Chapter 1 Introduction of Electronic commerce 1. 1 Development of Electronic Commerce(e-commerce 1.1.1 Histor Throughout history, attempts to promote new means of communication were simply means with which to increase opportunities for ease, efficiency and security. The foundations on which electronic commerce is based started 125 years ago with the use of telegraph technology to relay information concerning the transfer of funds, such as the stock ticker and Westem Unions Money Transfer system. Payment for goods with payment instruments and representations thereof, namely the advent of credit cards in 1914, revolutionized commerce for consumers, as needs for efficiency and ease of transactions were met Banks were the first institutions to automate commerce functions The fomation of first data resources and first Financial Management Corporation in 1971 as credit card processors for banks integrated banking with technological improvements. Electronic commerce continued in the 1980,s with the advent of Automatic Tellers, or ATMs, in 1986. The same technology information traveling electronically over wires was the basis for the Internet 1. 1.2 Development of e-commerce in Europe, North America and Asia Business on the web is beginning its second decade. What is the current state of lectronic commerce? At the beginning of the century, commentators and pundits were competing to announce the most optimistic projections for the growth of ecommerce. For mple Tab, forrester Research predicts that by 2004, online commerce will reach $6. 8 trillion(see Table1-1). This huge amount comprises Forrester's projection for both business-to-business and business-to-consumer transactions online I Table 1-1 Globalization of e-commerce World e Commerce Growth Projections Country/Language 2002 2004 e-commerce(2004) United States Ts1411s3,189047% United Kingdom S83.2 28884.2 australia 369 20763% Canada 680 160.32.3% Subtotal s15994[53:457|566% s1468□s880313% Germany $1020s386515.7% Other Asia Pacific(mostly$63.6$356.2.2% Internet:http://www.slis.indiana.edu/faculty/hrosenba.www/l561/syll
Chapter 1 Introduction of Electronic Commerce 1.1 Development of Electronic Commerce (e-commerce) 1.1.1 History Throughout history, attempts to promote new means of communication were simply means with which to increase opportunities for ease, efficiency and security. The foundations on which electronic commerce is based started 125 years ago with the use of telegraph technology to relay information concerning the transfer of funds, such as the stock ticker and Western Union's Money Transfer system. Payment for goods with payment instruments and representations thereof, namely the advent of credit cards in 1914, revolutionized commerce for consumers, as needs for efficiency and ease of transactions were met. Banks were the first institutions to automate commerce functions. The formation of First Data Resources and First Financial Management Corporation in 1971 as credit card processors for banks integrated banking with technological improvements. Electronic commerce continued in the 1980's with the advent of Automatic Tellers, or ATM's, in 1986. The same technology 、information traveling electronically over wires was the basis for the Internet.. 1.1.2 Development of e-commerce in Europe, North America and Asia Business on the web is beginning its second decade. What is the current state of electronic commerce? At the beginning of the century, commentators and pundits were competing to announce the most optimistic projections for the growth of ecommerce. For example: Forrester Research predicts that by 2004, online commerce will reach $6.8 trillion (see Table1-1). This huge amount comprises Forrester's projection for both business-to-business and business-to-consumer transactions online.1 Table1-1 Globalization of E-commerce World eCommerce Growth Projections Country/Language 2002 2004 % e-commerce(2004) United States $1,411.3 $3,189.0 47% United Kingdom $83.2 $288.8 4.2% Australia $36.9 $207.6 3% Canada $68.0 $160.3 2.3% Subtotal $1,599.4 $3,845.7 56.6% Japan $146.8 $880.3 13% Germany $102.0 $386.5 5.7% Other Asia Pacific (mostly $63.6 $356.2 5.2% 1 Internet: http://www.slis.indiana.edu/faculty/hrosenba.www/L561/syll
China france 49.1 20643% orea s393「5320573% 33.8 S424 Mexico $15.9 s107016% Netherlands S307 983 1.4% Latin america sl37s818 1.2% Other countries s133.9s479.57% Subtotal 6288□52,9441432 Total($B) s2,312「56,7898982% Here's another perspective Raising its estimates for internet e-commerce, eMarketer's newly released eCommerce: B2B Report forecasts that worldwide business-to-business will grow to $2.7 trillion by 2004, an increase from the $226 billion reported at year-end 2000 in Europe eMarketer's analysis indicates that in 2003, 19% of the Western European population was an online buyer, equating to 75 million people, or 45.5% of all Internet users. The four larges countries in the region, France, Germany, Italy and the UK, are all at different stages e-commerce development and, despite the fact that Germany has the largest population in West Europe, the UK leads all other countries in B2C e-commerce(see Figurel-1) ness to business ecommerce revenu Business to consumer ecommerce A431 19992000 19992000 Number of online users Number of expected buyers 1992000 19s92000 072003 igure 1-1 The Situation of E-commerce in Westem Europe The UK had 15.7 million online buyers in 2003, spending, on average, E745 each and generating Ell.7 billion in B2C e-commerce revenue. This compares with Germany at E9. 1 billion france at U2.9 billion and Italy at El.6 billion. The Netherlands, Switzerland and Sweden are also large e-commerce markets because of their experienced Internet populations and each of these countries generated well in excess of El billion in e-commerce revenue in 2003
China) France $49.1 $206.4 3% Korea $39.3 $205.7 3% Italy $33.8 $142.4 2.1% Mexico $15.9 $107.0 1.6% Netherlands $30.7 $98.3 1.4% Latin America $13.7 $81.8 1.2% Other countries $133.9 $479.5 7% Subtotal $628.8 $2,944.1 43.2% Total ($B) $2,231.2 $6,789.8 98.2% Here's another perspective: Raising its estimates for internet e-commerce, eMarketer's newly released eCommerce:B2B Report forecasts that worldwide business-to-business will grow to $2.7 trillion by 2004, an increase from the $226 billion reported at year-end 2000. 1. in Europe eMarketer's analysis indicates that in 2003, 19% of the Western European population was an online buyer, equating to 75 million people, or 45.5% of all Internet users. The four largest countries in the region, France, Germany, Italy and the UK, are all at different stages of e-commerce development and, despite the fact that Germany has the largest population in Western Europe; the UK leads all other countries in B2C e-commerce (see Figure1-1). Figure1-1 The Situation of E-commerce in Western Europe The UK had 15.7 million online buyers in 2003, spending, on average, €745 each and generating €11.7 billion in B2C e-commerce revenue. This compares with Germany at €9.1 billion, France at Û2.9 billion and Italy at €1.6 billion. The Netherlands, Switzerland and Sweden are also large e-commerce markets because of their experienced Internet populations and each of these countries generated well in excess of €1 billion in e-commerce revenue in 2003
2. North america q There is mounting evidence of the gains that enterprises derive from adopting e-business.For example, a survey(Varian et al. 2002)of the impact of Internet use on a sample of some 2,000 orporations in the United States showed that the corporations achieved accumulated savings of $155.2 billion and revenue increases of $443.9 billion between 1998 and 2001. The same study surveyed 634 corporations in France, Germany and the United Kingdom, where the Internet generated savings amounted to $8.3 billion and the additional revenue to $79 billion. By 2010 the accumulated savings for the US sample of enterprises alone are expected to rise to $528.3 billion and the accumulated additional revenues are projected to be $1, 551.9 billion. A that enterprises believe preparing themselves for e-business pays off is the fact that, while investment in information technology (IT) in general decreased by 6.2 per cent in 2002, e-business budgets (for projects in areas such as customer relationship management, procurement, supply chain management, electronic payment and settlement, and enterprise application integration) rose an estimated 1l per cent; in 2003 growth in e-business investment fell to 4 per cent, but this rate was twice as high as the growth in overall IT investment(see Figurel-2) Business to business ecommerce revenue Business to consumer ecommerce revenu 1992000200 19s92000200120022003 Number of online users Number of expected buyers 19992000 2003 Figure 1-2 The Situation of E-commerce in USA 3. Asia stly from the point of view of the relative positions of developed and developing countries,the tion has continued to move towards a growing presence of developing countries on the Internet, although this remains largely concentrated in a relatively small number of nations. Five countries (China, Republic of Korea, India, Brazil and Mexico) account for 61.52 per cent of all Internet users in the developing world. At the end of 2003, almost three out of four Internet users in developing countries lived in the developing countries of Asia, as did two thirds of all the new Internet users in the world. Table 1.2 shows the distribution of Internet users between the developed and the developing countries and the recent evolution of the number of Internet users by region(see Figure1-3)
2. North America There is mounting evidence of the gains that enterprises derive from adopting e-business. For example, a survey (Varian et al. 2002) of the impact of Internet use on a sample of some 2,000 corporations in the United States showed that the corporations achieved accumulated savings of $155.2 billion and revenue increases of $443.9 billion between 1998 and 2001. The same study surveyed 634 corporations in France, Germany and the United Kingdom, where the Internetgenerated savings amounted to $8.3 billion and the additional revenue to $79 billion. By 2010 the accumulated savings for the US sample of enterprises alone are expected to rise to $528.3 billion, and the accumulated additional revenues are projected to be $1,551.9 billion. A sign that enterprises believe preparing themselves for e-business pays off is the fact that, while investment in information technology (IT) in general decreased by 6.2 per cent in 2002, e-business budgets (for projects in areas such as customer relationship management, procurement, supply chain management, electronic payment and settlement, and enterprise application integration) rose an estimated 11 per cent; in 2003 growth in e-business investment fell to 4 per cent, but this rate was twice as high as the growth in overall IT investment (see Figure1-2). Figure1-2 The Situation of E-commerce in USA 3. Asia From the point of view of the relative positions of developed and developing countries, the situation has continued to move towards a growing presence of developing countries on the Internet, although this remains largely concentrated in a relatively small number of nations. Five countries (China, Republic of Korea, India, Brazil and Mexico) account for 61.52 per cent of all Internet users in the developing world. At the end of 2003, almost three out of four Internet users in developing countries lived in the developing countries of Asia, as did two thirds of all the new Internet users in the world. Table 1.2 shows the distribution of Internet users between the developed and the developing countries and the recent evolution of the number of Internet users by region (see Figure1-3)
Table 1.2 Internet users by region, 2000-2003( thousands gRowth 2002 Growth 2 Growth 211202 109257 Europe 18897 76232 143584 30 110824 Latin America and Caribbean 44217 42439 29224 17673 North America(2002) 175110000175110 156823 136971 11607 754 206 388746 15 19 285490 Developing countries 2201832580133748 Others 32634 1541 76行212 67567879462657926364958962795 397532 Business to business ecommerce revenue Business to consumer e commerce revenue 三 1999200000120022003 19992000X 20022003 Number of online users Number of expected buyers 19992000200120022003 19992000 20022003 Figure 1-3 The Situation of E-commerce in Asia Pacific Region Increasingly, there are synergies between the regions leading operators and vendors, in particular in the telecommunications sector. For example, a Japanese mobile Internet provider has set up a research and development facility in China to develop fourth-generation technology (ElU, 2004). Also, Asia is an emerging market for outsourcing, as evidenced by India's IT-enabled service sector, call centres in the Philippines, customer help desk centres in Malaysia, and Korean-language and Japanese-language software production houses in China 4 Basic connectivity and related investment remain low in many countries; for example, India ranks 46th in the elU e-readiness ranking and 45th in the nri ranking despite its strong outsourcing sector (estimated at $17 billion annually) The Asia Foundation has carried out a project to survey the use of the Internet and e-commerce in four South-East Asian countries -Indonesia, thePhilippines, Sri Lanka and Thailand. The datawere collected at the end of 2001. Since then, many companies have connected to the Internetand thus some of the results may look differenttoday. Furthermore, the selection of SMEs for thesurvey was not based on a random sampling, because Internet penetration was too low at thatstage(i. e. the number of companies using theinternet as a percentage of total Internet
Table 1.2 Internet users by region, 2000–2003 (thousands) Figure1-3 The Situation of E-commerce in Asia Pacific Region Increasingly, there are synergies between the region’s leading operators and vendors, in particular in the telecommunications sector. For example, a Japanese mobile Internet provider has set up a research and development facility in China to develop fourth-generation technology (EIU, 2004). Also, Asia is an emerging market for outsourcing, as evidenced by India’s IT-enabled service sector, call centres in the Philippines, customer help desk centres in Malaysia, and Korean-language and Japanese-language software production houses in China.4 Basic connectivity and related investment remain low in many countries; for example, India ranks 46th in the EIU e-readiness ranking and 45th in the NRI ranking despite its strong outsourcing sector (estimated at $17 billion annually). The Asia Foundation has carried out a project to survey the use of the Internet and e-commerce in four South-East Asian countries – Indonesia, thePhilippines, Sri Lanka and Thailand. The datawere collected at the end of 2001. Since then,many companies have connected to the Internetand thus some of the results may look differenttoday. Furthermore, the selection of SMEs for thesurvey was not based on a random sampling,because Internet penetration was too low at thatstage (i.e. the number of companies using theInternet as a percentage of total Internet
users wasstill very small). Therefore the companies are notrepresentative of all SMEs in each country and the surveys do not reveal how many companies use the Internet Rather, they look at those that use the Internet, plus some non-users and prospective users 1. 1.3 The Development of E-commerce in China In China, the wage is still relatively lower than that in developed countries. Chinese customers wouldnt choose electronic business for the reason of convenience. unless the commodities are cheap enough, which is an obvious fact. On the other hand, if electronic business can be combined with entertainment or recreational activities, the shop on net will ome more attractive;this is also the important prerequisite of B2c development. As is known to all shopping on net is not cheap in China now, and there are not yet enough recreational activities on the net, so we can't deduce that Chinese B2C has found its marketable power of development. For same reason, we can't say that Chinese B2C is in a period of developing fast. But we can prophesy that this period will arrive soon, for the following three reasons Firstly, large sums of money have been invested in the information infrastructure. Now the condition for E-commerce development in China is being upgraded continuously Secondly, the latent customer, such as the young people who have received higher education will accept B2C quickly Thirdly, people's living standard is rising Normally, people begin to value life quality when the per capita GDP reaches 3000 dollars. This signifies that people will pursue higher efficiency of doing household choirs so as to have more leisure time. a number of cities in east China have their per capita GDP exceeding 3000 dollars, which will double in ten years. Even though B2C well known to customers, B2B trade will exceed B2C in 3 years. Due to a report of IDC, the general value of Chinese B2B market will be 2.3 billion U.S. dollars in 2003. A report of Gartner Group points out that global B2B electronic commerce will climb to 7.29 trillion dollars in 2004 Why is B2B developing so quickly? A major reason should be that the E-commerce technology could reduce the trade cost of enterprises. Enterprises, big or small, have great demand for B2B trade. However, most of Chinese enterprises only utilize B2B at product purchase and sale. B2B has huge development space in China, but it needs a period of time to develop, because a lot of enterprises in China have defects in their systems 1.1.4 The Prospect of E-commerce Development The prospect that e-commerce transactions may gain a sizeable share of overall commerce is only one dimension of why the Internet is generating such interest. The open structure of the Internet and low cost of using it permit the interconnection of new and existing information and communication technologies, and offers businesses and consumers a new and powerful information system and a new form of communication. This makes it possible for buyers and sellers to come together in more efficient ways and is creating new marketplaces and opportunities for the reorganization of economic processes. It is also changing the way products are customized distributed and exchanged and how businesses and consumers search and consume products 1.2 Definition of e-commerce and categories of e-commerce 1.2.1 Definition of e- Electronic Commerce seems to be everywhere these days. It's nearly impossible to open newspaper or magazine without coming across an article about how Electronic Commerce is going to change all our lives. Businesses of all sizes are bombarded with adverts that seem to imply that any company not investing in E-Commerce will be left behind Electronic Commerce(EC) is the process of buying, selling, or exchanging products, service and information via computer networks 1. ec defined from these perspectives From a communications perspective, EC is the delivery of goods, services, information, or payments over computer networks or by any other electronic means From a business process perspective, EC is the application of technology toward the automation of business transactions and work flow From a service perspective, EC is a tool that addresses the desire of firms, consumers, and
users wasstill very small). Therefore, the companies are notrepresentative of all SMEs in each country and the surveys do not reveal how many companies use the Internet. Rather, they look at those that use the Internet, plus some non-users and prospective users. 1.1.3 The Development of E-commerce in China In China, the wage is still relatively lower than that in developed countries. Chinese customers wouldn't choose electronic business for the reason of convenience, unless the commodities are cheap enough, which is an obvious fact. On the other hand, if electronic business can be combined with entertainment or recreational activities, the shop on net will become more attractive; this is also the important prerequisite of B2C development. As is known to all, shopping on net is not cheap in China now, and there are not yet enough recreational activities on the net, so we can't deduce that Chinese B2C has found its marketable power of development. For the same reason, we can't say that Chinese B2C is in a period of developing fast. But we can prophesy that this period will arrive soon, for the following three reasons: Firstly, large sums of money have been invested in the information infrastructure.Now the condition for E-commerce development in China is being upgraded continuously. Secondly, the latent customer, such as the young people who have received higher education will accept B2C quickly. Thirdly, people’s living standard is rising. Normally, people begin to value life quality when the per capita GDP reaches 3000 dollars. This signifies that people will pursue higher efficiency of doing household choirs so as to have more leisure time. A number of cities in east China have their per capita GDP exceeding 3000 dollars, which will double in ten years. Even though B2C is well known to customers, B2B trade will exceed B2C in 3 years. Due to a report of IDC, the general value of Chinese B2B market will be 2.3 billion U.S. dollars in 2003. A report of Gartner Group points out that global B2B electronic commerce will climb to 7.29 trillion dollars in 2004. Why is B2B developing so quickly? A major reason should be that the E-commerce technology could reduce the trade cost of enterprises. Enterprises, big or small, have great demand for B2B trade. However, most of Chinese enterprises only utilize B2B at product purchase and sale. B2B has huge development space in China, but it needs a period of time to develop，because a lot of enterprises in China have defects in their systems. 1.1.4 The Prospect of E-commerce Development The prospect that e-commerce transactions may gain a sizeable share of overall commerce is only one dimension of why the Internet is generating such interest. The open structure of the Internet and low cost of using it permit the interconnection of new and existing information and communication technologies, and offers businesses and consumers a new and powerful information system and a new form of communication. This makes it possible for buyers and sellers to come together in more efficient ways and is creating new marketplaces and opportunities for the reorganization of economic processes. It is also changing the way products are customized, distributed and exchanged and how businesses and consumers search and consume products. 1.2 Definition of e-commerce and Categories of e-commerce 1.2.1 Definition of e-commerce Electronic Commerce seems to be everywhere these days. It’s nearly impossible to open a newspaper or magazine without coming across an article about how Electronic Commerce is going to change all our lives. Businesses of all sizes are bombarded with adverts that seem to imply that any company not investing in E-Commerce will be left behind. Electronic Commerce (EC) is the process of buying, selling, or exchanging products, services, and information via computer networks. 1. EC defined from these perspectives ▪ From a communications perspective, EC is the delivery of goods, services, information, or payments over computer networks or by any other electronic means. ▪ From a business process perspective, EC is the application of technology toward the automation of business transactions and work flow. ▪ From a service perspective, EC is a tool that addresses the desire of firms, consumers, and