Lect.Drd.Roxana Ştefănescu,
Prof.Dr.Dorian Aur
The Internet has become a medium through which a wide variety of goods and services are traded between businesses, businesses and consumers, and even between private individuals.
At this point, for reasons of clarification and precision,
I will present a definition of International E-commerce, out of the many definitions that exist.
The International E-commerce is a system that includes not only transactions that center on buying and selling goods and services to directly generate revenue, but also those transactions that support revenue generation, offering sales support and customer service, or facilitating communications between business partners.
This broad definition will be the base for further explanations.
The economic impact of Internet is deep, as it affects any existing sector of economy.
Therefore, in agriculture, the Internet is providing better information about market prices and has fostered the emergence of new online commodity markets. In construction, it reduces the need for blueprints and allows seamless communications between subcontractors. In manufacturing, it is generating new efficiencies by reducing procurement costs and improving supply chain management. Its role in the services sector is linked to qualitative aspects of products, such as convenience and customization, thereby reducing costs and delays and increasing reliability. From all these sectors, in service industries , Internet and electronic commerce are making a substantial contribution to economic growth.
If we consider now the firm’s level in a economy, in order to achieve stronger growth by involving more and more in E- commerce , and also to respond to the changes implied by Internet, firms are also pursuing organizational change.
Organisational change, involves, as firms reported, new strategies, new business processes, new organisational structures and better worker skills.
It is largely known that Internet creates an environment that significantly lowers the entry barriers and encourages electronic commerce. One reason of this fact is that Internet adheres to non–proprietary standards based on the existing communications infrastructure.
The firms are facing low barriers for E- commerce, as they benefit by the low cost of connecting to the Internet and its independence from specific equipment or operating systems mitigates the opportunity costs of being locked into a particular technology and reduces the switching costs that accompanied the adoption of earlier forms of e-commerce.
Boston Consulting Group(BCG) on retail e-commerce
A particular category of e-commerce is represented by the retail e-commerce. On April 02 2001 the famous Boston Consulting Group issued a new report where it predicted a “Bright future for retail e-commerce”
The sales are expected to grow impressively, and most of the growth will take place in the leisure travel, grocery, and clothing categories.
Also, another aspect was underlined, that traditional retailers will succeed in retail e-commerce, as they have the advantages of well established brands and existing sales and fulfillment infrastructure.
A category of sellers that will also succeed in e-commerce are the catalogers, due to their extensive experience in selling to consumers at distance.
BCG also predicts success for those pure-play retailers that have already established large-scale businesses, such as Amazon, and for niche retailers that are targeting a small group of loyal buyers.
All online retailers are recommended to focus on leveraging their brand, making the most of their customer relationships and managing the integration of online and offline sales channel.
The Internet Economy layers
Because of the numerous categories of companies participation at e-commerce , in order to separate them by segments of revenues and employee a classification system was developed. The system considered will be presented in the following.
The system is formed by breaking apart the Internet Economy into layers based upon the unique elements necessary to facilitate the ultimate revenue producer on the Internet : sales transactions.
Layer One - is represented by the the Internet Infrastructure, that consists of telecommunications companies, Internet Service Providers, Internet backbone carriers, “last mile” access companies and manufacturers of end-user networking equipment- all of which are a prerequisite for the Web and the proliferation of the Internet-base electronic commerce. Layer One provides the platform for growth for the reminder of the Internet Economy.
Layer One generated 142.8 billion $ in revenues in the first half of year 2000 and employed over 932,000 individuals at the end of the first half of 2000. Revenue per employee is the highest of all the layers, reaching over 80,000 $ for the second quarter. All these figures are part of a new study by the University of Texas Center for Research in Electronic Commerce , covering the first half of 2000. The figures presented for all the four layers are the principal findings of the report measuring the Internet Economy commissioned by Cisco Systems and refer at the US Economy.
Layer Two – consists of The Internet Applications Infrastructure that involves software products and services necessary to facilitate Web transactions, as well as transactions intermediaries. Also this layer includes the consultants and services companies that design, built and maintain all types of web sites, from portals to full E-commerce sites.
This layer generated 72.8 billion $ revenues in the first half of the year, and employed over 740,000individuals at the end of the same period. Layer two has the lowest revenue per employee at 52,554 $ for the second quarter of 2000.
Layer Three – “ The Internet Intermediary “ is a category that includes those businesses that did not generate transaction- related revenues in the same way as companies in the Internet Commerce layer. A predominant type of company in this layer is the Internet pure –play.
This layer generated almost 64 billion $ in revenues in the first half of 2000, and employed 468,689 individuals in the same period, that represents the fewest of any of the layers. By the second Level three is characterized by the second highest of all the layers at 78,312 $ for the second quarter.
Layer Four – The Internet Commerce
The companies included in the Layer Four are only those companies that are conducting web-based commerce transactions. This layer also includes the E-commerce revenue of retailers. Layer Four can include Business to Business e-commerce as well as Business to Consumer online sales. Sometimes B-to-B and B-to-C are difficult to separate because they can do business in both areas.
One of the conclusions of this study is that employment in Internet Economy companies is growing much faster than employment in overall economy. Also Internet economy revenue is growing twice as fast as Internet Economy and the Internet related revenue is a growing piece of corporate revenue as a whole.
This Layer generated over 127 billion $ in revenues in the first half of 2000, and accounted for 1million employees in the same period. Revenue per employee is under 65,000$ for the second quarter of 2000 reflecting slow employment growth combined with respectable revenue growth.
In conclusion, all these figures show that the Internet is transforming the economy and the way people work, to an extent few people would have imagined just a few years ago. The Internet has become an invaluable global marketing resource.
References
Carroll J., Broadhead R., Canadian Internet Handbook, , Prentice Hall Canada Inc. Scarborough, Ontario, 1996
Horspool D., How do businesses use the Internet?, course notes , Canada,1996
OECD, A complete and consistent macro-economic data set of the Euro Area, methodological issues and Results, Paris, France,2001
OECD, Committee for Information, Computer and Communication Policy, Paris, France,1997
Online references:
www.gao.gov/policy/itguide/homepage.htm
www1.tradeaccess.com/
www.internetindicators.com/
OECD (www.oecd.org/dsti/sti/it/cm)
