Ecommerce Case

Ecommerce is fuel for the growth of the new economy. The tremendous growth in the U.S. in the early nineties was almost all attributed to the growth of the Internet and ecommerce. Ecommerce is the purchase of goods over the World Wide Web. There are three types of ecommerce business-to-business, business to consumer, and consumer-to-consumer. Each one of these three has its own issues that hamper their growth.

The reason for the explosive growth in the Ecommerce industry is the accessibility to any product. You don't have to be limited by what the local store in some small farm town has. You also don't have to wait for the local J.C. Penny catalogue to come in the mail to order something. You can go online and order any product. A great example of this concept is textbooks. The textbook for this class was not available at the Barnes and Noble on twenty Third Street. This was not a problem because I just went online and ordered the book. I got the book two days later for ninety dollars cheaper.

Price is another major factor in the growth of the new economy. We have so much information in front of our computer screen. We can compare prices of airplane tickets, computers, cars and any product under the sun. The consumer doesn't have to pay outrageous prices because of the lack of competition. This helps the big retailers increase their market shares without adding too much cost. They have a lower cost than the ma and pa store; therefore, they can pass on their savings to the consumer. In the new economy retail stores are closing down because they can't compete with online retailers pricing.

The part of the new economy that has the most room to grow is the consumer-to-consumer sector. This sector includes web sites that allow private people to sell their items for a small fee to anyone who want to buy their products. The main site that does this is Ebay. You can sell anything you want from clothing, tickets, movies, and even cars. There is no limit to who can sell and what you can sell. Last quarter, when bad economic news came out; Vice president Cheney commented that the bad economic news did not include the sales and revenue of Ebay.

One of the hardest problems with buying an item from another consumer, who lives far away from you, is how do you pay for an item. In the early days of Ebay, when you bought an item, you had to send a check or money order in the mail. This caused numerous problems. The first problem is this caused the sale to take an extremely long amount of time. The United States postal system can take up to ten days to deliver mail from coast to coast. Add the four days for a check to clear and it takes two weeks just to receive the money.

The biggest problem with sending a check in the mail is how you can guarantee that the recipient will receive the money. Even if the seller receives the money, he could be a dishonest individual who denies receiving the check. You can track your check, but this costs additional money. Even if you can prove he received the check, it is not worth a protracted court battle to get you money back. The seller may receive defected merchandise and will not have any recourse to get his money back.

The solution to all these problems is Paypal and other companies like it. Paypal is a company that buyers and sellers register with to facilitate online transactions. Sellers register with paypal their bank accounts, which they want the purchase price of the sale to go into. Buyers register their credit cards or bank accounts, which they want to pay for their items from. The buyer transfers money to his paypal account, which takes about four days. When the buyer wishes to pay for a purchase he sends the money from his paypal account to the sellers paypal account. The buyer can transfer money from his credit card to paypal spontaneously to transfer to the seller. This process is advantageous to the buyer and seller. The seller gets his money instantly and the buyer has legal proof of his payment. If he has any problems with the lack of shipment, he can notify paypal. Paypal will demand proof of shipment from the seller. If the seller cannot provide this, Paypal will credit the buyer's account and deduct the seller's account for the purchase price. Paypal became such an integral part of Ebay that Ebay bought out Paypal.

All three types of Ecommerce must deal with two very important issues, privacy and security. These issues go hand in hand.