E-commerce
E-commerce (electronic commerce) is the activity of electronically buying or selling products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.
The term was coined and first employed by Robert Jacobson, Principal Consultant to the California State Assembly's Utilities & Commerce Committee, in the title and text of California's Electronic Commerce Act, carried by the late Committee Chairwoman Gwen Moore (D-L.A.) and enacted in 1984.
E-commerce typically uses the web for at least a part of a transaction's life cycle although it may also use other technologies such as e-mail. Typical e-commerce transactions include the purchase of products (such as books from Amazon) or services (such as music downloads in the form of digital distribution such as the iTunes Store).[1] There are three areas of e-commerce: online retailing, electronic markets, and online auctions. E-commerce is supported by electronic business.[2] The existence value of e-commerce is to allow consumers to shop online and pay online through the Internet, saving the time and space of customers and enterprises, greatly improving transaction efficiency, especially for busy office workers, and also saving a lot of valuable time.[3]
E-commerce businesses may also employ some or all of the following:
There are five essential categories of E-commerce:[6]
Forms
Contemporary electronic commerce can be classified into two categories. The first category is business based on types of goods sold (involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce). The second category is based on the nature of the participant (B2B, B2C, C2B and C2C).[7]
On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are pressing issues for electronic commerce.
Aside from traditional e-commerce, the terms m-Commerce (mobile commerce) as well (around 2013) t-Commerce[8] have also been used.
Governmental regulation
In the United States, California's Electronic Commerce Act (1984), enacted by the Legislature, the more recent California Privacy Rights Act (2020), enacted through a popular election proposition and to control specifically how electronic commerce may be conducted in California. In the US in its entirety, electronic commerce activities are regulated more broadly by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive.[9] Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers' personal information.[10] As a result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.[11]
Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for e-commerce around the world. In order to give a uniformity to e-commerce law around the world, many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996).[12]
Internationally there is the International Consumer Protection and Enforcement Network (ICPEN), which was formed in 1991 from an informal network of government customer fair trade organisations. The purpose was stated as being to find ways of co-operating on tackling consumer problems connected with cross-border transactions in both goods and services, and to help ensure exchanges of information among the participants for mutual benefit and understanding. From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a portal to report complaints about online and related transactions with foreign companies.
There is also Asia Pacific Economic Cooperation. APEC was established in 1989 with the vision of achieving stability, security and prosperity for the region through free and open trade and investment. APEC has an Electronic Commerce Steering Group as well as working on common privacy regulations throughout the APEC region.
In Australia, trade is covered under Australian Treasury Guidelines for electronic commerce and the Australian Competition & Consumer Commission[13] regulates and offers advice on how to deal with businesses online,[14] and offers specific advice on what happens if things go wrong.[15]
The European Union undertook an extensive enquiry into e-commerce in 2015-16 which observed significant growth in the development of e-commerce, along with some developments which raised concerns, such as increased use of selective distribution systems, which allow manufacturers to control routes to market, and "increased use of contractual restrictions to better control product distribution". The European Commission felt that some emerging practices might be justified if they could improve the quality of product distribution, but "others may unduly prevent consumers from benefiting from greater product choice and lower prices in e-commerce and therefore warrant Commission action" in order to promote compliance with EU competition rules.[16]
In the United Kingdom, the Financial Services Authority (FSA)[17] was formerly the regulating authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in 2013 by the Prudential Regulation Authority and the Financial Conduct Authority.[18] The UK implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into effect on 1 November 2009. The PSR affects firms providing payment services and their customers. These firms include banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as payment institutions (PIs), who are subject to prudential requirements. Article 87 of the PSD requires the European Commission to report on the implementation and impact of the PSD by 1 November 2012.[19]
In India, the Information Technology Act 2000 governs the basic applicability of e-commerce.
In China, the Telecommunications Regulations of the People's Republic of China (promulgated on 25 September 2000), stipulated the Ministry of Industry and Information Technology (MIIT) as the government department regulating all telecommunications related activities, including electronic commerce.[20] On the same day, the Administrative Measures on Internet Information Services were released, the first administrative regulations to address profit-generating activities conducted through the Internet, and lay the foundation for future regulations governing e-commerce in China.[21] On 28 August 2004, the eleventh session of the tenth NPC Standing Committee adopted an Electronic Signature Law, which regulates data message, electronic signature authentication and legal liability issues. It is considered the first law in China's e-commerce legislation. It was a milestone in the course of improving China's electronic commerce legislation, and also marks the entering of China's rapid development stage for electronic commerce legislation.[22]
Logistics
Logistics in e-commerce mainly concerns fulfillment. Online markets and retailers have to find the best possible way to fill orders and deliver products. Small companies usually control their own logistic operation because they do not have the ability to hire an outside company. Most large companies hire a fulfillment service that takes care of a company's logistic needs.[49] The optimization of logistics processes that contains long-term investment in an efficient storage infrastructure system and adoption of inventory management strategies is crucial to prioritize customer satisfaction throughout the entire process, from order placement to final delivery. [50]
A timeline for the development of e-commerce: