The modern society is being greatly reshaped by the rapid developments in information technologies where it is evident that computers, telecommunications networks, and other related digital systems have combined to increase people’s capacity to know, achieve, and even collaborate (I. T. L. Education Solutions Limited, 2009).
The presence of these technologies has motivated people to participate in activities of transmitting information more quickly and widely, connecting distant locations and creating global communities that almost one and half decade ago, such experiences were unimaginable (I. T. L. Education Solutions Limited, 2009).
Notable is the fact that information technology is uniting people through different forms while at the same time integrating cultures and creating new social dynamics.
Information technology is further resulting into formation of closely bonded and widely dispersed communities of people who largely are united by their desire to transact business or just sharing experiences and pursuing academic and knowledge goals (I. T. L. Education Solutions Limited, 2009).
Numerous areas of humankind world are being transformed and affected by information technology such as the business, media, education, security, and many more.
Particularly in business, information technology enabled through IT communication, electronic service networks and multimedia continue to contribute to new and effective means of processing business transactions, integrating business processes, transferring payments and delivering services electronically (I. T. L. Education Solutions Limited, 2009).
Thus, E-commerce has evolved to become a unique developmental product of information technology advances in business, which is tremendously changing business fronts and operation in the entire world.
E-Commerce
Electron commerce is regarded an emerging concept which among other variables involves the process of buying and selling or exchanging pf products, services and information through the use of telecommunication and computer support system networks largely involving the internet. E-Commerce has received numerous definitions as a concept that continues to undergo changes.
For instance according to definition provided by I. T. L. Education Solutions Limited (2009) e-commerce refers to, “the electronic means of conducting commerce between business communications and transactions over the internet” (p.179).
Accordingly this definition suggest that e-commerce involves “buying and selling over the internet, electronic fund transfers, smart cards, digital cash and all other ways of doing business over digital networks” (I. T. L. Education Solutions Limited, 2009, p.179).
According to Janice Reynolds, e-commerce has evolved as the mainstream that is enabling businesses to sell products and services to consumers on a global basis hence e-commerce can be seen as the platform upon which new methods to sell and to dispense innovative products and services electronically are tested (Reynolds, 2004).
Kalakota and Whinston (1997, cited in Bushry, 2005) define e-commerce concept using different perspectives such as follows. Communication perspective- where e-commerce is seen to constitute the delivery of information, products or services, orders and payments over telephone lines, computer networks or any other electronic means.
Business process perspective – which on the other hand postulates that, e-commerce is the employment of technology towards automation of business transactions and workflow.
Service perspective – which holds that e-commerce constitute a tool that fulfills the needs and desires of companies, customers and management with aim of reducing the transaction costs while at the same time being able to excel in quality of goods and services and further be able to increase the speed of delivery.
Lastly, an online perspective on its conviction state that e-commerce possess the ability and capacity to for buying and selling products and information mainly on internet and other related online services (Bushry, 2005).
E-Commerce has also been defined by Reynolds (2004) to comprise the paperless exchange of business information by largely using electronic data interchange, electronic mail. Electronic bulleting boards, electronic funds transfer, World Wide Web, and other network-based technologies (Reynolds, 2004).
At the same time, e-commerce apart from automating manual processes and paper transactions again contribute and helps organizations to move fully to electronic environment thereby modifying how businesses operate.
E-commerce has widely affected the world and business in numerous ways and the impacts are likely to accelerate in future as new innovative developments takes place. E-commerce today continue to exert concerted positive and negative influence on world economy, global markets, international trade, financial markets, and many more sectors of business (Bajaj, Nag and Bajaj, 2005).
As the world continues to benefit from industrial activities, internet will continue to shape the world in form of e-commerce activities.
In general, e-commerce involves moving organizations from dormant traditional environment to full electronic environment that in turn leads to “change in their work procedures, reengineering their business processes, integrating them with their business partners beyond their traditional boundaries” (Bajaj, Nag and Bajaj, 2005).
Observation is that, e-commerce has revolutionalized the way business is conducted, as modern businesses have been intricate and complex.
Transactions at the same time are involving several global trading partners located in different parts of the world, and to effectively handle these complexities and interdependences of business processes, the role of e-commerce has become important since it is able to knit different organizations objectives or goals through a viable electronic environment.
From these literatures, e-commerce concept has been summarized by two groups: The Aberdeen Consulting Group and Giga Group.
According to the Aberdeen Consulting Group, e-business which is used interchangeably with e-commerce constitutes, “the application of electronic network technologies to transform business processes” (Bajaj, Nag and Bajaj, p.20), while Giga Group defines e-business as, “the application of electronic network technologies to transform business processes” (Bajaj, Nag and Bajaj, 2005, p.20).
E-Commerce and Business
Business organizations both small and large have inevitably embraced internet for the delivery of numerous information-based services. Due to its numerous potentials and opportunities organization, especially those involved in business activities continue to appreciate the internet in a variety of tasks (Botha, 2004).
A business to full benefit from numerous aspects of internet has to go through certain but key stages: first, there is exposure stage, where the organization utilizes the technology mainly for electronic brochure and bulletin board. This is done to provide information to the company’s clients.
Second, there is the interaction stage, which is a point where the internet is viewed as the link between the firm and the customer; here, the internet is perceived to be a communication channel and it becomes integral component in the operation of the organization.
Third, there is the e-commerce stage, where internet is believed to have evolved and become part of the economic bloodline of the company generating need for new operational procedures, financial management and marketing skills. In essence, a part from conducting communication with the organization using the internet the customer is at the same time able to purchase goods and services through the internet.
The organization reacts to these by ensuring that adequate facilities to facilitate purchased products by customers and subsequent delivery are done effectively using the internet.
Lastly, there is the e-business stage, where business is able to expand from its internal-focus role to exploitation of new market opportunities and in this way the internet become vital and useful in influencing the organization and business unit strategy (Botha, 2004).
E-commerce constitutes five major types that continue to dominate modern business world: Business-to-Consumer (B2C), Business-to-Business (B2B), Consumer-to-Consumer (C2C), Peer-to-Peer (P2P), lastly, Mobile commerce (m-commerce). Primarily, Business-to-Consumer type of e-commerce entails the applications that “provide interface from businesses directly to their consumers” (Sun and Finnie, 2004).
Consumers are the main target of the business goals and objectives where electronic transactions in marketing, ordering and paying, and sometimes after sales service takes place more easily without requiring the consumer to move to the physical location of the product (Sun and Finnie, 2004).
Most businesses have resorted to B2C e-commerce in order to attract new customers, reach new markets, and promote products and services (Sun and Finnie, 2004).
Business-to-Business (B2B) on the other hand comprises the largest form of e-commerce in modern market. Modern companies associate and interact in business aspects of selling, negotiating, and contracting business products and opportunities through the web.
E-commerce in this type (B2B) is used to improve communication within the organization and reduce costs while at the same time increase efficiency of business processes (Sun and Finnie, 2004).
Consumer-to-Consumer (C2C) form of e-commerce on the other hand benefit consumers as it eliminates the hurdles of intermediaries. C2C Websites have been designed to enable consumers to have that ‘direct’ dealing with other consumers and these websites constitute online communities, free personal classified pages, and auction houses (Sun and Finnie, 2004).
In modern world, e-bay found at www.ebay.com is a clear form of C2C e-commerce application that has gained popularity among consumers. Consumers open their own stores at e-bay.com where they are able to display and sell all their products in e-bay stores (Sun and Finnie, 2004).
With advances in internet technology C2C traditional distance has become zero and communication largely free, an opportunity regarded to benefit and complement B2B e-commerce and B2C e-commerce in future.
Peer-to-Peer (P2P) e-commerce constitutes new form of modern e-commerce concept that in its operation is characterized by lack of centralized control (Mitchell and Institution of Electrical Engineers, 2005). P2P e-commerce has become popular due to its ability of being file-sharing networks, and providing means of distributing mostly copyrighted materials (Mitchell and Institution of Electrical Engineers, 2005).
Nevertheless this form of e-commerce has been drawn back largely by lack of addressing security issues which is further compounded by conflict that arise with requirement to provide anonymity for users and increasing need to provide forceful access control, data integrity, confidentiality and accountability services (Mitchell and Institution of Electrical Engineers, 2005 ).
The last type of e-commerce is mobile commerce. Mobile phones have become popular and constitute widely used mobile devices (Lim and Siau, 2003). Mobile phones especially those that are GSM enabled have become vital facilitating mobile commerce. Other mobile devices that are becoming important in mobile e-commerce include palmtops, and PDA, which are accelerating mobile e-commerce (Lim and Siau, 2003).
Mobile e-commerce enables the users to conduct electronic commerce activities using their mobile devices and the e-commerce activities include obtaining marketing and sales information, receive ordering information, make purchase decision, make payments, obtain the product or service, and finally receive necessary customer support (Lim and Siau, 2003).
Mobile e-commerce continues to get acceptance due to its convenience of being available anytime and anywhere.
On overall e-commerce role in most businesses cannot be ignored or underrated. It is clear that businesses have grown and expanded as a result of e-commerce.
Smaller business have been presented with opportunity to compete bigger and established businesses on equal grounds and business activities and operations have defied geographical barriers to establish in new markets and regions as a result of e-commerce (Botha, Bothma and Geldenhuys, 2008).
Therefore, e-commerce contribution to business has resulted into extended hours of operations for the business, geographical barriers have been broken, online tenders and contracts are enormous, business costs have drastically reduced, competition continue to be transparent, lastly, weak and inefficient middlemen have been eliminated (Botha, Bothma and Geldenhuys, 2008).
E-Commerce and Technology
As evidences show, it would be impossible to have electronic business without technology. Technology for e-commerce has originated in the use of internet and other computer networks to fulfill goals of online buying and selling, electronic funds transfer, business communications and other activities that involve buying and selling goods and services online (Zhou, 2004).
The use of internet and other information technology techniques, which in wide sense constitute e-commerce has become an important part of meeting the needs and wants of consumers while the company benefits by gaining profit. Technology usage by companies has resulted in companies achieving greater value from e-commerce.
In essence, companies with appropriate and superior technology infrastructure coupled with efficient human resource adopt e-commerce more easily than those lacking these aspects (Kraemer, 2006).
Analysis of e-commerce adoption in developed and developing countries indicate that it is the technological readiness that account as the strongest factor influencing adoption of e-commerce. Technology is seen to be relative diffuse in developing nations while integrated in developed nations (Kraemer, 2006).
E-commerce is further influenced and affected by the digital divide where in the past access and utilization of technology was confined in a small group of rich people. The masses especially in developing and least developed countries were left out leading to their inadequate acquisition of technology.
This has hampered their effort to be part of the global community appreciating and enjoying the benefits of e-commerce (Wahab, 2003). As such, what is needed is a well-orchestrated scheme that enhances to incorporate the developing and least developed nations into the mainstream of technological learning and training, which in turn possess the capability to transform the larger society into embracing e-commerce.
E-Commerce and Society
Society is one at the receiving end of technological products. People in the society are the ones facilitating and at the same time benefiting from technology. Nevertheless, people do not just act as passive consumers of technological products but also largely participate in influencing and directing invention and adoption of various technologies.
Different people in different regions of the world hold specific and unique values and norms, which has power in shaping and controlling the direction of information technology usages (Thanasankit, 2003). Adoption of technology and to extent e-commerce has been facilitated through language and communication.
Technology development and adoption tends to take place within the functioning capacities of economy, political, legal, social, religious, and education institutions. On overall these institutions and structures affect or influence the level, propensity, type and period for invention and subsequent adoption of particular technological products.
On overall the use of e-commerce has been associated with specific potential problems that emanate from issues to do with customer perception and cultural orientation, fear of loss of personal data, linguistic obstacles, difficult in integrating data and the high cost associated with adopting and running e-commerce technology (Reynolds, 2009).
Transparency, global and efficiency of e-markets
Electronic markets can be said to be still infant and online exchanges are yet to gain considerable acceptance especially by those in developing and less developed societies.
Nevertheless, electronic markets are seen to possess the potential to “reduce transactions costs, add product and pricing transparency, generate market liquidity, and facilitate bidding by a broad spectrum of potential suppliers in a standardized platform” (Zhu, 2002 cited in The Gale Group, 2004, p.1).
Accelerating activities of electronic market, internet is seen to be at forefront in generating improved and flow of information (Kemerer, 1998 cited in The Gale Group, 2004). Electronic markets in this sense is seen to constitute a platform on which information is collected, synthesized, availed and circulated among various suppliers and consumers.
The rise of electronic markets has resulted in creation of huge information with regard to products, prices, transactions, and competitors.
As a result of this, information in electronic markets has become more transparent as compared to traditional convectional markets (The Gale Group, 2004). According to Zhu (2002), information transparency can be seen as, “the degree of visibility and accessibility of information” (The Gale Group, 2004, p.1).
Benning (2007) notes that, the movement of the markets from their traditional form and location to the screen has been accompanied by numerous key developments. E-commerce in relation to electronic markets is changing the overall markets in the global perspective are organized, analyzed, quoted and priced (Benning, 2007).
Transactions costs have been eliminated in turn has led to increase in trading volumes, prices have become more transparent and much easier to obtain and markets further react with increasing speed to new information (Benning, 2007).
According to Mandorf (2008), electronic markets have become foundations of e-commerce when the possibilities of internet economy with regard to initiation, negotiation, and handling of contracts have been made easy by informational systems.
Electronic markets have been characterized to reflect: virtual meeting rooms where suppliers, customers ‘meet’, and these rooms are independent of location and time; electronic markets have greatly contributed to improvement of market transparency since they are able to relieve suppliers and consumers into getting relevant information.
Compared to traditional markets where markets were largely full of disequilibrium of information between supplier and consumers, which could in turn be used to gain undue competitive advantage; electronic markets have resulted into reduction of transaction costs as compared to traditional markets; lastly, electronic markets are more open providing a larger international audience (Mandorf, 2008).
According to Loebbecke, electronic markets as compared to traditional markets are relatively low in prices that in turn include low margins (Loebbecke, n.d, p.1). As a result of this, the market is further seen to be more transparent exercised by suppliers, customers and products (Loebbecke, n.d, p.1).
Electronic markets pool numerous offers from the world and these offers can be found online and consumers have the opportunity to sample and compare potential suppliers of products or services on the internet which in turn leads to lower transaction costs (Loebbecke, n.d, p.1).
Transparency of the electronic market is further boosted by the utilization of search tools where at the same time competition among suppliers cause constant pressure on market prices and demand for extra services to be delivered (Loebbecke, n.d, p.1).
Eugene Fama in 1970 developed the efficient market theory, which in essence is based on the economic theory of price equilibrium that originates from the interface of forces of supply and demand (Grover, Lim and Ayyagari, 2006). Generally, in an efficient market, information in great depth is available in terms of accessibility and cost and is handed to stakeholders at about the same time (Grover, Lim and Ayyagari, 2006).
Electronic markets consists of inter-organizational information systems, which support and facilitate seller-buyer information communication regarding products and services (Bakos, 1991 cited in Grover, Lim and Ayyagari, 2006).
As the internet continue to grow in great measures many expert and analysts’ predictions points to the fact that e-markets will continuously results into reduction of information asymmetry thereby paving way for price convergence operating at the lowest competitive level (Grover, Lim and Ayyagari, 2006).
Why much confidence in reduction of information asymmetry? Many authors who have written on e-markets efficiency express that lower search costs and availability of information in great measure through the internet reduction information asymmetry and opportunistic behavior, should be seen to be main reasons leading to efficient e-markets (Alba et al., 1997; Bakos, 1997; Bailey, 1998 cited in Grover, Lim and Ayyagari, 2006).
Globalization of e-markets is taking place at a first rate. E-markets are seen to be escalating into interrelated hubs of online exchange that pledge economies of scale that are greater than separate exchanges (Foley, Bacheldor and Wallace, 2000).
Due to expansion of e-markets into global scene, marketplace operators are viewed to be prepared to offer services such as “automated real-time credit, connections to shipping and logistic providers, and integration with enterprise resource management and inventory systems” (Foley, Bacheldor and Wallace, 2000, p.1).
As such, e-markets are fast becoming global supply-chain centers aimed at ensuring that businesses are all-round efficient; for instance, Oracle has in place Oracle Exchange, which is a horizontal e-marketplace in which majority of companies are able to buy and sell non-production goods and services (Foley, Bacheldor and Wallace, 2000).
Globalization of e-markets has further expanded to initiate and facilitate online financing, supply chain planning, and collaborative design (Foley, Bacheldor and Wallace, 2000). Global companies such as Daimler Chrysler, Ford, and General Motors have moved numerous steps forward to integrate their online purchasing activities.
Through the global e-marketing plan, the companies have formulated their operations in form of business-to-business exchange in which the overall aim is to enable them and other automakers to easily buy materials for constructing automobiles while at the same time collaborate with other partners (Foley, Bacheldor and Wallace, 2000).
The advantages to which most companies are attaching their aim of globalization of e-markets emanate from the numerous advantages e-markets holds. For instances e-markets reduce costs for business buyers as a result of increased choice and price competition while at the same time giving sellers a new and modified profitable channel for delivering inventory (Foley, Bacheldor and Wallace, 2000).
E-market rise: role of push or pull factors?
E-commerce and to extend e-markets have evolved to permit almost every aspect of human daily life. As from 1990s when internet became more popular among business and individuals, its utilization has is felt in almost all aspects of human sphere. Internet technologies have resulted into increased productivity; maximize convenience and improved communication in most parts of the world (Anonymous, n.d, p.1).
Online banking, online payment, online buying, and selling are just some aspects that have been produced by growth of technology. In other words, internet, and to extent technology, has become integral to daily lives of many people and organization. However, few years back the growth of and acceptance of internet technologies was not hot issue as it is today and the likely question that may be asked is why?
The answer to this considering the numerous information technology literatures available is that the necessary information infrastructural development that is evident today was not available (Anonymous, n.d, p.1). Put it simple the supportive infrastructural for adoption of internet technologies was limited by lack of necessary infrastructures.
However, as time lapsed, more information technologies gadgets found their way in people’s home, and individuals’ technological knowledge and experience increased. At the same time, most companies acquired more technologies, which apart from addressing the internal business issues and needs were seen to have the capacity of enhancing business operations and growth through e-commerce.
Therefore, as consumers’ needs arose for more internet products and services businesses were left with no alternative, except aligning and incorporating consumer needs with the business objectives and capacities. Therefore, the intense pressure for the development of e-markets was a direct response from outside pressure emanating from consumers and internal business pressures to adapt to efficient and more reliable technologies.
Push factors emanated internally in form of need to compete effectively in the market with other equally well-placed competitors and this required businesses to adopt efficient and sophisticated technologies.
At the same time to leverage competitive advantage companies were forced to become innovative in inventing online business activities, this was due to need to ease consumers need to move to physical locations, expand business with disregard to geographical barriers, reduce costs and largely increase consumer base. These needs prompted most businesses to embrace online markets.
On the other hand, consumers were becoming more informed, wanted to reduce transactional costs related to information search, wanted convenience and wanted to be part of global citizens, as a result they preferred and demanded for prefect forms of market they would operate with easiness. This resulted into development of e-commerce and subsequent electronic markets.
Today markets are seen to be driven by consumer choice and in turn the consumer choice affects and influences the company’s strategy. What is being observed is consumer need-based business model which is rising in the marketing and replacing the older model which was push-based model (Kalakota and Whinston, 1997).
In the push model companies have upper hands in making decisions while the pull model put much emphasis on the customer to make decisions which in turn translate and directs the company’s strategy.
Pull model, also known as ‘demand-driven model’ postulate that today technology has empowered a large population to search and utilize information more faster which in turn is used in making key purchasing decisions (Kalakota and Whinston, 1997). Once the information has been searched it is translated into preferences where consumers use it in becoming more conscious about choice.
As consumers demonstrates caution in relation to preference it becomes the duty of the company to translate the consumer wants and needs into appropriate products and the company that take early lead in doing this is able to gain competitive edge over its rivals (Kalakota and Whinston, 1997).
The pull model dictates a need for: supporting increased variability; reduced lead times; improved quality and lower unit cost; operation excellence; and comprehensive performance measures for control purposes (Kalakota and Whinston, 1997).
In summary today consumers are seen to be pushing sellers to the wall demanding lower processes and prices, better and improved quality, and large selection of in-season goods.
In return sellers are reacting to these demands by working hard to improve, reducing operational costs, reducing cycle times, buying more wisely, and making a lot of investments in technology. In short, e-markets have risen and expanded from both internal push factors and external pull factors which are further likely to influence future growth of technology in businesses.
Conclusion
For the last two decades, technology has transformed humankind world. From its slow development and acceptance in early 1990s to its current vibrant use in the 21st century it can be said with confident that technology will inevitably remain part of human’s society growth and expansion.
Notably, information technology through internet has revolutionalized the marketplace through the electronic market (e-markets). Electronic markets are growing at a faster rate, which in turn has resulted into the transparency, efficiency, and globalization of the e-market. Consumers and sellers are able to interact in virtual rooms, anywhere in the world and at any time.
This has resulted into convenience on the part of consumers while enabling businesses to increase their product. Nevertheless, e-markets are yet to be embraced by greater population of the world although statistics shows it is steadily increasing as more people become technological-knowledgeable.
Therefore, what is suggested is for the digital divide issue to be addressed. This is especially necessary in developing and least developed societies where adoption of technology is still low. As globalization continues to influence the world and disintegrate economic, political, and social barriers, digital divide is an issue that should be addressed to realize equal and faster adaptation to e-markets and e-commerce.
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