Reference no: EM133041018

The Internet has changed the way people buy, sell, hire, and organize business activities in more ways and more rapidly than any other technology in the history of business. For more than 40 years, banks have been using electronic funds transfers (EFT). Businesses have also used another form of e-commerce, electronic data interchange (EDI), for many years. The first wave of electronic commerce has often been characterized by rapid growth, often called a "boom," followed by rapid contraction, often called a "bust." Figure 1-3 summarizes the growth of actual and estimated global online sales for the B2C and B2B categories.

The second wave is characterized by an expanding international scope, with sellers beginning to do business in other countries and languages. In the second wave, established companies began using their own internal funds to finance gradual expansion of electronic commerce opportunities. The increase in broadband connections in homes was a key element in the B2C component of the second wave. Indeed, the second wave fulfilled the promise of available technology by supporting the legal distribution of music, video, and other digital products on the Web.

Several factors combined to trigger a third wave in the development of electronic commerce. These factors include: emergence of mobile commerce, widespread social networking, increased participation by small businesses, sophisticated analysis of large datasets, and integration of tracking technologies into B2B. Figure 1-4 summarizes the key characteristics of the first three waves of electronic commerce.

Discussion Questions

1. Compare the evolution of electronic commerce to other historic changes in economic organization, e.g., the Industrial Revolution.

2. Discuss why the "boom and bust" categorization of the first wave is considered a myth.

3. Why was the sale of digital products fraught with difficulties during the first wave of electronic commerce? Use the music industry as an  example.

4. Briefly discuss how companies began the second wave with a renewed interest in making the Internet work as an effective advertising medium.

5. Discuss how Web 2.0 technologies that enabled part of the growth in electronic commerce that occurred in the second wave will play a major  role in the third wave.