Abstract
This chapter describes e-commerce, a trading business built on top of the Internet. Different e-commerce models, such as B2B, B2C, C2C, and their major players are described. E-commerce companies like Amazon and Alibaba, are used to explain the effect of e-commerce on our economy, society, and beyond. GMV, MAU, market capitalization, and other business data are presented and analyzed. Influential factors, such as user retention, government policy, payment method, and logistics are also discussed. Finally, the emerging e-commerce model, emerging e-commerce market, and the future of e-commerce are illustrated.
TopBackground
Self-sufficiency was considered a primitive lifestyle in early human society. Once communications and interactions became popular in human society, trading gradually replaced self-sufficient economy (Watson, 2006). The advantages of commerce/trading over self-sufficient economy include the increase of productivity of human being and the increase of diversity of consuming products/services. Commerce (trading), as a basic activity of human society, can be traced back to prehistoric time and its evolution can be categorized into the following stages.
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Barter System: Barter system is the direct exchange of products or services with other products or services without using a medium. This kind of trading model can be traced back to 150 thousand years ago (Watson, 2006).
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Currency System: In currency system, standardized exchange medium, money, was introduced. With the support of currency, trading became more convenient. The development of original currency, metal coins, is believed to have originated about 500 BC.
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Banknote: The first development of a local banknote (paper currency) began about 700 AD in China. With its many advantages over metal coins, paper currency or paper money was gradually adopted nationally in China around 1100 AD.
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E-Currency: Electronic money was introduced within the modern banking system. Examples of e-currency include bank deposits, fund transfer, and electronic payment. Using e-currency, money balance and transaction history are stored in a computer system and users who have the access key could manage their money. The access key could be a bank card or an online password. The first bank card was introduced in 1946 by John Biggins, a banker in New York, and the first online banking system was introduced in 1983 by the Bank of Scotland.
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E-Commerce: The first e-commerce model was proposed and built in 1970s, which was long before the wide use of the Internet. It was created in student laboratories of Stanford University and Massachusetts Institute of Technology (Markoff, 2005). In the following half century, various e-commerce models are proposed, tested, and implemented (Tkacz & Kapczynski, 2009; Palmer, 1988; Kelly, 2005).
Key Terms in this Chapter
B2B (Business-to-Business): An e-commerce activity involves two business.
Horizontal E-Commerce: A website that sells various categories of products.
Local E-Commerce: An O2O model that is integrated with local business, where products/services are ordered online and consumed locally.
Social E-Commerce: An e-commerce built on top of social networking platforms, where products/services are sold to friends or followers in the social network.
GMV (Gross Merchandise Volume): The total sales of the values of products by a retailer in a specific period of time.
E-Commerce: The business activity of trading products or services online.
B2C (Business-to-Consumer): An e-commerce activity in which a product is sold by a business and to a consumer.
Vertical E-Commerce: A website that sells a specific category of products.
C2C (Consumer-to-Consumer): An e-commerce activity in which a product is sold by one consumer to another consumer.
Market Capitalization: The total market value of a company’s outstanding shares.
MAU (Monthly Active User): The average number of users that conduct business activities on an e-commerce platform in one month period.
O2O (Online-to-Offline): An e-commerce activity that combines online shopping with offline (physical store) shopping.
Internet-Based Business Ecosystem: A business environment built on top of the Internet to facilitate trading between sellers and buyers and provide services for various business activities.