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Competitive pressure in today’s consumer market requires organizations to maximize marketing efforts at minimum cost. The means to achieve this can be through the use of e-commerce technology. E-commerce allows the organization to reach a nearly unlimited number of possible buyers through the internet, facilitating a 24/7/365 selling cycle without significant human intervention in the selling process and without a significant physical retail presence. E-commerce accounts for a significant share of total retail sales. According to the U.S. Department of Commerce report, U.S. consumers spent $165 billion in e-commerce sales in 2010. This is a 15% increase over the corresponding figure in 2009. A projection by Forrester Research confirms this trend in e-commerce sales growth. The Forrester Research projects an annual growth of at least 7%, with the following numbers:
2011: $192 billion
2012: $210 billion
2013: $230 billion
2014: $250 billion
Compared to U.S., the prospect for e-commerce in Europe is much brighter according to comScore report. According to Kelkoo Research in UK, e-commerce sales in 2010 for the three major European economies have been healthy with UK generating €48 billion in sales, Germany at €39 billion and France at €25 billion. Penn-Olson research estimates that at the 70% annual growth in e-commerce that India has experienced every year since 2007, the 2011 online sales is projected to be US$10 billion.
Facilitating e-commerce requires having an adequate infrastructure to support the growth. Many advanced countries such as U.S., Canada, UK, France, Germany and Japan have a significant web presence. South Korea is leading the world with the highest broadband penetration covering 95% of the households (Arstechnica, http://www.arstechnica.com). This accounts for the popularity of e-commerce in South Korea. Table 1 shows the relative ranking of other countries with regard to household broadband penetration. These statistics show the rapid growth in e-commerce sales around the world. In U.S. alone the number of internet users is expected to reach 205 million, which is 66% of the population. Given the enormous number of potential consumers and possible number of potential sales, e-commerce as a market channel will likely continue to grow in the near future. As Zwass pointed out in his seminal article on e-commerce, an organization needs infrastructure, products and structures, and facilitating services in order to compete in the e-commerce space (Zwass, 1996). Infrastructure refers to the hardware, software and database necessary to facilitate transactions via the internet. Products and structures are the materials the organization is seeking to sell and the manner in which they are sold. Facilitating services are the provisioning of secure messaging and providing enabling services for e-commerce, such as the use of credit card in the purchase. Without these services the consumer would be at risk of sensitive personal data disclosure as the data that is transmitted over the internet.
Table 1. Rank | Country | Percentage of households with broadband connectivity |
1 | South Korea | 95 |
2 | Singapore | 88 |
3 | Netherlands | 85 |
4 | Denmark | 82 |
5 | Taiwan | 81 |
6 | Hong Kong | 81 |
7 | Israel | 77 |
8 | Switzerland | 76 |
9 | Canada | 76 |
10 | Norway | 75 |
11 | Australia | 72 |
12 | Finland | 69 |
13 | France | 68 |
14 | United Kingdom | 67 |
15 | United Arab Emirates | 65 |
16 | Japan | 64 |
17 | Sweden | 63 |
18 | Estonia | 62 |
19 | Belgium | 62 |
20 | United States | 60 |