INTRODUCTION E-commerce or electronic commerce, also known as ebusiness, refers to the transaction of goods and services through electronic communications. Although the general public has become familiar with e-commerce only in the last decade or so, e-commerce has actually been around for over 30 years. There are two basic types of ecommerce: business-to-business (B2B)and business—to-consumer (B2C). In B2B, companies conduct business with their suppliers, distributors, and other partners through electronic networks. In B2C, companies sell products and services to consumers. Although B2C is the better known to the general public, B2B is the form that actually dominates e-commerce in terms of revenue. The concept of e-commerce is related to notions of Interneteconomy and digital economy. All these concepts relate to the use of new information and communication technologies for economic activities, but with different focuses. Internet economy refers to the economic activities that generate revenue from the Internet or Internet-related products or services (Costa, 2001). Therefore, pre-Internet e-commerce, as will be detailed in the following section,cannot be called Internet economy. On the other hand, some activities, such as building Internet connections for commercial purposes, are a part of Internet economy, but they are not necessarily e-commerce. Digital economy is based on digital technologies such as computer, software, and digital networks. In most cases, digital economy is the same as e-commerce. However, not all activities in thedigital economy are e-commerce activities. For example, purchasing computer gear from a storefront retailer is not an activity of e-commerce, although it certainly is a key component of the digital economy. Hence, e-commerce, Internet economy, and digital economy are closely related but have different concepts.
E-commerce has been perhaps one of the most prevalent terms in this digital era.Although e-commerce was once looked upon simply as an expressway to wealth, it has actually transformed the way people conduct business. An historical analysis of e-commerce will provide insights into the evolution of the application of information and communication technologies in the commercial arena. Furthermore, an analysis of the evolution of ecommerce in the past as well as its present state willenable us to project future trends in e-commerce. THE INFANCY OF E-COMMERCE: BEFORE 1995 E-commerce was made possible by the development of electronic data interchange (EDI), the exchange of business documents from one computer to another in a standard format. EDI originated in the mid-1960s, when companies in transportation and some retail industries were attempting to create “paperless” offices.In the mid-1970s, EDI was formalized by the Accredited Standards Committee of industry representatives, and more varied companies began to adopt EDI through the 1970s and 1980s. As the first generation of e-commerce, EDI allowed companies to exchange information, place orders, and conduct electronic funds transfer through computers (Sawanibi, 2001). However, the diffusion of EDI was slow. By thelate 1990s, less than one percent of companies in Europe and in the United States had adopted EDI (Timmers, 1999). The huge expense for getting connected to an EDI network and some technical problems limited the diffusion of EDI.
The second generation of e-commerce is characterized by the transaction of goods and services through the Internet, which started as a research tool, but has generallyevolved into a commercial tool. The inception of the Internet can be traced back to the 1960s, when the Advanced Research Projects Agency Computer Network (ARPANET), the precursor to the Internet, was established for research in high technology areas. The nodes of ARPANET increased from 4 in 1969 to 15 in 1971. The term Internet actually did not come into use until 1982, when the number of hosts...