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Commerce
in all of its forms
Commerce
- YouTube Video: What is Commerce? | Characteristics, Functions and Classification
- YouTube Video: What is Commerce Content - Everything You Need to Know
- YouTube Video: Triple bottom line (3 pillars): sustainability in business
* -- Why Amazon Should Worry About Walmart’s Site Redesign
WalmartWMT +0.3% unveiled its redesigned website and app, which immediately drew comparisons to AmazonAMZN +3.5%.com.
Tom Ward, chief e-commerce officer at Walmart U.S., wrote on a company blog last week that the retailer has made “hundreds of enhancements” over the past year to improve the shopping experience for the chain’s customers.
Walmart’s new homepage features bigger photos, live video and a “social-inspired scroll so customers can browse our selection just as they’d scroll their favorite social media apps,” Ward wrote.
“These changes, in conjunction with the Walmart Creator platform, will improve product discovery and take steps out of the purchase process,” wrote Patricia Vekich Waldron, CEO of Vision First, in an online discussion about the redesign last week on RetailWire. “It will absolutely improve the experience for existing core and casual customers, and potentially offer an alternative to dissatisfied Amazon shoppers.”
Some of Ms. Waldron’s fellow members of the RetailWire BrainTrust were likewise convinced that a solid redesign stands to make Walmart more formidable in e-commerce against the incumbent e-tail juggernaut in a number of different ways.
“The new website and app will make consumers take the Walmart Marketplace more seriously as an alternative to, or an augmentation of, the Amazon Marketplace,” wrote David Naumann, marketing strategy lead, retail, travel & distribution at Verizon. “Walmart has aggressively added more sellers to its marketplace and now with a better user experience, it is a strong rival for Amazon.”
The newly redesigned website is intended to make it easier for customers to find the products they need and want from Walmart and its growing network of marketplace sellers. The redesign will also benefit suppliers and third-party sellers with “new opportunities to showcase more relevant products and better tell their stories,” according to Ward.
A Fast Company article said that Walmart’s redesign comes when some Amazon customers may feel disaffected by increases in Prime subscription fees and grocery delivery charges. Walmart also offers product search results that are not cluttered with a long list of sponsored products at the top.
An article on The Verge also claims that Walmart has an opportunity to grab disgruntled customers from Amazon. Walmart.com’s new look, it asserts, offers shoppers more access to products connected to the current season and upcoming holidays or events. The report also highlights the site’s search function, which “yields several rows of products matching your search that you can scroll through horizontally.”
Walmart has been on a multi-year mission to improve its digital operations and create seamless shopping experiences regardless of the point of fulfillment. The chain offers customers the option of express, next-day and two-day delivery as well as in-store and curbside pickup.
By one BrainTrust member’s account, the digital revamp was gaining traction even before the website and app redesigns.
“I downloaded the Walmart app about a year ago when I got frustrated with an Amazon search,” wrote Jeff Sward, founding partner at Merchandising Metrics. “I quickly found the product I was looking for and it was delivered two days later. The ‘out for delivery’ and ‘delivery completed’ emails were timely and accurate.
I have since been drawn into the Walmart universe to buy groceries, tools, storage containers and even a work shirt for chopping firewood. I used to visit Walmart as homework for my retail research. I’m now a shopper and buyer and it’s a direct result of a great website and app experience.”
Others on the BrainTrust, however, held that a redesign should be seen as table stakes, no matter what Amazon is up to.
“More retailers are focusing on making digital experiences discovery-oriented, versus simplistic and mission-driven,” wrote Melissa Minkow, director of retail strategy at C&T. “I think this is a great move for Walmart, but I don’t know that it would be the variable that steals customers from Amazon.”
“The description of Walmart’s website efforts sounds like they are moving in a direction the online customer responds to,” wrote Professor Gene Detroyer. “I hope that is the objective. To suggest that they are doing it to grab disaffected Prime members is inaccurate. Hopefully all the decisions were made to design a better website, as they should be doing regularly–with or without Amazon’s competition.”
[End of Forbes April 13, 2023 Article by George Anderson]
___________________________________________________________________________
Commerce
Commerce is the large-scale organized system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered distribution and transfer of goods and services on a substantial scale and at the right time, place, quantity, quality and price through various channels from the original producers to the final consumers within local, regional, national or international economies.
The diversity in the distribution of natural resources, differences of human needs and wants, along with division of labour and comparative advantage are the principal factors that give rise to commercial exchanges.
Commerce consists of trade and aids to trade along the entire supply chain. Trade is the exchange of goods (including raw materials, intermediate and finished goods) and services between buyers and sellers in return for a price at traditional (or online) marketplaces. It is categorized into domestic trade, including retail and wholesale as well as local, regional and inter-regional transactions and foreign trade, encompassing import, export and entrepôt/re-export trades.
Trade also involves the exchange of currencies, commodities and securities in specialized exchange markets. Aids to trade or auxiliary commercial activities facilitate trade and include:
Their purpose is to remove hindrances related to:
The broader framework of commerce incorporates additional elements and factors such as:
Commerce drives:
The above:
On the other hand, commerce can worsen economic inequality by concentrating wealth (and power) into the hands of a small number of individuals, and by prioritizing short-term profit over long-term sustainability and ethical, social, and environmental considerations, leading to environmental degradation, labor exploitation and disregard for consumer safety.
Unregulated, it can lead to excessive consumption (generating undesirable waste) and unsustainable exploitation of nature (causing resource depletion). Harnessing commerce's benefits for the society while mitigating its drawbacks remains vital for policymakers, businesses and other stakeholders.
Commerce traces its origins to ancient localized barter systems, leading to the establishment of periodic marketplaces, and culminating in the development of currencies for efficient trade. In medieval times, trade routes (like the Silk Road) with pivotal commercial hubs (like Venice) connected regions and continents, enabling long-distance trade and cultural exchange.
From the 15th to the early 20th century, European colonial powers dominated global commerce on an unprecedented scale. In the 19th century, modern banking and stock exchanges along with the industrial revolution fundamentally reshaped commerce.
In the post-colonial 20th century, free market principles gained ground, multinational corporations and consumer economies thrived in U.S.-led capitalist countries and free trade agreements (like GATT and WTO) emerged, whereas communist economies encountered trade restrictions, limiting consumer choice.
Notably, developing countries saw their share in world trade rise from a quarter to a third by the century's end. 21st century commerce is increasingly technology-driven (see e-commerce), globalized, intricately regulated, ethically responsible and sustainability-focused, with multilateral economic integrations (like the European Union and BRICS) leading to its reconfiguration.
Etymology:
The English-language word commerce has been derived from the Latin word commercium, from com ("together") and merx ("merchandise").
Relation to business and trade:
Commerce is distinguishable from business and trade.
Commerce is not business (i.e. an organization or activity whose goal is to sell manufactured goods and/or services for profit), but rather the aspect of business related to the movement and distribution of finished or intermediate (but valuable) goods and services from the primary manufacturers to the end customers on a large scale, as opposed to the sourcing of raw materials and manufacturing of those goods.
Commerce is different from trade as well. Trade is the transaction (buying and selling) of goods and services that makes a profit for the seller and satisfies the want or need of the buyer. When trade is carried out within a country, it is called home or domestic trade, which can be wholesale or retail.
A wholesaler buys from the producer in bulk and sells to the retailer who then sells again to the final consumer in smaller quantities. Trade between a country and the rest of the world is called foreign or international trade, which consists of import trade and export trade, both being wholesale in general.
Commerce not only includes trade as defined above, but also the auxiliary services and means that facilitate such trade. Auxiliary services or aids to trade provide services that ease the task of producers in possession of certain goods to send those to the target consumers for satisfaction of their needs and wants.
Such services include:
In other words, commerce encompasses a wide array of political, economical, technological, logistical, legal, regulatory, social and cultural aspects of trade on a large scale. From a marketing perspective, commerce creates time and place utility by making goods and services available to the customers at the right place and at the right time by changing their location or placement.
Described in this manner, trade is a part of commerce and commerce is an aspect of business.
History
Historian Peter Watson and Ramesh Manickam date the history of long-distance commerce from circa 150,000 years ago. In historic times, the introduction of currency as a standardized money facilitated the exchange of goods and services.
Commerce was a costly endeavor in the antiquities because of the risky nature of transportation, which restricted it to local markets. Commerce then expanded along with the improvement of transportation systems over time.
In the Middle Ages, long-distance and large-scale commerce was still limited within continents. Banking systems developed in medieval Europe, facilitating financial transactions across national boundaries.
Markets became a feature of town life, and were regulated by town authorities. With the advent of the age of exploration and oceangoing ships, commerce took an international, trans-continental stature.
Currently the reliability of international trans-oceanic shipping and mailing systems and the facility of the Internet has made commerce possible between cities, regions and countries situated anywhere in the world.
In the 21st century, Internet-based electronic commerce (where financial information is transferred over Internet), and its subcategories such as wireless mobile commerce and social network-based social commerce have been and continue to get adopted widely.
Regulation:
Legislative bodies and ministries or ministerial departments of commerce regulate, promote and manage domestic and foreign commercial activities within a country. International commerce can be regulated by bilateral treaties between countries.
After the second world war and the rise of free trade among nations, multilateral arrangements such as the GATT and later the World Trade Organization became the principal systems regulating global commerce. The International Chamber of Commerce (ICC) is another important organization which sets rules and resolves disputes in international commerce.
See also:
WalmartWMT +0.3% unveiled its redesigned website and app, which immediately drew comparisons to AmazonAMZN +3.5%.com.
Tom Ward, chief e-commerce officer at Walmart U.S., wrote on a company blog last week that the retailer has made “hundreds of enhancements” over the past year to improve the shopping experience for the chain’s customers.
Walmart’s new homepage features bigger photos, live video and a “social-inspired scroll so customers can browse our selection just as they’d scroll their favorite social media apps,” Ward wrote.
“These changes, in conjunction with the Walmart Creator platform, will improve product discovery and take steps out of the purchase process,” wrote Patricia Vekich Waldron, CEO of Vision First, in an online discussion about the redesign last week on RetailWire. “It will absolutely improve the experience for existing core and casual customers, and potentially offer an alternative to dissatisfied Amazon shoppers.”
Some of Ms. Waldron’s fellow members of the RetailWire BrainTrust were likewise convinced that a solid redesign stands to make Walmart more formidable in e-commerce against the incumbent e-tail juggernaut in a number of different ways.
“The new website and app will make consumers take the Walmart Marketplace more seriously as an alternative to, or an augmentation of, the Amazon Marketplace,” wrote David Naumann, marketing strategy lead, retail, travel & distribution at Verizon. “Walmart has aggressively added more sellers to its marketplace and now with a better user experience, it is a strong rival for Amazon.”
The newly redesigned website is intended to make it easier for customers to find the products they need and want from Walmart and its growing network of marketplace sellers. The redesign will also benefit suppliers and third-party sellers with “new opportunities to showcase more relevant products and better tell their stories,” according to Ward.
A Fast Company article said that Walmart’s redesign comes when some Amazon customers may feel disaffected by increases in Prime subscription fees and grocery delivery charges. Walmart also offers product search results that are not cluttered with a long list of sponsored products at the top.
An article on The Verge also claims that Walmart has an opportunity to grab disgruntled customers from Amazon. Walmart.com’s new look, it asserts, offers shoppers more access to products connected to the current season and upcoming holidays or events. The report also highlights the site’s search function, which “yields several rows of products matching your search that you can scroll through horizontally.”
Walmart has been on a multi-year mission to improve its digital operations and create seamless shopping experiences regardless of the point of fulfillment. The chain offers customers the option of express, next-day and two-day delivery as well as in-store and curbside pickup.
By one BrainTrust member’s account, the digital revamp was gaining traction even before the website and app redesigns.
“I downloaded the Walmart app about a year ago when I got frustrated with an Amazon search,” wrote Jeff Sward, founding partner at Merchandising Metrics. “I quickly found the product I was looking for and it was delivered two days later. The ‘out for delivery’ and ‘delivery completed’ emails were timely and accurate.
I have since been drawn into the Walmart universe to buy groceries, tools, storage containers and even a work shirt for chopping firewood. I used to visit Walmart as homework for my retail research. I’m now a shopper and buyer and it’s a direct result of a great website and app experience.”
Others on the BrainTrust, however, held that a redesign should be seen as table stakes, no matter what Amazon is up to.
“More retailers are focusing on making digital experiences discovery-oriented, versus simplistic and mission-driven,” wrote Melissa Minkow, director of retail strategy at C&T. “I think this is a great move for Walmart, but I don’t know that it would be the variable that steals customers from Amazon.”
“The description of Walmart’s website efforts sounds like they are moving in a direction the online customer responds to,” wrote Professor Gene Detroyer. “I hope that is the objective. To suggest that they are doing it to grab disaffected Prime members is inaccurate. Hopefully all the decisions were made to design a better website, as they should be doing regularly–with or without Amazon’s competition.”
[End of Forbes April 13, 2023 Article by George Anderson]
___________________________________________________________________________
Commerce
Commerce is the large-scale organized system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered distribution and transfer of goods and services on a substantial scale and at the right time, place, quantity, quality and price through various channels from the original producers to the final consumers within local, regional, national or international economies.
The diversity in the distribution of natural resources, differences of human needs and wants, along with division of labour and comparative advantage are the principal factors that give rise to commercial exchanges.
Commerce consists of trade and aids to trade along the entire supply chain. Trade is the exchange of goods (including raw materials, intermediate and finished goods) and services between buyers and sellers in return for a price at traditional (or online) marketplaces. It is categorized into domestic trade, including retail and wholesale as well as local, regional and inter-regional transactions and foreign trade, encompassing import, export and entrepôt/re-export trades.
Trade also involves the exchange of currencies, commodities and securities in specialized exchange markets. Aids to trade or auxiliary commercial activities facilitate trade and include:
- commercial intermediaries,
- banking and financial services,
- transportation,
- packaging,
- warehousing,
- communication,
- advertising
- and insurance.
Their purpose is to remove hindrances related to:
- direct personal contact,
- payments,
- savings,
- funding,
- separation of place and time,
- product protection and preservation,
- knowledge and risk.
The broader framework of commerce incorporates additional elements and factors such as:
- laws and regulations (including intellectual property rights and antitrust laws),
- policies,
- tariffs and trade barriers,
- consumers and consumer trends,
- producers and production strategies,
- supply chains and their management,
- financial transactions (including those in financial markets),
- market dynamics (including supply and demand),
- technological innovation,
- competition and entrepreneurship,
- trade agreements,
- multinational corporations and small and medium-sized enterprises (SMEs),
- and macroeconomic factors (like economic stability).
Commerce drives:
The above:
- promotes regional and international interdependence,
- fosters cultural exchange,
- creates jobs,
- improves people's standard of living by giving them access to a wider variety of goods and services,
- and encourages innovation and competition for better products.
On the other hand, commerce can worsen economic inequality by concentrating wealth (and power) into the hands of a small number of individuals, and by prioritizing short-term profit over long-term sustainability and ethical, social, and environmental considerations, leading to environmental degradation, labor exploitation and disregard for consumer safety.
Unregulated, it can lead to excessive consumption (generating undesirable waste) and unsustainable exploitation of nature (causing resource depletion). Harnessing commerce's benefits for the society while mitigating its drawbacks remains vital for policymakers, businesses and other stakeholders.
Commerce traces its origins to ancient localized barter systems, leading to the establishment of periodic marketplaces, and culminating in the development of currencies for efficient trade. In medieval times, trade routes (like the Silk Road) with pivotal commercial hubs (like Venice) connected regions and continents, enabling long-distance trade and cultural exchange.
From the 15th to the early 20th century, European colonial powers dominated global commerce on an unprecedented scale. In the 19th century, modern banking and stock exchanges along with the industrial revolution fundamentally reshaped commerce.
In the post-colonial 20th century, free market principles gained ground, multinational corporations and consumer economies thrived in U.S.-led capitalist countries and free trade agreements (like GATT and WTO) emerged, whereas communist economies encountered trade restrictions, limiting consumer choice.
Notably, developing countries saw their share in world trade rise from a quarter to a third by the century's end. 21st century commerce is increasingly technology-driven (see e-commerce), globalized, intricately regulated, ethically responsible and sustainability-focused, with multilateral economic integrations (like the European Union and BRICS) leading to its reconfiguration.
Etymology:
The English-language word commerce has been derived from the Latin word commercium, from com ("together") and merx ("merchandise").
Relation to business and trade:
Commerce is distinguishable from business and trade.
Commerce is not business (i.e. an organization or activity whose goal is to sell manufactured goods and/or services for profit), but rather the aspect of business related to the movement and distribution of finished or intermediate (but valuable) goods and services from the primary manufacturers to the end customers on a large scale, as opposed to the sourcing of raw materials and manufacturing of those goods.
Commerce is different from trade as well. Trade is the transaction (buying and selling) of goods and services that makes a profit for the seller and satisfies the want or need of the buyer. When trade is carried out within a country, it is called home or domestic trade, which can be wholesale or retail.
A wholesaler buys from the producer in bulk and sells to the retailer who then sells again to the final consumer in smaller quantities. Trade between a country and the rest of the world is called foreign or international trade, which consists of import trade and export trade, both being wholesale in general.
Commerce not only includes trade as defined above, but also the auxiliary services and means that facilitate such trade. Auxiliary services or aids to trade provide services that ease the task of producers in possession of certain goods to send those to the target consumers for satisfaction of their needs and wants.
Such services include:
- transportation,
- communication,
- warehousing,
- insurance,
- banking,
- financial markets,
- advertising,
- packaging,
- and the services of commercial agents and agencies.
In other words, commerce encompasses a wide array of political, economical, technological, logistical, legal, regulatory, social and cultural aspects of trade on a large scale. From a marketing perspective, commerce creates time and place utility by making goods and services available to the customers at the right place and at the right time by changing their location or placement.
Described in this manner, trade is a part of commerce and commerce is an aspect of business.
History
Historian Peter Watson and Ramesh Manickam date the history of long-distance commerce from circa 150,000 years ago. In historic times, the introduction of currency as a standardized money facilitated the exchange of goods and services.
Commerce was a costly endeavor in the antiquities because of the risky nature of transportation, which restricted it to local markets. Commerce then expanded along with the improvement of transportation systems over time.
In the Middle Ages, long-distance and large-scale commerce was still limited within continents. Banking systems developed in medieval Europe, facilitating financial transactions across national boundaries.
Markets became a feature of town life, and were regulated by town authorities. With the advent of the age of exploration and oceangoing ships, commerce took an international, trans-continental stature.
Currently the reliability of international trans-oceanic shipping and mailing systems and the facility of the Internet has made commerce possible between cities, regions and countries situated anywhere in the world.
In the 21st century, Internet-based electronic commerce (where financial information is transferred over Internet), and its subcategories such as wireless mobile commerce and social network-based social commerce have been and continue to get adopted widely.
Regulation:
Legislative bodies and ministries or ministerial departments of commerce regulate, promote and manage domestic and foreign commercial activities within a country. International commerce can be regulated by bilateral treaties between countries.
After the second world war and the rise of free trade among nations, multilateral arrangements such as the GATT and later the World Trade Organization became the principal systems regulating global commerce. The International Chamber of Commerce (ICC) is another important organization which sets rules and resolves disputes in international commerce.
See also:
- Bachelor of Business Administration
- Bachelor of Commerce
- Doctor of Commerce
- Capitalism
- Cargo
- Commercial law
- Eco commerce
- Economics
- Fair
- Financial planning (business)
- Fishery
- Harvest
- Laissez-faire
- Market (economics)
- Marketplace
- Mass production
- Master of Commerce
- Merchandising
- Roman commerce
- Value (economics)
E-commerce including E-Commerce Payment Systems
TOP: Ultimate 122 Future eCommerce Business Ideas That Would Work From 2023 and Beyond;
BOTTOM: Pros and Cons of Running an eCommerce Business*
- YouTube Video: A Day in the Life of Digital Commerce
- YouTube Video: 7 Things to Know BEFORE You Start an E-commerce Business
- YouTube Video: How to Start an Ecommerce Business (A Complete Blueprint)
TOP: Ultimate 122 Future eCommerce Business Ideas That Would Work From 2023 and Beyond;
BOTTOM: Pros and Cons of Running an eCommerce Business*
* -- BOTTOM Picture: Ultimate 122 Future eCommerce Business Ideas That Would Work From 2023 and Beyond:
Thinking of kicking off your eCommerce business? First, consider evaluating the pros and cons of starting this particular journey. In this competitive online business world, marking your strong presence requires great effort.
You should know that E-Commerce is constantly evolving hence keeping up with every development is necessary for you. This approach helps you to stand out with your startup in the world of E-Commerce.
Evaluating the pros and cons of an E-Commerce business from your perspective is essential for you. In addition, it helps you to know whether you should kick off an E-Commerce business or not.
This write-up is worth reading for you as it manifests some significant pros and cons of running an E-Commerce business. Below are those pros and cons, so you should make sure that you look at them thoroughly.
Pros:
Wrap-Up:
The abovementioned are some major pros and cons of running an E-Commerce website. Ensure that you do not overlook these pros and cons because it is essential to know them if you wish to start a successful E-Commerce business.
___________________________________________________________________________
E-Commerce (Wikipedia):
E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet.
E-commerce draws on technologies such as:
E-commerce is in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.
Defining e-commerce:
The term was coined and first employed by Robert Jacobson, Principal Consultant to the California State Assembly's Utilities & Commerce Committee, in the title and text of California's Electronic Commerce Act, carried by the late Committee Chairwoman Gwen Moore (D-L.A.) and enacted in 1984.
E-commerce typically uses the web for at least a part of a transaction's life cycle although it may also use other technologies such as e-mail.
Typical e-commerce transactions include the purchase of products (such as books from Amazon) or services (such as music downloads in the form of digital distribution such as the iTunes Store).
There are three areas of e-commerce:
E-commerce is supported by electronic business. The existence value of e-commerce is to allow consumers to shop online and pay online through the Internet, saving the time and space of customers and enterprises, greatly improving transaction efficiency, especially for busy office workers, and also saving a lot of valuable time.
E-commerce businesses may also employ some or all of the following:
There are five essential categories of E-commerce:
Forms of E-Commerce:
Contemporary electronic commerce can be classified into two categories:
The first category is business based on types of goods sold (involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce).
The second category is based on the nature of the participant (B2B, B2C, C2B and C2C).
On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are pressing issues for electronic commerce.
Aside from traditional e-commerce, the terms m-Commerce (mobile commerce) as well (around 2013) t-Commerce have also been used.
Governmental regulation:
In the United States, California's Electronic Commerce Act (1984), enacted by the Legislature, the more recent California Privacy Rights Act (2020), enacted through a popular election proposition and to control specifically how electronic commerce may be conducted in California.
In the US in its entirety, electronic commerce activities are regulated more broadly by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail.
The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers' personal information.
As a result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.
Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for e-commerce around the world. In order to give a uniformity to e-commerce law around the world, many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996).
Internationally there is the International Consumer Protection and Enforcement Network (ICPEN), which was formed in 1991 from an informal network of government customer fair trade organisations. The purpose was stated as being to find ways of co-operating on tackling consumer problems connected with cross-border transactions in both goods and services, and to help ensure exchanges of information among the participants for mutual benefit and understanding.
From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a portal to report complaints about online and related transactions with foreign companies.
There is also Asia Pacific Economic Cooperation. APEC was established in 1989 with the vision of achieving stability, security and prosperity for the region through free and open trade and investment. APEC has an Electronic Commerce Steering Group as well as working on common privacy regulations throughout the APEC region.
In Australia, trade is covered under Australian Treasury Guidelines for electronic commerce and the Australian Competition & Consumer Commission regulates and offers advice on how to deal with businesses online, and offers specific advice on what happens if things go wrong.
The European Union undertook an extensive enquiry into e-commerce in 2015-16 which observed significant growth in the development of e-commerce, along with some developments which raised concerns, such as increased use of selective distribution systems, which allow manufacturers to control routes to market, and "increased use of contractual restrictions to better control product distribution".
The European Commission felt that some emerging practices might be justified if they could improve the quality of product distribution, but "others may unduly prevent consumers from benefiting from greater product choice and lower prices in e-commerce and therefore warrant Commission action" in order to promote compliance with EU competition rules.
In the United Kingdom, the Financial Services Authority (FSA) was formerly the regulating authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in 2013 by the Prudential Regulation Authority and the Financial Conduct Authority.
The UK implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into effect on 1 November 2009. The PSR affects firms providing payment services and their customers. These firms include banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as payment institutions (PIs), who are subject to prudential requirements. Article 87 of the PSD requires the European Commission to report on the implementation and impact of the PSD by 1 November 2012.
In India, the Information Technology Act 2000 governs the basic applicability of e-commerce.
In China, the Telecommunications Regulations of the People's Republic of China (promulgated on 25 September 2000), stipulated the Ministry of Industry and Information Technology (MIIT) as the government department regulating all telecommunications related activities, including electronic commerce.
On the same day, the Administrative Measures on Internet Information Services were released, the first administrative regulations to address profit-generating activities conducted through the Internet, and lay the foundation for future regulations governing e-commerce in China.
On 28 August 2004, the eleventh session of the tenth NPC Standing Committee adopted an Electronic Signature Law, which regulates data message, electronic signature authentication and legal liability issues. It is considered the first law in China's e-commerce legislation. It was a milestone in the course of improving China's electronic commerce legislation, and also marks the entering of China's rapid development stage for electronic commerce legislation.
Global trends:
In 2010, the United Kingdom had the highest per capita e-commerce spending in the world. As of 2013, the Czech Republic was the European country where e-commerce delivers the biggest contribution to the enterprises' total revenue. Almost a quarter (24%) of the country's total turnover is generated via the online channel.
Among emerging economies, China's e-commerce presence continues to expand every year. With 668 million Internet users, China's online shopping sales reached $253 billion in the first half of 2015, accounting for 10% of total Chinese consumer retail sales in that period.
The Chinese retailers have been able to help consumers feel more comfortable shopping online. e-commerce transactions between China and other countries increased 32% to 2.3 trillion yuan ($375.8 billion) in 2012 and accounted for 9.6% of China's total international trade. In 2013, Alibaba had an e-commerce market share of 80% in China.
In 2014, Alibaba still dominated the B2B marketplace in China with a market share of 44.82%, followed by several other companies including Made-in-China.com at 3.21%, and GlobalSources.com at 2.98%, with the total transaction value of China's B2B market exceeding 4.5 billion yuan.
In 2014, there were 600 million Internet users in China (twice as many as in the US), making it the world's biggest online market. China is also the largest e-commerce market in the world by value of sales, with an estimated US$899 billion in 2016.
Research shows that Chinese consumer motivations are different enough from Western audiences to require unique e-commerce app designs instead of simply porting Western apps into the Chinese market.
Recent research indicates that electronic commerce, commonly referred to as e-commerce, presently shapes the manner in which people shop for products. The GCC countries have a rapidly growing market and are characterized by a population that becomes wealthier (Yuldashev). As such, retailers have launched Arabic-language websites as a means to target this population.
Secondly, there are predictions of increased mobile purchases and an expanding internet audience (Yuldashev). The growth and development of the two aspects make the GCC countries become larger players in the electronic commerce market with time progress.
Specifically, research shows that the e-commerce market is expected to grow to over $20 billion by 2020 among these GCC countries (Yuldashev). The e-commerce market has also gained much popularity among western countries, and in particular Europe and the U.S.
These countries have been highly characterized by consumer-packaged goods (CPG) (Geisler, 34). However, trends show that there are future signs of a reverse. Similar to the GCC countries, there has been increased purchase of goods and services in online channels rather than offline channels.
Activist investors are trying hard to consolidate and slash their overall cost and the governments in western countries continue to impose more regulation on CPG manufacturers (Geisler, 36). In these senses, CPG investors are being forced to adapt to e-commerce as it is effective as well as a means for them to thrive.
In 2013, Brazil's e-commerce was growing quickly with retail e-commerce sales expected to grow at a double-digit pace through 2014. By 2016, eMarketer expected retail e-commerce sales in Brazil to reach $17.3 billion. India has an Internet user base of about 460 million as of December 2017.
Despite being the third largest user base in the world, the penetration of the Internet is low compared to markets like the United States, United Kingdom or France but is growing at a much faster rate, adding around 6 million new entrants every month.
In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. The India retail market is expected to rise from 2.5% in 2016 to 5% in 2020.
The future trends in the GCC countries will be similar to that of the western countries.
Despite the forces that push business to adapt e-commerce as a means to sell goods and products, the manner in which customers make purchases is similar in countries from these two regions.
For instance, there has been an increased usage of smartphones which comes in conjunction with an increase in the overall internet audience from the regions. Yuldashev writes that consumers are scaling up to more modern technology that allows for mobile marketing.
However, the percentage of smartphone and internet users who make online purchases is expected to vary in the first few years. It will be independent on the willingness of the people to adopt this new trend (The Statistics Portal).
For example, UAE has the greatest smartphone penetration of 73.8 per cent and has 91.9 per cent of its population has access to the internet. On the other hand, smartphone penetration in Europe has been reported to be at 64.7 per cent (The Statistics Portal).
Regardless, the disparity in percentage between these regions is expected to level out in future because e-commerce technology is expected to grow to allow for more users.
The e-commerce business within these two regions will result in competition. Government bodies at the country level will enhance their measures and strategies to ensure sustainability and consumer protection (Krings, et al.). These increased measures will raise the environmental and social standards in the countries, factors that will determine the success of the e-commerce market in these countries.
For example, an adoption of tough sanctions will make it difficult for companies to enter the e-commerce market while lenient sanctions will allow ease of companies. As such, the future trends between GCC countries and the Western countries will be independent of these sanctions (Krings, et al.). These countries need to make rational conclusions in coming up with effective sanctions.
The rate of growth of the number of internet users in the Arab countries has been rapid – 13.1% in 2015. A significant portion of the e-commerce market in the Middle East comprises people in the 30–34 year age group. Egypt has the largest number of internet users in the region, followed by Saudi Arabia and Morocco; these constitute 3/4th of the region's share.
Yet, internet penetration is low: 35% in Egypt and 65% in Saudi Arabia.
E-commerce has become an important tool for small and large businesses worldwide, not only to sell to customers, but also to engage them.
Cross-border e-Commerce is also an essential field for e-Commerce businesses. It has responded to the trend of globalization. It shows that numerous firms have opened up new businesses, expanded new markets, and overcome trade barriers; more and more enterprises have started exploring the cross-border cooperation field.
In addition, compared with traditional cross-border trade, the information on cross-border e-commerce is more concealed. In the era of globalization, cross-border e-commerce for inter-firm companies means the activities, interactions, or social relations of two or more e-commerce enterprises.
However, the success of cross-border e-commerce promotes the development of small and medium-sized firms, and it has finally become a new transaction mode. It has helped the companies solve financial problems and realize the reasonable allocation of resources field. SMEs ( small and medium enterprises) can also precisely match the demand and supply in the market, having the industrial chain majorization and creating more revenues for companies.
In 2012, e-commerce sales topped $1 trillion for the first time in history.
Mobile devices are playing an increasing role in the mix of e-commerce, this is also commonly called mobile commerce, or m-commerce. In 2014, one estimate saw purchases made on mobile devices making up 25% of the market by 2017.
For traditional businesses, one research stated that information technology and cross-border e-commerce is a good opportunity for the rapid development and growth of enterprises.
Many companies have invested an enormous volume of investment in mobile applications. The DeLone and McLean Model stated that three perspectives contribute to a successful e-business: information system quality, service quality and users' satisfaction.
There is no limit of time and space, there are more opportunities to reach out to customers around the world, and to cut down unnecessary intermediate links, thereby reducing the cost price, and can benefit from one on one large customer data analysis, to achieve a high degree of personal customization strategic plan, in order to fully enhance the core competitiveness of the products in the company.
Modern 3D graphics technologies, such as Facebook 3D Posts, are considered by some social media marketers and advertisers as a preferable way to promote consumer goods than static photos, and some brands like Sony are already paving the way for augmented reality commerce.
Wayfair now lets you inspect a 3D version of its furniture in a home setting before buying.
Logistics:
Logistics in e-commerce mainly concerns fulfillment. Online markets and retailers have to find the best possible way to fill orders and deliver products. Small companies usually control their own logistic operation because they do not have the ability to hire an outside company.
Most large companies hire a fulfillment service that takes care of a company's logistic needs.
Impacts:
Impact on markets and retailers:
E-commerce markets are growing at noticeable rates. The online market is expected to grow by 56% in 2015–2020. In 2017, retail e-commerce sales worldwide amounted to 2.3 trillion US dollars and e-retail revenues are projected to grow to 4.891 trillion US dollars in 2021.
Traditional markets are only expected 2% growth during the same time. Brick and mortar retailers are struggling because of online retailer's ability to offer lower prices and higher efficiency. Many larger retailers are able to maintain a presence offline and online by linking physical and online offerings.
E-commerce allows customers to overcome geographical barriers and allows them to purchase products anytime and from anywhere. Online and traditional markets have different strategies for conducting business.
Traditional retailers offer fewer assortment of products because of shelf space where, online retailers often hold no inventory but send customer orders directly to the manufacture. The pricing strategies are also different for traditional and online retailers. Traditional retailers base their prices on store traffic and the cost to keep inventory. Online retailers base prices on the speed of delivery.
There are two ways for marketers to conduct business through e-commerce: fully online or online along with a brick and mortar store. Online marketers can offer lower prices, greater product selection, and high efficiency rates.
Many customers prefer online markets if the products can be delivered quickly at relatively low price. However, online retailers cannot offer the physical experience that traditional retailers can. It can be difficult to judge the quality of a product without the physical experience, which may cause customers to experience product or seller uncertainty.
Another issue regarding the online market is concerns about the security of online transactions. Many customers remain loyal to well-known retailers because of this issue.
Security is a primary problem for e-commerce in developed and developing countries. E-commerce security is protecting businesses' websites and customers from unauthorized access, use, alteration, or destruction.
The type of threats include:
E-commerce websites use different tools to avert security threats. These tools include:
Impact on supply chain management:
Main article: Supply chain management
For a long time, companies had been troubled by the gap between the benefits which supply chain technology has and the solutions to deliver those benefits. However, the emergence of e-commerce has provided a more practical and effective way of delivering the benefits of the new supply chain technologies.
E-commerce has the capability to integrate all inter-company and intra-company functions, meaning that the three flows (physical flow, financial flow and information flow) of the supply chain could be also affected by e-commerce. The affections on physical flows improved the way of product and inventory movement level for companies.
For the information flows, e-commerce optimized the capacity of information processing than companies used to have, and for the financial flows, e-commerce allows companies to have more efficient payment and settlement solutions.
In addition, e-commerce has a more sophisticated level of impact on supply chains:
First, the performance gap will be eliminated since companies can identify gaps between different levels of supply chains by electronic means of solutions;
Second, as a result of e-commerce emergence, new capabilities such implementing ERP systems, like SAP ERP, Xero, or Megaventory, have helped companies to manage operations with customers and suppliers. Yet these new capabilities are still not fully exploited.
Third, technology companies would keep investing on new e-commerce software solutions as they are expecting investment return.
Fourth, e-commerce would help to solve many aspects of issues that companies may feel difficult to cope with, such as political barriers or cross-country changes.
Finally, e-commerce provides companies a more efficient and effective way to collaborate with each other within the supply chain.
Impact on employment:
E-commerce helps create new job opportunities due to information related services, software app and digital products. It also causes job losses. The areas with the greatest predicted job-loss are retail, postal, and travel agencies.
The development of e-commerce will create jobs that require highly skilled workers to manage large amounts of information, customer demands, and production processes.
In contrast, people with poor technical skills cannot enjoy the wages welfare. On the other hand, because e-commerce requires sufficient stocks that could be delivered to customers in time, the warehouse becomes an important element. Warehouse needs more staff to manage, supervise and organize, thus the condition of warehouse environment will be concerned by employees.
Impact on customers:
E-commerce brings convenience for customers as they do not have to leave home and only need to browse websites online, especially for buying products which are not sold in nearby shops. It could help customers buy a wider range of products and save customers' time.
Consumers also gain power through online shopping. They are able to research products and compare prices among retailers. Thanks to the practice of user-generated ratings and reviews from companies like Bazaarvoice, Trustpilot, and Yelp, customers can also see what other people think of a product, and decide before buying if they want to spend money on it.
Also, online shopping often provides sales promotion or discounts code, thus it is more price effective for customers. Moreover, e-commerce provides products' detailed information; even the in-store staff cannot offer such detailed explanation. Customers can also review and track the order history online.
E-commerce technologies cut transaction costs by allowing both manufactures and consumers to skip through the intermediaries. This is achieved through by extending the search area best price deals and by group purchase. The success of e-commerce in urban and regional levels depend on how the local firms and consumers have adopted to e-commerce.
However, e-commerce lacks human interaction for customers, especially who prefer face-to-face connection. Customers are also concerned with the security of online transactions and tend to remain loyal to well-known retailers.
In recent years, clothing retailers such as Tommy Hilfiger have started adding Virtual Fit platforms to their e-commerce sites to reduce the risk of customers buying the wrong sized clothes, although these vary greatly in their fit for purpose.
When the customer regret the purchase of a product, it involves returning goods and refunding process. This process is inconvenient as customers need to pack and post the goods. If the products are expensive, large or fragile, it refers to safety issues.
Impact on the environment:
In 2018, E-commerce generated 1.3 million short tons (1.2 megatonnes) of container cardboard in North America, an increase from 1.1 million (1.00)) in 2017. Only 35 percent of North American cardboard manufacturing capacity is from recycled content. The recycling rate in Europe is 80 percent and Asia is 93 percent.
Amazon, the largest user of boxes, has a strategy to cut back on packing material and has reduced packaging material used by 19 percent by weight since 2016. Amazon is requiring retailers to manufacture their product packaging in a way that does not require additional shipping packaging. Amazon also has an 85-person team researching ways to reduce and improve their packaging and shipping materials.
Accelerated movement of packages around the world includes accelerated movement of living things, with all its attendant risks. Weeds, pests, and diseases all sometimes travel in packages of seeds. Some of these packages are part of brushing manipulation of e-commerce reviews.
Impact on traditional retail:
E-commerce has been cited as a major force for the failure of major U.S. retailers in a trend frequently referred to as a retail apocalypse. The rise of e-commerce outlets like Amazon has made it harder for traditional retailers to attract customers to their stores and forced companies to change their sales strategies.
Many companies have turned to sales promotions and increased digital efforts to lure shoppers while shutting down brick-and-mortar locations. The trend has forced some traditional retailers to shutter its brick and mortar operations.
E-commerce during COVID-19:
Further information: Economic impact of the COVID-19 pandemic
In March 2020, global retail website traffic hit 14.3 billion visits signifying an unprecedented growth of e-commerce during the lockdown of 2020. Later studies show that online sales increased by 25% and online grocery shopping increased by over 100% during the crisis in the United States.
Meanwhile, as many as 29% of surveyed shoppers state that they will never go back to shopping in person again; in the UK, 43% of consumers state that they expect to keep on shopping the same way even after the lockdown is over.
Retail sales of e-commerce shows that COVID-19 has a significant impact on e-commerce and its sales are expected to reach $6.5 trillion by 2023.
Business application
Some common applications related to electronic commerce are:
Timeline
A timeline for the development of e-commerce:
See also
An e-commerce payment system facilitates the acceptance of electronic payment for online transactions. Also known as a sample of Electronic Data Interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.
Over the years, credit cards have become one of the most common forms of payment for e-commerce transactions. In North America almost 90% of online retail transactions were made with this payment type.
It would be difficult for an online retailer to operate without supporting credit and debit cards due to their widespread use. Increased security measures include use of the card verification number (CVN) which detects fraud by comparing the verification number printed on the signature strip on the back of the card with the information on file with the cardholder's issuing bank.
Also online merchants have to comply with stringent rules stipulated by the credit and debit card issuers (Visa and MasterCard). This means that merchants must have security protocol and procedures in place to ensure transactions are more secure. This can also include having a certificate from an authorized certification authority (CA) who provides PKI (Public-Key infrastructure) for securing credit and debit card transactions.
Despite widespread use in North America, there are still a large number of countries such as China and India that have some problems to overcome in regard to credit card security. In the meantime, the use of smartcards has become extremely popular.
A Smartcard is similar to a credit card; however it contains an embedded 8-bit microprocessor and uses electronic cash which transfers from the consumers’ card to the sellers’ device.
A popular smartcard initiative is the VISA Smartcard. Using the VISA Smartcard you can transfer electronic cash to your card from your bank account, and you can then use your card at various retailers and on the internet.
There are companies that enable financial transactions to take place over the internet, such as PayPal. Many of the mediaries permit consumers to establish an account quickly, and to transfer funds into their on-line accounts from a traditional bank account (typically via ACH transactions), and vice versa, after verification of the consumer's identity and authority to access such bank accounts.
Also, the larger mediaries further allow transactions to and from credit card accounts, although such credit card transactions are usually assessed a fee (either to the recipient or the sender) to recoup the transaction fees charged to the mediary.
The speed and simplicity with which cyber-mediary accounts can be established and used have contributed to their widespread use, although the risk of abuse, theft and other problems—with disgruntled users frequently accusing the mediaries themselves of wrongful behavior—is associated with them.
Click on any of the following blue hyperlinks for more about E-commerce Payment Systems:
Thinking of kicking off your eCommerce business? First, consider evaluating the pros and cons of starting this particular journey. In this competitive online business world, marking your strong presence requires great effort.
You should know that E-Commerce is constantly evolving hence keeping up with every development is necessary for you. This approach helps you to stand out with your startup in the world of E-Commerce.
Evaluating the pros and cons of an E-Commerce business from your perspective is essential for you. In addition, it helps you to know whether you should kick off an E-Commerce business or not.
This write-up is worth reading for you as it manifests some significant pros and cons of running an E-Commerce business. Below are those pros and cons, so you should make sure that you look at them thoroughly.
Pros:
- Kicking off an E-Commerce business does not require you to have a physical store, and it is the biggest advantage which saves you a huge amount of money. To do a traditional business, you need to select an ideal location for your store, but you do not go this way in E-Commerce.
- In E-Commerce, you get a chance to have access to a bigger market. You have an opportunity to make your business famous internationally. Reaching your target audience in the E-Commerce world is also very easy, and you have customers from every part of the world. A precise online marketing strategy can take your E-Commerce business to the next high level and make it popular internationally.
- Your online store is open 24/7, and people make purchases whenever they want. So waiting until the following day to visit any traditional store to buy anything is no more practice. You should know that an online store provides convenience to today’s customers; hence, coming up with online stores is increasing.
- You do not need to have a huge staff to run your online store, and it is another great attribute of an E-Commerce business. Remember that most procedures get automated, and all you need to do is supervise everything. Hiring less staff also saves you huge money which you may spend on launching more interesting products for customers.
- Remember that you cannot survive in the online business world. without having strong internet connectivity
- You need to keep track of your stock, sales, and overall performance of your online store. It is essential; otherwise, you will ruin your experience of running an E-Commerce business.
- It is also a fact that competition in E-Commerce is high, and you have to deal with dozens of competitors at a time. You should know that customers have countless options, and they do not take the time to move toward your competitors if they do not like your products.
- In the eCommerce world, establishing a strong and positive relationship with customers is not easy ts you do not meet them face to face. However, keep in mind that you are nameless and faceless on the internet, and it comes in your way to have a strong relationship with your customers.
- Making a high-quality website is another daunting task when it comes to E-Commerce. If your website is of low quality, customers will not take the time to move towards other similar websites. You always have to be very attentive to eliminate errors on your website daily to offer the best customer experience. Ensuring that your website is easy to navigate is not an easy task, and it may take a huge time if you go with the wrong approach.
Wrap-Up:
The abovementioned are some major pros and cons of running an E-Commerce website. Ensure that you do not overlook these pros and cons because it is essential to know them if you wish to start a successful E-Commerce business.
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E-Commerce (Wikipedia):
E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet.
E-commerce draws on technologies such as:
- mobile commerce,
- electronic funds transfer,
- supply chain management,
- Internet marketing,
- online transaction processing,
- electronic data interchange (EDI),
- inventory management systems,
- and automated data collection systems.
E-commerce is in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.
Defining e-commerce:
The term was coined and first employed by Robert Jacobson, Principal Consultant to the California State Assembly's Utilities & Commerce Committee, in the title and text of California's Electronic Commerce Act, carried by the late Committee Chairwoman Gwen Moore (D-L.A.) and enacted in 1984.
E-commerce typically uses the web for at least a part of a transaction's life cycle although it may also use other technologies such as e-mail.
Typical e-commerce transactions include the purchase of products (such as books from Amazon) or services (such as music downloads in the form of digital distribution such as the iTunes Store).
There are three areas of e-commerce:
E-commerce is supported by electronic business. The existence value of e-commerce is to allow consumers to shop online and pay online through the Internet, saving the time and space of customers and enterprises, greatly improving transaction efficiency, especially for busy office workers, and also saving a lot of valuable time.
E-commerce businesses may also employ some or all of the following:
- Online shopping for retail sales direct to consumers via web sites and mobile apps, conversational commerce via live chat, chatbots, and voice assistants.
- Providing or participating in online marketplaces, which process third-party business-to-consumer (B2C) or consumer-to-consumer (C2C) sales;
- Business-to-business (B2B) buying and selling.
- Gathering and using demographic data through web contacts and social media.
- B2B electronic data interchange.
- Marketing to prospective and established customers by e-mail or fax (for example, with newsletters).
- Engaging in pretail for launching new products and services.
- Online financial exchanges for currency exchanges or trading purposes.
There are five essential categories of E-commerce:
- Business to Business (B2B)
- Business to Consumer (B2C)
- Business to Government (B2G)
- Consumer to Business (C2B)
- Consumer to Consumer (C2C)
Forms of E-Commerce:
Contemporary electronic commerce can be classified into two categories:
The first category is business based on types of goods sold (involves everything from ordering "digital" content for immediate online consumption, to ordering conventional goods and services, to "meta" services to facilitate other types of electronic commerce).
The second category is based on the nature of the participant (B2B, B2C, C2B and C2C).
On the institutional level, big corporations and financial institutions use the internet to exchange financial data to facilitate domestic and international business. Data integrity and security are pressing issues for electronic commerce.
Aside from traditional e-commerce, the terms m-Commerce (mobile commerce) as well (around 2013) t-Commerce have also been used.
Governmental regulation:
In the United States, California's Electronic Commerce Act (1984), enacted by the Legislature, the more recent California Privacy Rights Act (2020), enacted through a popular election proposition and to control specifically how electronic commerce may be conducted in California.
In the US in its entirety, electronic commerce activities are regulated more broadly by the Federal Trade Commission (FTC). These activities include the use of commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct marketing over e-mail.
The Federal Trade Commission Act regulates all forms of advertising, including online advertising, and states that advertising must be truthful and non-deceptive. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of cases to enforce the promises in corporate privacy statements, including promises about the security of consumers' personal information.
As a result, any corporate privacy policy related to e-commerce activity may be subject to enforcement by the FTC.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in 2008, amends the Controlled Substances Act to address online pharmacies.
Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for e-commerce around the world. In order to give a uniformity to e-commerce law around the world, many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996).
Internationally there is the International Consumer Protection and Enforcement Network (ICPEN), which was formed in 1991 from an informal network of government customer fair trade organisations. The purpose was stated as being to find ways of co-operating on tackling consumer problems connected with cross-border transactions in both goods and services, and to help ensure exchanges of information among the participants for mutual benefit and understanding.
From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a portal to report complaints about online and related transactions with foreign companies.
There is also Asia Pacific Economic Cooperation. APEC was established in 1989 with the vision of achieving stability, security and prosperity for the region through free and open trade and investment. APEC has an Electronic Commerce Steering Group as well as working on common privacy regulations throughout the APEC region.
In Australia, trade is covered under Australian Treasury Guidelines for electronic commerce and the Australian Competition & Consumer Commission regulates and offers advice on how to deal with businesses online, and offers specific advice on what happens if things go wrong.
The European Union undertook an extensive enquiry into e-commerce in 2015-16 which observed significant growth in the development of e-commerce, along with some developments which raised concerns, such as increased use of selective distribution systems, which allow manufacturers to control routes to market, and "increased use of contractual restrictions to better control product distribution".
The European Commission felt that some emerging practices might be justified if they could improve the quality of product distribution, but "others may unduly prevent consumers from benefiting from greater product choice and lower prices in e-commerce and therefore warrant Commission action" in order to promote compliance with EU competition rules.
In the United Kingdom, the Financial Services Authority (FSA) was formerly the regulating authority for most aspects of the EU's Payment Services Directive (PSD), until its replacement in 2013 by the Prudential Regulation Authority and the Financial Conduct Authority.
The UK implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into effect on 1 November 2009. The PSR affects firms providing payment services and their customers. These firms include banks, non-bank credit card issuers and non-bank merchant acquirers, e-money issuers, etc. The PSRs created a new class of regulated firms known as payment institutions (PIs), who are subject to prudential requirements. Article 87 of the PSD requires the European Commission to report on the implementation and impact of the PSD by 1 November 2012.
In India, the Information Technology Act 2000 governs the basic applicability of e-commerce.
In China, the Telecommunications Regulations of the People's Republic of China (promulgated on 25 September 2000), stipulated the Ministry of Industry and Information Technology (MIIT) as the government department regulating all telecommunications related activities, including electronic commerce.
On the same day, the Administrative Measures on Internet Information Services were released, the first administrative regulations to address profit-generating activities conducted through the Internet, and lay the foundation for future regulations governing e-commerce in China.
On 28 August 2004, the eleventh session of the tenth NPC Standing Committee adopted an Electronic Signature Law, which regulates data message, electronic signature authentication and legal liability issues. It is considered the first law in China's e-commerce legislation. It was a milestone in the course of improving China's electronic commerce legislation, and also marks the entering of China's rapid development stage for electronic commerce legislation.
Global trends:
In 2010, the United Kingdom had the highest per capita e-commerce spending in the world. As of 2013, the Czech Republic was the European country where e-commerce delivers the biggest contribution to the enterprises' total revenue. Almost a quarter (24%) of the country's total turnover is generated via the online channel.
Among emerging economies, China's e-commerce presence continues to expand every year. With 668 million Internet users, China's online shopping sales reached $253 billion in the first half of 2015, accounting for 10% of total Chinese consumer retail sales in that period.
The Chinese retailers have been able to help consumers feel more comfortable shopping online. e-commerce transactions between China and other countries increased 32% to 2.3 trillion yuan ($375.8 billion) in 2012 and accounted for 9.6% of China's total international trade. In 2013, Alibaba had an e-commerce market share of 80% in China.
In 2014, Alibaba still dominated the B2B marketplace in China with a market share of 44.82%, followed by several other companies including Made-in-China.com at 3.21%, and GlobalSources.com at 2.98%, with the total transaction value of China's B2B market exceeding 4.5 billion yuan.
In 2014, there were 600 million Internet users in China (twice as many as in the US), making it the world's biggest online market. China is also the largest e-commerce market in the world by value of sales, with an estimated US$899 billion in 2016.
Research shows that Chinese consumer motivations are different enough from Western audiences to require unique e-commerce app designs instead of simply porting Western apps into the Chinese market.
Recent research indicates that electronic commerce, commonly referred to as e-commerce, presently shapes the manner in which people shop for products. The GCC countries have a rapidly growing market and are characterized by a population that becomes wealthier (Yuldashev). As such, retailers have launched Arabic-language websites as a means to target this population.
Secondly, there are predictions of increased mobile purchases and an expanding internet audience (Yuldashev). The growth and development of the two aspects make the GCC countries become larger players in the electronic commerce market with time progress.
Specifically, research shows that the e-commerce market is expected to grow to over $20 billion by 2020 among these GCC countries (Yuldashev). The e-commerce market has also gained much popularity among western countries, and in particular Europe and the U.S.
These countries have been highly characterized by consumer-packaged goods (CPG) (Geisler, 34). However, trends show that there are future signs of a reverse. Similar to the GCC countries, there has been increased purchase of goods and services in online channels rather than offline channels.
Activist investors are trying hard to consolidate and slash their overall cost and the governments in western countries continue to impose more regulation on CPG manufacturers (Geisler, 36). In these senses, CPG investors are being forced to adapt to e-commerce as it is effective as well as a means for them to thrive.
In 2013, Brazil's e-commerce was growing quickly with retail e-commerce sales expected to grow at a double-digit pace through 2014. By 2016, eMarketer expected retail e-commerce sales in Brazil to reach $17.3 billion. India has an Internet user base of about 460 million as of December 2017.
Despite being the third largest user base in the world, the penetration of the Internet is low compared to markets like the United States, United Kingdom or France but is growing at a much faster rate, adding around 6 million new entrants every month.
In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. The India retail market is expected to rise from 2.5% in 2016 to 5% in 2020.
The future trends in the GCC countries will be similar to that of the western countries.
Despite the forces that push business to adapt e-commerce as a means to sell goods and products, the manner in which customers make purchases is similar in countries from these two regions.
For instance, there has been an increased usage of smartphones which comes in conjunction with an increase in the overall internet audience from the regions. Yuldashev writes that consumers are scaling up to more modern technology that allows for mobile marketing.
However, the percentage of smartphone and internet users who make online purchases is expected to vary in the first few years. It will be independent on the willingness of the people to adopt this new trend (The Statistics Portal).
For example, UAE has the greatest smartphone penetration of 73.8 per cent and has 91.9 per cent of its population has access to the internet. On the other hand, smartphone penetration in Europe has been reported to be at 64.7 per cent (The Statistics Portal).
Regardless, the disparity in percentage between these regions is expected to level out in future because e-commerce technology is expected to grow to allow for more users.
The e-commerce business within these two regions will result in competition. Government bodies at the country level will enhance their measures and strategies to ensure sustainability and consumer protection (Krings, et al.). These increased measures will raise the environmental and social standards in the countries, factors that will determine the success of the e-commerce market in these countries.
For example, an adoption of tough sanctions will make it difficult for companies to enter the e-commerce market while lenient sanctions will allow ease of companies. As such, the future trends between GCC countries and the Western countries will be independent of these sanctions (Krings, et al.). These countries need to make rational conclusions in coming up with effective sanctions.
The rate of growth of the number of internet users in the Arab countries has been rapid – 13.1% in 2015. A significant portion of the e-commerce market in the Middle East comprises people in the 30–34 year age group. Egypt has the largest number of internet users in the region, followed by Saudi Arabia and Morocco; these constitute 3/4th of the region's share.
Yet, internet penetration is low: 35% in Egypt and 65% in Saudi Arabia.
E-commerce has become an important tool for small and large businesses worldwide, not only to sell to customers, but also to engage them.
Cross-border e-Commerce is also an essential field for e-Commerce businesses. It has responded to the trend of globalization. It shows that numerous firms have opened up new businesses, expanded new markets, and overcome trade barriers; more and more enterprises have started exploring the cross-border cooperation field.
In addition, compared with traditional cross-border trade, the information on cross-border e-commerce is more concealed. In the era of globalization, cross-border e-commerce for inter-firm companies means the activities, interactions, or social relations of two or more e-commerce enterprises.
However, the success of cross-border e-commerce promotes the development of small and medium-sized firms, and it has finally become a new transaction mode. It has helped the companies solve financial problems and realize the reasonable allocation of resources field. SMEs ( small and medium enterprises) can also precisely match the demand and supply in the market, having the industrial chain majorization and creating more revenues for companies.
In 2012, e-commerce sales topped $1 trillion for the first time in history.
Mobile devices are playing an increasing role in the mix of e-commerce, this is also commonly called mobile commerce, or m-commerce. In 2014, one estimate saw purchases made on mobile devices making up 25% of the market by 2017.
For traditional businesses, one research stated that information technology and cross-border e-commerce is a good opportunity for the rapid development and growth of enterprises.
Many companies have invested an enormous volume of investment in mobile applications. The DeLone and McLean Model stated that three perspectives contribute to a successful e-business: information system quality, service quality and users' satisfaction.
There is no limit of time and space, there are more opportunities to reach out to customers around the world, and to cut down unnecessary intermediate links, thereby reducing the cost price, and can benefit from one on one large customer data analysis, to achieve a high degree of personal customization strategic plan, in order to fully enhance the core competitiveness of the products in the company.
Modern 3D graphics technologies, such as Facebook 3D Posts, are considered by some social media marketers and advertisers as a preferable way to promote consumer goods than static photos, and some brands like Sony are already paving the way for augmented reality commerce.
Wayfair now lets you inspect a 3D version of its furniture in a home setting before buying.
Logistics:
Logistics in e-commerce mainly concerns fulfillment. Online markets and retailers have to find the best possible way to fill orders and deliver products. Small companies usually control their own logistic operation because they do not have the ability to hire an outside company.
Most large companies hire a fulfillment service that takes care of a company's logistic needs.
Impacts:
Impact on markets and retailers:
E-commerce markets are growing at noticeable rates. The online market is expected to grow by 56% in 2015–2020. In 2017, retail e-commerce sales worldwide amounted to 2.3 trillion US dollars and e-retail revenues are projected to grow to 4.891 trillion US dollars in 2021.
Traditional markets are only expected 2% growth during the same time. Brick and mortar retailers are struggling because of online retailer's ability to offer lower prices and higher efficiency. Many larger retailers are able to maintain a presence offline and online by linking physical and online offerings.
E-commerce allows customers to overcome geographical barriers and allows them to purchase products anytime and from anywhere. Online and traditional markets have different strategies for conducting business.
Traditional retailers offer fewer assortment of products because of shelf space where, online retailers often hold no inventory but send customer orders directly to the manufacture. The pricing strategies are also different for traditional and online retailers. Traditional retailers base their prices on store traffic and the cost to keep inventory. Online retailers base prices on the speed of delivery.
There are two ways for marketers to conduct business through e-commerce: fully online or online along with a brick and mortar store. Online marketers can offer lower prices, greater product selection, and high efficiency rates.
Many customers prefer online markets if the products can be delivered quickly at relatively low price. However, online retailers cannot offer the physical experience that traditional retailers can. It can be difficult to judge the quality of a product without the physical experience, which may cause customers to experience product or seller uncertainty.
Another issue regarding the online market is concerns about the security of online transactions. Many customers remain loyal to well-known retailers because of this issue.
Security is a primary problem for e-commerce in developed and developing countries. E-commerce security is protecting businesses' websites and customers from unauthorized access, use, alteration, or destruction.
The type of threats include:
- malicious codes,
- unwanted programs (ad ware, spyware),
- phishing,
- hacking,
- and cyber vandalism.
E-commerce websites use different tools to avert security threats. These tools include:
- firewalls,
- encryption software,
- digital certificates,
- and passwords.
Impact on supply chain management:
Main article: Supply chain management
For a long time, companies had been troubled by the gap between the benefits which supply chain technology has and the solutions to deliver those benefits. However, the emergence of e-commerce has provided a more practical and effective way of delivering the benefits of the new supply chain technologies.
E-commerce has the capability to integrate all inter-company and intra-company functions, meaning that the three flows (physical flow, financial flow and information flow) of the supply chain could be also affected by e-commerce. The affections on physical flows improved the way of product and inventory movement level for companies.
For the information flows, e-commerce optimized the capacity of information processing than companies used to have, and for the financial flows, e-commerce allows companies to have more efficient payment and settlement solutions.
In addition, e-commerce has a more sophisticated level of impact on supply chains:
First, the performance gap will be eliminated since companies can identify gaps between different levels of supply chains by electronic means of solutions;
Second, as a result of e-commerce emergence, new capabilities such implementing ERP systems, like SAP ERP, Xero, or Megaventory, have helped companies to manage operations with customers and suppliers. Yet these new capabilities are still not fully exploited.
Third, technology companies would keep investing on new e-commerce software solutions as they are expecting investment return.
Fourth, e-commerce would help to solve many aspects of issues that companies may feel difficult to cope with, such as political barriers or cross-country changes.
Finally, e-commerce provides companies a more efficient and effective way to collaborate with each other within the supply chain.
Impact on employment:
E-commerce helps create new job opportunities due to information related services, software app and digital products. It also causes job losses. The areas with the greatest predicted job-loss are retail, postal, and travel agencies.
The development of e-commerce will create jobs that require highly skilled workers to manage large amounts of information, customer demands, and production processes.
In contrast, people with poor technical skills cannot enjoy the wages welfare. On the other hand, because e-commerce requires sufficient stocks that could be delivered to customers in time, the warehouse becomes an important element. Warehouse needs more staff to manage, supervise and organize, thus the condition of warehouse environment will be concerned by employees.
Impact on customers:
E-commerce brings convenience for customers as they do not have to leave home and only need to browse websites online, especially for buying products which are not sold in nearby shops. It could help customers buy a wider range of products and save customers' time.
Consumers also gain power through online shopping. They are able to research products and compare prices among retailers. Thanks to the practice of user-generated ratings and reviews from companies like Bazaarvoice, Trustpilot, and Yelp, customers can also see what other people think of a product, and decide before buying if they want to spend money on it.
Also, online shopping often provides sales promotion or discounts code, thus it is more price effective for customers. Moreover, e-commerce provides products' detailed information; even the in-store staff cannot offer such detailed explanation. Customers can also review and track the order history online.
E-commerce technologies cut transaction costs by allowing both manufactures and consumers to skip through the intermediaries. This is achieved through by extending the search area best price deals and by group purchase. The success of e-commerce in urban and regional levels depend on how the local firms and consumers have adopted to e-commerce.
However, e-commerce lacks human interaction for customers, especially who prefer face-to-face connection. Customers are also concerned with the security of online transactions and tend to remain loyal to well-known retailers.
In recent years, clothing retailers such as Tommy Hilfiger have started adding Virtual Fit platforms to their e-commerce sites to reduce the risk of customers buying the wrong sized clothes, although these vary greatly in their fit for purpose.
When the customer regret the purchase of a product, it involves returning goods and refunding process. This process is inconvenient as customers need to pack and post the goods. If the products are expensive, large or fragile, it refers to safety issues.
Impact on the environment:
In 2018, E-commerce generated 1.3 million short tons (1.2 megatonnes) of container cardboard in North America, an increase from 1.1 million (1.00)) in 2017. Only 35 percent of North American cardboard manufacturing capacity is from recycled content. The recycling rate in Europe is 80 percent and Asia is 93 percent.
Amazon, the largest user of boxes, has a strategy to cut back on packing material and has reduced packaging material used by 19 percent by weight since 2016. Amazon is requiring retailers to manufacture their product packaging in a way that does not require additional shipping packaging. Amazon also has an 85-person team researching ways to reduce and improve their packaging and shipping materials.
Accelerated movement of packages around the world includes accelerated movement of living things, with all its attendant risks. Weeds, pests, and diseases all sometimes travel in packages of seeds. Some of these packages are part of brushing manipulation of e-commerce reviews.
Impact on traditional retail:
E-commerce has been cited as a major force for the failure of major U.S. retailers in a trend frequently referred to as a retail apocalypse. The rise of e-commerce outlets like Amazon has made it harder for traditional retailers to attract customers to their stores and forced companies to change their sales strategies.
Many companies have turned to sales promotions and increased digital efforts to lure shoppers while shutting down brick-and-mortar locations. The trend has forced some traditional retailers to shutter its brick and mortar operations.
E-commerce during COVID-19:
Further information: Economic impact of the COVID-19 pandemic
In March 2020, global retail website traffic hit 14.3 billion visits signifying an unprecedented growth of e-commerce during the lockdown of 2020. Later studies show that online sales increased by 25% and online grocery shopping increased by over 100% during the crisis in the United States.
Meanwhile, as many as 29% of surveyed shoppers state that they will never go back to shopping in person again; in the UK, 43% of consumers state that they expect to keep on shopping the same way even after the lockdown is over.
Retail sales of e-commerce shows that COVID-19 has a significant impact on e-commerce and its sales are expected to reach $6.5 trillion by 2023.
Business application
Some common applications related to electronic commerce are:
- B2B e-commerce (business-to-business)
- B2C e-commerce (business-to-consumer)
- Conversational commerce: e-commerce via chat
- Digital Wallet
- Document automation in supply chain and logistics
- Electronic tickets
- Enterprise content management
- Group buying
- Instant messaging
- Internet security
- Online auction
- Online banking
- Online office suites
- Online shopping and order tracking
- Online transaction processing
- Pretail
- Print on demand
- Shopping cart software
- Social networking
- Teleconference
- Usenet newsgroup
- Virtual assistant
- Domestic and international payment systems
Timeline
A timeline for the development of e-commerce:
- 1971 or 1972: The ARPANET is used to arrange a cannabis sale between students at the Stanford Artificial Intelligence Laboratory and the Massachusetts Institute of Technology, later described as "the seminal act of e-commerce" in John Markoff's book What the Dormouse Said.
- 1979: Michael Aldrich demonstrates the first online shopping system.
- 1981: Thomson Holidays UK is the first business-to-business (B2B) online shopping system to be installed.
- 1982: Minitel was introduced nationwide in France by France Télécom and used for online ordering.
- 1983: California State Assembly holds first hearing on "electronic commerce" in Volcano, California. Testifying are CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone, and Pacific Telesis. (Not permitted to testify is Quantum Technology, later to become AOL.) California's Electronic Commerce Act was passed in 1984.
- 1983: Karen Earle Lile (AKA Karen Bean) and Kendall Ross Bean create e-commerce service in San Francisco Bay Area. Buyers and sellers of pianos connect through a database created by Piano Finders on a Kaypro personal computer using DOS interface. Pianos for sale are listed on a Bulletin board system. Buyers print list of pianos for sale by a dot matrix printer. Customer service happened through a Piano Advice Hotline listed in the San Francisco Chronicle classified ads and money transferred by a bank wire transfer when a sale was completed.
- 1984: Gateshead SIS/Tesco is first B2C online shopping system and Mrs Snowball, 72, is the first online home shopper
- 1984: In April 1984, CompuServe launches the Electronic Mall in the US and Canada. It is the first comprehensive electronic commerce service.
- 1989: In May 1989, Sequoia Data Corp. introduced Compumarket, the first internet based system for e-commerce. Sellers and buyers could post items for sale and buyers could search the database and make purchases with a credit card.
- 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer.
- 1992: Book Stacks Unlimited in Cleveland opens a commercial sales website (www.books.com) selling books online with credit card processing.
- 1993: Paget Press releases edition No. 3 of the first app store, The Electronic AppWrapper
- 1994: Netscape releases the Navigator browser in October under the code name Mozilla. Netscape 1.0 is introduced in late 1994 with SSL encryption that made transactions secure.
- 1994: Ipswitch IMail Server becomes the first software available online for sale and immediate download via a partnership between Ipswitch, Inc. and OpenMarket.
- 1994: "Ten Summoner's Tales" by Sting becomes the first secure online purchase through NetMarket.
- 1995: The US National Science Foundation lifts its former strict prohibition of commercial enterprise on the Internet.
- 1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, product manager for CompuServe UK, from W H Smith's shop within CompuServe's UK Shopping Centre is the UK's first national online shopping service secure transaction. The shopping service at launch featured:
- W H Smith,
- Tesco,
- Virgin Megastores/Our Price,
- Great Universal Stores (GUS),
- Interflora,
- Dixons Retail,
- Past Times,
- PC World (retailer)
- and Innovations.
- 1995: Amazon is launched by Jeff Bezos.
- 1995: eBay is founded by computer programmer Pierre Omidyar as AuctionWeb. It is the first online auction site supporting person-to-person transactions.
- 1995: The first commercial-free 24-hour, internet-only radio stations, Radio HK and NetRadio start broadcasting.
- 1996: The use of Excalibur BBS with replicated "storefronts" was an early implementation of electronic commerce started by a group of SysOps in Australia and replicated to global partner sites.
- 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.
- 1999: Alibaba Group is established in China. Business.com sold for US$7.5 million to eCompanies, which was purchased in 1997 for US$149,000. The peer-to-peer filesharing software Napster launches. ATG Stores launches to sell decorative items for the home online.
- 1999: Global e-commerce reaches $150 billion.
- 2000: The dot-com bust.
- 2001: eBay has the largest userbase of any e-commerce site.
- 2001: Alibaba.com achieved profitability in December 2001.
- 2002: eBay acquires PayPal for $1.5 billion. Niche retail companies Wayfair and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
- 2003: Amazon posts first yearly profit.
- 2004: DHgate.com, China's first online B2B transaction platform, is established, forcing other B2B sites to move away from the "yellow pages" model.
- 2007: Business.com acquired by R.H. Donnelley for $345 million.
- 2014: US e-commerce and online retail sales projected to reach $294 billion, an increase of 12 percent over 2013 and 9% of all retail sales. Alibaba Group has the largest Initial public offering ever, worth $25 billion.
- 2015: Amazon accounts for more than half of all e-commerce growth, selling almost 500 Million SKU's in the US.
- 2017: Retail e-commerce sales across the world reaches $2.304 trillion, which was a 24.8 percent increase than previous year.
- 2017: Global e-commerce transactions generate $29.267 trillion, including $25.516 trillion for business-to-business (B2B) transactions and $3.851 trillion for business-to-consumer (B2C) sales.
- 2020: Government of India launched BHIM UPI digital payment interface in 2016. In the year 2020 it had 2 billion digital payment transactions.
See also
- Comparison of free software e-commerce web application frameworks
- Comparison of shopping cart software
- Customer intelligence
- Digital economy
- E-commerce credit card payment system
- Electronic bill payment
- Electronic money
- Non-store retailing
- Online shopping
- Payments as a service
- South Dakota v. Wayfair, Inc.
- Types of e-commerce
- Timeline of e-commerce
An e-commerce payment system facilitates the acceptance of electronic payment for online transactions. Also known as a sample of Electronic Data Interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.
Over the years, credit cards have become one of the most common forms of payment for e-commerce transactions. In North America almost 90% of online retail transactions were made with this payment type.
It would be difficult for an online retailer to operate without supporting credit and debit cards due to their widespread use. Increased security measures include use of the card verification number (CVN) which detects fraud by comparing the verification number printed on the signature strip on the back of the card with the information on file with the cardholder's issuing bank.
Also online merchants have to comply with stringent rules stipulated by the credit and debit card issuers (Visa and MasterCard). This means that merchants must have security protocol and procedures in place to ensure transactions are more secure. This can also include having a certificate from an authorized certification authority (CA) who provides PKI (Public-Key infrastructure) for securing credit and debit card transactions.
Despite widespread use in North America, there are still a large number of countries such as China and India that have some problems to overcome in regard to credit card security. In the meantime, the use of smartcards has become extremely popular.
A Smartcard is similar to a credit card; however it contains an embedded 8-bit microprocessor and uses electronic cash which transfers from the consumers’ card to the sellers’ device.
A popular smartcard initiative is the VISA Smartcard. Using the VISA Smartcard you can transfer electronic cash to your card from your bank account, and you can then use your card at various retailers and on the internet.
There are companies that enable financial transactions to take place over the internet, such as PayPal. Many of the mediaries permit consumers to establish an account quickly, and to transfer funds into their on-line accounts from a traditional bank account (typically via ACH transactions), and vice versa, after verification of the consumer's identity and authority to access such bank accounts.
Also, the larger mediaries further allow transactions to and from credit card accounts, although such credit card transactions are usually assessed a fee (either to the recipient or the sender) to recoup the transaction fees charged to the mediary.
The speed and simplicity with which cyber-mediary accounts can be established and used have contributed to their widespread use, although the risk of abuse, theft and other problems—with disgruntled users frequently accusing the mediaries themselves of wrongful behavior—is associated with them.
Click on any of the following blue hyperlinks for more about E-commerce Payment Systems:
- Methods of online payment
- See also:
United States Department of Commerce
- YouTube Video: U.S. Secretary of Commerce Gina Raimondo: Tech Hubs
- YouTube Video: Commerce Secretary Gina Raimondo Applauds Final Passage of CHIPS and Science Act of 2022
- YouTube Video: Deputy Secretary Graves Highlights Ways the Commerce Dept. is Supporting Minority-Owned Businesses
The United States Department of Commerce (DOC) is an executive department of the U.S. federal government concerned with creating the conditions for economic growth and opportunity.
Among its tasks are gathering economic and demographic data for business and government decision making, and helping to set industrial standards. Its main purpose is to create jobs, promote economic growth, encourage sustainable development and block harmful trade practices of other nations.
It is headed by the Secretary of Commerce, who reports directly to the President of the United States and is a member of the president's Cabinet. The Department of Commerce is headquartered in the Herbert C. Hoover Building in Washington, D.C.
History:
Further information on the department's publication: Commerce Reports
Organizational history:
The department was originally created as the United States Department of Commerce and Labor on February 14, 1903. It was subsequently renamed the Department of Commerce on March 4, 1913, as the bureaus and agencies specializing in labor were transferred to the new Department of Labor.
Since its creation, the Commerce Department has seen various agencies and administrative offices shift in and out of its organizational structure. The United States Patent and Trademark Office was transferred from the Interior Department into the Commerce Department in 1925.
The Federal Employment Stabilization Office existed within the department from 1931 to 1939. In 1940, the Weather Bureau (now the National Weather Service) was transferred from the Agriculture Department, and the Civil Aeronautics Authority was also merged into the Commerce Department.
In 1949, the Public Roads Administration was added to the department after the Federal Works Agency was dismantled.
In 1958, the independent Federal Aviation Agency was created and the Civil Aeronautics Authority was abolished. The United States Travel Service was established by the United States Secretary of Commerce on July 1, 1961, pursuant to the International Travel Act of 1961 (75 Stat. 129; 22 U.S.C. 2121 note)
The Economic Development Administration was created in 1965. In 1966, the Bureau of Public Roads was transferred to the newly created Department of Transportation.
The Minority Business Development Agency (MBDA) was created on March 5, 1969, originally established by President Richard M. Nixon as the Office of Minority Business Enterprise. The National Oceanic and Atmospheric Administration (NOAA) was created on October 3, 1970.
The Cabinet Council on Commerce and Trade was one of multiple Cabinet Councils established in the United States on or about February 26, 1981 by the Reagan Administration.
2020 data breach:
In 2020, the Department of Commerce suffered a data breach following a cyberattack likely conducted by a nation state adversary, possibly Russia.
Herbert Hoover as secretary of commerce: Herbert Hoover was appointed Secretary of Commerce in 1921 by then-President Warren G. Harding. Hoover was, by far, the most active secretary in the history of the department until the end of his position in 1928.
After his election as president in 1920, Warren G. Harding rewarded Hoover for his support, offering to appoint him as either Secretary of the Interior or Secretary of Commerce.
Secretary of Commerce was considered a minor Cabinet post, with limited and vaguely defined responsibilities, but Hoover, emphasizing his identity as a businessman, accepted the position. In sharp contrast to the Interior Department, there were no scandals at Commerce.
Hoover envisioned the Commerce Department as the hub of the nation's growth and stability. His experience mobilizing the war-time economy convinced him that the federal government could promote efficiency by eliminating waste, increasing production, encouraging the adoption of data-based practices, investing in infrastructure, and conserving natural resources.
Contemporaries described Hoover's approach as a "third alternative" between "unrestrained capitalism" and socialism, which was becoming increasingly popular in Europe. Hoover sought to foster a balance among labor, capital, and the government, and for this he has been variously labeled a "corporatist" or an associationalist.
Hoover demanded, and received, authority to coordinate economic affairs throughout the government. He created many sub-departments and committees, overseeing and regulating everything from manufacturing statistics to air travel. In some instances he "seized" control of responsibilities from other Cabinet departments when he deemed that they were not carrying out their responsibilities well; some began referring to him as the "Secretary of Commerce and Under-Secretary of all other departments."
In response to the Depression of 1920–21, he convinced Harding to assemble a presidential commission on unemployment, which encouraged local governments to engage in countercyclical infrastructure spending. He endorsed much of Mellon's tax reduction program, but favored a more progressive tax system and opposed the treasury secretary's efforts to eliminate the estate tax.
Radio and travel:
When Hoover joined the department, almost no families had radios; when he became president in 1929, 10 million owned one, and most of the rest listened in a nearby home, store or restaurant. Hoover's department set the policies that shaped the entire new industry.
Hoover's radio conferences played a key role in the organization, development, and regulation of radio broadcasting. Hoover also helped pass the Radio Act of 1927, which allowed the government to intervene and abolish radio stations that were deemed "non-useful" to the public.
Hoover's attempts at regulating radio were not supported by all congressmen, and he received much opposition from the Senate and from radio station owners.
Hoover was also influential in the early development of air travel, and he sought to create a thriving private industry boosted by indirect government subsidies. He encouraged the development of emergency landing fields, required all runways to be equipped with lights and radio beams, and encouraged farmers to make use of planes for crop dusting.
Hoover also established the federal government's power to inspect planes and license pilots, setting a precedent for the later Federal Aviation Administration.
As Commerce Secretary, Hoover hosted national conferences on street traffic collectively known as the National Conference on Street and Highway Safety. Hoover's chief objective was to address the growing casualty toll of traffic accidents, but the scope of the conferences grew and soon embraced motor vehicle standards, rules of the road, and urban traffic control.
Hoover left the invited interest groups to negotiate agreements among themselves, which were then presented for adoption by states and localities. Because automotive trade associations were the best organized, many of the positions taken by the conferences reflected their interests.
The conferences issued a model Uniform Vehicle Code for adoption by the states, and a Model Municipal Traffic Ordinance for adoption by cities. Both were widely influential, promoting greater uniformity between jurisdictions and tending to promote the automobile's priority in city streets.
Other Hoover initiatives:
With the goal of encouraging wise business investments, Hoover made the Commerce Department a clearinghouse of information. He recruited numerous academics from various fields and tasked them with publishing reports on different aspects of the economy, including steel production and films.
To eliminate waste, he encouraged the standardization of products like automobile tires and baby bottle nipples. Other efforts at eliminating waste included reducing labor losses from trade disputes and seasonal fluctuations, reducing industrial losses from accident and injury, and reducing the amount of crude oil spilled during extraction and shipping.
Hoover promoted international trade by opening overseas offices to advise businessmen. Hoover was especially eager to promote Hollywood films overseas.
His "Own Your Own Home" campaign was a collaboration to promote ownership of single-family dwellings, with groups such as the Better Houses in America movement, the Architects' Small House Service Bureau, and the Home Modernizing Bureau. He worked with bankers and the savings and loan industry to promote the new long-term home mortgage, which dramatically stimulated home construction.
Other accomplishments included winning the agreement of U.S. Steel to adopt an eight-hour workday, and the fostering of the Colorado River Compact, a water rights compact among Southwestern states.
Foreign economic policy:
The department has always been involved in promoting international non-financial business. It stations commercial attachés at embassies around the world. Currently, the key sub-agencies are the International Trade Administration, and the Bureau of Industry and Security.
The ITA provides technical expertise to numerous American companies, helping them adjust to foreign specifications. It provides guidance and marketing data as well. The Office of Export Enforcement administers export controls, especially regarding the spread of nuclear technology and highly advanced electronic technology.
Under the administration of President Donald Trump, the policy has been to restrict high-technology flows to China. From 1949 to 1994, the department worked with the 17-nation Coordinating Committee on Multilateral Export Controls, which restricted technological flows to the Soviet Union and other communist nations.
Since 1980, the Commerce Department works to neutralize the dumping of exports or the subsidies of overseas production. Along with the export controls, this work continues to generate friction with other nations.
On July 20, 2020, the commerce department announced adding eleven Chinese firms to an export blacklist for committing human rights abuse against Uyghur Muslims and other ethnic minorities in Xinjiang by conducting genetic analysis on them. Two of the firms sanctioned were subsidiaries of BGI Group, a Chinese genetic sequencing, and biomedical firm.
In the same year October, the BGI Group firm was again named in the alleged exploitation of medical samples of patients testing for Covid-19 in Nevada using the 200,000 rapid testing kits donated by the United Arab Emirates under its AI and cloud computing firm, Group 42.
The Emirati firm, also known as G42, has previously been named in the mass surveillance of people via an instant messaging application called ToTok, which was actually a spy application snooping on user data.
Current Organization:
Structure below:
Among its tasks are gathering economic and demographic data for business and government decision making, and helping to set industrial standards. Its main purpose is to create jobs, promote economic growth, encourage sustainable development and block harmful trade practices of other nations.
It is headed by the Secretary of Commerce, who reports directly to the President of the United States and is a member of the president's Cabinet. The Department of Commerce is headquartered in the Herbert C. Hoover Building in Washington, D.C.
History:
Further information on the department's publication: Commerce Reports
Organizational history:
The department was originally created as the United States Department of Commerce and Labor on February 14, 1903. It was subsequently renamed the Department of Commerce on March 4, 1913, as the bureaus and agencies specializing in labor were transferred to the new Department of Labor.
Since its creation, the Commerce Department has seen various agencies and administrative offices shift in and out of its organizational structure. The United States Patent and Trademark Office was transferred from the Interior Department into the Commerce Department in 1925.
The Federal Employment Stabilization Office existed within the department from 1931 to 1939. In 1940, the Weather Bureau (now the National Weather Service) was transferred from the Agriculture Department, and the Civil Aeronautics Authority was also merged into the Commerce Department.
In 1949, the Public Roads Administration was added to the department after the Federal Works Agency was dismantled.
In 1958, the independent Federal Aviation Agency was created and the Civil Aeronautics Authority was abolished. The United States Travel Service was established by the United States Secretary of Commerce on July 1, 1961, pursuant to the International Travel Act of 1961 (75 Stat. 129; 22 U.S.C. 2121 note)
The Economic Development Administration was created in 1965. In 1966, the Bureau of Public Roads was transferred to the newly created Department of Transportation.
The Minority Business Development Agency (MBDA) was created on March 5, 1969, originally established by President Richard M. Nixon as the Office of Minority Business Enterprise. The National Oceanic and Atmospheric Administration (NOAA) was created on October 3, 1970.
The Cabinet Council on Commerce and Trade was one of multiple Cabinet Councils established in the United States on or about February 26, 1981 by the Reagan Administration.
2020 data breach:
In 2020, the Department of Commerce suffered a data breach following a cyberattack likely conducted by a nation state adversary, possibly Russia.
Herbert Hoover as secretary of commerce: Herbert Hoover was appointed Secretary of Commerce in 1921 by then-President Warren G. Harding. Hoover was, by far, the most active secretary in the history of the department until the end of his position in 1928.
After his election as president in 1920, Warren G. Harding rewarded Hoover for his support, offering to appoint him as either Secretary of the Interior or Secretary of Commerce.
Secretary of Commerce was considered a minor Cabinet post, with limited and vaguely defined responsibilities, but Hoover, emphasizing his identity as a businessman, accepted the position. In sharp contrast to the Interior Department, there were no scandals at Commerce.
Hoover envisioned the Commerce Department as the hub of the nation's growth and stability. His experience mobilizing the war-time economy convinced him that the federal government could promote efficiency by eliminating waste, increasing production, encouraging the adoption of data-based practices, investing in infrastructure, and conserving natural resources.
Contemporaries described Hoover's approach as a "third alternative" between "unrestrained capitalism" and socialism, which was becoming increasingly popular in Europe. Hoover sought to foster a balance among labor, capital, and the government, and for this he has been variously labeled a "corporatist" or an associationalist.
Hoover demanded, and received, authority to coordinate economic affairs throughout the government. He created many sub-departments and committees, overseeing and regulating everything from manufacturing statistics to air travel. In some instances he "seized" control of responsibilities from other Cabinet departments when he deemed that they were not carrying out their responsibilities well; some began referring to him as the "Secretary of Commerce and Under-Secretary of all other departments."
In response to the Depression of 1920–21, he convinced Harding to assemble a presidential commission on unemployment, which encouraged local governments to engage in countercyclical infrastructure spending. He endorsed much of Mellon's tax reduction program, but favored a more progressive tax system and opposed the treasury secretary's efforts to eliminate the estate tax.
Radio and travel:
When Hoover joined the department, almost no families had radios; when he became president in 1929, 10 million owned one, and most of the rest listened in a nearby home, store or restaurant. Hoover's department set the policies that shaped the entire new industry.
Hoover's radio conferences played a key role in the organization, development, and regulation of radio broadcasting. Hoover also helped pass the Radio Act of 1927, which allowed the government to intervene and abolish radio stations that were deemed "non-useful" to the public.
Hoover's attempts at regulating radio were not supported by all congressmen, and he received much opposition from the Senate and from radio station owners.
Hoover was also influential in the early development of air travel, and he sought to create a thriving private industry boosted by indirect government subsidies. He encouraged the development of emergency landing fields, required all runways to be equipped with lights and radio beams, and encouraged farmers to make use of planes for crop dusting.
Hoover also established the federal government's power to inspect planes and license pilots, setting a precedent for the later Federal Aviation Administration.
As Commerce Secretary, Hoover hosted national conferences on street traffic collectively known as the National Conference on Street and Highway Safety. Hoover's chief objective was to address the growing casualty toll of traffic accidents, but the scope of the conferences grew and soon embraced motor vehicle standards, rules of the road, and urban traffic control.
Hoover left the invited interest groups to negotiate agreements among themselves, which were then presented for adoption by states and localities. Because automotive trade associations were the best organized, many of the positions taken by the conferences reflected their interests.
The conferences issued a model Uniform Vehicle Code for adoption by the states, and a Model Municipal Traffic Ordinance for adoption by cities. Both were widely influential, promoting greater uniformity between jurisdictions and tending to promote the automobile's priority in city streets.
Other Hoover initiatives:
With the goal of encouraging wise business investments, Hoover made the Commerce Department a clearinghouse of information. He recruited numerous academics from various fields and tasked them with publishing reports on different aspects of the economy, including steel production and films.
To eliminate waste, he encouraged the standardization of products like automobile tires and baby bottle nipples. Other efforts at eliminating waste included reducing labor losses from trade disputes and seasonal fluctuations, reducing industrial losses from accident and injury, and reducing the amount of crude oil spilled during extraction and shipping.
Hoover promoted international trade by opening overseas offices to advise businessmen. Hoover was especially eager to promote Hollywood films overseas.
His "Own Your Own Home" campaign was a collaboration to promote ownership of single-family dwellings, with groups such as the Better Houses in America movement, the Architects' Small House Service Bureau, and the Home Modernizing Bureau. He worked with bankers and the savings and loan industry to promote the new long-term home mortgage, which dramatically stimulated home construction.
Other accomplishments included winning the agreement of U.S. Steel to adopt an eight-hour workday, and the fostering of the Colorado River Compact, a water rights compact among Southwestern states.
Foreign economic policy:
The department has always been involved in promoting international non-financial business. It stations commercial attachés at embassies around the world. Currently, the key sub-agencies are the International Trade Administration, and the Bureau of Industry and Security.
The ITA provides technical expertise to numerous American companies, helping them adjust to foreign specifications. It provides guidance and marketing data as well. The Office of Export Enforcement administers export controls, especially regarding the spread of nuclear technology and highly advanced electronic technology.
Under the administration of President Donald Trump, the policy has been to restrict high-technology flows to China. From 1949 to 1994, the department worked with the 17-nation Coordinating Committee on Multilateral Export Controls, which restricted technological flows to the Soviet Union and other communist nations.
Since 1980, the Commerce Department works to neutralize the dumping of exports or the subsidies of overseas production. Along with the export controls, this work continues to generate friction with other nations.
On July 20, 2020, the commerce department announced adding eleven Chinese firms to an export blacklist for committing human rights abuse against Uyghur Muslims and other ethnic minorities in Xinjiang by conducting genetic analysis on them. Two of the firms sanctioned were subsidiaries of BGI Group, a Chinese genetic sequencing, and biomedical firm.
In the same year October, the BGI Group firm was again named in the alleged exploitation of medical samples of patients testing for Covid-19 in Nevada using the 200,000 rapid testing kits donated by the United Arab Emirates under its AI and cloud computing firm, Group 42.
The Emirati firm, also known as G42, has previously been named in the mass surveillance of people via an instant messaging application called ToTok, which was actually a spy application snooping on user data.
Current Organization:
Structure below:
Budget and finances:
The Department of Commerce was authorized a budget for Fiscal Year 2015 of $14.6 billion. The budget authorization is broken down as follows:
The Department of Commerce was authorized a budget for Fiscal Year 2015 of $14.6 billion. The budget authorization is broken down as follows:
Reorganization proposals:
Proposals to reorganize the department go back many decades. The Department of Commerce was one of three departments that Texas governor Rick Perry advocated eliminating during his 2012 presidential campaign, along with the Department of Education and Department of Energy.
Perry's campaign cited the frequency with which agencies had historically been moved into and out of the department and its lack of a coherent focus, and advocated moving its vital programs into other departments such as:
The Economic Development Administration would be completely eliminated.
On January 13, 2012, President Barack Obama announced his intentions to ask the United States Congress for the power to close the department and replace it with a new cabinet-level agency focused on trade and exports. The new agency would include the Office of the United States Trade Representative, currently part of the Executive Office of the President, as well as:
The Obama administration projected that the reorganization would save $3 billion and would help the administration's goal of doubling U.S. exports in five years.
The new agency would be organized around four "pillars":
Pillar #1: a technology and innovation office including the United States Patent and Trademark Office and the National Institute of Standards and Technology;
Pillar #2: a statistical division including the United States Census Bureau and other data-collection agencies currently in the Commerce Department, and also the Bureau of Labor Statistics which would be transferred from the Department of Labor;
Pillar #3: a trade and investment policy office;
and Pillar #4: a small business development office. The National Oceanic and Atmospheric Administration (NOAA) would be transferred from the Department of Commerce into the Department of the Interior.
Later that year, shortly before the 2012 presidential election, Obama invoked the idea of a "secretary of business" in reference to the plan. The reorganization was part of a larger proposal which would grant the president the authority to propose mergers of federal agencies, which would then be subject to an up-or-down Congressional vote.
(This ability had existed from the Great Depression until the Reagan presidency, when Congress rescinded the authority.)
The Obama administration plan faced criticism for some of its elements. Some Congress members expressed concern that the Office of the United States Trade Representative would lose focus if it were included in a larger bureaucracy, especially given its status as an "honest broker" between other agencies, which tend to advocate for specific points of view.
The overall plan has also been criticized as an attempt to create an agency similar to Japan's powerful Ministry of International Trade and Industry, which was abolished in 2001 after some of its initiatives failed and it became seen as a hindrance to growth.
NOAA's climate and terrestrial operations and fisheries and endangered species programs would be expected to integrate well with agencies already in the Interior Department, such as the United States Geological Survey and the United States Fish and Wildlife Service.
However, environmental groups such as the Natural Resources Defense Council feared that the reorganization could distract the agency from its mission of protecting the nation's oceans and ecosystems.
The plan was reiterated in the Obama administration's FY2016 budget proposal that was released in February 2015.
See also:
Reorganization proposals:
Proposals to reorganize the department go back many decades. The Department of Commerce was one of three departments that Texas governor Rick Perry advocated eliminating during his 2012 presidential campaign, along with the Department of Education and Department of Energy.
Perry's campaign cited the frequency with which agencies had historically been moved into and out of the department and its lack of a coherent focus, and advocated moving its vital programs into other departments such as:
The Economic Development Administration would be completely eliminated.
On January 13, 2012, President Barack Obama announced his intentions to ask the United States Congress for the power to close the department and replace it with a new cabinet-level agency focused on trade and exports. The new agency would include the Office of the United States Trade Representative, currently part of the Executive Office of the President, as well as:
- the Export-Import Bank of the United States,
- the Overseas Private Investment Corporation,
- the United States Trade and Development Agency,
- and the Small Business Administration,
- which are all currently independent agencies.
The Obama administration projected that the reorganization would save $3 billion and would help the administration's goal of doubling U.S. exports in five years.
The new agency would be organized around four "pillars":
Pillar #1: a technology and innovation office including the United States Patent and Trademark Office and the National Institute of Standards and Technology;
Pillar #2: a statistical division including the United States Census Bureau and other data-collection agencies currently in the Commerce Department, and also the Bureau of Labor Statistics which would be transferred from the Department of Labor;
Pillar #3: a trade and investment policy office;
and Pillar #4: a small business development office. The National Oceanic and Atmospheric Administration (NOAA) would be transferred from the Department of Commerce into the Department of the Interior.
Later that year, shortly before the 2012 presidential election, Obama invoked the idea of a "secretary of business" in reference to the plan. The reorganization was part of a larger proposal which would grant the president the authority to propose mergers of federal agencies, which would then be subject to an up-or-down Congressional vote.
(This ability had existed from the Great Depression until the Reagan presidency, when Congress rescinded the authority.)
The Obama administration plan faced criticism for some of its elements. Some Congress members expressed concern that the Office of the United States Trade Representative would lose focus if it were included in a larger bureaucracy, especially given its status as an "honest broker" between other agencies, which tend to advocate for specific points of view.
The overall plan has also been criticized as an attempt to create an agency similar to Japan's powerful Ministry of International Trade and Industry, which was abolished in 2001 after some of its initiatives failed and it became seen as a hindrance to growth.
NOAA's climate and terrestrial operations and fisheries and endangered species programs would be expected to integrate well with agencies already in the Interior Department, such as the United States Geological Survey and the United States Fish and Wildlife Service.
However, environmental groups such as the Natural Resources Defense Council feared that the reorganization could distract the agency from its mission of protecting the nation's oceans and ecosystems.
The plan was reiterated in the Obama administration's FY2016 budget proposal that was released in February 2015.
See also:
- Bureau of Industry and Security
- Commerce Department trade mission controversy
- Title 13 of the Code of Federal Regulations
- Title 15 of the Code of Federal Regulations
- Title 19 of the Code of Federal Regulations
- USA.gov
- Official website
- Department of Commerce on USAspending.gov
- Department of Commerce in the Federal Register
- Department of Commerce reports and recommendations from the Government Accountability Office
- US Commercial Service
- Department of Commerce Representation in the UK