E-Commerce Architecture

Introduction

Electronic commerce, or e-commerce, refers to the purchase and sale of goods and services over the Internet. Fundamentally, e-commerce is about the people, process, and technology involved in allowing a consumer or business to purchase goods or services from another business or individual. For centuries, traditional commerce has involved physical brick and mortar businesses, stores, shopping malls, catalog sales, and so on. In the last hundred years, other channels for commerce, such as telephone and television sales were established. With the growth and widespread availability of the Internet in the 1990s, a sizeable commerce activity moved to the World Wide Web. Today, consumers go to their favorite e-commerce sites to not only to buy and sell, but to conduct research, review, or comment on products and services. A recent comScore presentation1 reports that nearly 70 percent of customers consider the Internet to be an important factor in making buying decisions, and 60 percent have gone online to do research before purchasing items in a store.

The share of e-commerce sales as compared to overall retail sales has been increasing continuously, and now represents approximately 6 percent of the total US retail sales in 2009. For industries such as travel and hospitality, it is becoming the preferred transaction channel. In the future, this trend is expected to grow even more for traditional retail offerings.

Conversion rates—that is, the percentage of customers who visit an e-commerce site and actually buy something—remained stable, even during the recent challenging economic times. The conversion rate remains at 3 to 3.5 percent, as it has for the past few years. This is a clear indication that Web-based commerce has not been as adversely affected as other channels during the recent economic slowdown. Table 1 summarizes the conversion rate statistics.