Globalization and advancement in information and communication technology are primary factors that enable the growth of the economy. Electronic commerce (e-commerce) has shown tremendous growth in business globally with the aid of globalization. E-commerce is the buying and selling goods and services over an electronic system such as the internet and computer networks. E-commerce incorporates technologies such as supply chain management, inventory management, electronic data interchange, online marketing, electronic funds transfer, and electronic transaction processing. Information and technology are one of the critical factors in the growth of businesses, generation of wealth, and achievement of sustainable economic growth because by applying new technologies in the business industry, it becomes more competent, accesses more market and creates more employment opportunities. The application of e-commerce in business has a significant impact on customer service and the success of the business (Choshin & Ghaffari, 2017). E-commerce has enabled a change in customer attitudes, business opportunities, and digital marketing due to the internet that goes beyond geographical boundaries. Since it is always open and no time limitation, e-commerce enables customers much more control and comfort to purchase goods and services using the internet. This essay discusses the birth and globalization of e-commerce, rules, barriers, international expansion and standardization, and its future.
The Birth of E-commerce
The introduction and use of e-commerce dates back to the invention of electricity, computers, cables, and the internet. The first-time e-commerce was introduced was in 1969 when CompuServe, an e-commerce company established by Dr. John R. Goltz and Jeffrey Wilkins, used a dial-up connection to enable the exchange of information via internet-based email addresses. The use of e-commerce was still limited until 1991, when the internet was opened for commercial use enabling thousands of businesses to take up residence in the websites. In the beginning, e-commerce was limited to the execution of electronic commercial transactions using technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) that enabled the businesses to exchange information and conduct electronic transactions.
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The ability of the businesses and organizations to send commercial documentation electronically began in the late 1970s. Even though the use of the internet among the public began to advance as of 1994, it took approximately five years to develop secure protocols that allowed rapid connection to the network. Around 2000, thousands of companies in the United States and Europe represented their services in the World Wide Web (Sun et al., 2015). The move led to a change in the meaning of e-commerce to purchasing goods and services over the Internet using secure connections and online transaction services. The use of e-commerce has been advancing, becoming more efficient and effective with the increase in Internet coverage and use of smartphones. Currently, many businesses use e-commerce services for their operations. Small businesses have seen a rise in local sellers operating from social media platforms such as Facebook and WhatsApp. During the Covid-19 pandemic, the physical purchase of goods and services was impacted, forcing many businesses and organizations to e-commerce for their purchases.
Rules of E-commerce
The importance of e-commerce to the success of businesses cannot be underestimated. The ability of entrepreneurs to conduct business across the world using internet technology creates an enormous opportunity for the success of a business. E-commerce technology can be of great importance, but it also presents complex commercial compliance challenges. There is a need to have rules and regulations that govern the use of e-commerce to ensure sustainable online transactions in a highly competitive business environment.
E-commerce Data Protection Rule
Protecting information is one of the important considerations when it comes to the use of online transactions. Suppose the e-commerce website intends to collect the personal information of the customers and visitors. In that case, it is important to have the website registered under the Data Protection Act to ensure handling sensitive information in compliance with the law. Online data privacy is a big issue in e-commerce sites because it collects and retains customer's personal information during transactions. Some of the personal information the e-commerce website can collect include name, email address, credit card, and other types of sensitive financial information. Protecting the information of the customers is crucial when providing e-commerce service, and one should ensure that the collection and use of personal data comply with federal and state laws. The owners of e-commerce should provide a privacy policy and post it on the transaction website enabling the customers and other users to know the type of information collected from them, the use, and how that personal information is stored.
Another consideration in the protection of data is to understand the rules applicable when conducting online advertisements on the e-commerce website. When advertising products, it is essential to ensure that the exercise complies with advertisement regulations. The Federal Trade Commission regulations for advertisement are designed to ensure that any activity taken to market goods and services protects consumers by preventing deceptive and unfair acts (Campbell & Grimm, 2019). Among the small businesses that use e-commerce, email is the primary form of online advertising. When using email for advertisement, businesses need to understand the federal advertising laws to ensure the content complies with Acts such as the Controlling the Assault of Non-Solicited Pornography and Marketing Act. The emails used for advertisement must have a disclaimer or notice that indicates the message is an advertisement and opt-out information.
E-commerce Refunds Rule
Refund is an important way of building trust with customers and failing to recognize that it can affect customer relation since sometimes refunds are required. Having an open refund policy available to the customers is essential, and the business must refund canceled purchases within a specified time. The business can ask the customer to cover the cost of returning the goods, and there are high chances that the goods will be returned in a merchantable condition. Refund is a natural part of the business, and understanding that and responding promptly in handling refund requests assure the customers that the entrepreneur cares about them. Businesses that use e-commerce should provide refund policies to the customers on the website and ensure that they read and agree to the terms and conditions before accepting the terms of refunds. Ensuring accuracy of the information, proper packaging, and dispatching of goods is essential towards limiting potential reasons for customers to request refunds.
Customer Financial Data Handling Rule
Proper handling of the customer financial data is critical to the success of e-commerce. The entrepreneurs who use e-commerce websites need to understand the payment card industry and data security standards (PCI DSS). The organizations and businesses that transmit, process, and store customer credit card information must observe this regulation. PCI security standards play a critical role in safeguarding credit card information in the process of enhancing online payment and security of the account. Some of the security standards in PCI include using firewall protection between wireless network and cardholder, making use of the latest authentication security, and applying network intrusion detection systems to secure the customers' information. Meeting PCI security standards can be time-consuming and expensive for small e-commerce businesses. Still, they can outsource it to a third party with experience and a payment system to ensure they comply with PCI regulations.
Business Interest Protection Rule
For the business to thrive, there is a need to protect its interests, especially when it involves internet transactions. Establishing terms and conditions is critical to protecting business and personal interests when engaging in an online transaction. In an ideal world, one cannot encounter difficulties in e-commerce, but numerous challenges affect the real world's business. Taking utmost care over drafting the business's terms and conditions and consulting lawyers when necessary sets out terms of business securing agreements during contract creation and when selling goods and services online.
Service Delivery Rule
For businesses utilizing e-commerce, it is critical to have a clear service delivery policy that enables the customers to know how the packages are delivered and when to expect them. The owner of the business needs to specify expected delivery timeframes and costs. Availing delivery information to the customers plays a critical role in preventing problems that arise due to disgruntled customers. Ensuring that customers access the information concerning service and goods delivery means that they are likely to understand the security of their agreement to the business terms in the event of a dispute.
Barriers to E-commerce and Globalization
The adoption of e-commerce by businesses and its expansion worldwide is constrained by some of the barriers that discourage people from embracing the use of this technology. The barriers that influence the use of e-commerce for business transactions include; lack of information, customs-related barriers, consumer sales laws, information barriers, taxes and payment barriers, data transfer barriers, property rights barriers, and other barriers.
Lack of Information
Access to information is key to the success of e-commerce in business. Lack of adequate information concerning national laws, payment methods, and logistics in countries that use e-commerce for business transactions can be a big problem for e-traders who sell their goods and services in a broad market. Due to lack of information, small businesses also find it difficult to collect and analyze relevant data concerning the countries they sell or would wish to sell. Accessing relevant data concerning business and its dynamics plays a critical role in informing decision-making to ensure successful business operations in the country of origin and across the globe.
Customs-related Barriers
Conducting business across the border can be very challenging due to regulations that are involved, for instance, customs duties and other rules. When engaging in cross-border-e-commerce, the primary challenge is tariffs that one should pay before exporting goods to other countries. Imposing high tariffs significantly influence the price of goods and services among the e-traders, consequently reducing their competitiveness (Fayad & Paper, 2015). Customs duties can also affect the efficiency of e-commerce when it comes to returning goods bought via the internet because it leads to high costs and administrative challenges involved in dealing with cross-border online transactions. The customs-related issues are among the challenges that affect the globalization of e-commerce, restricting the use of technology within the countries.
Consumer Sales Laws and Information Barriers
The barrier of consumer sales laws and information occurs when e-commerce businesses direct their sales to a different market while becoming subject to various consumer sales laws applicable in different countries. The laws regulating e-commerce in different countries create costs and administrative problems for business operators because they have to adjust their sales accordingly to fit different markets. Obtaining consumer information in different counties can be difficult because the laws and regulations that govern businesses differ from one country to another. The problems facing e-commerce businesses due to restrictive consumer sales laws hamper the globalization of e-commerce because it can be difficult to meet different countries' laws.
Taxes and Payment Barriers
In every country, businesses must pay taxes to the government; however, the regulations of paying taxes can be unclear of the difference between digital and physical sales. The payment of products and services purchased using e-commerce is usually processed differently than those bought in physical stores. Ensuring that consumers feel secure when purchasing goods and services using the internet is essential if e-commerce reaches its full potential (Mankiw, 2020). In that connection, different countries have different legislations to help control and regulate types of payment methods that are safe and secure when transacting through the internet. Even though this method's regulation is necessary for a high-security level of payment, over-regulation may create barriers for businesses compromising cross-border e-commerce or globalization.
Data Transfer Barriers
The transfer of sensitive personal information and business from one country to another can be a challenge to e-commerce businesses. Every country has laws and regulations that restrict the storage and transfer of personal details and confidential information beyond national boundaries, becoming one of the major barriers to the globalization of e-commerce. Even though protection of individual privacy and personal integrity is necessary, there is a need to design the rules and regulations to promote the use of technology and the economic benefits associated with the transfer of data across the borders. The ability to transfer data across the boundaries is critical towards the success of e-commerce globalization because it enables the utilization of cloud storage services making necessary information accessible via the internet.
Intellectual Property Barriers
When conducting e-commerce, many businesses experience intellectual property rights being infringed. Some competitor companies may design their products and user names to appear as original, affecting competitiveness in business and the quality of products. In e-commerce, intellectual property rights barriers occur because these rights are always controlled at the national level and are not harmonized beyond the boundaries of the country. When intellectual property rights barriers face business, they cannot engage in e-commerce effectively to purchase goods and products outside the country. The issue also reduces the willingness of consumers to shop online, affecting the growth of e-commerce globally.
Other Barriers
Even though the use of e-commerce has been increasing significantly, some problems prevent consumers from fully engaging in e-commerce transactions. Lack of trust is one of the barriers where people are unwilling to provide their sensitive information to e-commerce websites due to devastating data breaches. The online business requires such personal information to conduct effective e-commerce. The slow adoption of mobile payment is another barrier to successful internet transactions. Mobile shopping is one of the primary drivers of e-commerce because many people have access to it and can purchase goods and services. However, many people are reluctant to use mobile payment because of speculations concerning data transactions' integrity and the security involving online transactions.
Online payment fraud is another barrier affecting the success of e-commerce in business (Soviany, 2018). The rise in online transactions and the instant payment method has been major drivers behind the increase in fraud. People are reluctant to embrace online transactions because they fear being victims of fraud. The poor shopping experience is another barrier to the success of e-commerce. In physical stores, customers can engage the business owners and ask questions concerning goods and services, but it is a different case when it comes to online shopping. Creating a positive experience for online shoppers has been a challenge for e-commerce businesses because there is little interaction between a business owner and the consumer.
International Expansion and Standardization of E-commerce
The adoption of internet technologies as a viable method of transaction is a process. One of the critical models of predicting people's ability to adopt internet technology for purchasing goods and services online is Technology Acceptance Model (TAM). The model theorizes that the perceived usefulness and ease of use play a critical role in determining the actual intention and behavior to use online transaction technology among individuals. The uncertainty around the use of online transactions revolves around the spatial separation between the consumers and online retailers, the newness of online transactions, and the Internet infrastructure's unpredictability (Brynjolfsson & Smith, 2000). There is a critical factor in online transactions on the notion of uncertainty, which was not the case in the traditional or physical purchasing of goods and services. There is a risk to face when using internet transactions; for instance, consumers can experience monetary loss because they have to rely on electronic information, vulnerable to distortion or incompleteness. Online retailers and third parties engage with prospective customers. Consumers are also likely to face privacy issues due to personal information provided to Web retailers. Technology Acceptance Model is one of the methods that help business people who wish to engage in an online transaction to identify some of the factors that influence the ability of people to embrace e-commerce. Addressing some of the model's issues can play a critical role in determining the success of the online business.
E-commerce has played a critical role in turning the world into a global marketplace. Today, getting products and services from different parts of the world I just a click away. International expansion of e-commerce has enabled the economy by tightening global ties to form a network where people can send money and items seamlessly across borders. The e-commerce industry is growing rapidly, becoming one of the leading contributors to the global economy. Nowadays, the international expansion of e-commerce is essential towards sustainable economies and markets across the globe. International e-commerce has played a critical role in rescuing unstable economies, converting them into productive markets, creating employment, and generating revenue. The growth and expansion of e-commerce across the globe have been tremendous, and it is one of the considerations that an individual should consider when expanding businesses internationally.
Economic statistics indicate that e-commerce across the world accounted for US$3.53 trillion in 2019, and the figure is projected to increase even further (Kao et al., 2021). The trend of e-commerce reveals that the industry is growing and spreading across different parts of the world. Every internet business global e-commerce market should be a priority. When undertaking an international expansion of e-commerce, one needs to take the following steps to ensure successful entering into global markets.
Understanding and Identifying Target Markets
For every online retailer, selling in international e-commerce is a must, but it can be a broad goal because it is difficult to sell to each country across the globe. That is the reason why identifying and understanding a specific potential market in a region where online trading can perform is critical. Evaluating different markets before starting the business is also crucial for understanding consumer needs and demographics necessary in ensuring the success of e-commerce in different regions and countries.
Proper Designing of E-commerce Website
Each country and region has ideas and requirements, making it complex for the expansion of e-commerce to different countries across the world. For instance, a website design that works in the United States cannot work in China or India. Therefore, an entrepreneur wishing to enter into the global market will require a specific website that can work in a particular market or country. Another important move is to get a local domain name for the website. This is critical because it increases the local people's confidence in the brand, leading to the growth of the business in the foreign country or region.
Using Acceptable Payment Methods
Across the globe, each market has a preferred payment method, and it is an important consideration when expanding e-commence to the global level. In some countries, people prefer using a bank to pay for goods and services. Others prefer credit cards, but the online payment method will be appropriate for international e-commerce businesses. Ensuring that businesses use the acceptable payment method is critical to the success of the business in the global market.
Using Suitable Technology
E-commerce depends primarily on technology, which is why choosing the most appropriate and latest technology is vital to online businesses' success (Kütz, 2016). With the latest technologies, an online retailer can provide a good customer experience, secure and manage information effectively, enabling the business to thrive. The type of technology that e-commerce businesses choose should also offer a good user experience to allow more customers to use it. Choosing the most appropriate type of technology can determine the success of e-commerce in the global market.
Around-the-clock Operation
When expanding e-commerce transactions and business worldwide, providing good customer service can be challenging due to time differences and language barriers. Providing customer services all round the clock using local language with assistance by third-party customer service is crucial for the success of e-commerce in the global market. Operating round the clock means that customers worldwide can access the goods and services they require regardless of the time difference making international e-commerce successful.
Understanding The Competitors
Competition is another important consideration when engaging in international e-commerce business. Researching to understand competitors in each market and identify gaps fill and learn from their mistakes to ensure successful international e-commerce. One can successfully engage in the international e-commerce market by analyzing business competitors and leaning from what they do right and wrong to give the best chance of staying ahead.
Standardization of e-commerce is a strategy of ensuring that online businesses assume a homogenous global market by providing standardized products and services to the consumers (Cui et al., 2021). With the advancement in technology and globalization, homogenized consumer markets are created. There is a need to ensure that international e-commerce businesses use standardized marketing and transaction to attract and provide their services to different consumers worldwide. Standardization is also critical when engaging in international e-commerce because it enables all the businesses to use the same strategy template when providing goods and services, minimizing high-level competition cases and ensuring equality. Standardization of e-commerce also plays another critical role in ensuring the development of a single and unified brand and corporate identity across the globe leading to better recognition and competitive advantage. Standardization of e-commerce plays a critical role in allocating resources, higher operation efficiencies, and a homogenized market, resulting in higher profits from the business.
Future of E-commerce
The ever-changing landscape of e-commerce every time provided opportunities and challenges; however, the industry is growing bigger and bigger. The Covid-19 pandemic leads to an increase in the number of e-commerce users by 9.5% worldwide (Turban et al., 2021). The emerging new markets are projected to play a critical role in the future of e-commerce. The growth of online shopping is far outpacing the sales from brick-and-mortar stores, which means that e-commerce is likely to dominate the business industry in the future. Personalization of e-commerce is another critical factor that ensures the success of e-commerce in the future by building effective relationships with the customers. E-commerce personalization enables businesses to customize the shopping experience of the customers as per their preferences and interests. The introduction of voice e-commerce is another step forward in improving the online transaction's performance and customer experience. The voice e-commerce technology allows the customers to build better communication with brands, goods, and services through voice interaction. The Amazon e-commerce platform is using voice technology, and it provides an excellent customer experience.
The introduction of new online payment methods is another indicator that e-commerce is here to stay. The type of payment method plays a critical role when making purchasing decisions by customers. When goods and services are well branded, and the payment method is not customer-friendly, the business will not make any sales because the buyers will avoid using the bad payment method. New payment methods such as PayPal, Google Pay, and Samsung or Apple pay enable the customers to have efficient methods of paying for goods and services conveniently, which means the future of e-commerce is bright. An increase in demand and use of mobile phones is also enhancing the efficiency of e-commerce because it allows the users to book orders, get online information, communicate with people, and buy goods and services (Khrais & Azizi, 2020). E-commerce business knows that the best way to access customers is through mobile phones, allowing them to share their experience and improve the performance of e-commerce. E-commerce businesses also use mobile phones to personalize marketing experiences for customers. The e-commerce industry is thriving, and due to various supporting factors, the business can even do better in the future.
Conclusion
The advancement in technology brings new ways of transaction enabling people to purchase goods across the globe using the internet. E-commerce has the opportunity of enabling businesses to grow and help them access customers quickly. When engaging in online transactions, it is crucial to ensure that businesses provide their customers with flexible methods and many payment options because this is one of the primary considerations for buyers when using e-commerce. Addressing the challenges that e-commerce face plays a critical role in enabling the business to expand beyond the national boundaries. E-commerce has several rules that one needs to follow to ensure that it effectively delivers it to customers. The future of e-commerce looks bright because the advancement in technology allows further use of the internet to buy goods and services worldwide.
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