Read this essay to learn about e-commerce. After reading this essay you will learn about:- 1. Introduction to E-Commerce 2. The Advantages of E-Commerce 3. Meaning of E-Commerce 4. E-Commerce in Services 5. Obstacles and Problems (E-Commerce) 6. The affect of E-Commerce on Business Practices 7. India and E-Commerce 8. The Policy Issues of E-Commerce.
List of Essays on E-Commerce
Essay Contents:
- Essay on the Introduction to E-Commerce
- Essay on the Advantages of E-Commerce
- Essay on the Meaning of E-Commerce
- Essay on E-Commerce in Services
- Essay on the Obstacles and Problems of E-Commerce
- Essay on the affect of E-Commerce on Business Practices
- Essay on India and E-Commerce
- Essay on the Policy Issues of E-Commerce
1. Essay on the Introduction to E-Commerce:
Electronics commerce is the result of Internet revolution in the field of communication and information. It converts the traditional ways of doing business into digital ways; electronically. As the Internet brought revolution in the field of information and communication, e-commerce has brought similar revolution in the international and national fields of business transactions.
Its universal popularity has left behind the policy makers by couple of years. While the policy makers are still trying to formulate relevant laws of the e-trade the market potential has moved forward by quantum jump.
The e-commerce is projected to grow from US$ 24.4 billion in 1997 to US$ 1 trillion by 2001 against the expected total global trade of 6 trillion dollars. Its importance has been recognised not only by the world bodies like WTO and ICC but also by the respective national governments.
The developed nations view it as the potential means for capturing the world markets and the developing and least developed nations view it as means of making qualitative advancement in the business techniques which brings a sense of parity between them and the developed nations.
Its reach is universal and unlimited in potential growth and has all the ingredients to take over the traditional ways of doing business.
Presently we are at the threshold of a market led revolution and this is the right time students of international trade learn not only the intricacies of this emerging trend of doing things digitally online but also learn the formation and governance side of the rules and regulations.
The Transitional Phase of E-Commerce:
The decades between 1950 to 1990 were dominated by the Global trading organisations especially from Japan. There was a time when these trading organisations dominated world’s top 10 organisations on the Fortune 500 list. The main reason for their dominance was their powers in the areas of information and communication.
The decade of nineties saw the emergence of the Internet as the means of universal communication and information. The power source of the Japanese trading firms was gradually lost when Internet started becoming almost universal in application in the business communities world over.
2. Essay on the Advantages of E-Commerce:
The advantages with internet are:
1. Despite the fact that it offers the two most wanted means for conducting business (communication and information) it charges nothing or near to nothing as compared to the fee/commission being charged by the trading organisations.
2. The Internet has the speed and reach of multidirectional communication that has helped companies to reach out to global markets and get access to global markets without even leaving their seat in the office.
3. Internet is credited with the operational ease from any point on the earth. The concept of home office is but due to the Internet.
4. It has helped the global companies to establish business to business relationships thus eliminating the need of the middlemen/traders. Perhaps the only sector that is being hit hard and will suffer further in future is this trading service organisation.
5. Internet shopping is creating a revolution in retailing by allowing consumers to sit in their homes and buy a wide variety of products and services from all corners of the world.
6. The potential areas are not limited to shopping and banking but also in education, politics, society and the everyday lives of people
7. It has the credit of being the fastest expansion and penetrative powers as compared to other audio-visual means; like radio which took 38 years to reach 50 million users, the PC took 16 years, TV 13 years, but Internet-users crossed the 50 million mark in just first four years of introduction.
8. The Internet had an unprecedented growth potential. The developing countries could use it to leapfrog an entire generation of technology.. Internet thus has the potential to become world’s most active means of present and future business transactions.
9. It has helped Companies in locating components of their value-added chains in different parts of the world and thus creating opportunities for developing countries and small and medium enterprises to benefit from the expanded markets.
10. The global economy and technology is changing fast in a fundamental way and internet is the prime driving force for its universal spread covering all strata of human involvement.
All these advantages have been packed and utilised for the spread of the electronic commerce or e- commerce in short.
3. Essay on the Meaning of E-Commerce:
“Production, advertising, sales, delivery, and payment realisation for products and services via telecommunication network is called e-commerce”.
It is an internet based digitized information & communication service that is used for the conduct of online business comprising of business to business, business to market, and business to government formats. It requires access to the Internet as a pre-condition for both the sender and the receiver.
There are three types of transactions possible on the Internet:
1. Transactions for a service that is completed entirely on the Internet from selection to purchase and delivery that includes the production, advertising, sale and distribution of products via telecommunication networks.
It can be divided into three broad categories:
(i) The searching stage where producers and consumers, or buyers and sellers, first interact;
(ii) The ordering and payment stage once a transaction has been agreed upon;
(iii) The delivery stage for the products that can be delivered electronically through the Internet
2. Transactions involving “distribution services” in which a product, whether a good or a service, is selected and purchased on-line but delivered by conventional means.
3. Transactions involving the telecommunication transport function, including provision of Internet services.
Electronic Commerce is thus useful to both producers and consumers as it helps them overcome the traditional barriers of distance from markets and lack of information about market opportunities.
Producers and traders no longer need to maintain physical establishments requiring large capital outlays. Virtual shops and contact points on the Internet may enable storage close to the production site and distribution can be made directly to the consumer.
Increased advertising possibilities world-wide may help small and medium industries and businesses in developing countries that traditionally find it difficult to reach the customer abroad.
E-Commerce may also enable such firms to eliminate middlemen while trying to sell their products abroad. For the developing and least developed nations small and medium enterprises are likely to be the biggest beneficiaries of e-commerce.
There are three forms of business format possible via e-commerce; the business to business, business to customer, and business to government. A1 the three formats hold tremendous potential of their own strength, but the business to business format is going to dominate the e-commerce world for next couple of years if not decade
4. Essay on E-Commerce in Services:
This is covered under three heads:
(a) Internet access services;
(b) Electronic delivery of services; and
(c) Use of the Internet as a medium for distribution services – the sale of goods and services subsequently delivered in non-electronic form.
E-Commerce makes it possible for consultancy type work such as software development to be carried out in the developing countries from where the consultants come rather than in the country where the service is demanded.
This should facilitate sale of services in which the developing country has a comparative advantage that it has not been able to utilise fully because of restrictions on the movement of natural persons. This should be a net benefit to the exporting country both in terms of income and retained earnings.
The e-commerce is a multimedia system which has the potential to provide video and audio output along with text; opens 24 hours, it has worldwide coverage that enables conduct of business at a very small cost and access to clients from across the world.
The home page or the website can be easily modified to suit any changes in the product/service or other terms & conditions of the business. These Websites could also be easily customized to suit the requirements of particular businesses and/or customer.
5. Essay on the Obstacles and Problems of E-Commerce:
Obstacles to E-Commerce:
There are different types of obstacles in developed and developing countries. As per the data as published by WTO there are different kinds of obstacles encountered by the developed and developing countries.
The percentagewise breakup is as follows:
In the developing countries Internet access prices are high due mainly to high telephone call charges, Internet Service Provider (ISP) charges, and high leased line charges. The major reason for these high charges is attributed to the prevalence of monopolies besides the absence of any independent telecom policy in these countries.
Problem areas:
(i) Mandatory paper-based documentation requirements in the major laws of most countries.
(ii) Incompatibility of domestic contractual frameworks and international trade requirements.
(iii) There are certain apprehensions of doing business over the Internet. The most important one is the credibility of the other party that you are trying to conduct business, this disadvantage can be taken care of if one proceeds consciously.
There is a standard format of agreement which has to be entered between the two parties wishing to do business, this format has to be digitally signed by the bankers of the buyers/importers, only after it is done, the business commences.
(iv) The other problem area is the use of credit card. In India it is still not very popular and most of payments are conducted in traditional ways before the delivery is affected. But globally there is perception that using a credit card on the Web meant risking the loss of secrecy.
The use of encryption and digitisation of the number have addressed this problem. Still many companies use traditional ways of payment receipt even for the e-commerce-related business.
(v) The other disadvantages (temporary) are low band width on the Internet, which could create problems if the websites were heavily loaded with audio and visual effects; lack of customer traffic, customer trust (as the goods being sold cannot be evaluated physically) and credibility. These were issues that do not exist for a business located, say, in a well-known shopping area.
(vi) The problem of ubiquity in e-commerce that prevented geographical earmarking of the market between two or more online dealerships of the same product and could discourage famous brands from e-marketing.
(vii) The problem of uniform pricing so that a seller of goods on the Web can have only one price across the world, whereas in the traditional method a product could be priced differently in different countries.
(viii) The problem of logistics.
Out of the eight problems described above the first two are the most important and both fall in the area of activities of ICC and WTO, more of ICC, others are sort of teething problems and can be sorted out as the e-commerce develops in the global market place.
UNCITRAL had been working on e- commerce since 1980 has again undertaken work in 1996 to resolve these two problems. There is strong need to develop uniform rules and model law that covers both these problem areas.
Establishing equivalence between electronic and paper transactions is the major challenge faced by the policy makers. One of the suggestions, as suggested by UNCITRAL, is the development of a process of ‘functional equivalence’ and ‘media neutrality’.
For example the function of a signature is to identify the identity of the signatory and the consent of the signatory to the contents of a document. Any electronic message that fulfills both these functions must be regarded as legally acceptable. Similarly to establish the legally valid types of electronic documents that are accepted universally by the trading communities and the financial institutions must be developed.
Media neutrality means that the electronic system does not accord preferences of one over the other when the choice is between the electronic and normal paper work, at least till the time total paper work is digitized.
Banks have been doing some work in this direction but universal application is required if e-commerce has to become more popular. Some Model Laws have been developed which are designed to cover both commercial and non-commercial transactions.
Singapore and the State of Illinois, USA are using it in some of the governmental activities such as procurement, filing of returns, government service matters etc. More countries are expected to adopt this law especially Mexico, New Zealand, India and Thailand. However some countries like Korea, China and Philippines have their own e- commerce laws.
The e-commerce laws as applicable in the Philippines are given at the end of this section as a case study for the students.
In order to overcome these disadvantages following suggestions could be useful:
(a) Government support,
(b) Public network liberalization,
(c) Improvement in the access points to the public,
(d) Favourable local tariffs for Internet services,
(e) Creation of a competitive market,
(f) Adoption of cost based tariffs in leased lines,
(g) Exemption from customs duty and taxation,
(h) Recognition of electronic payment systems,
(i) Developing a global uniform commercial code,
(j) Intellectual property laws,
(k) Security and encryption,
(l) Technical standards/interoperability, and
(m) Human resource development.
6. Essay on the affect of E-Commerce on Business Practices:
There are many ways in which e-commerce has affected the normal business practice:
1. The elimination of middlemen and it was possible that several types of business, such as forwarding agencies, could disappear.
2. New technology is likely to create new types of intermediaries needed for instance, to filter out excess information that was prone to being displayed in the system, merger of services; for instance, some courier services had also become network providers.
3. E-commerce would reduce the need for consultants to travel to the country of their client.
4. International businesses become more mobile, with superior and less costly communications allows companies to shift their offices to cheaper locations within countries and abroad.
5. Employers and employees were also likely to be more mobile than before so long as they could access the Internet from wherever they were.
6. The national government promoting competition among service providers and also in promoting the speedy adoption of suitable laws that legitimized the use of electronic means in commerce.
7. The importance of infrastructure and logistics, the minimum requirement for e-commerce is a telephone line.
8. E-commerce changed the national economic conditions, example Venezuela and Singapore. Singapore that was poorer than Venezuela some years ago but had changed status through the induction of Internet based information, communication, and e-commerce.
9. Deregulation and liberalization by the national governments in the LDC and developing countries has helped them to improve their economic outlook.
10. There are immense opportunities for the developing countries to earn revenues through e- commerce.
11. The future direction of cyber-trading would be business-to-business (yearly growth potential app US$ 160 billion) by rather than business-to-consumers (yearly growth potential app US$ 10 billion). The internet policies of the developing countries would be affected by this anticipated future trend.
12. The cost of sending a 42-page document from Ottawa to Tokyo over the Internet was 260 times less than if it was sent by traditional post. It was also 720 times faster to transmit the document electronically. This showed the extent of the savings in time and money that was possible as a result of the new technology.
7. Essay on India and E-Commerce:
India is a success story in the Global Internet (& e-commerce) sector.
The salient features about India are:
(i) Currently 158 “Fortune 500†companies including General Electric, Pepsi, British Airways, Citibank, American Express, Alcatel and Coca Cola are outsourcing their software requirements to India.
(ii) The software exports industry had been growing at a rate of 50 per cent per annum since 1991. The majority of software exports were directed towards the United States (58 per cent in 97/98) followed by Europe (21 per cent).
(iii) India has world’s second largest reservoir of English speaking scientific manpower, with 115,000 engineers graduating from Indian universities every year and 150 universities and 460 institutes providing computer education at the undergraduate level.
(iv) India has the availability of technology such as high-speed (satellite) data communication and other value added telecom services for software development.
(v) Beginning of 2000, India had app. 3.5 million PCs, 40 million cable TV connections which had the potential to be used to access the Internet by suitably programming television set top boxes.
(vi) The extensive use of over 600,000 public call offices (PCOs) spread throughout the country for e-mail and Internet services by public not having PC at home or at business place. This activity directly leads to the users towards the e-commerce.
(vii)Popularity of “Remote Processing” had emerged in India as major Internet based service business transactions.
(viii) Private sector has led the e-commerce revolution in India.
The only limiting factor is the current underdeveloped stage of credit card usage in business.
8. Essay on the Policy Issues of E-Commerce:
Trade and business communications through electronic means give rise to a number of legal issues. For instance if a service was sold over the Internet across countries in which geographical location can the transaction be deemed to have occurred? This question may be important from the point of view of consumer protection and establishing the jurisdiction.
Furthermore electronic transactions require electronic contracts and electronic signatures which have not been provided for in the contract laws of many countries. Most developing countries that wished to participate in electronic commerce needed to undertake major legislative reforms in this regard. In this sub-section we shall cover the policy issues covering the internet services and e-commerce.
The policy issues involved are the concept of industry self-regulation in e-commerce, and promotion of the e-commerce action plan of the Alliance for Global Business (AGB), the legal and regulatory framework for Internet transactions, security and privacy questions, tariff and taxation, electronic payment systems, uniform commercial code for the electronic business/transactions access to the Internet, market access for suppliers over the Internet, trade facilitation, public procurement, intellectual property questions, and regulation of content, and the technical standards in telecommunications.
For the first two issues ICC has provided some solutions:
“With regard to the first, the ICC believed that e-commerce was a business system that had grown very quickly without regulation. This meant that self-regulation was likely to bring in greater returns than ever. With a view to helping the e-commerce sector regulate itself the ICC provided certain services that facilitated individuals and businesses in developing countries to switch from traditional business transactions to electronic transactions. One type of service, called “E-Terms”, made available a repository of rules and terms used in international trade that were capable of being directly incorporated into contracts. Another service provided small companies anywhere in the world with legal resources that enabled them to draw up international contracts easily. Another service, provided by to the International Bureau of Chambers of Commerce, enabled member Chambers of Commerce to provide help to SMEs in listing their products or services on the Internet. With regard to the second feature of ICC’s program the AGB was a coordinating mechanism for a group of organizations that had made e-commerce one of their areas of priority for the next few years. Members of the body included the Business and Industry Advisory Committee to the OECD, the Global Information Infrastructure Commission, the World Information Technologies and Services Alliance, the International Telecommunications User Group and the ICC. Areas where governments needed to take the initiative and those where they needed to allow business to lead. Governments had to lead in such areas as promoting competition, reinforcing the sanctity of contracts, protecting intellectual and physical property and protecting societal values. A technical issue like digital signatures was an area where it would be much easier for business to take the lead in making detailed rules”.
E-Commerce policy has four guiding principles:
1. Individuals should be allowed to determine the products, services and content of the Internet;
2. Internet policy should be market driven and industry led, although government’s role in areas like taxes and tariffs was warranted;
3. Where government intervention is considered necessary, it should be non-discriminatory and technology neutral;
4. Internet policy should aim at universal access to the Internet and electronic commerce.
E-Commerce & GATS:
The general view is that the vast majority of transactions on the Internet are services which are covered by the General Agreement on Trade in Services (GATS). The GATS does not distinguish between technological means of delivery. All the provisions of the GATS apply to trade in services through electronic means.
There is a disagreement on the classification of a small number of products made available on the Internet, as to whether or not they are services or goods. This disagreement is on products such as books and software. Whereas a printed book delivered through conventional means is classified as a good, but the digital version of the text of such a book is a service covered by the GATS.
Such a product remains a goods which is subject to customs duties and other provisions of the WTO Agreement. Such a product constitutes a third category of products which are neither good nor services and for which special provisions need to be devised. Questions are raised about how the Telecommunications annex of the GATS should relate to access to and use of Internet access services.
Many Internet service providers (ISPs) and services may benefit from the Annex provisions ensuring fair and reasonable access to the leased circuits they obtain from pubic telecom operators. But some Member Governments wonder if, or to what extent, ISPs themselves should be obliged by the Annex to offer such access to others.
The declaration on global electronic commerce:
The General Council established a comprehensive work programme to examine all trade-related issues relating to global electronic commerce, taking into account the economic, financial, and development needs of developing countries.
The electronic delivery of services falls within the scope of the GATS, since the Agreement applies to all services regardless of the means by which they are delivered, and electronic delivery can take place under any of the four modes of supply. Measures affecting the electronic delivery of services are measures affecting trade in services and would therefore be covered by GATS obligations.
All GATS provisions, whether relating to general obligations (e.g. MFN, transparency, domestic regulation, competition, payments and transfer, etc.) or specific commitments (Market Access, National Treatment or Additional Commitments), are applicable to the supply of services through electronic means.
The need for further work on the implications of Article VI for domestic regulations affecting electronic commerce
The need to clarify the scope of the Annex on Telecommunications in relation to access to and use of Internet access and other related services.
The need to study further the application of customs duties on electronic transmissions.
The question of the proper valuation of electronically transmitted products in the context of encrypted electronic payments and related issues.
E-Commerce and the WTO:
The unique nature of this emerging mode of delivering products (goods and services). Products which are bought and paid for over the Internet but are delivered physically would be subject to existing WTO rules on trade in goods. But the situation is more complicated for products that are delivered as digitalized information over the Internet, as a variety of issues arise relating to the appropriate policy regime.
Both the supply of Internet access services and many of the products delivered over the Internet fall within the ambit of the General Agreement on Trade in Services, but there is a need to clarify how far particular activities are covered by the members’ market-access.
E-commerce & International Telecom Union:
International Telecom Union (ITU) is also trying to contribute its services for improving spread of e-commerce. They have undertaken a number of steps for the promotion of e-commerce.
One of them was the EC-DC project under which the ITU transfers its know-how in e-commerce to private and public sector companies in developing countries. If these steps are implemented then they said obstacles might diminish if not disappear and e-commerce will get a boost in the developing countries as well.
E-Commerce and ITC:
1. ITC is mainly concerned with pre-transactional activities such as providing data for market research, trade promotion including publicity through the Internet, research on electronic tendering, legal aspects of e-commerce and training activities for government and business.
2. ITC had contributed to the setting up of a Virtual Exhibition Centre on the Internet in 1996 in cooperation with UNCTAD and UNESCO, with a view to promoting handicrafts from developing countries.
3. ITC also has a plan to provide training to developing countries that desired to have their own websites for promoting handicrafts in the future.