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Electronic Commerce: Electronic Commerce, Commonly Known As E-Commerce or Ecommerce, or E-Business Consists
Electronic Commerce: Electronic Commerce, Commonly Known As E-Commerce or Ecommerce, or E-Business Consists
A large percentage of electronic commerce is conducted entirely electronically for virtual items
such as access to premium content on a website, but most electronic commerce involves the
transportation of physical items in some way. Online retailers are sometimes known as e-tailers
and online retail is sometimes known as e-tail. Almost all big retailers have electronic
commerce presence on the World Wide Web.
History
Early development
The meaning of electronic commerce has changed over the last 30 years. Originally, electronic
commerce meant the facilitation of commercial transactions electronically, using technology
such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both
introduced in the late 1970s, allowing businesses to send commercial documents like purchase
orders or invoices electronically. The growth and acceptance of credit cards, automated teller
machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce.
Another form of e-commerce was the airline reservation system typified by Sabre in the USA
and Travicom in the UK.
From the 1990s onwards, electronic commerce would additionally include enterprise resource
planning systems (ERP), data mining and data warehousing.
An early example of many-to-many electronic commerce in physical goods was the Boston
Computer Exchange, a marketplace for used computers launched in 1982. An early online
information marketplace, including online consulting, was the American Information Exchange,
another pre Internet[clarification needed] online system introduced in 1991.
In 1990, Tim Berners-Lee invented the WorldWideWeb web browser and transformed an
academic telecommunication network into a worldwide everyman everyday communication
system called internet/www. Commercial enterprise on the Internet was strictly prohibited
until 1991.[1] Although the Internet became popular worldwide around 1994 when the first
internet online shopping started, it took about five years to introduce security protocols and
DSL allowing continual connection to the Internet. By the end of 2000, many European and
American business companies offered their services through the World Wide Web. Since then
people began to associate a word "ecommerce" with the ability of purchasing various goods
through the Internet using secure protocols and electronic payment services.
Timeline
1979: Michael Aldrich invented online shopping
1981: Thomson Holidays, UK is first B2B online shopping
1982: Minitel was introduced nationwide in France by France Telecom and used for
online ordering.
1984: Gateshead SIS/Tesco is first B2C online shopping and Mrs Snowball, 72, is the first
online home shopper
1985: Nissan UK sells cars and finance with credit checking to customers online from
dealers' lots.[
1985: Nissan UK sells cars and finance with credit checking to customers online from
dealers' lots.[
1987: Swreg begins to provide software and shareware authors means to sell their
products online through an electronic Merchant account.[
1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT
computer.
1994: Netscape releases the Navigator browser in October under the code name
Mozilla. Pizza Hut offers online ordering on its Web page. The first online bank opens.
Attempts to offer flower delivery and magazine subscriptions online. Adult materials
also become commercially available, as do cars and bikes. Netscape 1.0 is introduced in
late 1994 SSL encryption that made transactions secure.
1995: Jeff Bezos launches Amazon.com and the first commercial-free 24 hour, internet-
only radio stations, Radio HK and NetRadio start broadcasting. Dell and Cisco begin to
aggressively use Internet for commercial transactions. eBay is founded by computer
programmer Pierre Omidyar as AuctionWeb.
1998: Electronic postal stamps can be purchased and downloaded for printing from the
Web.
1999: Business.com sold for US $7.5 million to eCompanies, which was purchased in
1997 for US $149,000. The peer-to-peer filesharing software Napster launches. ATG
Stores launches to sell decorative items for the home online.
2000: The dot-com bust.
2002: eBay acquires PayPal for $1.5 billion.[2] Niche retail companies CSN Stores and
NetShops are founded with the concept of selling products through several targeted
domains, rather than a central portal.
2003: Amazon.com posts first yearly profit.
2007: Business.com acquired by R.H. Donnelley for $345 million.
2009: Zappos.com acquired by Amazon.com for $928 million. Retail Convergence,
operator of private sale website RueLaLa.com, acquired by GSI Commerce for $180
million, plus up to $170 million in earn-out payments based on performance through
2012.
2010: US eCommerce and Online Retail sales projected to reach $173 billion, an increase
of 7 percent over 2009.
E-Mail
Enterprise Content Management
Instant Messaging
NewsGroups
Online Shopping or Order Tracking
Online Banking
Online Office Suites
Domestic and international payment system
Shopping Cart Softwares
TeleConferencing
Electronic Tickets
Government regulations
In America
In the United States, some electronic commerce activities are regulated by the Federal Trade
Commission (FTC). These activities include the use of commercial e-mails, online advertising
and consumer privacy. The CAN-SPAM Act of 2003 establishes national standards for direct
marketing over e-mail. The Federal Trade Commission Act regulates all forms of advertising,
including online advertising, and states that advertising must be truthful and non-deceptive.
Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices,
the FTC has brought a number of cases to enforce the promises in corporate privacy
statements, including promises about the security of consumers’ personal information. As
result, any corporate privacy policy related to e-commerce activity may be subject to
enforcement by the FTC.
The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law in
2008, amends the Controlled Substances Act to address online pharmacies.
In Pakistan
The president passed the Electronic Transactions and Governance Ordinance in September
2002. It provides for the legal recognition of electronic documents and specifies offences. The
ordinance makes it an offence for a person to gain or attempt to gain unauthorised access to
any information system with or without intent to acquire the information contained therein,
whether or not he/she is aware of the nature or contents of such information. It also makes it
an offence for any person to do or attempt to do any act with intent to alter, modify, delete,
remove, generate, transmit or store any information through or in any information system,
knowing that he/she is not authorised to do any of the foregoing. Both offences are punishable
with either a prison term of up to seven years, or a fine up to PRs1m or both.
Forms
Contemporary electronic commerce involves everything from ordering "digital" content for
immediate online consumption, to ordering conventional goods and services, to "meta"
services to facilitate other types of electronic commerce.
On the consumer level, electronic commerce is mostly conducted on the World Wide Web. An
individual can go online to purchase anything from books or groceries, to expensive items like
real estate. Another example would be online banking, i.e. online bill payments, buying stocks,
transferring funds from one account to another, and initiating wire payment to another
country. All of these activities can be done with a few strokes of the keyboard.
On the institutional level, big corporations and financial institutions use the internet to
exchange financial data to facilitate domestic and international business. Data integrity and
security are very hot and pressing issues for electronic commerce today.
E-Business
Electronic business, commonly referred to as "eBusiness" or "e-business", may be defined as
the application of information and communication technologies (ICT) in support of all the
activities of business. Commerce constitutes the exchange of products and services between
businesses, groups and individuals and can be seen as one of the essential activities of any
business. Electronic commerce focuses on the use of ICT to enable the external activities and
relationships of the business with individuals, groups and other businesses.
E-Money
Electronic money (also known as e-currency, e-money, electronic cash, electronic currency,
digital money, digital cash or digital currency) refers to money or scrip which is only exchanged
electronically. Typically, this involves the use of computer networks, the internet and digital
stored value systems. Electronic Funds Transfer (EFT) and direct deposit are all examples of
electronic money. Also, it is a collective term for financial cryptography and technologies
enabling it.
Mobile Commerce
"Mobile Commerce is any transaction, involving the transfer of ownership or rights to use
goods and services, which is initiated and/or completed by using mobile access to computer-
mediated networks with the help of an electronic device."
Online Shopping
Online shopping is the process whereby consumers directly buy goods or services from a seller
in real-time, without an intermediary service, over the Internet. If an intermediary service is
present the process is called electronic commerce. An online shop, eshop, e-store, internet
shop, webshop, webstore, online store, or virtual store evokes the physical analogy of buying
products or services at a bricks-and-mortar retailer or in a shopping mall. The process is called
Business-to-Consumer (B2C) online shopping. When a business buys from another business it is
called Business-to-Business (B2B) online shopping. Both B2C and B2B online shopping are forms
of e-commerce.
B2B eMarketplace
A B2B e-marketplace is an business to business, internet-based broker of goods or services
within a community of many buyers and many sellers. A 'B2B e-marketplace' is a place where
buyers could find many suppliers from many countries and make a contact to supplier(s)
directly.
MultiChannel E-Commerce
Multichannel ecommerce (eCommerce, e-commerce, electronic commerce) consists of selling
products or services through third party retail partners. Multichannel ecommerce can be
differentiated from traditional retail distribution partnerships in that the manufacturer usually
maintains a single product management system that electronically feeds into multiple partners.
These partners can be: a comparison shopping engine like Google Product Search, a search
engine like Bing Marketplace, an online marketplace like Amazon or an online shopping malls
like Yatego.
Between 2005-2010, multichannel distribution has become a significant part of the overall
ecommerce universe. The key factor in the development of multichannel ecommerce has been
the advent of online marketplaces, which aggregate product and inventory information from
multiple merchants and display on their own sites, either in a branded or a non-branded
fashion. Companies like Amazon, eBay, Buy.com, Shop.com, and Overstock all allow online
merchants to syndicate product information to their product and inventory databases and
generally receive a commission for goods sold through their marketplaces. According to
Amazon.com, up to 40% of its revenue is now derived through the sales of third-party goods
through its Merchants@ and Amazon Associates programs.
Product and inventory information that feeds into marketplaces is aggregated either through a
seller portal offered by marketplaces or via data uploads and links in the form of flat files or
XML feeds. Merchant integration services are often utilized by merchants in setting up direct
XML links with the marketplaces. Most frequently, merchants rely on third-party integration
services offered by companies like ChannelAdvisor, Ixtens, and Mercent.
Amazon's success in developing its online marketplace has led to traditional retailers exploring
the model, with both Walmart and Sears opening online marketplaces in 2009.
E-Commerce in Pakistan
FROM THE ECONOMIST INTELLIGENCE UNIT
Half of the country’s 7,000 commercial-bank branches, including 90% of the branches in urban
areas, had been computerised by August 2006. Many banks and exchange companies offer
online funds transfers from overseas, such as for workers remittances. A few of banks offer
mobile-phone banking, where customers can pay utility bills using their mobile phones. The
National Institutional Facilitation Technologies (NIFT), an automated check-clearing house, was
operating in 14 cities in August 2006, and it processed 60m checks per year in 2005/06. NIFT is
a public-private company owned 51% by banks.
Internet merchant accounts (used for processing financial transactions of Internet vendors)
were permitted by the State Bank of Pakistan (the central bank) in February 2001. However,
inadequate infrastructure and security concerns remain, and in mid-2006 only Citibank (US)
offered these accounts, which were used by airlines, mobile companies, Internet service
providers and merchants. The transactions that do occur use international credit cards, which
are processed outside Pakistan. Users of Internet merchant accounts undertaking transactions
outside Pakistan need to submit electronic forms for transactions valued at US$500 or more to
their banks, which must then submit the same in consolidated form on a monthly basis to the
central bank.
In December 2005 the Central Board of Revenue, the tax authority, started allowing electronic
filing of sales tax and federal excise returns by registered private and public companies. At that
time, it said that it expected about 1,500 large taxpayers out of 22,000 to use the facility.
Government efforts to promote the IT sector include the establishment of the Information
Technology and Telecommunications Division in July 2000, various incentives, and the
commitment of resources for education and infrastructure building. The Ministry of Science and
Technology launched the National Information Technology Policy in August 2000. It was
developed by a team that included working groups on the following: human-resource
development; IT in government and databases; IT market development and support; IT fiscal
issues; telecoms, convergence and deregulation; cyberlaw, legislation and intellectual-property
rights; IT research and development; Internet development; software export; e-commerce; and
incentives for IT investment.
Total spending (by the government and private sector) on information, communications and
technology in Pakistan was US$10bn during 2005/06. Various e-commerce projects and
initiatives were underway in the public and private sectors in August 2006. The government
said in May 2004 that it has planned new IT and e-commerce projects worth well over PRs4.5bn
up to 2007, and by then it aims to produce 100,000 graduates a year in IT studies from the
seven new IT universities it has already set up.
Pakistan is part of the 15-member Asia Pacific Council for the Facilitation of Procedures and
Practices for Administration, Commerce and Transport. The council aims to support the United
Nations Centre for the Facilitation of Procedures and Practices for Administration, Commerce
and Transport. Pakistan is a member of the Asia Pacific Council for Trade Facilitation and
Electronic Business, a non-governmental organisation that promotes trade facilitation,
electronic business policies and activities in the Asia–Pacific region.
Growth of e-commerce
Pakistan has a number of barriers to electronic commerce, including inadequate infrastructure
(insufficient telephone lines and frequent power failures); relatively few Internet users; and lack
of security for online transactions. The government is working to overcome these problems and
has made some progress.
The number of Internet users in Pakistan is growing fast. According to the government’s
economic survey for 2005/06, there were an estimated 2.1m Internet subscribers and about
10m Internet users in June 2005 (latest figures available), and Internet access had expanded
from 29 cities in August 2000 to 2,339 cities and towns by June 2006. Optical-fibre networks
were available in 500 cities in June 2006, compared with 53 cities in August 2000. Pakistan had
170 Internet service providers in June 2006.
The Sustainable Development Networking Programme (SDNP), funded by the UNDP, started
providing e-mail services and then Internet connectivity beginning in 1993. This remained the
country’s largest network until 1996. The government began allowing private Internet service
providers (ISPs) in 1995. Paknet, a fully owned subsidiary of Pakistan Telecommunication
Company, the formerly government-owned telcoms firm, began offering ISP services in 1999.
Paknet is Pakistan’s largest ISP, followed by cyber.net, part of the local Lakson Group. Other
leading ISPs include Comsats, Brainnet, Fascom, Supernet, Worldtel (an affiliate of Worldtel
Canada) and NetSolConnect (owned by NetSol Technologies of the US and the Akhter group of
the UK).
During August 2006 various e-commerce projects and initiatives were underway in the public
and private sectors, including electronic-government projects worth US$300m at the federal
and provincial level. For example, a five-year, US$30m project funded by World Bank at the
State Bank of Pakistan (the central bank) to interlink the countrywide regional office network of
the central bank was almost complete. A real-time gross settlements (RTGS) project with
backward linkages to commercial banks and the clearing house is scheduled to be completed by
end-2006.
The Pakistan Software Export Board (PSEB) has a number of programmes to activate the local
information-technology (IT) sector. For example, the Bridge 2002 programme seeks to
computerise small and medium-sized enterprises and to provide projects to local software
companies, with technical and financial assistance from the board. Another programme, the
GEMS-2002, was launched in August 2002 to incubate small software companies, providing
logistics support, infrastructure, and marketing and financial guidance. The PSEB also provides
financial subsidies and technical support for various training programmes and for securing
internationally-recognised quality certifications.
Software-technology parks have been established to develop the IT industry in Lahore, Karachi
and Islamabad. But a software-technology park set up in Peshawar in June 2004 was
abandoned because of lack of funds and poor infrastructure. Other IT incentives include the
following:
Foreign investment
Foreign investment of 100% is permitted in the telecommunications sector. About 100 IT and
telecoms companies from the United States, Europe and Japan have offices in Pakistan,
including Oracle, Cisco Systems, International Business Machines, Microsoft and Intel. Two
leading ISPs have foreign connections: Worldtel is an affiliate of Worldtel Canada and
NetSolConnect is owned by NetSol Technologies of the US and the Akhter group of the UK.
Foreign investors are allowed to invest up to 100% in software companies, and foreign interest
in Pakistan’s technology sector has been increasing. Local entrepreneurs have set up around
100 call centres in recent years in Pakistan; one of the first was a call-centre that Align
Technologies (US) set up in 2000.
The United Nations Industrial Development Organisation and the World Bank also support
projects for information-technology development.
Intellectual property
There was a flurry of legislative activity concerning protection of intellectual property in
2000/01. The Pakistan Patent Ordinance 2000 was issued in December 2000 and the
Trademarks Ordinance 2001 was issued in April 2001, and they can be applied to Internet
activity.
According to an August 2006 report from the government, the Electronic Data Protection Act
2005, the revised Electronic Crimes Act 2004 and a law relating to electronic payments had
been drafted and were ready for legislation, although there is no schedule to present them. The
Electronic Data Protection Act would provide protection and safety to foreign data regarding
the processing of such data in Pakistan; details for the other two acts were not yet available by
August 2006.
Consumer protection
The president passed the Electronic Transactions and Governance Ordinance 2002 in
September 2002. It extends the coverage of laws concerned with physical contracts or
documents to their electronic forms.
Basis of taxation
No rules have been established on how to tax e-commerce or determine “electronic residence”
in Pakistan.
E-Commerce as a course
After the government realizes the importance of e-Commerce, they asked all the universities to
make e-Commerce the part of their syllabus.
Barriers to Face
In Pakistan, e-commerce is still in its infancy and faces many barriers to grow. The notable
barriers are:
However, the Government has recently put a crack on the barriers when it approved the
merchant ID accounts to facilitate online transactions. But there is still a long way to go and
requires government to continue to grease the wheels of e-commerce to speed up the process.
Predictions
Those who create, distribute, and sell goods and services to consumers also have reason to look
forward to this new mechanism. All enterprises, including the small and medium sized can
reach customers throughout the world instantly and comparatively inexpensively. Many
vendors can sell globally without the costly infrastructure of worldwide retail stores, sales
offices, distributors, or warehouses.
Pakistan is still an under developing country and is in a process of making their way towards the
road of technology. The internet is prevailing like dark cloud on Pakistan and it will hit the
Pakistan economy positively in the near future. People are getting aware of the importance of
business on the internet rapidly and this will prove good in the favor of Pakistan.
Pakistan Government is taking bold steps when it came to the concern of e-Commerce. Calling
FDI, making laws so that they could be able to invest more in Pakistan in the field of
Technology. The policies of decreasing the rigidity and monopoly of PTCL will help in this
regard. These steps will lead to more investment in the field and towards a bright future of e-
Commerce in Pakistan.
Banks are playing an important role in increasing the awareness of e-Commerce in Pakistan.
The banks start e-Banking and also the availability of merchant account that will help the
investors to invest in the internet business.
The literacy rate of the country is a big block when we thought of the future of e-Commerce in
Pakistan. It will take a lot of time in increasing the literacy rate of the country and more time
will be required to give awareness to the people about the e-Commerce.
Pakistan became a member of AFACT in September 2000 at Taipei, Taiwan and was nominated
its Chairman last month at AFACT 2002 held in Kuala Lumpur, Malaysia. Which surely reflects
that e-Commerce got a very bright future in Pakistan.
The young entrepreneurs can also play an important role in making the e-commerce a bright
activity in the business field. Fresh students who know about the internet and the business over
it will focus on the internet business as it requires fewer budgets and it pays more.
Conclusion
It can be concluded that there is a lot of scope of e-commerce in Pakistan, and most companies
are eager to going to the digital world, but at present E-commerce is not expected to increase
in near future due to low PC and internet penetration. Industry, businesses and trade people
prefer to use traditional ways of business enjoying personal contacts and mode of payments.
We think that companies have started realizing the potential of ecommerce and electronic data
interchange In Pakistan, especially in the Banking sector. So the future of Ecommerce in
Pakistan is bright. We will embrace ecommerce by desire or by force as more and more
international transactions are undertaken electronically.