Electronic Commerce Essay

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Electronic commerce, or ecommerce (sometimes conducted by online “etailers”), is the selling of products and services online and through other electronic services. Since the 1990s, it has been a growing sector of the American economy, with significant impact both on the economy in general and on specific industries. It is especially associated with online stores located on the World  Wide Web, which for many people is metonymous  with the internet  itself.

The earliest electronic  commerce  was enabled by the  development  of electronic  funds  transfer—the shifting of money electronically from one account to another, whether in the form of online banking, direct deposit and debit, or the use of credit and debit cards at ATMs and points  of sale. In that  sense, the  first ecommerce  consumers  were aware of was the use of electronic systems to facilitate credit card purchases, in the 1970s and early 1980s. ATMs and telephone banking spread throughout the 1980s, allowing more and more access to one’s money without  needing to go to the bank; by the end of the decade, debit cards were in use at many supermarkets and gas stations, and through the 1990s debit cards became more universally useful as Visa and MasterCard  branding was attached  to  them  and  regional  interbank  networks such as MAC and Pulse adopted mutual agreements.

Visaand  MasterCard-branded debit  cards  soon assisted online ecommerce as well, by enabling online purchases without the use of a credit card and without the delays or security concerns  of an electronic checking balance transfer. Early online marketplaces were bulletin  board  system  (BBS) based, predating the arrival of internet access in most homes. The Boston Computer  Exchange—BCE or BoCoEx—was the first of these, enabling the buying and selling of used computers  and  computer  parts  in 1983, arriving at the same time as the IBM XT (the successor to IBM’s original PC).

A precursor  to eBay, BCE allowed home users to browse inventories  uploaded  by sellers; but in these early  marketplaces,   only  the  shopping   was  done online, and purchases were conducted  over the telephone. BCE realized an early side benefit to running its marketplace, issuing each week the BoCoEx Index, listing the high, low, and closing prices for the most popular  items in its marketplace.  The Index quickly became the “blue book” for used computers,  used in asset valuation  and court  cases, and was published by the major industry magazines. Within a few years, BCE was licensing  its  software  and  technology  to computer exchanges in other cities—and in Chile and the Soviet Union.

1994 was the big year for home internet.  Though available through  dial-up  internet   service  providers for years in many  cities, the  popularity  of the internet  was slim compared  to online services like America Online and Prodigy—in no small part because those services offered graphics and a single program interface, while internet  access was spread out  among  multiple  protocols   like  telnet,  email, and FTP, with limited or no graphics. But in 1994, Netscape’s browser  for the  World  Wide  Web  was introduced; through  the use of hypertext,  the Web (as proposed  by Tim Berners-Lee at CERN) unified multimedia content in an experience much like using America Online, with far more content.  Commerce arrived quickly: Pizza Hut  instituted  online  ordering  in  some  markets,  online  banking  began,  and online pornography  and flower delivery were introduced within months  of each other. Netscape soon upgraded its browser to provide encrypted communications,  making credit card transactions  more secure. The following year, Amazon and eBay—still the two giants of ecommerce—launched.

The dotcom  boom  shortly  followed, even before DSL  and   cable  internet   access  made   high-speed home internet  access commonplace.  Companies like Amazon, eBay, PayPal, Google, Yahoo, and YouTube became household names, introduced by and associated with a technology adopted  as fast as radio and television had been. The bubble burst in 2000, in part because of exuberant  over speculation,  venture  capitalists  who didn’t understand the  marketplace  well enough because it was too new to be known, and too many big ideas that  didn’t clearly lead to profit; but the  internet  quickly showed  that  it would  become more  and more  integrated  into  everyday life rather than  fading like a fad, and  ecommerce  was no less integral a part of the economy when the boom died off. In 2003, Amazon posted its first profits. By 2008, American  ecommerce  accounted  for over $200 billion in sales.

Newer, robust protocols and systems have been developed to process online transactions,  for the protection  of privacy and financial data, in an environment  of increasing  concerns  over identity  theft  and other  fraud. Whole  industries  have emerged  around or developed in response  to ecommerce.  Even more than catalogue mail order, ecommerce has enabled the success of niche direct-to-consumer companies, from barbecue shacks selling their sauce online to independent  record  labels making their  albums available for purchase. The mp3 has become the common commercial unit of music, and billions of dollars of ringtones are purchased each year, directly from cellular phones. Amazon  has introduced  its Kindle, an ebook reader revolutionary not in its design—competing models are similar—but in its integration with Amazon’s inventory and the ability to purchase  ebooks wirelessly without need of a home internet connection.

Companies like Netflix, which rents a flexible number of DVDs a month  for a flat fee, have successfully competed with their “brick and mortar” counterparts. Blockbuster soon found it necessary to offer a DVDby-mail subscription service as well, while Movie Gallery, the second-largest American movie rental chain, filed for bankruptcy in 2007.


  1. Abijit Chaudhury and Jean-Pierre Kuilboer, e-Business and e-Commerce Infrastructure (McGraw-Hill, 2002);
  2. Henry R. Cheeseman, Contemporary Business and Online Commerce Law: Legal, Internet, Ethical, and Global Environments   (Pearson   Prentice   Hall,  2009);
  3. Jonathan D. Frieden and Sean Patrick Roche, “E-Commerce: Legal Issues of the Online Retailer in Virginia,” Richmond Journal of Law & Technology (v.13/2, 2006);
  4. Mark Graham, “Warped Geographies of Development: The Internet  and Theories of Economic  Development,”  Geography Compass  (v.2/3, 2008);
  5. Mehdi Khosrowpour, Consumer Behavior, Organizational Development and Electronic Commerce: Emerging Issues for Advancing Modern Socioeconomies (Information Science Reference, 2009);
  6. In Lee, Emergent Strategies for E-Business Processes, Services and Implications: Advancing Corporate  Frameworks  (Information   Science  Reference, 2009);
  7. Roger Miller, The Legal and E-Commerce Environment Today (Thomson Learning, 2002);
  8. Daniel Nissanoff, FutureShop: How the New Auction Culture  Will  Revolutionize the Way We Buy, Sell and Get the Things We Really Want  (Penguin, 2006);
  9. Kamel Rouibah, Omar Khalil, and Aboul Ella Hassanien, Emerging Markets and E-Commerce in Developing Economies (Information  Science Reference, 2009);
  10. Gary P. Schneider,  Electronic Commerce  (Course Technology,  2006);
  11. Pat Seybold, Customers.com  (Crown Business Books, 2001);
  12. Efraim Turban, David R. King, and Judy Lang, Introduction  to Electronic Commerce (Pearson Prentice Hall, 2009).

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