E-Commerce Communications: Types, Technologies & Global Reach

Introduction to E-Commerce: Definitions and Classifications

Electronic commerce, or e-commerce, is the term used to describe all forms of information exchange and business transactions based on information and communication technologies. There are different formal definitions of e-commerce, but the wide scope involved has resulted in many definitions focusing on only certain aspects. A fairly comprehensive definition covers e-commerce from four different perspectives (Kalakota and Whinston, 1997, p. 38): communications, business process, service, and online. From a communications perspective, e-commerce is the transfer of information, products, services, and payments over communication and electronic networks. The business process perspective concerns the application of information and communications technology for the automation of business activities and transactions. From a service perspective, e-commerce provides solutions to consumers and organizations for enhancing business performance and efficiency, such as improvement in quality, deliverables, and resolving customer complaints quickly. The online element of e-commerce allows the buying and selling of products on the internet and other online systems.

Since e-commerce involves transactions between business partners, there is a common tendency to use the term e-business as an alternative, and the terms are often used interchangeably. It is generally accepted that e-business is a broader concept than e-commerce, encompassing not just buying and selling, but also servicing customers, collaborating with business partners, and carrying out electronic communications within the organization. In the words of Lou Gerstner, who served as Chief Executive Officer of IBM: "E-business is all about cycle time, speed, globalization, enhanced productivity, reaching new customers and sharing knowledge across institutions for competitive advantage" (Turban, Lee, King, and Michael, 2000, p. 78).

Electronic commerce is commonly classified by the nature of the transaction. Business-to-business (B2B) is one of the most common forms of transaction and includes inter-organizational system transactions and electronic market transactions. Business-to-consumer (B2C) includes retailing transactions, with sellers offering goods and services to individual shoppers. In the consumer-to-consumer (C2C) category, the transaction is between consumers themselves, without the intervention of producers; middlemen may or may not be involved. C2C is mostly personal in nature, with examples including the sale of residential property, antiques, cars, and personal computers. Consumer-to-business (C2B) is essentially the reverse of B2C, where individuals sell products and services to organizations or other sellers. A growing type of e-commerce is the non-business variety, wherein academic institutions and non-profit organizations use electronic commerce to reach more people, reduce costs, and improve service. Intra-business or organizational e-commerce refers to activities and transactions within a single organization, used for instant and cost-effective communication among employees spread over wide geographical areas, exchange of business data, and online training (Whiteley, 2000, p. 88).

Electronic Markets: Structure and Function

There are three broad categories of e-commerce: electronic markets, electronic data interchange, and internet commerce. While the categorization is based on differences in application and functional attributes, in practice these categories often overlap. An electronic market is an information system that enables buyers and sellers to exchange information about products and prices (Been et al., 1995, p. 3). The primary function of electronic markets is to assist buyers in searching for required products; for sellers, it facilitates the spread of product information to several buyers simultaneously, thereby enhancing the probability of sale. Electronic markets are generally associated with B2B or B2C categories of e-commerce.

Electronic markets are very effective in commodity markets, where products and price offerings are broadly similar across the entire market. For example, international trade in commodities such as wheat, rice, cotton, edible oils, and metals benefits greatly from electronic markets, where buyers can have multiple options in terms of product specifications, price, and place of delivery, while sellers can access a large number of customers across the world. Given the global reach of electronic markets, buyers increasingly carry out extensive searches until they find the best buy at the lowest cost. There is therefore a view that electronic markets in the commodity business represent a more efficient distribution of market information, which can lead to best buys for buyers but decreasing profit possibilities for sellers (Been et al., 1995, p. 4). A major worldwide application of electronic markets is the commercial airline passenger booking system, through which passengers can locate available seats, decide on the time and type of airline, and bargain for attractive prices.

In electronic markets, two types of buyer–seller relationships exist. First, the linkage between buyer and seller is established at the time of the transaction and may cover only that single transaction. Second, there is a definite purchase agreement between seller and buyer over a period of time, also referred to as a subscription transaction. Electronic markets are invariably built around freely accessible networks, and online service providers generally play the role of market makers. Typically, sellers — in collaboration with market makers — decide which business transactions they will offer in the electronic market. Communication networks are usually determined by both sellers and consumers and may vary for different transactions. A distinct feature of electronic markets is that no joint guidelines are framed in advance between buyer and seller (Amor, 1999, p. 25).

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