E-business
«In five
years, there won’t be any Internet companies because they’ll all be Internet
companies. Otherwise they will die.” Andy Grove, Intel’s co-founder
and chairman.
Internet companies are incredibly diverse and the
different ways they do business are equally so. The web has known an explosive
growth into every kind of commerce: in 1999, retail sales were estimated at
about $20 billion.
And by the year 2004, they are expected to
have risen to $185 billion, propelled by the increasing variety of goods and
services offered and the increasing numbers of consumers willing to buy online.
What can explain such figures? One thing is
true: in the world of e-commerce, the buyer is king: the next vendor of the
product he is looking for is just one mouse click away and he can compare
prices instantly across multiple suppliers. On the Internet, geography is dead
and so is time: whatever time it is, someone who can sell you what you want is
probably awake somewhere in the world
Who sells what, to whom and how?
What? Whatever a prospective customer wants to
buy, he/she is sure to find it some where on the Internet, even if it is
something as way-out as, say, a stuffed rattlesnake or a sterling silver
Jaguar. But the seven products bought most often on the web are: books,
software, music, travel, hardware, clothing and electronics.
Who and to whom?
— Businesses
can sell things to each other. This is known as B2B (business-to-business). It
is by far the most successful form of e-commerce. By the year 2003, it is
estimated that its value will have risen to $1 .5 trillion.
— B2C
(business-to-consumer) is the term used for the exchange of goods and services
between businesses and the buying public.
- A type of
commerce known as online auctions can also be B2C: here, manufacturers or
retailers agree on a price with a buyer very often for old stocks or goods
approaching the end of their shelf life. But almost any 45 thing can be sold in
this way: holidays, cars, cameras. Buyers and sellers in online auctions can
also be individual members of the public. Sellers post a description of the
item for sale on a site such as eBay. They set a closing date and an optional
reserve price and wait for customers to bid .The auctioneers make money by charging
sellers an insertion fee and taking a commission on the sale.
How?
Businesses can operate exclusively online:
these are often called pure-play businesses, pure-plays or pure players. Very
often, however, traditional companies merely exploit the Internet to expand and
streamline their business. These are called clicks-and-mortar. A company like
the
The problems facing start-ups
An average
e-commerce site costs $1 m and takes five months to build, so start-ups rely
heavily on venture capital . In March 2000,70 Internet shares slumped and many dotcoms had to close
down, the majority of which were start-ups. By mid-2001 however, things seemed
to be looking up again at least in the field of technology start-ups.
Experienced entrepreneurs with good technology were finding it easier to raise
finance and it was predicted then that the new ones would be much tougher than
their predecessors. They would be built to last.