Web Systems Design and Online Consumer Behavior [Electronic resources]

E-Commerce

Ecommerce, e-commerce and EC are all notations for electronic commerce, which simply refers to any transaction done electronically, usually via the Internet. Fundamentally, e-commerce has changed the way in which business is conducted. It may include “old” forms of e-commerce such as fax, EDI, and the electronic transfer of funds as well as the more recent and revolutionary changes that are now classified into B2B, B2C, C2C, P2P and Mobile commerce (Laudon and Traver, 2002). B2C means business-to-consumer commerce; B2B defines business transactions between commercial companies; C2C enables consumers selling and buying from each other. Online auction sites are examples of C2C. P2P represents Peer-to-Peer exchanges.

Overview

According to a new report from Gartner, the global e-commerce market is forecasted to rise from $1,930 billion in 2002 to $8,530 billion in 2005. ElectricNews reports that European business-to-business e-commerce sales are expected to grow from $500 billion in 2002, to $2,300 billion by 2005. In the B2C market, although some companies have failed and exited the e-commerce market, a recent study conducted by the industry group Shop.org, the Boston Consulting Group, and Forrester Research predicts that B2C e-commerce in the United States will grow from $38.8 billion in 2000 to $184.5 billion in 2004. BizRate reports the average consumer transaction is up from $120 to $127 per purchase and online transactions grew from $69 million in the second quarter of 2001, to $91.5 million in Q1 2002. In addition to these industry forecasts, eMarketer estimates that nearly half of Internet users in the US spent an average $1,089 on goods and services in 2002 purchased online. Jupiter expects online retail spending to reach $105 billion by 2007, accounting for 5% of all US retail spending and influencing 34% of all US retail spending. Table 12-1 shows the payment methods and consumer comfortable level as reported by Jupiter Research (2003).

Table 12-1: Consumer payment methods (Jupiter Research, 2003)

Consumer Comfort Level Using Various Payment Methods, March 2003 by Jupiter Research
	Comfortable	Uncomfortable
Billed later	68%	18%
Credit card	55%	27%
Debit card	32%	49%
Checking account	25%	57%
Debit with PIN	20%	66%

Table 12-2 shows the top 10 e-commerce Web sites, the size of their consumer markets and the effectiveness of the Web site to reach consumers. eBay which represents C2C (consumer-to-consumer market) in the e-commerce segment, tops the list. eBay is made up of a variety of people: individual buyers and sellers, small businesses and even Fortune 100 companies. The great shopping experience eBay offers to its members, including an interactive environment created by discussion and chat boards, contributes to its success.

Table 12-2: Top 10 e-commerce Web sites (Jupiter Research, 2003)

Rank	Brand or Channel	Industry	Unique Audience	Active Reach
1.	EBay	Auction	14,881,000	17.19%
2.	Amazon	Online Retail	8,795,000	10.16%
3.	MSN Shopping	Online Retail	3,364,000	3.89%
4.	Yahoo! Shopping	Online retail	3,006,000	3.47%
5.	Expedia	Travel	2,752,000	3.18%
6.	Dell	Computer	2,718,000	3.14%
7.	Orbitz.com	Travel	2,371,000	2.74%
8.	Wal-Mart Stores	Online Retail	2,204,000	2.55%
9.	DealTime	Online Retail	2,146,000	2.48%
10.	Travelocity	Travel	2,049,000	2.37%

Development

E-commerce involves both selling and buying, and each needs its own platform. Sell-Side platforms cover content, order, catalog management, analytics, interactive selling, legacy integration and commerce syndication. Only a few vendors provide all these complete functions. Administrative tools include product editors, sophisticated color and font editors, inventory control, automated order status updates, product cloning, coupon activation, personalized marketing tracking, affiliate tracking,l promotional e-mail capability, shipping manager, real-time statistics, and image manager. Powerful administrative e-commerce tools enable virtual companies to better protect their own business and their customers.

Feature-rich software is now increasing the competitiveness of e-commerce sites. It is not advisable to use the plentiful, free but outdated shopping cart software that does not include security and transaction support features. A successful e-commerce site manages inventory, tracks orders, and has a fully edited storefront. Web-based control panels are mandatory for success.

However, it takes more than richly featured e-commerce software to be successful in the virtual environment. Marketing strategies must be designed into the Web pages to increase site traffic, which, as in brick-and-mortar business, must then convert visitors to customers. There are many marketing tools available to persuade visitors to become customers and then to retain their repeat business: coupon activation and other personalized discounts, enabling gift transactions, tracking affiliates, promotional emails, product cross-selling, and so on. When an e-commerce company maintains real-time statistics on inventory and purchases, it can evaluate the effectiveness of a marketing strategy, even adjusting promotions in real-time based on demand and availability of stock.