E-commerce Executive Summary

There is no doubt about it the Internet has changed the world we live in. Never before has it been so easy to access information, communicate with people all over the globe and share articles, videos, photos and all manner of media. The Internet has led to an increasingly connected environment, and the growth of Internet usage has resulted in declining distribution of traditional media: television, radio, newspapers and magazines. People can buy goods with a click of mouse button without moving out of their house or office. Shopping online has now become a fad. Today, there are numerous advertisements on television promoting online shopping. Some or the other time, each one of us has gone online to compare prices before making an expensive purchase. And why not? The internet provides us with vast information that a salesman most certainly cant. Also, life cant get more convenient than that. We are pampered with discounts, services like cash on delivery, free shipping and even a 30day replacement period. Amazed by the world of e-commerce, I have made sincere efforts to study the Growth of E-commerce where it all began, how consumers are responding to it in the world as well as in India and what it will lead to in the future.

1. Introduction
There were an estimated 2,405,510,175 internet users worldwide for mid-year 2012 (June 30, 2012), according to Internet World Stats. This represented about 34.3% of the population worldwide and a 566.4% growth compared to 2000. Source www.internetworldstats.com With such startling figures, it is only obvious that the internet is where everything is happening in todays world. Be it socializing, expressing ones views or even shopping, its all just a few clicks away. This chapter is a little introduction to the ecommerce, a word we all have heard of.

1.1 E-commerce
Electronic commerce, commonly known as E-Commerce refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well. A large percentage of electronic commerce is conducted entirely in electronic form for virtual items such as access to premium content on a website, but mostly electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes

known as e-tail. Almost all big retailers are now electronically present on the World Wide Web. Electronic commerce that takes place between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that takes place between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of e-commerce where the buyer is directly online to the seller's computer usually via the internet. There is no intermediary service involved. The sale or purchase transaction is completed electronically and interactively in realtime such as in Amazon.com for new books. However in some cases, an intermediary may be present in a sale or purchase transaction such as the transactions on eBay.com. Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of business transactions.

1.2 Types of E-commerce

Ecommerce can be broken into four main categories: B2B, B2C, C2B, and C2C.

B2B (Business-to-Business) Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.

B2C (Business-to-Consumer) Businesses selling to the general public typically through catalogs utilizing shopping cart software. By dollar volume, B2B takes the prize, however B2C is really what the average Joe has in mind with regards to ecommerce as a whole.

Having a hard time finding a book? Need to purchase a custom, high-end computer system? How about a first class, all-inclusive trip to a tropical island? With the advent ecommerce, all three things can be purchased literally in minutes without human interaction. Oh how far we've come!

C2B (Consumer-to-Business) A consumer posts his project with a set budget online and within hours companies review the consumer's requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project. Elance empowers consumers around the world by providing the meeting ground and platform for such transactions.

C2C (Consumer-to-Consumer) There are many sites offering free classifieds, auctions, and forums where individuals can buy and sell thanks to online payment systems like PayPal where people can send and receive money online with ease. eBay's auction service is a great example of where person-to-person transactions take place every day since 1995.

Benefits of e-commerce

Convenience Best bargain as you can visit numerous shops/suppliers. No national or international barriers, making equal playing ground for players from developed as well as 3rd world nations.

Consumer at a demanding position and suppliers not in a very commanding one.

Drawbacks of e-commerce

Fraud and security concerns Privacy of personal information is a significant issue for some customers. Most transactions are made on the basis of a picture which doesnt go down too well with some customers

2. History & Evolution

The history of e-commerce is an interesting one, and longer than one might think. Beginning in the early days of the modern computer and only allowing simple B2B (Business to Business) transactions, it has grown to a multi-billion dollar industry that nearly all of us use today. But where did it all begin?

1960- EDI (Electronic Data Interchange i.e the structured transmission of data between organizations by electronic means) permits companies to carry out electronic transactions. Although the concept of e-commerce did not touch the daily Internet user till the era of 1990s yet some big players had started to use EDI as early as 1960. The railroad industry was among the first to understand the importance of EDI and start using the same. Other players in the transportation industry followed.

1979 There is always a hero. Someone who comes out of nowhere and does something unusual. E-commerce has its own

hero. Michael Aldrich is the man. It was the year 1979 when Aldrich was on a stroll in a supermarket with his wife. Suddenly, he was hit by an idea which changed it all for ecommerce. Aldrich connected a domestic TV and a computer with telephone lines so as to start selling groceries online via this model. How they were able to tackle various situations is a different story altogether, but at the end of the day they did come up with a model that helped them launch the business of online shopping.

1981 - It was the year 1981 when Thomson Holidays picked up 66 travel agents from around England and connected them in order to come up with what has been tagged as first B2B (Business to Business) online shopping. These agents were able to extract data online and understand what was available from the Thomson Brochure so as to serve customers instantly.

1982 - This was the year for France to jot down her name in the history books. France based telecom company invented Minitel which has been considered as the most happening preWWW online service. Even during its infant years users had the privilege to make online purchases, check phone directories, chat with each other and various other basic searches just like it happens in todays Internet.

The first ever Minitel invented in 1982

1984 - How would it sound if someone tagged you as the first ever home shopper on this planet. Well, Jane Snowball was tagged as the first ever home shopper when at the age of 72 she became Tescos customer. It was the year 1984 itself when the worlds first B2C (Business-to-Consumer) online shopping system was launched by Tesco. The online shopping system started the concept of Online Shopping Basket which was later renamed Online Shopping Trolley. Also, it was April 1984 when CompuServe announced Electronic Mall which was almost like the e-commerce of today.

1987 - Next up was a Merchant Account launched in the year 1987 that helped software developers sell their software products online. SWREG was the name and it happens to be one of the oldest pieces of software that is still available.

1990 - Here we go. This year marked the launch of the first web browser. The name of the browser was World Wide Web (written by Tim Berners-Lee) which was later renamed to Nexus so as to avoid the obvious confusion. Nexus was also the editor for programmers who coded websites. During those days Nexus was supposed to be the only medium to access the Internet in graphical format. The amusing part is that the browser was launched for the public by using Internet newsgroups as the medium of communication. This will help you understand that the communication system (on the Internet) of those days wasnt as big as it is nowadays.

1991 -Back then NSFNET was the backbone of the Internet, but it wasnt available for commercial use. It was the year 1991 when the NSF (National Science Foundation) cleared the way for the commercial use of NET. This was considered to be a major boost for the eCommerce industry and its future growth. Statistics state that the traffic on the backbone network of NSF jumped to over 1 trillion bytes per month in the year 1991 itself after it was opened for commercial use. By 1996 there were over 10 million hosts online and the Internet was now a global phenomenon. It was the year 1991 itself when University of Minnesota launched gopher, the first point-and-click based browser that could be used to navigate files on the Internet. At times this has been tagged as the birth of Internet. Gopher was originally designed to ease campus communication. The first Internet application my mom can use. ~ Mark MaCahil, Team Lead of the computer programming team which launched Gopher.

1992 - A book called Future Shop: How new technologies will change the way we shop and what we buy was published in the year 1992. The book was considered revolutionary considering the fact that it talked about what will happen in the future of e-commerce and how the Internet will take shape. Snider and Ziporyn (the authors of the book) powerfully describe the glass highways of the future, which will not only benefit consumers but will also provide fantastic opportunities for schools, hospitals, businesses, and the average American as we enter the Information Age of the 21st century. Conrad Burns, Chair of U.S. Senate Communications Subcommittee

1994 - This could be tagged as the Mother of all Years for e-commerce as Netscape launched encryption certificate which became the trustworthy means of transmitting data over the Internet. Certificates gave the browsers a chance to trust a source before displaying its data and sharing personal information. Something that helped the end consumer shower more interest on the Internet and indirectly on electronic transactions.

This wasnt all. The year 1994 also marked the launch of Yahoo! though the domain was registered later in the year 1995. This truly gave the Internet and e-commerce a completely new direction.

1995 - It was the year 1995 when NSF started charging a fee for registering domain names. At that time the Internet had 12,000 domain names registered and the number jumped to over 2 Million in the next 3 years.

January 18, 1995 was the day when the domain Yahoo.com was registered. The word Yahoo is an acronym for Yet Another Hierarchical Officious Oracle. One must understand that by now a lot of other services that would later rule the web had started to appear. Some of these were Amazon, AuctionWeb (which later became eBay) and Verisign etc.

1998 - PayPal came into existence in the year 1998. The current PayPal system that we see is actually the merger of X.COM, a financial service company of the late 2000s, and Cofinity which happened to be a payment and cartographic company. It was the year 1998 only when Google entered the world of e-commerce and Yahoo! launched Yahoo! Stores online.

2000 - The dot-com bust as we know it today wasnt something that happened in a day, over speculation for a period of time (approx. 1995-2000) where just the prefix e- or .com in names could make stock prices rise at great rates. This saw a great many companies rise and fall.

Many entrepreneurs came up with brilliant plans and most got pretty generous venture capitalists, most of these firms started working on the principle expand the market and later profits will cover all present debts and losses. This speculation was constantly taking the market upwards with NASDAQ at a peak of 5132.52 points on March 10, 2000. After this the market goes down and with them the over speculating ones were just wiped off the market.

2002 - PayPal the company which offered an alternative (through internet) to cash or check payment was acquired by eBay for $1.5 billion. CSN Stores and NetShops were founded with the concept of domain specific commodity and sprung with many online stores, going for one item on each website.

2003 - Online shopping matures showing to the world their confidence. Amazon.com posted first yearly profit and thus again making presence on the stock market.

2007 - Acquisition of Business.com by R.H. Donnelley for $345 million, making way for bigger players in technology domain.

2008 - Tremendous growth in US in Ecommerce with sales figures touching $204 billion, a decent 17% rise from the previous year.

2009 - Online Retailer Amazon.com has an estimated turnover on a daily basis is over US $2.5 trillion with growth rate of 14% annually. Ebay having sales of US $1.89 billion, these numbers alone speak. And then? - The rest, they say, is history. As we know it, the Internet continues to grow with major and minor e-commerce companies launching their own set of stores. Today, we can literally buy anything via the Internet. That is the wonderland of ecommerce.

Online Shopping in todays world Anything and everything is available on the internet! All sort of transactions take place on the web. No need to wait in a line or for the sale to start as we now have the privilege to shop online, get pampered with a wide choice and heavy discounts (like Cyber Monday in the USA, the concept is being brought to India by Citigroup) Customers have become the kings and entrepreneurs understand that. This explains why online shopping has become so customer-friendly. With services like cash on delivery (for those who dont believe in plastic money) and 30-day replacement, we just cant ask for more.