Introduction to eCommerce PDF Print E-mail
Human Development - Business

Introduction to eCommerce

Virtually rich

eCommerce is the popular name for conducting business by electronic transactions and has to do with selling and buying goods and services using computer telecommunications networks, of which the internet is one such network system and today the most popular one.

eCommerce includes business-to-consumer (B2C) and business-to-business (B2B) activities, but also includes virtual private networking (VPN) over the internet between offices of one company or business.

The history of eCommerce

eCommerce started after World War 2, around 1948-1949, at a time when Berlin was closed off from the rest of the Western world.

Because of the blockade the city was under it was impractical, and not often impossible, to conduct business in the normal manner - by using paper documents.

The U.S. Army, who was in charge of a large section of the city, started using telephone, telex and radio-type instead. Credit goes to Edward Guilbert, a logistics officer who devised this first electronic commerce system.

Over the years since then other businesses and organizations started using and devising electronic transfer systems and by 1975 the first general standard was excepted known as the Electronic Data Interchange standard (EDI). the EDI standard was universal and flexible enough to handle most electronic transactions.

eCommerce and the internet

As the internet slowly grew in the early 1990's, companies such as CompuServe started using graphical browsers, of which Mosaic was the first. Much of Microsoft's Internet Explorer is based on Mosaic, for example.

As access to the internet got easier and more people and businesses started to hook up, so did commerce move to the net en masse. And with this explosive development the need to secure data transactions became necessary.

Where early hackers made off with millions by tapping into data streams, current hackers have a much more difficult time since the use of encryption, firewalls and secure log in became accepted practices.

Electronic Funds Transfers (EFT) and other sensitive information now widely uses encryption as a means to ensure secure ecommerce.

Current ecommerce business practices

The internet and ecommerce made the world smaller. The idea of a global village and market place suddenly became a reality rather than a dream and many budding businesses and entrepreneurs took to the net in search of success and fast cash.

It is now possible to buy almost anything through the internet and many companies conduct all their business this way. Naturally, where others sell products, some sell information and services, as does Links999.

Shopping centers, on line auctions, ticket reservations and purchase for holidays, concerts and travel are now commonplace. Ordering books and music, furniture and everything imaginable is now available on the internet.

Directories and guides, telephone directories and discussion platforms are all service (by)products of the internet and ecommerce revolution.


The ecommerce or dotcom crache of 2000

By 2000 doing business on the internet was a much hyped event and everyone got on the bandwagon. Internet companies like Yahoo! and Amazon sprang up, quickly reaching outrageous share prices, for example.

Billions were spent on these and many other internet-based companies. Unrealistically so, and the Make-Money-Quick hype that took off in 1998 reached its melt-down only two years later in early 2000.

The world had not gone up in smoke and flame and soon enough financial reality reared its ugly head. Starting in March of that year, inflated internet stocks started their downward slide and by December of 2000 it was estimated that these stocks lost a total of about US$800 billion.

Capital investors and venture capitalists

Since the crache of 2000 investors have been cautious of internet IPO's (Initial Public Offerings) and the investment made in startup internet companies by organizations, banks and venture capitalists has declined drastically since then. Perhaps rightly so, but we beg to differ.

When you start off with someone else's capital it may seem smooth sailing until they want their money back and demand to see a profit. That's nothing new in business and the fault of the crache lies mostly with the investors rather than with the entrepreneurs.

Investors who, despite knowing better, should not have expected or demanded such outrageous short term profits. It was their own greed that made them lose money. Anyone serious about starting a business knows that it takes several years to turn a profit, not months!

As such, entrepreneurs were forced to present business plans which were unrealistically profitable in the short term in order to obtain any outside funding.

The result was that most did not make it where, had they been properly advised and invested in by the VC's, banks and other financial institutions (which, after all, employed financial experts and professionals!), they would have survived the initial set up years and would have turned a profit within standard average time of one to three years.

eCommerce today and tomorrow

So the internet was not the "Get rich quick" arena that everyone thought it was. Perhaps only for a lucky few, but it was, and still is, a real time business venture, just as the high street shop, with all that entails - proper planning, hard work, perseverance, and a little bit of good luck.

But the good news of the dotcom crache is that where big companies have failed, smaller companies are doing extremely well on the internet using ecommerce.

No longer are we limited to the local shopping street - with often extortionate rents and utility costs - to sell goods and services. We can now offer them over the internet at a much lower startup price or monthly overhead.

The time of quick money by getting someone else to put up the cash is over and if you want to make it on the net you have to think long term and provide quality of content or product.

But the net is here to stay and a good thing too. For many smaller businesses it's the only way to avoid marketing costs and still reach their desired target consumers. As with all business you need to persevere and not be afraid of competition.

So, and you think you can still make it on the net?


PlanMagic Business and Marketing software. Simply the best software available for business planning, marketing and web promotion. Used by us and many other successful businesses and sites around the world.

Get the right information

If you have or plan to have a commercially viable web site it is a good idea to have a look around and see how others have made it or are trying to make it.

Many sites offer valuable advice and insights while others offer secure transaction services.


Pay on the net

Before you can receive payment for your products or services you need a merchant account. Merchant accounts are various and each country will have rules and regulations about them. Most require you to be a registered company in one form or another.

But there are other ways of receiving payments on line, for example, by signing up with one of the on line payment systems as an individual. Most countries allow you to earn money as a person, not just as a registered company.


And you may not even want to sell anything, just pay a friend, family or colleague or share in the cost of a dinner or some other expense. Micropayment systems are a good solution, costing little per transaction and thus making it worth to use for small amounts.
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