When one considers the mighty IT mechanisms used in making a payment to someone, perhaps on the far side of the world, it may come as a surprise to a new Internet shopper when he sees items for sale on eBay for as little as one cent. Obviously the seller makes his profit somehow, if it is only through charging extra for posting and packing, but traditionally it has not been easy or even possible to send tiny payments through international systems. But with the huge increase in buying and selling over the Internet by individuals using facilities such as eBay, this plainly had to change.
Ecommerce hosting has changed it, making possible marketplaces where sales are aimed specifically at the very small buyer. If someone were selling it, you could buy a pin over the World Wide Web and pay the tiny amount asked for it using multi-million dollar technology! Businesses carrying on marketing over the Internet have become known as e-tailers, and the method itself as e-tail.
Most ecommerce transactions involve the purchase and shipping of actual physical goods, whether this is a book bought on Amazon, or tons of small machine parts ordered by a manufacturing business. Of course, ecommerce can also be used for virtual items, such as access to specialized content or information on a website.
So what happens when you buy something on the Internet? You firstly enter your payment details, such as a credit card, or login to a payment system such as PayPal, and your creditworthiness for the proposed transaction is checked instantly. If your bank signals that your credit is sufficient for the transaction, or if your credit within the payments system is sufficient for the transaction at hand, then the payment is authorized. After the various players in the chain have taken a small percentage of the transaction, total payment is made to the vendor of the service or product which you want to buy. The transaction is completed electronically in real-time while you sit at your PC, with no more effort required from you than a click of the mouse and remembering your credit card number and passwords.
Key issues with ecommerce are privacy and security. Because ecommerce systems handle people’s credit card details and personal details such as bank account numbers, financial status and telephone numbers and addresses, they are extremely sensitive systems which need to be protected as far as possible against intrusions of various kinds. The most obvious threats come from external sources such as hackers; however, theft of information or credit by corrupt company employees is also a significant factor which needs to be guarded against.
Whilst we most commonly think of ecommerce as being the vehicle by which a transaction between an end-user customer and vendor takes place, it is also a mechanism whereby companies can do business with one another via the Internet. For example it may be that an Internet ecommerce server is involved in one company automatically requisitioning manufacturing parts from another company. So ecommerce can equally apply to company-to-company (also known as business-to-business, or B2B) transactions as well as to company-to-individual transactions.