FORCES DRIVING E-COMMERCE

FORCES DRIVING E-COMMERCE

The speed at which the web has brought e-commerce to the average person is astounding. In August 1995, there were 18 million internet users in the U.S and Canada. By April 1999 that number had skyrocketed to 92 million of these 60 percent were online shoppers.

Consequently new e-commerce sites are being developed and launched very rapidly. Given the downturn in the stock market fortunes of many e-commerce companies in 2000, the casual observer might be prompted to wonder why business continue to feel that a web presence is vital.

Despite the drop in stock prices of “dot.com” companies e-commerce is rapidly becoming a staple of the business world. Indeed this may be why the prices dropped; perhaps the “pie-in-the-sky” valuations of e-commerce ventures were are consequence of the type surrounding the new industry. Now that this industry is more established and traditional companies are also venturing into e-commerce the stock prices are more commensurate with those of promising companies in other industries.

There are several forces that are driving the development of new e-commerce Web sites. As in the physical world of commerce there are three key players.

Ø  BUSINESSES: Businesses want a piece of the pie. The number of people on the web and their demographic are impressive. The pie is still rapidly getting bigger. Also online consumers are not the only market available to web businesses. Increasingly businesses are using the web as a means to reduce the cost of conducting inter and intra company commerce. Inter- company e-commerce also known as B2B e-commerce reduces costs by avoiding middlemen. Intra-company e-commerce reduces costs by eliminating paperwork.

Ø  CUSTOMERS: There are many benefits of e-commerce for customers. At the simplest level e-commerce makes the acquisition of goods and services much less burdensome in terms of time and effort. Customers also want privacy and security while benefiting from the advantages that the web provides.

Ø  GOVERNMENT: Government entities are still trying to figure out how or whether to take an active role in governing the internet at all. One of the major issues with governance of the internet is that it’s a global entity and as such has no clear boundaries of jurisdiction.