The Evolution of E-commerce
Electronic commerce, the buying and selling of goods and services on the internet especially the World Wide Web, has become a dominant force not only for the development of national economies but also for the globalization of the world economy. Today, E-commerce dictates the future of a country, how it will perform in the global community and how it will take a big economic leap. Those who are ahead of others in the E-commerce competition are usually the stronger forces in the global village.
Their economic strength is usually transformed or being equated to social and political power, making them the leading voices in human development and evolution. But before it has become the leading trend in global business, E-commerce took on several stages of transformation, much the same as its foundation, the Internet. And it being a by-product of the Internet, E-commerce literally means “buying and selling goods and services over the Internet. ”
Other terminologies are also used synonymously with E-commerce, such as Internet trade and E-business, since E-commerce also includes promotion, advertising, customer relations, employee and investor relations, recruitment, communication, research and any other business using the Internet and any other electronic network. Although E-commerce is relatively new, several phases of E-commerce have already been introduced to the global community for more than 25 years now.
These include electronic means of transferring funds, the use of automated teller machines (ATM), telephone banking, supply chain management, e-marketing, online marketing, online transaction processing, automated inventory management systems, automated data collection systems, and perhaps the most familiar, the use of credit cards. From the ‘70s to ‘80s, these aspects of E-commerce have been popular in the digitally advanced countries such as United States of America and the United Kingdom.
Another aspect of E-commerce is the Electronic Data Interchange (EDI), which started out in the 1970s as a technique for sending data electronically using computers. The computers then interpret, analyze and take action on the data without any human help. Such is accomplished through the use of codes and structures in the data that are acceptable to both the sender and the receiver. Today, E-commerce is the language of competitive businesses. Firms and countries that do not engage in E-commerce may put to risk the potentials and competitiveness of their enterprise.
Many enterprises have become integral part of global networks of production supply chains and through these networks, enterprises in developed countries induce new information technology, organizational changes and business trends to traders in developing countries. And since the Internet is the prime source for conducting E-commerce, more and more individuals, consumers, enterprises and even governments use the Internet for their day-to-day transactions and activities.
According to the United Nations, some 150 million new people began using the Internet in 2001 to 2002, bringing the number of Internet users worldwide to 655 million by end of 2002. This means that about 10 per cent of the world’s population was “on-line” in the said year. Meanwhile, the success of both the Internet and E-commerce and their respective statistics should not be confused.
Internet economy is bigger and has a wider scope which includes Internet infrastructure and programs and marketing. E-commerce, however, deals directly with retail and wholesale E-commerce and the exchange of goods and services around the globe through the Internet. E-commerce revenues since 1998 to 2001 are in excess of US$280 billion, according to Internet Indicators. With the continuing success of E-commerce, the demands of the global market have also evolved.
The times of traditional ink-and-pen signing of contracts and transactions was replaced by E-signatures and E-contracts. Business has become faster and perhaps more productive through the electronic world. Since E-commerce developed into a wider spectrum and along with it came the necessity to use E-contracts and other forms of electronic information, debates on several issues arose among scholars, private firms, IT experts, governments and individuals using the Internet, for business started to mount.
Such issues range from network architecture and infrastructural robustness, of international legal and regulatory frameworks, and of public trust, security and privacy, e-crimes, to jurisdictions and scope of control. Even the United Nations Commission on International Trade Law (UNCITRAL) accepts the reality of increasing number of transactions which involves the use of alternatives to paper-based forms of communication, storage and authentication of information.
This is why the UNCITRAL enacted the Model Laws on Electronic Commerce in 1996 and the Model Laws in Electronic Signatures in 2001. The two model laws intend to assist countries in the framing of legislation that would enable and facilitate electronic contracting and also, to uphold the UNCITRAL’s mandate to further the “harmonization of the law of international trade and in that respect to bear in mind the interests of all peoples, particularly those of developing countries. ”
The details on the principles and implementation of E-contracts and E-signatures will be discussed further in the succeeding chapters of this paper. However, the United Nation’s effort to harmonize the laws of international trade is just one of the many concerns that remain to be resolved in relation to E-commerce. As mentioned above, the success of E-commerce is highly correlated to the success of the Internet. And as we speak, the so-called “Digital Divide” continues to grow and the gap between the developed countries and the developing countries increases uncontrollably.
The “Digital-Divide” is an economic phenomenon that differentiates developed and developing countries in terms of information and communication technology. A growing number of research show that the divide between the “haves and have-nots” was decreasing but the gap is far from closing. It was proven that the improving and increasing access to Information and Communications Technologies seem to retain rather than eradicate the distinction between those who have greater capacity to access as against the less disadvantaged.
The gap between the developed and developing countries is even accentuated in E-commerce. At present, the leading countries in E-commerce are the United States of America, Germany, United Kingdom and other members of the Council of Europe. This is why they are now in the lead in formulating policies for the effective implementation of laws on E-contracts, E-signatures, consumer protection and data protection in E-commerce.
The developing countries like Saudi Arabia, United Arab Emirates, Bahrain, Egypt, China and others in Asia are left behind and are still trying to enhance their strategies to promote and maximize the potentials of E-commerce. It is interesting to note that despite their insufficient infrastructure and accessibility in information technology, notwithstanding their cultural and social backgrounds, their people gradually embrace the reality of the digital and electronic age.
The Economic and Social Commission for Western Asia (ESCWA) believes that Arab countries must generate and exploit new economic opportunities through the adoption of E-commerce practices. Despite its position that E-commerce offers no instant cure to the local economies, the commission says that “the acceleration of economic growth that E-commerce can bring about would probably result in a more immediate and sustainable contribution to the reduction of poverty and economic progress. ”