Electronic Commerce:
An Introduction to the Special Issue
Charles Steinfield
Michigan State University
East Lansing, MI USA
steinfield@tc.msu.edu
Based upon sheer attention in the popular press, 1995 has been the year of the Internet. Exponential growth in the number of Internet users, the number of hosts connected to the World Wide Web, and the number of companies establishing a Web presence has
created a gold rush mentality among firms and investors. The application that is fueling this euphoria is electronic commerce, and many are convinced that the day in which we all buy everything from groceries to clothing to movies over the Internet is not
far away (see Yahoo's Electronic Commerce directory entry for several enthusiastic discussions of the possibilities of electronic commerce, including papers by Branson et al., 1995; and Reitz & Lewis, 1995).
It is important to keep the topic of electronic commerce in perspective. One recent study by a consulting firm called Euromonitor, noted that the global shopping market was approximately $166 billion in 1994 (cited in the Lansing State Journal, Dec 26, 1
995). Electronic shopping, including CD-ROMS, accounted for just $300 million in sales or less than .02%. In the United States in 1994, the 3.5 million people connected to online services spent an average of under 60 cents each via their PCs, compared t
o $94 through traditional mail ordering. However, it must also be pointed out that this study focused on 1994, before the Web as we know it really started to take off.
Moreover, electronic commerce can be defined to encompass many things. For some, it emphasizes all forms of electronic interaction between businesses, but downplays linkages to end consumers. The Electronic Com
merce Resource Center takes such a view, defining electronic commerce as "a broad term describing business activities with associated technical data that are conducted electronically." They further note that "The goal of Electronic Commerce is to mol
d the vast network of small businesses, government agencies, large corporations, and independent contractors into a single community with the ability to communicate with one another seamlessly across any computer platform."
The National Telecommunications and Information Administration (NTIA) uses a broader definition that includes the end consumer who participates via electronic shopping. They note that, at its broadest level, electron
ic commerce can mean any use of electronic technology in any aspect of commercial activity. Their task force on electronic commerce more narrowly uses the term to mean the use of a National Information Infrastructure (NII) to perform any of the following
functions (quoted from the NTIA Office of the Assistant Secretary, 1995):
- Bring products to market, (e.g., Research & Development via telecommunications)
- Match buyers with sellers (e.g., electronic malls, Electronic Funds Transfer)
- Communicate with government in pursuit of commerce (e.g., electronic tax filings)
- Deliver electronic goods (e.g., information)
Many technologies can be used in support of electronic commerce, highlighting the fact that it is more than just an Internet-based phenomenom. The Electronic Commerce Association includes the followin
g list of key technologies and procedures in their discussion of electronic commerce: "streamlining processes, interconnectivity, Internet, electronic data interchange (EDI), electronic funds transfer, e-mail, security, electronic document management, wo
rkflow processing, middleware, bar coding, imaging, smart cards, voice response, and networking."
This special issue of JCMC takes a close look at electronic commerce; attempting to separate the hype from the reality, while providing computer-mediated communication researchers with a number of interesting and relevant directions for further research.
Among the many interesting issues raised by the authors are:
- Electronic commerce is more than home shopping. It encompasses a
range of electronic interactions between organizations and their up and
downstream trading partners. Many of these transactions have been
occurring for quite some time, long before
the Internet opened to commercial traffic. Platforms for electronic
commerce that precede the Internet include the use of the Teletel in
France for interorganizational commercial transactions, as well as the
use of EDI over private networks. The article by Steinfield, Kraut, & Plummer in particular addresses these other electronic commerce platforms.
- Marketing on a network enables and requires new types of strategies, requiring firms to learn new ways of interacting with customers. Hoffman, Novak, & Chatterjee provide a
useful typology for organizing the many new web-based marketing strategies that have emerged.
- Networks can facilitate the coordination between buyers and sellers, reducing transaction costs, and lowering costs to final consumers. Wigand & Benjamin provide compelling examples of
the cost savings that the use of an NII can enable. They, along with Hoffman et al, and many other electronic commerce researchers, are intrigued by the new possibilities an NII affords
for bypassing traditional intermediaries.
- However, Sarkar, Butler, & Steinfield, in what may lead to an interesting debate among the electronic commerce research community, provide a contrasting perspective on the likely
impacts on intermediaries. They argue that "frictionless" transactions, i.e. transactions without any intermediation will be rare on an NII. Bypassing traditional intermediaries may occur, but because of the many functions of intermediaries, they may be
just
as likely to benefit from electronic commerce as producers. Moreover, new network-based intermediaries - or "cybermediaries" are rapidly becoming prominent on the World Wide Web.
- Steinfield, Kraut & Plummer introduce another research issue, questioning how use of a network for transactions will influence buyer-seller relationships. They argue
that one of the main effects of networks linking business trading
partners is likely to be a reinforcing of existing relations, and the
formation of electronic hierarchies, rather than the creation of large
electronic marketplaces. Contrary to expectations in much of the
previous literature, they suggest that this is likely to be true even on ubiquitous, public network infrastructures like the World Wide Web.
- This issue is further elaborated by Nouwens & Bouwman, who point out that organizations will exploit an NII to create closed interorganizational networks, characterized by intranetwork
cooperation and interdependence. Their many case studies in the Netherlands help to illustrate this trend. Together, these two papers suggest that visions of a vast electronic marketplace, on which buyers shop around for the best deal among a large set
of sellers, do not take into account the real dynamics of interorganizational relations.
- Picot, Bortenlanger, and Rohrl also introduce
a bit of realism into the debate surrounding electronic commerce, focusing
on the automation (or lack thereof) in the financial securities markets.
They argue that these markets should be among the first to become fully
automated, given their commodity-like attributes and no physical goods to transport. Yet, they find that automation has not been fully
implemented in these markets. They explain that fully automated
transactions over networks will be difficult to achieve, mainly because
the network removes the ability of actors (buyers and sellers) to
behave strategically, especially during the price discovery phase
of a transaction.
- Nearly everyone focuses on the problems associated with payment
mechanisms on the Internet. Crede helps to put
this issue in perspective, with his review of a wide range of electronic
payment options. Ironically, he points out that large value
electronic payment systems already exist and function well enough. The
more difficult problem is in low value, but vastly more frequent,
payment flows.
Many electronic commerce topics that might have been addressed in this issue were not covered, but are by no means any less relevant. Clearly there is room for new research on many issues such as collaborative work between organizations over networks, me
thods of achieving network security, ensuring privacy of consumers in an electronic commerce environment, the design of appropriate interfaces to facilitate network-based commerce, and the possible behavioral responses of consumers to electronic shopping.
These and the many researchable topics discussed in this issue should keep the Computer-Mediated Communication research community busy for some time.
Acknowledgements
Many people worked long and hard to help this issue become a [virtual?]
reality. I would first like to gratefully acknowledge the hard work of the
guest editorial board for this issue. Many thanks to Mary Cronin, Donna
Hoffman, and Thomas Novak for their timely and insightful reviews of the
manuscripts that were submitted. Anne Hoag is to be commended for her
excellent work as an editorial assistant. Alice Plummer and M.B. Sarkar
also helped in the editorial process and are to be thanked. Of course,
thanks are due to the authors, who provided excellent articles and timely
revisions. Finally, I am grateful to the editors of JCMC, Margaret
McLaughlin and Sheizaf Rafaeli, for their efforts, patience, and
painstaking editorial work during the production of this special issue. I
remain responsible, however, for all mistakes, omissions, or other problems
that remain.
References
Branson, M., Davis, C. Elko, P., Finley, T., Plumley, D., Sakioka, G., & Suleiman, M. (1995). Commerce and the World Wide Web. [Online]. Available as
http://www.deltanet.com/users/dplumley/eticket/index.html
as of December, 1995.
Lansing State Journal. (1995, Dec 26). People still like to go shopping. Lansing State Journal, p. 5B.
NTIA Office of Assistant Secretary. (1995). Electronic commerce. [Online]. Available as
http://www.ntia.doc.gov:80/opadhome/ecom3.html
as of December, 1995.
Reitz, R., & Lewis, W. (1995). Business and the Internet. [Online].
Available as
http://falcon.cc.ukans.edu/~wlewis/project/hpage.html as of December, 1995.