Chapter 1: What Is Electronic Commerce?

“It is impossible for ideas to compete in the marketplace if no forum for their presentation is provided or available.”

—Thomas Mann (1875–1955)

Overview

Electronic commerce is doing business online. It is about using the power of digital information to understand the needs and preferences of each customer and each partner to customize products and services for them, and then to deliver the products and services as quickly as possible. Personalized, automated services offer businesses the potential to increase revenues, lower costs, and establish and strengthen customer and partner relationships. To achieve these benefits, many companies today engage in electronic commerce for direct marketing, selling, and customer service; online banking and billing; secure distribution of information; value chain trading; and corporate purchasing.

Although the benefits of electronic commerce systems are enticing, developing, deploying, and managing these systems is not always easy. In addition to adopting new technology, many companies will need to reengineer their business processes to maximize the benefits of electronic commerce.

An electronic commerce strategy should help deliver a technology platform, a portal for online services, and a professional expertise that companies can leverage to adopt new ways of doing business. Platforms are the foundation of any computer system. An e-commerce platform should be the foundation of technologies and products that enable and support electronic commerce. With it, businesses can develop low-cost, high-value commerce systems that are easy to grow as business grows. An e-commerce platform’s breadth should also be unmatched, ranging from operating systems to application servers, to an application infrastructure and development tools, and to a development system.

Portals are the crossroads of the Internet, where consumers gather and where businesses can connect with them. Companies normally provide customers with a wide range of choices for professional implementation services and tightly integrated software for commerce solutions. Independent software vendors (ISVs) have created specialized commerce software components that extend the platform.

This chapter details introductory strategies and priorities for electronic commerce, which sets the stage for the rest of the book. It also describes how the platform, portal, and partners are critical to solving business problems in the four most common areas of electronic commerce: direct marketing, selling, and service; value chain integration; corporate purchasing; and financial and information services.