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E-commerce can be simply defined as business handled via the Internet--digital business transactions. This sounds straightforward. After all, right now you can use the computer to handle your banking, investing, and shopping. This is what most of us think about when we hear the term e-commerce: individual consumers doing business on-line with retailers and service institutions. Amazon.com has certainly helped shape how consumers and retailers think about traditional retail transactions. Amazon.com and many other sites present a digital storefront--instead of walking into a store, you log on to a site.

On-line Retail E-commerce

Ebay.com presents another kind of commercial venture on the Internet--selling and buying, both for consumers and for businesses, through on-line auctions. This idea has clearly caught on, and is doing very well. This considerably revises the e-commerce model, from that of a digital storefront to that of an auction house.

Shopping.com and similar sites permit you to comparison shop on-line--search lots of retail sites without having to click on each one. The closest experience to this you can have without hoofing it to the mall is to comparison shop using catalogs. Some sites compare costs of specific items: insurance, mortgages, and pet supplies, for example. Priceline.com combines auctions and comparison shopping: you say what you’re willing to pay, and this site tries to get it for you at that price.

Paying On-line Bills

Another business task that you can handle on-line is paying bills. Consumers now typically must use single-biller Web sites; this means that consumers must go to each company’s Web site to pay that bill. For example, to pay my gasoline bill, I logon to the Web site hosted by my gasoline credit card, then pay that bill, usually with a credit card such as Visa or Discover. A lot of businesses have already set up this kind of site, but consumers don’t like having to go to lots of sites each month, one per bill. In addition, to pay all on-line bills, consumers needs to set up a connection to their banks or other financial institution so that the credit card used to pay bills can be paid through electronic funds transfer (EFT), which operates basically like a check--the funds are moved from a bank account to the payee.

Because single-biller Web sites have not succeeded as well as businesses may have hoped, businesses are now considering other kinds of e-commerce. Payment through a centralized Web site is another possibility. The Canadian Postal Corporation has set up such a site, www.epo.ca, that lets Canadian (and U.S.) citizens get bills using a centralized site and pay them using credit card or EFT. This system, although not widely adopted yet, is a good model for consumers, as it functions pretty much like a postal office--delivering bills and other communication, and setting up a secure method of paying bills, which includes letting the consumer set up automatic recurring payments --for example, for a mortgage, typically a pre-set amount due each month.

Business-to-Business (b2b): Selling Goods and Paying Bills

Businesses have bills to pay, like the consumer model discussed above; however, businesses also sell things, which requires an invoicing process. When you think about a steel company, for example, you realize that the company must purchase raw materials and equipment, and purchase typical business-related items as computers and office supplies. The company must track sold goods as well, including tracking payment received for sold items. In addition, purchasing for such a company is complicated: the company may have many suppliers (vendors), and needs to comparison shop the vendor catalogs and tie directly into those systems to process invoices and payments. Similarly, when the company sells, it needs to send bills then track payment.

Large companies have typically invested heavily in purchasing systems that track this data. Companies want to take advantage of such an investment and still use the Internet to support business-to-business commerce. This has spawned a lot of the recent buzz about e-commerce: this market may be worth as much as $112 billion this year alone. Many companies, both established and upstart dot-coms, are vying for a share of this market.

No clear b2b e-commerce model has so far dominated the market. It may be that the consolidator, or portal, Web site, similar to an on-line post office, is a workable solution. This is the interesting part: to see how the b2b market develops.

Implications

The promise of e-commerce for consumers and for business is a reduction of the labor-intensive effort involved in the process of buying and selling goods, and paying bills. Eventually, the Internet may provide a method that allows consumers to integrate personal digital accounting software, such as Quicken, with the Internet-based e-commerce network to vastly simplify financial management. This carries a corresponding threat of misuse, which must be dealt with through increasing Internet and software security. The e-commerce market is evolving rapidly, and holds a potential that has only just begun to be mined.