E Commerce Essay, Research Paper
Table of Contents
o The (other) Great American Pastime (introduction). 3
o Dialing up for dollars 3
o Growing Pains ..4
o Walking dead ….5
o The top 10 barriers and inhibitors to eCommerce .5
o The Speed Limit 6
o The Bright Future a head . for some (conclusion) .7
o Works Cited ..7
The (other) Great American Pastime.
In 1969, The United States Department of Defense started a project called ARPANet (Advanced Research Projects Agency Network) to exchange research information. It eventually linked the computers of several universities and research centers across the country, and, over time, it developed into the worldwide Internet, as we know it today. In less than a decade the Internet has gone from an obscure technological toy for computer geeks to a fixture of everyday life. More than half (52%) of U.S. households had Internet access as of July 2000, according to research by Nielson Netratings. This is a 35% increase from last year, and the firm predicts 60% of American households will be online by the end of 2000. The average minutes of 55,000 U.S. Internet users online in July 2000, was more than 1,123 minutes. The most remarkable thing about it all is how important it has become to us. A web use has increased nearly four hours per month (from about 12.5 hours in June 1999 to nearly 16.5 hours in June 2000) in the last year alone. 38% of a random sample of 1000 Internet users felt the Internet was nearly a necessity in their lives.
Dialing up for dollars.
Money is the single largest factor in influencing and speeding the growth of the Internet. The Internet s transformation from a small network of university and government research computers to the mass media that it is is due mainly to entrepreneurs recognizing its potential as marketing resource. The Internet can be compared to the radio about 80 years ago. Big businesses realized just how influential it could be, started to advertise. And thanks to money paid from sponsorships, the amount and quality of radio programming improved and increase considerably. And thanks to modern Web advertising and commercial web sites, the amount of information available online grows daily. It grows at an estimated 7 million pages per day. Compared to traditional methods of advertising and selling, the costs are relatively low. The constant access to a company over the Internet makes the web a perfect platform for small-business owners and corporations alike.
Although estimates vary from source to source, it is clear that companies are more willing to spend a bundle on web advertisements around the web. According to research firm IDC, total Internet revenues in the United States reached $1.2 billion in 1998 and nearly doubled in 1999 to $2 billion. But these numbers don t compare to the numbers coming in from e-businesses alone. According to the United States Department of Commerce, online retail sales in the United States reached $5.198 billion by the fourth quarter of 1999. E-tailer revenues continue to grow steadily despite the in and out of many dot com companies.
In a June 1999 retailing report, Goldman Sachs defined three phases of development: vision, discrimination (the phase we are in today), and demonstration. The first phase is like the grand opening of a typical retail store. When prices are artificially low, promotional activity is unusually high, and staffing is above normal. Over time a shakeout testes the business s viability. Afterward, prices rise, promotional activity subsides, and payroll costs are leveraged by rising sales volumes, enabling a store to achieve a satisfactory economic return. This makes the e-market very volatile for any newcomers. The start up losses of an e-tailer are bound to be much larger and last longer than the local five and dime stores because of it s instant global access. To open an e-business is to open an entire chain with worldwide reach. The genetics for an e-tailer aren t that much different that that of the typical retailer. The opportunity for growth is greater online than off, but in both cases the retail world is cruel. Retailing is a treacherous, generally low margin business with almost no room for error. It s about detail and execution. And the one with the upper hand is the one that utilizes various information systems to their advantage.
There s still a lot of walking dead out there It ll be a few quarters before it s cleaned up. says Lauren Cooks Levitan, a Robertson Stephens managing director and senior Internet retailing analyst. Many Companies throw millions of dollars into trying to build a brand and infrastructure in a category that is not really giving up many sales. This is the attitude of many of the newest dot comers on the block. Since the weaker players are the most likely to compete on price rather than service, prospects for the survivors improve as the weak dwindle into a mountain of debt. Those that do remain are radically restructuring their business plans to get some profitability. Many are looking into the double life, both on and offline sale strategies. In the end it comes down to research, development, and a whole lot of ingenuity. And overcoming the barriers that this technology brings.
The top 10 barriers and inhibitors to eCommerce
The top barrier to electronic commerce in 1999 was deemed to involve security and encryption concerns. This was interesting because last year, security had dropped in importance. It s increase in importance in 199 can be attributed to the addition of non-US data and the fat that more and more companies are Going electronic now instead of just talking about it. And when your business is online, so to speak, you become much more cognizant of security risks to your business.
These are the ten biggest concerns for eCommerce today according to a survey done by commerce.net:
1. Security and encryption
2. Culture (corporate)
4. Interoperability between e-commerce applications and legacy systems
5. Ability to make and receive payments
6. Culture (customers)
8. Lack of knowledge or qualified personnel
9. Lack of business models
10. Executive awareness
The Speed Limit.
Speed seems to be on the mind of most businesses and many would say that this relentless appetite for speed is what helps them remain profitable businesses. Computer speed has gone from the Intel 4004 processor chip in 1971 that processed 108 cycles per second, to processors that run at more than a billion cycles per second. The consumer cannot get enough information, this we know. You may spend thousands of dollars, but you still wont get your computer and Internet connection to feel as fast as your TV or phone. This poses a problem for many an e-tailer. This is why many must invest in continual hardware upgrades. The customer wants Product, and the one to give the customer what he or she wants the quickest is usually who wins the race.
Company specific information systems are a growing reality in today s business life.
The Bright Future ahead . for some.
The early bird gets the worm, still applies to the strategies of many e-tailers. The key is finding your niche, or making one of your own. And the only secure way of doing that is structuring a business to revolve around information. Using information efficiently is what keeps the e-tailer on the road to success and away from a chapter eleven. The Internet itself is a very untamed information system that is slowly being tamed at the cost of billions. Learning to harness the powers of e-business is a challenge that every businessman should keep an eye on.
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www.commerce.net, Internet Users top 92 Million www.commerce.net/research/reports/1999/99_26_n.html 10/4/2000
www.commerce.net, Continued Price Transparency www.commerce.net/research/reports/1999/99_24_n.html 10/4/2000