What is E-Commerce?

E-commerce, short for electronic-commerce, is “a term for any type of business, or commercial
transaction, that involves the transfer of information across the Internet”. [1] Currently, e-
commerce is mostly used via the Internet, but before the Internet was available, a form of
electronic transactions occurred over Electronic Data Interchange (EDI). Businesses and
customers used EDI by setting up a data link specifically reserved for commerce between them.
[2]
In 1979, Michael Aldrich invented the concept of “teleshopping” which gave the base
structure that evolved into the online shopping ability we know today. In 1990’s, websites like
Amazon.com and Ebay.com were created. Because e-commerce is now done through the
Internet, it has made a global market-place for businesses and consumers to make trades and
transactions all across the world. [3] For example, businesses in Europe can ship items to
customers in America, and vice versa. Just like any other technology, a user needs to know how
e-commerce works and how to navigate through it. One of the basic concepts is knowing what a
"shopping cart" is and how to use it. A "shopping cart" is a software that allows buyers to have a
virtual chart, just like you would at a physical store, to collect multiple items and be able to buy
all the items at once when you “check out”. [4] Other concepts that one should know are the
advantages and disadvantages of shopping online.

Advantages of E-Commerce

For businesses, the most prominent advantages to using E-Commerce are the reduced costs
associated with it, the broader customer base, the increased customer satisfaction, and the
potentially higher sales it produces. Because E-Commerce transactions are done through a
website and not a brick and mortar store, much of the overhead associated with running a retail
store is reduced. The need to pay for heating, lighting, staffing, and restocking a store is
practically eliminated. This results in fewer employees and smaller facilities which in turn allows
for larger capital gains. Usually, only a company headquarters is needed along with a few
warehouses that can cover larger areas than a single retail store normally would. Also, more
individuals can be reached through a website rather than the small geographical area that a retail
store would cover. Multiple retailers are required to cover larger geographical areas, but with E-
Commerce anyone anywhere can access the website at anytime! This increases the possible
amount of customers dramatically. Websites also allow people to shop from the comfort of their
own home without having to consume time and money (gas) to view a companies products in
their retail store. Plenty of times have people gone to the store for a specific item only to be
disappointed that it wasn't in stock. With E-Commerce this doesn't happen. The comfort
provided, the time saved, and the money saved can easily increase the satisfaction of the
consumer. The potentially higher sales is another advantage. By using E-Commerce, a business
can be open every hour of the year and accessible to everyone across the globe. They're no
longer limited by a geographical area or a 40 hr work week.[5]

For Consumers, the greatest advantages lie in it's convenience, selection, customization, price
comparison, and potential cost savings. As mentioned above, the convenience of shopping from
home (in your underwear if you like) is very appealing to many consumers. Shopping can be
done during anytime of the day or night through the use of a website and it's no longer a
necessity to rush home from work to buy an item before its store closes. A person can also
compare the prices, quality, and features of multiple items from multiple stores. Their selection
is no longer limited to the facilities closest to them, but to their attention span. Before, consumers
would drive from store to store comparing these characteristics before driving back to make their
final purchase. The time, effort, and expense involved in this type of comparison is nullified
through E-Commerce. Many individuals want to make their purchases unique to their
preferences. With the option to communicate with a company directly through their site instead
of buying a pre-manufactured item on a store shelf, the ability to customize the item they are
looking for is greatly improved. The company can take the order and payment while putting it
through to the warehouse so that the final product to be shipped is tweaked to the consumer's
desire. Also, the ability to save on cost is increased for the consumer using E-Commerce. The
person can compare prices to find the lowest and often the item can be shipped to their front door
for less than it would normally have taken to find it in a motor vehicle. They say time is money,
so if your spending less time looking for what you need then you can potentially spend more
time working for what you want.[6]

Disadvantages of E-Commerce

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As mentioned above, there are a lot of advantages, but it is not perfect. One of these
disadvantages is that those who are running the site must keep the site open 24/7 since at any
point it is morning somewhere in the world. This takes money to run the servers, and takes
money to pay the programmers to make the site in the first place. Also a business that is running
a site should make it interesting by having something change, like having a daily deal like
Newegg[7] or return coupons like Kohls[8], otherwise people may not return to the site. Another
disadvantage is that anyone can make a website, driving competition and prices. So some sites
may spend extra money on