Introduction to Electronic Commerce

Online business has many names; e-Commerce, e-business, online shopping and others involving the use of the internet or a modern telephone or smart phone to place transactions for desired products and services. As you read, think about the power a successful online firm has over his store-based counterpart. What is online business? What is the role of the Internet and other communications media in providing an organization's e-business presence? What are some similarities and some differences between e-business and brick and mortar commerce? How can they complement each other? Are the days of brick-and-mortar stores coming to an end?

Why use the Internet?

Innovation risk

In most mature industries, there is an oversupply of products and services, and customers have a choice, which makes them more sophisticated and finicky consumers. If firms are to continue to serve these sophisticated customers, they must give them something new and different; they must innovate. Innovation inevitably leads to imitation, and this imitation leads to more oversupply. This cycle is inexorable, so a firm might be tempted to get off this cycle. However, choosing not to adapt and not to innovate will lead to stagnation and demise. Failure to be as innovative as competitors–innovation risk–is a second strategic challenge. In an era of accelerating technological development, the firm that fails to improve continually its products and services is likely to lose market share to competitors and maybe even disappear (e.g., the typewriter company). To remain alert to potential innovations, among other things, firms need an open flow of concepts and ideas. Customers are one viable source of innovative ideas, and firms need to find efficient and effective means of continual communication with customers.

Internet tools can be used to create open communication links with a wide range of customers. E-mail can facilitate frequent communication with the most innovative customers. A bulletin board can be created to enable any customer to request product changes or new features. The advantage of a bulletin board is that another customer reading an idea may contribute to its development and elaboration. Also, a firm can monitor relevant discussion groups to discern what customers are saying about its products or services and those of its competitors.