Table of Contents

I. E-Commerce: An Introduction

II. History of E-Commerce

III. Economic Impact

IV. Advantages of E-Commerce

V. Disadvantages of E-Commerce

VI. The Future of E-Commerce

E-Commerce ¡V An Introduction

With the astonishing growth of the Internet, many companies are finding new and exciting ways to expand upon their business opportunities. There are very few successful companies that do not use computers in their everyday business activities, which also means there are few companies that do not use e-commerce. To emphasise the point that the effect of the Internet is so widespread in today¡¦s business communities, one online article stated that more than 100000 companies have Internet addresses, and 20000 companies have home pages on the Internet as of February 1999. (DataQuest, 1999). These numbers have more than tripled since 1995, and the trend shows no signs of slowing. But what exactly is e-commerce? To most casual Internet surfers, e-commerce means online shopping ¡V ¡§workaholics pointing their web browser to Amazon.com to order an emergency present because they forgot someone¡¦s birthday again.¡¨ (Weiss, 1999) As we will soon find out, this is far from the case.

Simply put, e-commerce is the exchange of business information between two or more organizations. An example of this would be buying and selling products or services over the Internet. E-commerce became very popular soon after it proved to be an efficient means to conduct long distance transactions. The purpose of this report is to discuss some of the advantages and disadvantages of e-commerce, as well as examining its potential for the future of business.

Electronic commerce, or e-commerce has developed very rapidly in the last few years and has left some people wondering what it is all about. "Most people think e-commerce is just about buying and selling things over the Internet." (Wareham, 2000) E-commerce is a broad term describing the electronic exchange of business data between two or more organizations\' computers. Some examples might be the electronic filing of your income tax return, on-line services like Prodigy, and on-line billing for services or products received. E-commerce also includes buying and selling any item over the Internet, electronic fund transfer, smart cards, and all other methods of conducting business over digital networks. ¡§The primary technological goal of e-commerce is to integrate businesses, government agencies, and contractors into a single community with the ability to communicate with one another across any computer platform.¡¨(Edwards, 1998)

History of E-commerce

Electronic commerce was built on a foundation that was started more than 125 years ago with Western Union\'s money transfer as an example of telegraph technology. In the early 1900¡¦s the advent of credit cards as a payment system revolutionised the process of automated commerce functions. In the mid 1980¡¦s the introduction of the ATM card was the latest improvement to electronic commerce. The Internet was conceived in 1969 when the Department of Defence began funding the research of computer networking. The Internet, as a means for commerce, did not become reality until the 1990¡¦s. Before this time, it was mainly a tool for the army, and a research device for some American universities. Its popularity grew when it proved to become a fast and efficient means to conduct long distance transactions, as well as an effective way to distribute information.

Economic Impact

Clearly, E-commerce will change the face of business forever. Companies that are thousands of miles away can complete business transactions in a matter of seconds as well as exchange information. As one online article explained:
¡§Dell Computers sells more than $14 million worth of computer equipment a day from its web-site. By taking their customer service department to the web Federal Express began saving $10,000 a day. The Internet provides businesses with the opportunity to sell their products to millions of people, 24 hours a day.¡¨ (Baxton, 1999)

Figure #1 shows the amount of revenues generated by the on the Internet dating back to 1996 as well as estimating possible revenues through the year 2002. With 1998, revenue equalling almost 74 billion dollars and experts predicting that it will climb to as much as 1,234 billion dollars by the year 2002, anyone can see that e-commerce is the wave of the future.

Figure #1- Internet generated revenues in US dollars. Source: NUA Internet Surveys

"Without a doubt, the Internet is ushering in an