Chapter 1 -- The XML Business Perspective

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Chapter 1

E-commerce is huge and growing in importance every day. But what is e-commerce? For some people, it means taking credit card information on a Web site. For others, it means the presence of a shopping cart on a Web site. Everywhere I look, I see ecommerce mentioned as the present and future of human interaction.

I think most people understand that e-commerce means "electronic commerce." Commerce is, of course, the process of engaging in a business transaction—people getting together and doing what comes naturally. Adam Smith, the father of modern economic theory, said that capitalism is what people do when they are left alone (that is, left without government interference or "help"). Commerce is so natural, it would seem, that my American Heritage Dictionary has, as two of its definitions of commerce, the following:

2. Intellectual exchange or social interaction. 3. Sexual intercourse.

That last definition might be difficult to achieve over the Internet, but the point is that commerce is what we do when we deal with each other.

Of course, humans have engaged in commerce for thousands of years. Since the earliest days of civilization, we have conducted business with each other face to face. Only recently have we been doing commerce by technological proxy, letting a means other than face-to-face communication be instrumental in leading to a business transaction.

The wealthy elite conducted business remotely for centuries by having couriers communicate parts of a transaction. But for important or large transactions, a face-to-face meeting was almost always part of closing a deal.

In the mid-19th century, the United States benefited from a sophisticated network of mail delivery, the Pony Express. Finally, normal people could afford to do business remotely. This radically changed the way people consumed goods and made it cheaper to do business because a buyer had more choices of sellers. I guess you could say the Pony Express led to "p-commerce."

As the country developed, trains helped in the delivery of goods across the West, and a denser network of mail delivery lowered the cost even more, allowing more buyers and sellers to interact. (Hmmm, sounds like they invented the west-wide-Web.) Commerce by mail was born. Sears, Roebuck and Company made quite a few bucks taking orders by mail and shipping their products. Face-to-face interaction was not necessary once people trusted the corporate name.

Then came the telephone and 1-800-Flowers, which let you pick up a phone, pick out a flower arrangement, and make someone's day instantly, without paper. This is a business transaction that has taken place because of a system of electronics called the telephone. Isn't this e-commerce?

The book of Ecclesiastes (1:9) has a passage that comes to mind here:

What has been will be again, what has been done will be done again; there is nothing new under the sun.

Now I can go to www.1800flowers.com ("Flowers are just the beginning") and buy all kinds of things. I don't even need to talk to a human to show that I care. Unless you've been living in a cabin in the woods without a phone line for the past five years, the process should be familiar: Select things you want from full-color pictures viewed on your computer, and add them to your electronic shopping cart. When you finish shopping, you pay for your kindness by filling out a form that contains shipping information and asks for the all-important credit card number, and soon your joy will be spread.

I think most people would consider this to be a transaction enabled by ecommerce. But are there others? If commerce is the interaction of buyers and sellers, is a site that offers written content for a subscription price an e-commerce-enabled venture? There might be no tangible products for sale, but these sites do provide value for people who have paid money. Every time someone sees the site, a transaction is made. Wouldn't that be considered e-commerce?

What about a "free" site? I put "free" in quotes because nothing is really free. Mom always said there's no free lunch. That was a metaphor, of course. (She also said "don't take any wooden nickels." That one was a bit harder to figure out. I just had to assume there was a vast counterfeiting conspiracy that was pumping out worthless wooden nickels to ignorant kids on the streets. I'm still not sure what she meant.)

Any time someone provides you with something for free, he or she gets something in return. Take the Internet. So much information out there is free for the looking. But when you look at it, you also expose your eyes to banner ads, sponsor messages, or even the host's logo and message. Those hosts and sponsors think that your eyeballs falling on their messages is valuable enough that they pay the Web site people for the privilege of exposing themselves to you. This implicit "eyeball tax" is just as real to the advertisers as cash, so a transaction has taken place. Is this e-commerce?