The Invention of E Commerce - Essay Example

The invention of E Commerce The invention of E Commerce During the last decades, the rapid expansion of globalization has resulted to the transformation of a series of human activities, such as communication and commerce. Technology has played a key role to the above process. This fact is clear in the case of e-commerce. Initially, e-commerce was considered as an ideal means for increasing sales. Soon, it was made clear that e-commerce could effectively replace commerce, in its traditional form. In the context of e-commerce the physical presence of customer in a shop is not necessary, a fact that has highly contributed in the increase of popularity of e-commerce worldwide. In order to understand the success of e-commerce, it would be necessary to refer to the terms and the causes of the specific invention. Reference should be also made to its characteristics, meaning especially its advantages and disadvantages. In this way, it would be easy to understand whether the invention of e-commerce has actually benefited entrepreneurs worldwide. Different views have been developed in the literature in regard to the nature and the role of e-commerce. Still, all these views have a common characteristic: they all emphasize on the value of e-commerce as a tool for promoting online sales. For example, Basu (2007) notes that e-commerce is a term used for describing ‘commercial transactions which take place in or over electronic networks’ (Basu, 2007, p. 15). Pinto (2003) refers to the definition of e-commerce as developed by the Australian Taxation Office. According to the above definition, e-commerce refers to ‘the buying and selling goods on the Internet’ (Pinto, 2003, p. 2). On the other hand, it has been stated that e-commerce is ‘the process of sharing business information, maintaining business relationships and conducting business transactions through telecommunication networks’ (Sun & Finnie, 2004, p. 47). In other words, e-commerce does not focus on sales but it can incorporates a wide range of business activities, as described above. This means also that e-commerce is not affected solely by the economic conditions of each market but also by the local social and political conditions, as related to commerce and trade. For example, a law introducing restrictions to the exchange of business information can negatively affect e-commerce, as used by the businesses in a particular state. The history of E-commerce is closely related to the history of the Internet. In fact, it was because of Internet that the development of E-commerce has become feasible (Schmid, Stanoevska-Slabeva, & Tschammer, 2001). The specific fact has both a positive and a negative aspect. Indeed, using the Internet as its basis, E-commerce could be easily expanded worldwide. Internet in this case offered the necessary technological framework for the realization of E-commerce (Schmid, Stanoevska-Slabeva, & Tschammer, 2001). At the same time, Internet has been used for the promotion of E-commerce. Internet users have been aware of the establishment of E-commerce immediately when the specific business tool entered the global market. On the other hand, E-commerce sites have not been always trusted. The fact that the specific business tool is based on the WWW cannot be used for justifying its validity (Schmid, Stanoevska-Slabeva, & Tschammer, 2001). In any case, the development of E-commerce worldwide has been quite rapid. This fact is reflected in the findings of a research included in the study of Joseph (2006). According to the above study, between 2000 and 2004 the commercial transactions developed through e-commerce have been significantly increased (Joseph, 2006). More specifically, in 2000 the global e-commerce transactions reached the $657.0 (in billion dollars) while in 2004 e-commerce transactions worldwide were valued at $6,789.8 (in billion dollars) (Joseph, 2006, p. 3). As explained earlier, E-commerce has been closely related to Internet. Thus, the understanding of the history of E-commerce requires the reference to the history of Internet. Internet first appeared in 1973 as a form of ‘communication protocols’ (Plunkett, 2009, p. 3). The relevant project was funded by the US Department of Defense (Plunkett, 2009, p. 3). The development of online communication framework took about 4 years. Indeed, in 1977 the first online connection was achieved (Plunkett, 2009, p. 3). The next important step in the development of Internet has been the establishment of HTML in 1989 (Plunkett, 2009, p. 3). HTML was used for the creation of WWW in its current form (Plunkett, 2009, p. 3). As the interest of people worldwide for the new tool of communication was increased, entrepreneurs saw a chance for increasing the performance of their businesses (Plunkett, 2009, p. 3). E-commerce, in its initial form, as described in Graph 1 below, appeared between 1993 and 1994 (Plunkett, 2009, p. 3). It should be noted that the expansion of Internet worldwide has supported the increase of popularity of E-commerce. In the study of Botha, Bothma and Geldenhuys (2008) the rate of expansion of Internet worldwide is described by referring to the following fact: ‘in 1996 the number of Internet users was doubling every 100 days’ (Botha, Bothma, & Geldenhuys, 2008, p. 499). Baldauf and Stair (2010, p. 436) also support the view that the invention of E-commerce has been related to Internet. Reference is made especially to the Electronic Data Interchange (EDI) system. This system operates through communication networks of specific form: ‘the value added networks’ (Baldauf & Stair, 2010, p. 436). EDI systems were extensively used during ‘1970s and 1980s’ (Baldauf & Stair, 2010, p. 436). Through these systems, the exchange of information between businesses and their suppliers was significantly improved (Baldauf & Stair, 2010). According to Baldauf and Stair (2010) EDI systems should be considered as the first form of E-commerce. It is noted that it took rather a long time, about 20 years so that E-commerce to achieve its current status, both in terms of quality and of performance (Baldauf & Stair, 2010, p. 436). It is further explained that the cost of EDI systems was high (Baldauf & Stair, 2010, p. 436). The rapid expansion of E-commerce could not be achieved through these systems. An alternative communication network, of low cost, should be established (Baldauf & Stair, 2010, p. 436). WWW offered the chance for the establishment of E-commerce as a key business tool worldwide (Baldauf & Stair, 2010, p. 436). Two have been the key advantages of WWW that highly supported the rapid development of E-commerce: the low cost of use and the lack of restrictions in access (Baldauf & Stair, 2010, p. 436). Westland and Clark (1999) have presented another aspect of the historical development of E-commerce. According to the above researchers, the initial forms of E-commerce can be traced back at 1860s when efforts were made for reducing the time required for handling orders in the New York Stock Exchange (Westland & Clark, 1999, p. 385). The stock ticker, invented in 1867, is considered as an initial mode of E-commerce (Westland & Clark, 1999, p. 385). The above ticker helped to reduce the time required for ‘announcing sales figures to each brokerage house’ (Westland & Clark, 1999, p. 385). Still, the ticker technology had a disadvantage: the time saved in exchanging info on sales figures was not significant. The improved ticker system, as developed by the inventor Thomas Edison, was able to respond to the above task within shortest time (Westland & Clark, 1999, p. 385). In the beginning of the 20th century, the ticker system used in brokerage homes was further improved (Westland & Clark, 1999, p. 385). The lease-wired ticker system was based on ‘tape recorders, established in the Quotation Department’ (Westland & Clark, 1999, p. 385). The above system, which was fully developed in 1952, was extensively used in the New York Stock Exchange and it is often considered as the initial mode of E-commerce (Westland & Clark, 1999, p. 385). Although it is not much relevant to E-commerce, in its current form, the above described ticker system indicates the framework on it’s the establishment of E-commerce has been based. Reference is made particularly to the need for reducing cost/ time in exchanging business information. From this point of view, the ticker system of NYSE should be regarded as the first reflection of E-commerce, as a critical invention. At this point, it should be made clear that the development of e-commerce has been gradual. This means that e-commerce, in its current form, has been the result of a series of processes, which are analytically described in the study of Qin (2009). These processes have been incorporated in Graph 1 below. It is made clear that since its appearance e-commerce has been highly alternated under the influence of important changes in the technology used in online activities. Manual Business Graph 1 – Phases of development of E-commerce (Qin, 2009, p. 5) The benefits of e-commerce can be characterized as significant. Qin (2009) emphasizes on the value of e-commerce for saving time and space, reducing business costs, such as cost of production and cost of daily operations (Qin 2009, p. 4). At the same time, reference should be made to the role of e-commerce in increasing the volume of sales, a target achieved by the increase of the number of orders handled on a daily basis (Qin, 2009, p. 4). From a similar point of view, Wagner (2006) noted that E-commerce has offered the chance of low-cost marketing. Also, emphasis is given on the importance of E-commerce for deleting geographical barriers in business activities (Wagner, 2006). Indeed, through E-commerce a firm can have access to markets worldwide without having to establish branches locally (Wagner, 2006). Despite its advantages, e-commerce has been related to certain risks. More specifically, online buying is not always safe for consumers. E-commerce websites may not be related to existing businesses (Schniederjans & Cao, 2002). Moreover, the cases of fraud cannot be easily detected and addressed due to the high number of businesses that use e-commerce websites (Schniederjans & Cao, 2002). At the same time, firms using e-commerce features are not always capable of securing the privacy of data of their customers (Schniederjans & Cao, 2002). Failures when exchanging or storing valuable customer data, such as number of credit cards, are quite common (Schniederjans & Cao, 2002). The above risks could be decreased if customers make a thorough research in regard to the credibility of the online seller in advance, i.e. before proceeding to the online commercial transaction (Schniederjans & Cao, 2002). Needle (2010) notes that E-commerce has helped towards the reduce of time required for delivering products to customers. Still, it seems that not all businesses are able to develop effective E-commerce websites. Indeed, the cost of establishing an effective E-commerce website can be extremely high, depending on the size of the firm, the volume and the range of its products and the similar practices of competitors (Needle, 2010, p. 106) According to Rouibah (2009), a major disadvantage of E-commerce is its dependency on local economic and political conditions. It is explained that the development of E-commerce is not feasible in all countries worldwide mostly because ‘local governments are often opposed to economic liberalization’ (Rouibah, 2009, p. 84). This means that E-commerce, as an economic and social phenomenon, cannot be promoted in countries where economic activities are closely monitored and controlled by the state. Like all business tools, e-commerce has been strongly criticized mostly because the risks involved can be many, as analyzed above. Still, the value of e-commerce in promoting business activities worldwide cannot be doubted. Also, the historical development of e-commerce proves that at the time when e-commerce was first introduced no other means for increasing sales globally was available. At the same time, it has been made clear that the benefits of e-commerce are significantly more than its disadvantages. It is for this fact that e-commerce has become a key tool for buying and selling online. In any case, reference should be made to the following fact: the level of development of e-commerce worldwide is differentiated, probably because of the different potentials of individuals to have access to the technology or the funds required for the particular activity. This trend has been clear since the initial appearance of e-commerce. From this point of view, it could be stated that e-commerce is mostly related to developed countries. In developing and poor countries the rate of expansion of e-commerce is quite low, a phenomenon that can be characterized as rather justified. The above assumption cannot reduce the value of e-commerce as a tool for promoting business activities. On the contrary, it could be noted that e-commerce as an invention has fully respond to the terms set by its initiators. The benefits of e-commerce and, mainly, the level of its use worldwide verify the above view. References Baldauf, K., & Stair, R. (2010). Succeeding with Technology. (4th ed.). Belmont: Cengage Learning. Basu, S. (2007). Global Perspectives on E-Commerce Taxation Law. Aldershot: Ashgate Publishing. Botha, J., Bothma, C., & Geldenhuys, P. (2008). Managing E-commerce in Business. (2nd ed.). Cape Town: Juta and Company Ltd. Joseph, P. (2006). E-Commerce: An Indian Perspective. (2nd ed.). New Delhi: PHI Learning Pvt. Ltd. Needle, D. (2010). Business in Context: An Introduction to Business and Its Environment. (5th ed.). Belmont: Cengage Learning EMEA. Pinto, D. (2003). E-Commerce and Source-Based Income Taxation. Amsterdam: IBFD. Plunkett, J. (2009). Plunketts E-Commerce and Internet Business Almanac 2009. Houston: Plunkett Research, Ltd. Qin, Z. (2009). Introduction to E-Commerce. New York: Springer. Rouibah, K. (2009). Emerging Markets And E-Commerce In Developing Economies. Hershey: Idea Group Inc (IGI). Schmid, B., Stanoevska-Slabeva, K., & Tschammer, V. (2001). Towards the E-Society: E-Commerce, E-Business, and E-Government. New York: Springer. Schniederjans, M., & Cao, Q. (2002). E-Commerce Operations Management. Singapore: World Scientific. Sun, Z., & Finnie, G. (2004). Intelligent Techniques in E-Commerce: A Case Based Reasoning Perspective. New York: Springer. Wagner, S. (2006). Is Europe on the right track to becoming ready for E-Commerce? How effective is recent regulation? Santa Cruz: GRIN Verlag. Westland, C., & Clark, T. (1999). Global Electronic Commerce: Theory and Case Studies. 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