E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer or consumer-to-business. The terms e-commerce and e-business are often used interchangeably. The term e-tail is also sometimes used in reference to transactional processes for online shopping.
The beginnings of e-commerce can be traced to the 1960s, when businesses started using Electronic Data Interchange (EDI) to share business documents with other companies. In 1979, the American National Standards Institute developed ASC X12 as a universal standard for businesses to share documents through electronic networks. After the number of individual users sharing electronic documents with each other grew in the 1980s, in the 1990s the rise of eBay and Amazon revolutionized the e-commerce industry. Consumers can now purchase endless amounts of items online, both from typical brick and mortar stores with e-commerce capabilities and one another.
E-commerce is conducted using a variety of applications, such as email, online catalogs and shopping carts, EDI, File Transfer Protocol, and web services. This includes business-to-business activities and outreach such as using email for unsolicited ads (usually viewed as spam) to consumers and other business prospects, as well as to send out e-newsletters to subscribers. More companies now try to entice consumers directly online, using tools such as digital coupons, social media marketing and targeted advertisements.
The benefits of e-commerce include its around-the-clock availability, the speed of access, the wide availability of goods and services for the consumer, easy accessibility, and international reach. Its perceived downsides include sometimes-limited customer service, consumers not being able to see or touch a product prior to purchase, and the necessitated wait time for product shipping.
The e-commerce market continues to grow: Online sales accounted for more than a third of total U.S. retail sales growth in 2015, according to data from the U.S. Commerce Department. Web sales totaled $341.7 billion in 2015, a 14.6% increase over 2014. E-commerce conducted using mobile devices and social media is on the rise as well: Internet Retailer reported that mobile accounted for 30% of all U.S. e-commerce activities in 2015. And according to Invesp, 5% of all online spending was via social commerce in 2015, with Facebook, Pinterest and Twitter providing the most referrals.
The rise of e-commerce forces IT personnel to move beyond infrastructure design and maintenance and consider numerous customer-facing aspects such as consumer data privacy and security. When developing IT systems and applications to accommodate e-commerce activities, data governance related regulatory compliance mandates, personally identifiable information privacy rules and information protection protocols must be considered.
1. Easily customizable
2. Data security
3. High performance
1. Large initial investment
3. Technical knowledge
Software as a service (SaaS) E-commerce
Software as a Service (SaaS)- is a cloud based delivery model in which applications are hosted and managed in a service provider’s datacenter, paid for on a subscription basis and accessed via a browser over an internet connection. Two examples of typical SaaS E-commerce solutions are Shopify and Demandware.
1. Affordable low-cost solution
2. Hosted/upgraded by E-commerce provider
3. Easily scalable 4. High availability
1. Limited integration with back-end systems
2. Limited control over the system
Fully Managed (FM) E-commerce
Fully Managed (FM) E-commerce – is the next step of Platform as a Service (PaaS). As a basis, PaaS consists of e-commerce software and hardware hosting. In addition to this, fully managed e-commerce solutions provide services like product picture taking, image editing, data management, customer support, marketing consulting. FM E-Commerce is offered to brickand-mortar stores as a B2B solution to help them start selling online quickly and at low cost. The licensing model is usually based on the sales volume.
Open source E-commerce
Open source e-Commerce is a free of charge platform that doesn’t imply licenses fee. Furthermore, open source users are also responsible for installing, maintaining, securing and configuring the software on their own servers. In order to set up an open source platform, basic technical expertise is required in the areas of web design and development. Software products that are distributed as open source are generally free, and users can access and modify the source code.
Advantages: 1. Free of charge system
2. Wide variety of available addons/plugins/extensions
3. Better flexibility with a customizable source code
Disadvantages: 1. More technical knowledge required
2. Performance depends on hosting costs
3. No standard integration with back-end system