Introduction:

E-commerce is generally concerned with buying and selling over the Internet, or
carrying out some transaction involving the transfer of ownership or rights to use
products or services through a computer-mediated network. This concept, while
common, is not sufficiently comprehensive to capture recent developments in this
new and innovative market phenomenon. A more detailed definition is: e-
commerce is the use of electronic communications and digital information
processing technology in business transactions to establish, transform, and redefine
value-creating relationships between, or among, organizations and individuals.
Back in the 1960s, the term e-commerce was coined with the rise of electronic
commerce – the purchasing and sale of goods via data transfer – made possible by
the advent of electronic data interchange. Quick forward fifty years and e-
commerce has changed the way we sell goods and services in society. E-commerce
has become one of the most popular online money-making methods, and an
attractive opportunity for investor.

Electronic commerce is a modern way of doing business over the Internet. While it
is just three years old, it has the ability to change the economic practices and the
social climate dramatically. It already affects large sectors such as media, finance
and retail (around 30 per cent of GDP in total). It holds promise (about 20 percent
of GDP) in areas such as education, health and government. The greatest effects
can be correlated not with many of the most attentive impacts ( e.g. personalized
goods, removal of intermediaries) but with less noticeable, but potentially more
omnipresent, effects on everyday business operations ( e.g., ordering office
supplies, paying bills, and predicting demand), i.e., how companies communicate.

The relative value of time shifts for electronic commerce. Many of the rituals that
help define the economy and society's "look and feel" are a function of time: mass
manufacturing is the easiest way to manufacture at the lowest cost; one 's culture
appears to be geographically defined, since time is a proximity determinant. E-
commerce is reducing the value of time by increasing production cycles, enabling
businesses to work in close collaboration and enabling customers to carry out
transactions around the clock. As the function of time shifts, so will the business
and social activity structure, potentially causing great impacts. E-commerce over
the Internet significantly enhances economic interactivity. These links also spread
to small businesses and families, which reach out to the entire world.

Why Do People Buy ‘Online’?

1. Lower Prices: Managing an online storefront is far cheaper than an offline, brick and mortar
store. Typically less staff are required to manage an online shop as web-based management systems
enable owners to automate inventory management and warehousing is not necessarily required (as we
discuss later). As such, e-commerce business owners can afford to pass operational cost savings on
to consumers (in the form of product or service discounts) whilst protecting their overall margin.
Furthermore, with the rise of price comparison websites, consumers have more transparency with
regard to prices and are able to shop around, typically purchasing from online outlets instead.

2. Accessibility and Convenience: Unlike many offline stores, consumers can access e-

commerce websites 24 hours a day. Customers can read about services, browse products and place
orders whenever they wish. In that sense, online shopping is extremely convenient and gives the
consumer more control. Furthermore, those living in more remote areas are able to order from their
home at a touch of a button, saving them time travelling to a shopping centre.

3. Wider Choice: For the past twenty years, the growth of online shopping has to a large extent
been based around increased choice. With an almost endless choice of brands and products to choose
from, consumers are not limited by the availability of specific products in their local town, city or
country. Items can be sourced and shipped globally. Interestingly, one recent study found that
consumers are actually starting to become frustrated by e-commerce sites that offer too much choice.
Whichever way you look at it though, more choice has likely been a good thing over the long term.

Naturally e-commerce has significant benefits for the consumer, but it has also been useful for
businesses too. Next, we look at some of the reasons why businesses have been quick to race
into the space.