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E-Commerce and Development Essay

From the beginning of mankind, humans have been involved in several innovative practices. However, many times his practices failed but he kept going on. And this world, this global village is the result of the innovative mind of human beings. Industrialization, Trade and Commerce are essential conditions for the good economy of a country. Nowadays, we have been introduced by a new technology, E-Commerce. Ecommerce is means of trading through internet.

There are shops located at specific World Wide Web addresses and people are allowed to visit these sites and purchase or sell their products. There can be B2B ecommerce that is business to business, and B2C that is Business to Customers. For the past few years the online retail market has grown rapidly and is still growing. This introduction to ecommerce has given an opportunity to people of searching their favorite items on the internet, compare their prices, look for better options etc.

This same opportunity has been an important factor in the growth of e-commerce. By the middle of 2001 the business revolution promised by the ‘new economy’ and the functions of the Internet had come to naught. The promise of a new business model based on e-Commerce or e-Business

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(as the term has been used interchangeably) failed to deliver as the dotcom phenomenon imploded into that of the dot-bomb. A common factor in this scenario is the role of technology. In fact, all the recent developments can be said to be technologically determinist.

That is, it is the technology that is transforming economy and society, rather than the business processes to which technology is put to use. In Drucker’s account, technology and the invention of calculating machines, in particular the computer, are central to the progress of society through the three revolutions outlined above. In the above mentioned context, it is reasonable to compare the building of the interstate highway system in the United States between 1956 and 1976 and the Internet as innovations. The interstate and Internet are both network innovations.

The former transformed the economic geography of the United States, promoting lower transport costs, greater market access, outward mobility into the suburbs and the rise of the local shopping mall. While the Internet offers a wider selection and a greater ability to search, the delivery of goods is not immediate. Consequently, Internet marketing may not be superior to the marketing of the conventional shopping malls. The Internet began life in 1969 as a demonstration project linking up four university campuses in the United States.

It showed how a primitive file-sharing system worked. Today, the Internet boasts in excess of 300 million users, offering the most rapid take-up of any technology in history. Growth of Electronic Commerce “Indeed, e-commerce has evolved from online billboards to a fully functional, personalized shopping experience over the past decade. While there were admittedly a few bumps along the road” (Evolution of E-Commerce 2005). E-commerce has evolved rapidly since its inception. This one word has connected the whole world together and what was unimaginable before is now a common practice. Read also how can business owners attract qualified laborers

The way a business is conducted has changed and now companies are more relied on Internet and computers than it ever was. Ecommerce in the beginning was only considered as online billboards. But today there is more to ecommerce. Ecommerce includes marketing, sales, purchases etc. The first online vendors or suppliers were eBay and Amazon. And according to the senior analyst of NASDAQ if we only look at the evolution of Amazon we can clearly know the evolution of ecommerce (Evolution of E-Commerce 2005).

According to E-commerce and Development Report 2004 the amount of Internet access since 2002 has increased by 7. 8 percent. Internet hosts worldwide grew by 35. 8% from 2003 January to 2004. As for the increase in websites, in June 2004 there were 51,635,284 websites worldwide this is an increase of 26. 13% (EDR 2004). The same report stated that in the United States, B2B e-commerce was responsible for 16. 28 % of all commercial transactions. B2B e-commerce thus grew by 6. 1%. On the other hand, B2C e-commerce amounted to 1. 9% of total retail sales.

By these statistics we can know that E-commerce has been growing faster than predicted. The U. S retail e-commerce growth rate by end of the first quarter of 2004 was 28. 1%, while the growth rate of total retail in U. S was 8. 8% (EDR 2004). This growth has not stopped regardless of war, terrorism and climate. The U. S retail ecommerce sales in the first quarter of 2006 were around $25. 2 billion, which is an increase of 7% from 2005 (Strategic Ecommerce Solutions 2006). As the number of internet users is increasing day by day, so are the chances of ecommerce.

Those who log in to the internet for e-mail or chat tend to browse sites as well. Though the percentage of people ordering via internet is still increasing there are predictions as to this percentage to double in the coming years. E-commerce has established itself very nicely in the major developed nations like America and Europe. It is still trying to establish itself strongly in the third world nations. Though it has made its mark there but there is still a lot of developing needed. E-commerce Impact on Business Internet was an amazing invention for the mankind.

Ecommerce added to its beauty. Because of ecommerce it is possible for small or medium size enterprises to connect to the world and explore the international market. Besides giving access to the global market the internet has “boosted the efficiency of the organizations” (Impact of E-Commerce on Business Activities 2000). It has broken down the boundaries that were once there between the supplier and the customer, because of the innovative process it has also made the organizations efficient in what they do (Impact of E-Commerce on Business Activities 2000).

E-Commerce is the easiest way to communicate to the business chains around the world. Through this useful technology, E-Commerce businessmen can have a look at the commodities of other countries and try to make theirs better. E-Commerce is flourishing in American countries because industries have made their positions in little towns too, so people who wish to start their own businesses prefer the E-Commerce technology. Through E-Commerce there is no need to run here and there for clients and payments.

The data or information/ contracts are sent via mail and this is the best benefit of this technology. This technology has made the B2B ecommerce market flourished. It assists the supplier at every stage of the value chain. It also assists in reducing costs and time. Furthermore, many different businesses have set up their websites and are doing business via them and via their street shops. To attract customers to their websites many such firms even give discounts online which are not available at their stores.

According to an article in BBC there are many different effects of ecommerce on businesses. 1. “Distances are reduced. People can find even specialist shops in their living rooms on the computer. 2. Isolation is reduced. Banking and other services that used to be concentrated in the town are now available wherever an Internet connection is available. 3. Competition is encouraged. The Internet allows people to research their shopping or other needs very thoroughly, checking prices and product details. 4. Job availability.

E commerce can take business away from local shops and businesses and so affects the availability of jobs. But many companies have also started and developed based on E-commerce alone. Others have developed it as a response to competition. 5. Increased convenience. For consumers buying on the Internet has become convenient and safe. 6. Increased dependence on the Internet. Now, both for companies and individuals, there is pressure to have Internet access to do everyday things such as submit orders or look up details in a catalogue.

There are initiatives to make as many services available on the Internet as possible, including E-government, where government departments such as the Inland Revenue can be dealt with using secure websites” (http://www. bbc. co. uk/schools/gcsebitesize/ict/implications/2workpatternsrev5. shtml) B2B business has been greatly affected by ecommerce. As the statistic show the growth rate of B2B has been more than B2C. The reason for this is that ecommerce makes B2B transactions easier. Ecommerce has made business so easy that now everyone who wants to do a business on his own is working on online businesses.

B2B business productivity has been improved due to ecommerce. And this improved productivity can be due to many reasons as said by John Freebairn in Some Market Effects of Ecommerce 2001, “by better inventory control and less wastage, by the procurement of more suitable and cheaper inputs, by lower transaction costs, by more effective and lower cost staff training, by better and cheaper access to research and market information, and by facilitating the process of incremental, continuous and evolutionary organizational change. In the first instance, B2B e-commerce reduces business production costs” (www.

economics. unimelb. edu. au/research/workingpapers/wp00_01/789. pdf) B2C business has also experienced the impact of ecommerce. Maybe less than B2B but it is true that it has. The productivity of B2C businesses has also enhanced. The reasons for this improvement are better choice options, convenience, reduced transaction time and costs, and by better customer and supplier relationship (John Freebairn 2001). Ecommerce has helped in making the online businesses successful money makers and also have enhanced their company profiles (Positive effects of e-commerce). Security and Fraud Issues in E-Commerce

As ecommerce is growing its dependency on internet is also increasing. As someone once said that every good thing brings with it some bad aspects as well. Nothing is perfect and so trading on internet is also not perfect. There are some security issues involved. Once you have a website online it is prone to viruses, hackers, legal issues and other security and fraud elements. There have been instances of financial institutions being robbed online and not to forget identity theft (Adam Rombel 2004). There are some threats that hackers pose to ecommerce. They make the ecommerce business very risky.

In an article “Securing your Ecommerce System” the writer states that a number of threats are created by hackers to an ecommerce business “carrying out denial-of-service (DoS) attacks that stop access to authorized users of a website, so that the site is forced to offer a reduced level of service or, in some cases, cease operation completely, Gaining access to sensitive data such as price lists, catalogues and valuable intellectual property, and altering, destroying or copying it, Altering your website, thereby damaging your image or directing your customers to another site, Gaining access to financial information about your business or your customers, with a view to perpetrating fraud, Using viruses to corrupt your business data” (www. businesslink. gov. uk/bdotg/action/detail? type=RESOURCES&itemId=1075385862) The two most common threats to client-server models are viruses and Trojan Horses. Viruses are problematic in nature but Trojans are the worst. They break into a system and also facilitate data integrity attacks (Ecommerce security Issues 2002). Ecommerce also involves the use of credit cards. There have been cases where credit card numbers were stolen in order to purchase online merchandise. The problems really start with credit cards and the Internet when deceitful buyers or sellers hide behind the computer and use the internet to carry out transactions.

Buyers remain anonymous and give stolen or fraudulent credit card information when ordering goods. According to a latest survey of 800 retailers in the United Kingdom, seventy percent of them believe that internet poses greater risk than traditional market routes. A global information-management company, Experian, conducted Internet Fraud: A threat to Online Retailers. It exposes the extent of e-fraud, its operational impact, the similarities in the methods of operation used by the fraudsters’, and the effectiveness of fraud prevention systems. According to this study, increasing number of business became the victim of repeated, opportunistic, and unsophisticated fraud.

Richard Fiddis, chief operating officer of Experian U. K. , says that before what might have been the first choice (shoplifter or locker-room pickpockets) for thieves, now, it has become the Internet. Though, luckily for the retailers, internet thieves do not make en effort to hide their tracks. This study shows that only ten percent of e-fraudsters have a false telephone account and fewer than these use a redirection service at the delivery address. Even then, ninety percent of Internet fraudsters do not get caught. Fifty percent of organizations do report fraud incidents to the criminal authorities but only nine percent of those end up in prosecution.

Survey also shows the inadequate process of identification verification, performed by the organizations repeatedly. Most organizations rely on the manual preventions on fraud, and less than half of them are in the habit of using external data for verification of a customer’s name and address preceding authorizing the e-transaction. According to Fiddis, victims respond slowly to the crime for an Internet fraud. Indeed, seventy five present of survey participants’ organization took more than a month for credit card frauds, and eighteen percent took up to two months. As Fiddis reports, in this length of time the thief gets away with the crime not once but, as in forty percent of the cases, repeated number of times on the same website.

Fiddis maintains that the best way to handle this crime of crime is to use external information provided by the website visitor for his authentic identification. He adds that the level of this authentic identification can cause frustration only to the most sophisticated fraudsters. The rest of the processes will run smoothly, making the web safer for other parties. Software and hardware architecture may also be strengthened to improve fraud prevention, as suggested by experts of KPMG’s assurance and advisory services. They recently released E-Commerce and Cyber Crime: New Strategies for Managing the Risks of Exploitation. This white paper focuses on ways organizations can develop cyber-defense programs that are comprehensible and fight online crimes.

It also describes current e- market risks, explains the ways the frequent online attacks occur, predicted changes in the nature of online crime are examined, gives details of ways organizations respond to e-fraud and avert damages, and lastly, discusses future protection for the leaders of the organizations. Future of E-commerce The future of ecommerce is bright. It will thrive more than it is at the moment. Is this true? Not everyone will agree to this statement. As always there are people who support this thought and there are those who say that the future of ecommerce is not going to be that bright. Therefore, the future of ecommerce remains a mystery. Researchers and analysts have proved that in the coming 50 years, half of the world would be dependant on this E-Commerce technology. The reason is very fact full.

They say that if heavy industries would not close their buildings then their ration would be about quarter half in the whole world, because many people in this era are finding online jobs so that they can easily sit at home and work at their own timings and according to their will. This would happen in the 2050, because mill owners and industrialists would run towards this technology and introduce them in the business market. Even television channels would be broadcasted on their official websites. In another study it is calculated that the ecommerce industry’s sales will grow at a fast rate during 2010. Juan Carlos Perez writes that American shopped worth of $81 billion in 2005 and this figure will reach $144 billion in 2010 (Juan Carlos Perez 2006). according to Jupiter Research Study ecommerce will be enjoying a strong and healthy growth in the future.

More over, the factor that has been behind the increase in sales, new online shoppers, will change. By 2010 increase in online sales will be due to other reasons. As new online shoppers join the ecommerce industry, this industry will move out from the growth stage and enter the maturation stage. Then the growth in sales will be entirely because of existing customers. Due to this reason the ecommerce industry players will have to work on retaining their customers instead of attracting new ones (Juan Carlos Perez 2006). The competition will become intense and their will be price wars and maybe a lot of introduction of special offers and new products.

Naseem Javed says that the future of the ecommerce industry is “scary” (www. ecommercetimes. com/story/37777. html). According to him there is not much left to this ecommerce market. There is more of junk e-mail and spam then something useful. Time is not properly organized when someone is working from home. The 9 to 5 life will be gone and people would work whenever and from wherever they want. This does not promise free time. Prices are falling every day only to beat the competition. There are so many people out there who are agreeing to work at cheap rates. Instead of getting paid rightly for your efforts this industry is ripping people of their rights. E-Commerce is strengthening its roots day by day.

It has reached to the eagle’s nest. I mean it has reached to its peak. According to researchers if businesses would start running on E-Commerce basis, then there should be an increase in UN employment because a little more staff would be required to run industries on the web. The laborers who are working day and night in the grease of those heavy machines would be expelled from their employments and qualified individuals will be appointed to run business on web. Hunger and poverty will rise effectively and the countries that are making themselves welfare states would have nothing else except unemployment, hunger, poverty and illiteracy in their states.

Therefore, there are varying opinions about the future of ecommerce industry. Some researchers agree that the prospects are high while some argue that sales will decline instead of rising. Whatever the arguments maybe, the fact at this moment in time is that the ecommerce industry is being successful in what it is doing. Their sales are rising and so is the percentage of new online shoppers. Works Cited C. Brune, “Combating E-Crime- electronic commerce fraud”. Dec. 2000. Boyer, R. and Drache, D. (eds) (1996) States against Markets: the Limits of Globalization, London: Routledge. Coyle, D. (1997) The Weightless World: Thriving in the Digital Age, London: Capstone. Drache, D. (ed.

) (2001) The Market or the Public Domain: Global Governance and the Asymmetry of Power, London: Routledge. Drucker, P. (1993) ‘From capitalism to knowledge society’ in P. Drucker (ed. ) Post-capitalist Society, New York: Harper. Electronic Banking. February 13, 2007 <http://www. ftc. gov/bcp/edu/pubs/consumer/credit/cre14. htm> “Electronic commerce. ” 10 Feb 2007. Wikipedia, The Free Encyclopedia. . February 14, 2007 <http://en. wikipedia. org/w/index. php? title=Electronic_commerce&oldid=107105752>.

“E-Commerce and Development Report. ” 2004. February 14, 2007 <http://www. unctad. org/en/docs/ecdr2004_fas_en. pdf> “E-Commerce Security Issues. ” February 14, 2007 http://csdl2. computer. org/comp/proceedings/hicss/2002/1435/07/14350193. pdf “Effects of e-commerce. ” Bbc. co. uk. February 14, 2007 <http://www. bbc. co. uk/schools/gcsebitesize/ict/implications/2workpatternsrev5. shtml> Javed, Naseem “The Future of E-Commerce Could Be Scary. ” E-Commerce Times. . February 14, 2007 <http://www. ecommercetimes. com/story/37777. html> Mathy, L. , Edwards, C. and Hutchison, D. (2000) ‘The Internet: a global telecommunications solution? ’ IEEE Network Magazine, 14, 4: 46-57. Perez, Juan Carlos. “U. S ecommerce sales to have brisk growth through 2010. ” 2 July 2006. Network World. . February 14, 2007 <http://www. networkworld. com/news/2006/020706-e-commerce. html>

“Positive effects of e-commerce. ” February 14, 2007 <http://smallbusiness. ninemsn. com. au/article. aspx? id=2215> “Securing your ecommerce System. ” February 14, 2007 www. businesslink. gov. uk/bdotg/action/detail? type=RESOURCES&itemId=1075385862 “Strategic ECommerce Solutions. ” February 14, 2007 <http://www. sescommerce. com/pages/main_page. asp? nID=46> “The Evolution of E-Commerce. ” 02/07/05. E-Commerce times. February 14, 2007 <http://www. ecommercetimes. com/story/40249. html> “The Impact of E-Commerce on Business Activities in the New Millennium. ” February 14, 2007 <http://www. mier. org. my/mierscan/archives/pdf/yeap8_1_2000. pdf>

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