web The World Wide Web (WWW), commonly known as the Web, is an information system ...

Tim Berners-Lee
writes the first web browser,
WorldWideWeb WorldWideWeb (later renamed to Nexus to avoid confusion between the software Software is a collection of Instruction (computer science), instructions and data (computing), data that tell a computer how to work. This is in contrast to Computer ...

WorldWideWeb
, using a
NeXT NeXT, Inc. (later NeXT Computer, Inc. and NeXT Software, Inc.) was an American technology company that specialized in computer workstations A workstation is a special computer designed for technical or scientific Science () is a syst ...
computer. * 1992: Book Stacks Unlimited in Cleveland opens a commercial sales website (www.books.com) selling books online with credit card processing. * 1993: Paget Press releases edition No. 3 of the first
app store An app store (or app marketplace) is a type of digital distribution Digital distribution (also referred to as content delivery, online distribution, or electronic software distribution (ESD), among others) is the delivery or distribution of di ...

app store
, The
Electronic AppWrapper The Electronic AppWrapper (EAW) was an early commercial electronic software distribution catalog. Originally, the AppWrapper was a traditional printed catalog, which later developed into the Electronic AppWrapper, offering electronic distribution ...
* 1994:
Netscape Netscape Communications Corporation (originally Mosaic Communications Corporation) was an American independent computer services company with headquarters in Mountain View, California Mountain View is a city in Santa Clara County, Californi ...

Netscape
releases the Navigator browser in October under the code name
Mozilla Mozilla (stylized as moz://a) is a free software Free software (or libre software) is computer software distributed under terms that allow users to run the software for any purpose as well as to study, change, and distribute it and any a ...

Mozilla
.
Netscape Netscape Communications Corporation (originally Mosaic Communications Corporation) was an American independent computer services company with headquarters in Mountain View, California Mountain View is a city in Santa Clara County, Californi ...
1.0 is introduced in late 1994 with
SSLSSL may refer to: Entertainment * RoboCup Small Size League * ''Sesame Street Live ''Sesame Street Live'' is a live touring show based on the children's television show ''Sesame Street'' produced by Feld Entertainment. History The VStar Entertain ...
encryption that made transactions secure. * 1994:
Ipswitch IMail Server Technical Specs IMail can handle as many as 300,000 users, with an average message flow of ~25 per second / ~2 million a day. Support for 32 and 64 bit platforms. IIS/.Net Framework The .NET Framework (pronounced as "''dot net"'') is a software ...
becomes the first software available online for sale and immediate download via a partnership between Ipswitch, Inc. and
OpenMarket OpenMarket Inc. is a privately owned subsidiary of Infobip that provides cloud-based Cloud computing is the on-demand availability of computer A computer is a machine that can be programmed to carry out sequences of arithmetic or ...
. * 1994: "Ten Summoner's Tales" by Sting becomes the first secure online purchase through
NetMarket NetMarket is an online marketplace An online marketplace (or online e-commerce marketplace) is a type of e-commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and elect ...
. * 1995: The US
National Science Foundation The National Science Foundation (NSF) is an independent agency of the United States government Independent or Independents may refer to: Arts, entertainment, and media Artist groups * Independents (artist group)The Independents were a group of ...

National Science Foundation
lifts its former strict prohibition of commercial enterprise on the Internet. * 1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, product manager for
CompuServe CompuServe (CompuServe Information Service, also known by its initialism CIS) was an American online service provider, the first major commercial one in the United States – described in 1994 as "the oldest of the Big Three information services ...
UK, from
W H Smith WH Smith (also known as WHS or colloquially as Smith's, and formerly W. H. Smith & Son) is a British retailer, headquartered in Swindon Swindon () is a large town in Wiltshire Wiltshire (; abbreviated Wilts) is a Ceremonial counties o ...
's shop within CompuServe's UK Shopping Centre is the UK's first national online shopping service secure transaction. The shopping service at launch featured
W H Smith WH Smith (also known as WHS or colloquially as Smith's, and formerly W. H. Smith & Son) is a British retailer, headquartered in Swindon Swindon () is a large town in Wiltshire Wiltshire (; abbreviated Wilts) is a Ceremonial counties o ...
,
Tesco Tesco plc () is a British multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a ...

Tesco
,
Virgin Megastores Virgin Megastores is an international entertainment retailing chain, founded in early 1976 by Richard Branson, Sir Richard Branson as a record shop on London's Oxford Street. In 1979 the company opened their first Megastore at the end of Oxfor ...
/
Our Price Our Price was a chain of record stores in the United Kingdom and Ireland from 1971 until 2004. History Founded in 1971 by Gary Nesbitt, Edward Stollins and Mike Isaacs, their first store was located in London's Finchley Road. Until 1976, the ...
, Great Universal Stores ( GUS),
Interflora Interflora is a flower delivery network, associated with over 58,000 affiliated flower shops in over 140 countries. It is a subsidiary of Teleflora, a subsidiary of The Wonderful Company. History In 1920 a florist, Joe Dobson, of Leighton's S ...

Interflora
,
Dixons Retail Dixons Retail plc was one of the largest consumer electronics Consumer electronics or home electronics are electronic Electronic may refer to: *Electronics Electronics comprises the physics, engineering, technology and applications t ...

Dixons Retail
, Past Times,
PC World (retailer) PC World was a retail chain of mass market computer big-box store, megastores. Established in November 1991, it became part of Dixons Retail in February 1993, and then part of Currys plc, Dixons Carphone, after the merger of Dixons Retail and Ca ...
and Innovations. * 1995:
Amazon.com Amazon.com, Inc. ( ) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational ...
is launched by
Jeff Bezos Jeffrey Preston Bezos ( ; né Jorgensen; born January 12, 1964) is an American entrepreneur, media proprietor, investor, computer engineer, and commercial astronaut. He is the founder and executive chairman of Amazon (company), Amazon, where ...

Jeff Bezos
. * 1995:
eBay eBay Inc. ( ) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational sta ...
is founded by computer programmer
Pierre Omidyar Pierre Morad Omidyar (born Parviz Morad Omidyar, June 21, 1967) is a French born Iranian-American billionaire A billionaire is a person with a net worth of at least 1,000,000,000, one billion (1,000,000,000, i.e., a thousand million) u ...
as AuctionWeb. It is the first
online auction An online auction (or also electronic auction or e-auction or eAuction) is an auction An auction is usually a process of buying and selling goods In economics Economics () is the social science that studies how people interact with v ...

online auction
site supporting person-to-person transactions. * 1995: The first commercial-free 24-hour, internet-only radio stations, Radio HK and
NetRadio NetRadio (Net.radio, NetRadio, NetRadio Network) was an Eden Prairie, Minnesota-based company founded by Scott Bourne and radio veteran Scot Combs in 1994. NetRadio helped pioneer Internet radio, online radio and was the world's first Internet-only ...
start broadcasting. * 1996: The use of Excalibur BBS with replicated "storefronts" was an early implementation of electronic commerce started by a group of
SysOps A sysop (; an abbreviation of system operator) is an administrator of a multi-user computer system, such as a bulletin board system A bulletin board system or BBS (also called ''Computer Bulletin Board Service'', ''CBBS'') is a computer server ...

SysOps
in
Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...

Australia
and replicated to global partner sites. * 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web. * 1999:
Alibaba Group Alibaba Group Holding Limited, also known as Alibaba Group and Alibaba.com, is a Chinese multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, ...
is established in China. Business.com sold for US$7.5 million to eCompanies, which was purchased in 1997 for US$149,000. The peer-to-peer filesharing software
Napster Napster is an audio streaming Streaming media is multimedia that is delivered and consumed in a continuous manner from a source, with little or no intermediate storage in network elements. ''Streaming'' refers to the delivery method of co ...

Napster
launches.
ATG Stores The Mine is an American e-commerce company which sells home goods. Formerly known as ATG Stores, the company was founded in 1999 and now sells a variety of home items including furniture, lighting and home decor. The company's headquarters are cur ...
launches to sell decorative items for the home online. * 1999: Global e-commerce reaches $150 billion * 2000: The dot-com bust. * 2001:
eBay eBay Inc. ( ) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational sta ...
has the largest userbase of any e-commerce site. * 2001: Alibaba.com achieved profitability in December 2001. * 2002:
eBay eBay Inc. ( ) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational sta ...
acquires
PayPal PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional pape ...

PayPal
for $1.5 billion. Niche retail companies
Wayfair Wayfair Inc. is an American e-commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of elect ...
and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal. * 2003:
Amazon.com Amazon.com, Inc. ( ) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational ...
posts first yearly profit. * 2004: DHgate.com, China's first online B2B transaction platform, is established, forcing other B2B sites to move away from the "
yellow pages #REDIRECT Yellow pages The yellow pages are any telephone directory of businesses, organized by category rather than alphabetically by business name, and in which advertising is sold. The directories were originally printed on yellow paper, as ...
" model. * 2007: Business.com acquired by R.H. Donnelley for $345 million. * 2014: US e-commerce and online retail sales projected to reach $294 billion, an increase of 12 percent over 2013 and 9% of all retail sales.
Alibaba Group Alibaba Group Holding Limited, also known as Alibaba Group and Alibaba.com, is a Chinese multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, ...
has the largest
Initial public offering An initial public offering (IPO) or stock launch is a public offering A public offering is the offering of securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal defi ...
ever, worth $25 billion. * 2015:
Amazon.com Amazon.com, Inc. ( ) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational ...
accounts for more than half of all e-commerce growth, selling almost 500 Million SKU's in the US. * 2017: Retail e-commerce sales across the world reaches $2.304 trillion, which was a 24.8 percent increase than previous year. * 2017: Global e-commerce transactions generate , including for business-to-business (B2B) transactions and for business-to-consumer (B2C) sales.


Business application

Some common applications related to electronic commerce are:


Governmental regulation

In the United States, California's Electronic Commerce Act (1984), enacted by the Legislature, and the more recent California Privacy Act (2020) enacted through a popular election proposition, control specifically how electronic commerce may be conducted in California. In the US in its entirety, electronic commerce activities are regulated more broadly by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers' personal information. As a result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address Online pharmacy, online pharmacies. Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for e-commerce around the world. In order to give a uniformity to e-commerce law around the world, many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996). Internationally there is the International Consumer Protection and Enforcement Network (ICPEN), which was formed in 1991 from an informal network of government customer fair trade organisations. The purpose was stated as being to find ways of co-operating on tackling consumer problems connected with cross-border transactions in both goods and services, and to help ensure exchanges of information among the participants for mutual benefit and understanding. From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a portal to report complaints about online and related transactions with foreign companies. There is also Asia Pacific Economic Cooperation (APEC) was established in 1989 with the vision of achieving stability, security and prosperity for the region through free and open trade and investment. APEC has an Electronic Commerce Steering Group as well as working on common privacy regulations throughout the APEC region. In Australia, Trade is covered under Australian Treasury Guidelines for electronic commerce and the Australian Competition & Consumer Commission regulates and offers advice on how to deal with businesses online, and offers specific advice on what happens if things go wrong. In the United Kingdom, The Financial Services Authority (FSA) was formerly the regulating authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in 2013 by the Prudential Regulation Authority (United Kingdom), Prudential Regulation Authority and the Financial Conduct Authority. The UK implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into effect on 1 November 2009. The PSR affects firms providing payment services and their customers. These firms include banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as payment institutions (PIs), who are subject to prudential requirements. Article 87 of the PSD requires the European Commission to report on the implementation and impact of the PSD by 1 November 2012. In India, the Information Technology Act 2000 governs the basic applicability of E-commerce in India, e-commerce. In China, the Telecommunications Regulations of the People's Republic of China (promulgated on 25 September 2000), stipulated the Ministry of Industry and Information Technology (MIIT) as the government department regulating all telecommunications related activities, including electronic commerce. On the same day, The Administrative Measures on Internet Information Services released, is the first administrative regulation to address profit-generating activities conducted through the Internet, and lay the foundation for future regulations governing e-commerce in China. On 28 August 2004, the eleventh session of the tenth NPC Standing Committee adopted The Electronic Signature Law, which regulates data message, electronic signature authentication and legal liability issues. It is considered the first law in China's e-commerce legislation. It was a milestone in the course of improving China's electronic commerce legislation, and also marks the entering of China's rapid development stage for electronic commerce legislation.


Forms

Contemporary electronic commerce can be classified into two categories. The first category is business based on types of goods sold (involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce). The second category is based on the nature of the participant (B2B e-commerce, B2B, Retail, B2C, Consumer-to-business, C2B and Customer to customer, C2C). On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and data security, security are pressing issues for electronic commerce. Aside from traditional e-commerce, the terms m-Commerce (
mobile commerce The term mobile commerce was originally coined in 1997 by Kevin Duffey at the launch of the Global Mobile Commerce Forum, to mean "the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless techno ...
) as well (around 2013) t-Commerce have also been used.


Global trends

In 2010, the United Kingdom had the highest per capita e-commerce spending in the world. As of 2013, the Czech Republic was the European country where e-commerce delivers the biggest contribution to the enterprises´ total revenue. Almost a quarter (24%) of the country's total turnover is generated via the online channel. Among emerging economies, China's e-commerce presence continues to expand every year. With 668 million Internet users, China's online shopping sales reached $253 billion in the first half of 2015, accounting for 10% of total Chinese consumer retail sales in that period. The Chinese retailers have been able to help consumers feel more comfortable shopping online. e-commerce transactions between China and other countries increased 32% to 2.3 trillion yuan ($375.8 billion) in 2012 and accounted for 9.6% of China's total international trade. In 2013, Alibaba Group, Alibaba had an e-commerce market share of 80% in China. In 2014, there were 600 million Internet users in China (twice as many as in the US), making it the world's biggest online market. China is also the largest e-commerce market in the world by value of sales, with an estimated in 2016. Research shows that Chinese consumer motivations are different enough from Western audiences to require unique e-commerce app designs instead of simply porting Western apps into the Chinese market. Recent research clearly indicates that electronic commerce, commonly referred to as e-commerce, presently shapes the manner in which people shop for products. The GCC countries have a rapidly growing market and are characterized by a population that becomes wealthier (Yuldashev). As such, retailers have launched Arabic-language websites as a means to target this population. Secondly, there are predictions of increased mobile purchases and an expanding internet audience (Yuldashev). The growth and development of the two aspects make the GCC countries become larger players in the electronic commerce market with time progress. Specifically, research shows that the e-commerce market is expected to grow to over $20 billion by the year 2020 among these GCC countries (Yuldashev). The e-commerce market has also gained much popularity among western countries, and in particular Europe and the U.S. These countries have been highly characterized by consumer-packaged goods (CPG) (Geisler, 34). However, trends show that there are future signs of a reverse. Similar to the GCC countries, there has been increased purchase of goods and services in online channels rather than offline channels. Activist investors are trying hard to consolidate and slash their overall cost and the governments in western countries continue to impose more regulation on CPG manufacturers (Geisler, 36). In these senses, CPG investors are being forced to adapt to e-commerce as it is effective as well as a means for them to thrive. In 2013, Brazil's e-commerce was growing quickly with retail e-commerce sales expected to grow at a double-digit pace through 2014. By 2016, eMarketer expected retail e-commerce sales in Brazil to reach $17.3 billion. India has an Internet user base of about 460 million as of December 2017. Despite being the third largest user base in the world, the penetration of the Internet is low compared to markets like the United States, United Kingdom or France but is growing at a much faster rate, adding around 6 million new entrants every month. In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. The India retail market is expected to rise from 2.5% in 2016 to 5% in 2020. The future trends in the GCC countries will be similar to that of the western countries. Despite the forces that push business to adapt e-commerce as a means to sell goods and products, the manner in which customers make purchases is similar in countries from these two regions. For instance, there has been an increased usage of smartphones which comes in conjunction with an increase in the overall internet audience from the regions. Yuldashev writes that consumers are scaling up to more modern technology that allows for mobile marketing. However, the percentage of smartphone and internet users who make online purchases is expected to vary in the first few years. It will be independent on the willingness of the people to adopt this new trend (The Statistics Portal). For example, UAE has the greatest smartphone penetration of 73.8 per cent and has 91.9 per cent of its population has access to the internet. On the other hand, smartphone penetration in Europe has been reported to be at 64.7 per cent (The Statistics Portal). Regardless, the disparity in percentage between these regions is expected to level out in future because e-commerce technology is expected to grow to allow for more users. The e-commerce business within these two regions will result in competition. Government bodies at the country level will enhance their measures and strategies to ensure sustainability and consumer protection (Krings, et al.). These increased measures will raise the environmental and social standards in the countries, factors that will determine the success of the e-commerce market in these countries. For example, an adoption of tough sanctions will make it difficult for companies to enter the e-commerce market while lenient sanctions will allow ease of companies. As such, the future trends between GCC countries and the Western countries will be independent of these sanctions (Krings, et al.). These countries need to make rational conclusions in coming up with effective sanctions. The rate of growth of the number of internet users in the Arab countries has been rapid – 13.1% in 2015. A significant portion of the e-commerce market in the Middle East comprises people in the 30–34 year age group. Egypt has the largest number of internet users in the region, followed by Saudi Arabia and Morocco; these constitute 3/4th of the region's share. Yet, internet penetration is low: 35% in Egypt and 65% in Saudi Arabia. E-commerce has become an important tool for small and large businesses worldwide, not only to sell to customers, but also to engage them. In 2012, e-commerce sales topped $1 trillion for the first time in history. Mobile devices are playing an increasing role in the mix of e-commerce, this is also commonly called mobile commerce, or m-commerce. In 2014, one estimate saw purchases made on mobile devices making up 25% of the market by 2017. For traditional businesses, one research stated that information technology and cross-border e-commerce is a good opportunity for the rapid development and growth of enterprises. Many companies have invested an enormous volume of investment in mobile applications. The DeLone and McLean Model stated that three perspectives contribute to a successful e-business: information system quality, service quality and users' satisfaction. There is no limit of time and space, there are more opportunities to reach out to customers around the world, and to cut down unnecessary intermediate links, thereby reducing the cost price, and can benefit from one on one large customer data analysis, to achieve a high degree of personal customization strategic plan, in order to fully enhance the core competitiveness of the products in the company. Modern 3D graphics technologies, such as Facebook 3D Posts, are considered by some social media marketers and advertisers as a preferable way to promote consumer goods than static photos, and some brands like Sony are already paving the way for augmented reality commerce. Wayfair now lets you inspect a 3D version of its furniture in a home setting before buying.


Logistics

Logistics in e-commerce mainly concerns fulfillment. Online markets and retailers have to find the best possible way to fill orders and deliver products. Small companies usually control their own logistic operation because they do not have the ability to hire an outside company. Most large companies hire a fulfillment service that takes care of a company's logistic needs. Contrary to List of common misconceptions, common misconception, there are significant barriers to entry in e-commerce.


Impacts


Impact on markets and retailers

E-commerce markets are growing at noticeable rates. The online market is expected to grow by 56% in 2015–2020. In 2017, retail e-commerce sales worldwide amounted to 2.3 trillion US dollars and e-retail revenues are projected to grow to 4.891 trillion US dollars in 2021. Traditional markets are only expected 2% growth during the same time. Brick and mortar retailers are struggling because of online retailer's ability to offer lower prices and higher efficiency. Many larger retailers are able to maintain a presence offline and online by linking physical and online offerings. E-commerce allows customers to overcome geographical barriers and allows them to purchase products anytime and from anywhere. Online and traditional markets have different strategies for conducting business. Traditional retailers offer fewer assortment of products because of shelf space where, online retailers often hold no inventory but send customer orders directly to the manufacture. The pricing strategies are also different for traditional and online retailers. Traditional retailers base their prices on store traffic and the cost to keep inventory. Online retailers base prices on the speed of delivery. There are two ways for marketers to conduct business through e-commerce: fully online or online along with a brick and mortar store. Online marketers can offer lower prices, greater product selection, and high efficiency rates. Many customers prefer online markets if the products can be delivered quickly at relatively low price. However, online retailers cannot offer the physical experience that traditional retailers can. It can be difficult to judge the quality of a product without the physical experience, which may cause customers to experience product or seller uncertainty. Another issue regarding the online market is concerns about the security of online transactions. Many customers remain loyal to well-known retailers because of this issue. Security is a primary problem for e-commerce in developed and developing countries. E-commerce security is protecting business' websites and customers from unauthorized access, use, alteration, or destruction. The type of threats include: malicious codes, unwanted programs (Adware, ad ware, spyware), phishing, Hacker, hacking, and Vandalism, cyber vandalism. E-commerce websites use different tools to avert security threats. These tools include Firewall (computing), firewalls, encryption software, digital certificates, and passwords.


Impact on supply chain management

For a long time, companies had been troubled by the gap between the benefits which supply chain technology has and the solutions to deliver those benefits. However, the emergence of e-commerce has provided a more practical and effective way of delivering the benefits of the new supply chain technologies. E-commerce has the capability to integrate all inter-company and intra-company functions, meaning that the three flows (physical flow, financial flow and information flow) of the supply chain could be also affected by e-commerce. The affections on physical flows improved the way of product and inventory movement level for companies. For the information flows, e-commerce optimized the capacity of information processing than companies used to have, and for the financial flows, e-commerce allows companies to have more efficient payment and settlement solutions. In addition, e-commerce has a more sophisticated level of impact on supply chains: Firstly, the performance gap will be eliminated since companies can identify gaps between different levels of supply chains by electronic means of solutions; Secondly, as a result of e-commerce emergence, new capabilities such implementing ERP systems, like SAP ERP, Xero (software), Xero, or Megaventory, have helped companies to manage operations with customers and suppliers. Yet these new capabilities are still not fully exploited. Thirdly, technology companies would keep investing on new e-commerce software solutions as they are expecting investment return. Fourthly, e-commerce would help to solve many aspects of issues that companies may feel difficult to cope with, such as political barriers or cross-country changes. Finally, e-commerce provides companies a more efficient and effective way to collaborate with each other within the supply chain.


Impact on employment

E-commerce helps create new job opportunities due to information related services, software app and digital products. It also causes job losses. The areas with the greatest predicted job-loss are retail, postal, and travel agencies. The development of e-commerce will create jobs that require highly skilled workers to manage large amounts of information, customer demands, and production processes. In contrast, people with poor technical skills cannot enjoy the wages welfare. On the other hand, because e-commerce requires sufficient stocks that could be delivered to customers in time, the warehouse becomes an important element. Warehouse needs more staff to manage, supervise and organize, thus the condition of warehouse environment will be concerned by employees.


Impact on customers

E-commerce brings convenience for customers as they do not have to leave home and only need to browse website online, especially for buying the products which are not sold in nearby shops. It could help customers buy wider range of products and save customers’ time. Consumers also gain power through online shopping. They are able to research products and compare prices among retailers. Also, online shopping often provides sales promotion or discounts code, thus it is more price effective for customers. Moreover, e-commerce provides products’ detailed information; even the in-store staff cannot offer such detailed explanation. Customers can also review and track the order history online. E-commerce technologies cut transaction costs by allowing both manufactures and consumers to skip through the intermediaries. This is achieved through by extending the search area best price deals and by group purchase. The success of e-commerce in urban and regional levels depend on how the local firms and consumers have adopted to e-commerce. However, e-commerce lacks human interaction for customers, especially who prefer face-to-face connection. Customers are also concerned with the security of online transactions and tend to remain loyal to well-known retailers. In recent years, clothing retailers such as Tommy Hilfiger have started adding Virtual Fit platforms to their e-commerce sites to reduce the risk of customers buying the wrong sized clothes, although these vary greatly in their fit for purpose. When the customer regret the purchase of a product, it involves returning goods and refunding process. This process is inconvenient as customers need to pack and post the goods. If the products are expensive, large or fragile, it refers to safety issues.


Impact on the environment

In 2018, E-commerce generated 1.3 million tons of container cardboard in North America, an increase from 1.1 million in 2017. Only 35 percent of North American cardboard manufacturing capacity is from recycled content. The recycling rate in Europe is 80 percent and Asia is 93 percent. Amazon, the largest user of Cardboard box, boxes, has a strategy to cut back on packing material and has reduced packaging material used by 19 percent by weight since 2016. Amazon is requiring retailers to manufacture their product packaging in a way that doesn't require additional shipping packaging. Amazon also has an 85-person team researching ways to reduce and improve their packaging and shipping materials.


Impact on traditional retail

E-commerce has been cited as a major force for the failure of major U.S. retailers in a trend frequently referred to as a "retail apocalypse." The rise of e-commerce outlets like Amazon has made it harder for traditional retailers to attract customers to their stores and forced companies to change their sales strategies. Many companies have turned to sales promotions and increased digital efforts to lure shoppers while shutting down brick-and-mortar locations. The trend has forced some traditional retailers to shutter its brick and mortar operations.


Distribution channels

E-commerce has grown in importance as companies have adopted pure-click and Bricks and clicks, brick-and-click channel systems. We can distinguish pure-click and brick-and-click channel system adopted by companies. * Pure-click or pure-play companies are those that have launched a website without any previous existence as a firm. * Bricks-and-clicks companies are those existing companies that have added an online site for e-commerce. * Click-to-brick online retailers that later open physical locations to supplement their online efforts. E-commerce may take place on retailers' Web sites or
mobile apps A mobile application, also referred to as a mobile app or simply an app, is a computer program In imperative programming, a computer program is a sequence of instructions in a programming language that a computer can execute or interpret. In d ...

mobile apps
, or those of e-commerce marketplaces such as on
Amazon Amazon usually refers to: * Amazons In Greek mythology, the Amazons (Ancient Greek: Ἀμαζόνες ''Amazónes'', singular Ἀμαζών ''Amazōn'') are portrayed in a number of ancient Greek, ancient epic poems and legends, such as the ...
, or Tmall from Alibaba Group, AliBaba. Those channels may also be supported by
conversational commerce Conversational commerce is e-commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the emission, behaviour and effects of electrons ...
, e.g.
live chat A web chat is a system that allows users to communicate in real-time using easily accessible web interfaces. It is a type of Internet online chat Online chat may refer to any kind of communication Communication (from Latin Latin (, o ...
or
chatbot A chatbot or chatterbot is a software Software is a collection of instructions Instruction or instructions may refer to: Computing * Instruction, one operation of a processor within a computer architecture instruction set * Computer progra ...

chatbot
s on Web sites. Conversational commerce may also be standalone such as live chat or chatbots on messaging apps and via voice assistants.


Recommendation

The contemporary e-commerce trend recommends companies to shift the traditional business model where focus on "standardized products, homogeneous market and long product life cycle" to the new business model where focus on "varied and customized products". E-commerce requires the company to have the ability to satisfy multiple needs of different customers and provide them with wider range of products. With more choices of products, the information of products for customers to select and meet their needs become crucial. In order to address the mass customization principle to the company, the use of recommender system is suggested. This system helps recommend the proper products to the customers and helps customers make the decision during the purchasing process. The recommender system could be operated through the top sellers on the website, the demographics of customers or the consumers' buying behavior. However, there are 3 main ways of recommendations: recommending products to customers directly, providing detailed products' information and showing other buyers' opinions or critiques. It is benefit for consumer experience without physical shopping. In general, recommender system is used to contact customers online and assist finding the right products they want effectively and directly.


E-commerce during COVID-19

In March 2020, global retail website traffic hit 14.3 billion visits signifying an unprecedented growth of e-commerce during the lockdown of 2020. Studies show that in the US, as many as 29% of surveyed shoppers state that they will never go back to shopping in person again; in the UK, 43% of consumers state that they expect to keep on shopping the same way even after the lockdown is over. Retail sales of e-commerce shows that COVID-19 has a significant impact on e-commerce and its sales are expected to reach $6.5 trillion by 2023.


See also

* Alternative payments * Comparison of free software e-commerce web application frameworks * Comparison of shopping cart software * Comparison of payment systems * Customer intelligence * Digital economy * E-commerce credit card payment system * Electronic bill payment * Electronic money * Non-store retailing * Paid content * Payments as a service * Types of e-commerce * Timeline of e-commerce * South Dakota v. Wayfair, Inc.


References


Further reading

* * * * * * * * * * *


External links

* {{DEFAULTSORT:E-commerce E-commerce, Electronics industry Non-store retailing Retail formats Supply chain management