2. e-commerce: Origins, Evolution and Implications
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In 1989 Tim Berners Lee proposed the World Wide Web (WWW or web) while working at CERN, the Swiss based scientific organisation for research into subnuclear physics. Berners Lee initially envisaged a text based global hypertext system enabling fast and efficient communication between scientists located around the world and released the first text based browser in January 1992.
The 1990s saw the advent of affordable desktop computers together with the emergence of Microsoft's Windows as the dominant personal computer (PC) operating system. Its point-and-click graphical interface utilised a set of (supposedly) universally understandable icons to represent tasks such as file management and printing.
September 1992 saw the release of Mosaic. Developed by Marc Andreesen and others at the National Center for Supercomputing Applications at the University of Illinois, Mosaic was the first web browser with a graphical interface. The web started to become the familiar face of the Internet providing easy access to a wealth of text, images, animation, sound and video.
2.3 Growth and Evolution
The largely academic roots of Cyberspace meant the commercial exploitation of the 'net was initially viewed with hostility. In 1994 two Arizona lawyers, Laurence Canter and Martha Siegal, posted advertisements to a large number of newsgroups offering legal help to foreigners seeking U.S. work permits. Their act caused outrage, resulting in thousands of complaints including death threats. Since then attitudes have changed with most users accepting most forms of 'net advertising as a means of paying for the huge amount of valuable free content available, just as television advertising pays for the programmes. However, the non-commercial ethos of the web remains evident in the vast quantity of valuable content which is still freely available, including daily newspapers such as the Times  and the entire contents of the Encyclopaedia Britannica . This is significant for the contemporary e-commerce enterprise.
2.4 The Benefits of e-commerce
2.4.1 Finding the Best Deal
2.4.4 The Global Marketplace
2.4.5 New Opportunities
E-commerce currently offers secure server and encryption technology as a solution to the security risks associated with transmitting data through Cyberspace. Encryption involves encoding information into a form that only the intended recipient can interpret. The commonly used public key encryption involves two keys for each user; a public one, made freely available, and a private one known only to the user. Sensitive information (e.g. a credit card number) is encoded using the intended recipient's public key before transmission, even if intercepted by a hacker it is thus useless without the corresponding private key (Whittle [95, pp 99-103]). In addition to utilizing secure technology for processing transactions and storing user data it is also necessary to inform users that such measures have been implemented, see 4.9 for further discussion.
The ease with which individuals may represent themselves misleadingly
also gives cause for concern. Before entering a credit card number consumers
demand reassurance they are dealing with a legitimate supplier that will
meet its side of the bargain rather than a confidence trickster operating
an online fraud. Digital certificates, issued by a trusted third party,
may provide authentication of an online trader's identity.
This may account for why only an estimated 2.7% of new-car sales in America in 1999 took place over the Internet while as many as 40% involved the 'net at some point, e.g. for information gathering . The consequence may be more manufacturer's showrooms, such as the Sony Centre in Tokyo, where visitors can peruse, but not purchase, the company's latest gadgetry.
Advances in virtual reality capabilities combined with the increasing availability of high-speed Internet access will permit more realistic representations of products to be presented. Already estate agents are able to provide virtual walk-throughs of properties and car manufacturers to present 360° views of their range of models. Avatar technology will provide users with a physical representation in Cyberspace that could be used, for example, to try on clothes in virtual boutiques.
2.5.4 Information Overload
A form of marketing unique to the web is the affiliate program. First introduced by Amazon , it involves links to a company's site being posted on numerous other affiliate sites. For example, a photography website may link to Amazon (as a supplier of photographic books), photographic stores, processing houses etc. When a sale arises from one of these links the owner of the affiliate site earns commission.
Corporate websites are advertisements, but the most successful offer valuable content alongside the sales pitch e.g. a supermarket providing free recipes. Whittle  predicts a blurring of the distinction between information and advertising in Cyberspace along with users being able to determine what kind(s) of advertising they are subjected to.
The most controversial form of Cyber advertising is spam, the e-mail equivalent of direct (junk) mail. The 'net makes it easy and cheap for advertisers to mail millions of recipients. Programs trawl Cyberspace collecting e-mail addresses, which are traded on huge lists. The result is that anyone who has published his e-mail address is bombarded with worthless messages like:
Sell 1 million products on your website.
to quote but a few examples from my own mailbox. Every such message has to be transmitted and then downloaded before it can be discarded, given the number of recipients that implies a huge amount of wasted time. Many e-mail services such as Yahoo and Hotmail now offer "filters" to automatically delete such messages.
2.7 Case Study: Amazon.com
Amazon backs up its excellent Cyber-presence with a reputation for fulfilment and delivery. Whilst it is not the cheapest e-tailer, according to the Economist  66% of its sales go to repeat customers.
Despite its apparent success Amazon has yet to record a profit. According to the E-commerce Times  the company has debts of more than $2 billion and a second quarter loss of $58 million announced in July 2001 was reported as good news by BBC Business .
2.8 The Changing Business Environment
Small believes methodologies which were successful in the industrial age are no longer applicable due to the inherent unpredictability of rapidly changing technology. "It is not just that there are new rules or that some of the rules have changed. The new rules which apply in the digital world of communications and e-commerce are sometimes the exact opposite of the proven and accepted dogmas which apply in the conventional world" [90, p19]. He goes on to suggest a process of evolutionary design as an alternative to traditional planning. In this model a business develops and changes in response to the market, technological advancement, user feedback etc.
Small [90, pp272-7] describes the limitations, in the information age, of the traditional managed team operating as part of a rigid hierarchy. Instead he proposes the concept of temporary, virtual teams, brought together by an initiator, someone able to "identify a win-win situation where cooperation can produce benefits" and "produce enough evidence that profits will result from [the] proposed cooperation". Such teams aren't "held together by rules, but by benefits of mutual advantage."
Of the Internet, Small [90, p179] states "It isn't about technology, it is about communicating with people". The 'net thus provides the perfect environment for the formation of virtual teams.
The Information Economies group at IBM research carries out simulations using agents programmed with various strategies. The work is described by Kephart et al.  who predict that over the next decade "the global economy and the Internet will merge into an information economy bustling with billions of autonomous software agents that exchange information goods and services with humans and other agents". This report also predicts a role for agents in personalised filtering and bundling of information as a response to the problem of information overload described in 2.5.4 above.
Bloor [8, p176] reports that "some websites have chosen to bar access to the robots that obtain comparison prices". He describes this as foolish and likens it to "turning customers away".
2.10 The Future
As intelligent agents become more sophisticated and more widely deployed it would appear that profit through artificially high prices will cease to be feasible. Merchants of near-identical goods and services will need to provide some form of added value to their core purpose in order to differentiate themselves from their competitors and earn a share of the market. For those that can successfully achieve this the potential rewards are enormous.
e-commerce promises to liberate business, consumers and workers alike but is set to impact widely on the existing economy forcing traditional businesses to adapt and creating numerous opportunities for new entrants.
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