1. Electronic commerce, commonly known as e-commerce or eCommerce, or e-
business consists of the buying and selling of products or servicesover electronic
systems such as the Internet and other computer networks. The amount of trade
conducted electronically has grown extraordinarily with widespread Internet usage. The
use of commerce is conducted in this way, spurring and drawing on innovations
in electronic funds transfer, supply chain management, Internet marketing, online
transaction processing, electronic data interchange (EDI), inventory
management systems, and automated data collection systems. Modern electronic
commerce typically uses the World Wide Web at least at some point in the transaction's
lifecycle, although it can encompass a wider range of technologies such as e-mail as
well.
A large percentage of electronic commerce is conducted entirely electronically
for virtual items such as access to premium content on a website, but most electronic
commerce involves the transportation of physical items in some way. Online retailers are
sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all
big retailers have electronic commerce presence on the World Wide Web.
Electronic commerce that is conducted between businesses is referred to as business-
to-business or B2B. B2B can be open to all interested parties (e.g. commodity
exchange) or limited to specific, pre-qualified participants (private electronic market).
Electronic commerce that is conducted between businesses and consumers, on the
other hand, is referred to as business-to-consumer or B2C. This is the type of electronic
commerce conducted by companies such as Amazon.com. Online shopping is a form of
electronic commerce where the buyer is directly online to the seller's computer usually
via the internet. There is no intermediary service. The sale and purchase transaction is
completed electronically and interactively in real-time such as Amazon.com for new
books. If an intermediary is present, then the sale and purchase transaction is called
electronic commerce such as eBay.com.
Electronic commerce is generally considered to be the sales aspect of e-business. It
also consists of the exchange of data to facilitate the financing and payment aspects of
the business transactions.
E-COMMERCE

2. The Internet has created a new economic ecosystem, the e-commerce marketplace, and
it has become the virtual main street of the world. Providing a quick and convenient way
of exchanging goods and services both regionally and globally, e-commerce has
boonline.It has online transactions impacting industries from travel services to consumer
electronics, from books and media distribution to sports & fitness. With more than 70%
of America using the Internet on a daily basis for private and/or business use and the
rest of the world also beginning to catch on, e-commerce's global growth curve is not
likely to taper off anytime soon. However, the US recession has taken its toll on online
sales. Online Sales to Climb Despite Struggling Economy, holiday sales showed the first
decrease in the last 7 years. Research by ComScore shows sales declining by 1% for
the first 49 days of the holiday season. There are four types of e-commerce:- 1.Business
to business 2.Consumer to consumer 3.Business to consumer 4.Digital Middlemen In
the last decade, many startup e-commerce companies have rapidly stolen market share
from traditional retailers and service providers, pressuring these established traditional
players to deploy their own commerce websites or to alter company strategy in
retaliation. This effect is most pronounced in travel services and consumer electronics.
As traditional brick and mortar firms continue to lose market share to e-commerce
players, they will likely see continued declines in their revenues, operating margins, and
profits. It is important to note that most e-commerce players are at a competitive
advantage to retailers. They have lower operating expenses and better inventory
management due to operating in a virtual commerce environment.Clearly, e-commerce
vendors will have the most to gain if they successfully disrupt retail customer acquisition,
disintermediate distributors/resellers, and under-price retail establishments. As a
consequence of e-commerce vendor gains, financial transaction processors and parcel
shipping companies are among ancillary vendors who will gain.
2005-2006: E-commerce continues to seize market share from traditional retailers in the
US.
E-commerce Drivers
There are several key drivers the growth of e-commerce
The economy, consumer spending, and retail spending

3. At a macro level, overall economic activity ,total retail spending and change in consumer
life style are in general are key drivers to the growth of e-commerce. At a micro level, for
instance, rising oil prices and gasoline costs could benefit e-commerce players, e.g., it is
more expensive driving to the offline retail store than shopping online. The recession
beginning in 2008 has slowed e-commerce, but overall sales are still growing. US online
retail sales grew 11% in Q1 2008 compared to a growth of 16.9% in Q1 2007.
Online Taxation
Several proposals have been made at the U.S. state and local level that would impose
additional taxes on the sale of goods and services through the Internet. These
proposals, if adopted, could substantially impair the growth of e-commerce. The U.S.
federal government's moratorium on states and other local authorities imposing access
or discriminatory taxes on the Internet expired in November 2007. The taxation situation
is a dynamic one, and one which is carefully being watched by many stakeholders. We
Dont Need No Script For This.
Differentiation vs. Click-and-Mortars
Many e-commerce websites have established their leadership positions through low
prices, high customer satisfaction, and convenient interfaces--but that position is
becoming less and less unique. The largest retailers, such as Wal-Mart, Target, and
Best Buy are pressing harder to gain market share online. The inroads the click-and-
mortar retailers have been making is evident in recent comScore data, which shows the
unique user traffic at the aforementioned sites increasing at greater year-over-year rates
vs. pure e-commerce players. Those pure play e-tailers that develop and deploy the
most unique web technologies to enhance consumer experiences and keep prices
competitive will be in the best position to ward off the click-and-mortar convoy.
Internet Penetration and Emerging Markets
Global Internet penetration rates have an enormous impact on e-commerce growth
rates. Currently, more than 90% of the world does not have access to the internet, and
hence, e-commerce. Reduced Internet surfing charges, Internet technology development
covering expanded bandwidth, and increased speeds & reliability could make e-
commerce available to a large pool of emerging market consumers. In India, only about
60 million (or 5.2%) of a total 1 billion person population currently have access to the

4. internet. In China, the internet penetration rate is now at 19% as of June 2008. The
companies that are able to gain significant traction first in emerging markets will be at
great advantage to competitors.
Who Stands to Gain?
Online Travel Services
Expedia (EXPE) and Hotels.com are among many successful online travel service
providers who stand to gain the most from recent growth trends. These players focus on
travel-related transactions for airline seats, hotel rooms, car rentals, cruises, tours, and a
host of other services. Travelzoo is a smaller player that has taken a novel approach to
selling travel packages.
Online Retail
Overstock.com (OSTK) and Amazon.com (AMZN), two of the more successful online
retailers, should continue to do well because of their consumer electronics focus.
Consumer Electronics
Sony (SNE) and Philips Electronics are among the leading consumer electronics
manufacturers benefiting from an increase in e-commerce consumer electronics sales.
For these companies, internet presence increases the visibility, easy availability and
volume sales of their consumer electronics products.
Financial Transaction Services
EBay/PayPal and Authorize.net are examples of two leading financial transaction
processors that get a cut every time you make a online purchase using their processing
platform. More than 175 thousand merchants use Authorize.net (ANET) to help
consumers accept credit cards and electronic check payments online. As more
merchants move online, these types of companies could see their fortunes accelerate.
Travel Industry
Travel service companies, such as airlines, hotels, cruise ships, and rental car
companies, also benefit from e-commerce intermediaries selling their products more

5. quickly and easily than was previously possible and to a wider consumer
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Shipping
FedEx (FDX) and United Parcel Service (UPS), two of the major shipping company
players, are responsible for shipping the majority of products that are purchased online
by consumers. As consumers continue to buy more online, these companies will see
demand for their shipping services rise.
Bold text===E-commerce Software=== Many companies interested in selling products
and services through the Internet choose to contract the construction and operation of
their e-commerce platforms to third-party vendors. Some of these companies, such as
Volusion eCommerce, GSI Commerce (GSIC) and Digital River (DRIV) offer
comprehensive, integrated packages that include software, web-hosting, order fulfillment
and distribution and online marketing. Other firms offer more limited services such
as Ariba (ARBA) andAkamai Technologies (AKAM). These two companies are e-
commerce software vendors that make money selling software for e-commerce
applications. All of these e-commerce service providers stand to gain as e-commerce
traffic accelerates.

6. Traditional retailers like Gap are scrambling to keep up with the e-commerce trend,
offering online catalog shopping in addition to traditional stores.
User Interface
E-commerce software are in the early phases of carving our core feature areas, either
integrated within the software or via partnership with third parties. Such features as
marketing (SEO), fulfillment (shipping) and as mentioned earlier web-hosting are
becoming as much as part of the software as its ability to simply provide order
management. Additionally, firms such as aitendantare focusing on interface design to
deliver a more robust e-commerce experience. Emerging technologies includes natural
language instruction.
Web Analytics
One interesting niche of e-commerce services is the area of "web-analytics". These tools
provide the management of online shops and all kind of e-commerce platforms a great
inside of what happens on their websites. In particular they allow them to run real-time
experiments with their advertising and marketing, to allow them to rapidly optimise
their sales pipeline. Not only can they tell when sales improve, but they can also see

7. which adverts brought those sales, and the routes the customers took through the e-
commerce site to get there.
Two major players are Omniture (OMTR) and Visual Sciences (VSCN) (former
WebSideStory). One question for the future is how such niche players will compete with
business analytic/intelligence solutions like SAS. They will also need to keep an eye
on Google (GOOG), who have their own Google Analytics software, which they provide
for free to customers of their advertising products.
Who Stands to Lose?
Traditional Retail
Circuit City Stores (CC) and Best Buy (BBY) are prime examples of traditional retailers
that have been losing market share to e-commerce startups over the last decade. These
firms are now working aggressively to create an online presence for themselves in an
attempt to halt earlier losses. In fact, with the added pressure of the recession, Circuit
City filed for bankruptcy and is closing all of its stores. Specialty retailers like Zale
(ZLC) have also faced increased competition from internet company sites.
Traditional Travel Agencies
American Express Company (AXP) is an example of a major travel agency that has
seen demand for their travel-related services decrease as more consumers and
businesses rely on online travel portals.
Direct Retail Marketing
CDW (CDWC) and Systemax (SYX) are direct marketers of consumer electronics. Both
will see business decline if the revenue distribution of consumer electronics sales
continues to shift to online vendors. As more businesses buy from online intermediaries,
the direct marketers' services are increasingly being bypassed.