Electronic commerce: an introduction.

Summary

Electronic commercial transactions over the Internet, or "e-commerce," have grown so fast over the last five years that many experts continue to underestimate its growth and development. Whether retail business-to-customer or business-to-business transactions, e-commerce shows no signs of slowing down. In turn, policymakers both in the United States and abroad are likely to face increasingly complex issues of security, privacy, taxation, infrastructure development and other issues in 2000 and beyond. This report will be updated periodically.

The Internet and E-Commerce (1)

The convergence of computer and telecommunications technologies has revolutionized how we get, store, retrieve, and share information. Many contend that this convergence has created the Information Economy, driven by the Internet, and fueled a surge in U.S. productivity and economic growth. Commercial transactions on the Internet, whether retail business-to-customer or business-to-business, are commonly called electronic commerce, or "e-commerce."

In 1995, it was estimated that between 1 and 2 million people in the United States used the Internet for some form of commercial transaction. By the next year, Internet traffic, including e-commerce, was doubling every 100 days. By mid-1997, the U.S. Department of Commerce reported that just over 4 million people were using e-commerce; by the end of 1997, that figure had grown to over 10 million users. The rate of e-commerce growth continues to rapidly that projections often are outdated as fast as they are published. One 1998 industry estimate projected that U.S. retail transactions would reach $7 billion by 2000--a figure now widely accepted as having been reached in the year the report came out. Still, reliable industry sources report huge jumps in e-commerce transactions, particularly during fourth quarter holiday shopping. The Census Bureau of the Department of Commerce, which began tracking national e-commerce sales in 1999, estimates that in the first quarter of 2000, total retail e-commerce sales reached $5.3 billion, an increase of 1.2% from fourth quarter 1999. Some analysts contend that financial transactions-such as electronic banking and online stock trading-are also fueling a large part of retail e-commerce growth. (2)

One of the fastest growing sectors of e-commerce is business-to-business transactions. The Forrester Group, a private sector consulting firm, estimates that by 2003, that sector of the U.S. economy will reach $1.5 trillion, up from $131 billion in 1999. In the United States, business-to-business transactions between small and medium sized businesses and their suppliers is rapidly growing, as many of these firms begin to use Internet connections for supply chain management, after-sales support, and payments.

Internationally, there are issues regarding Internet use and e-commerce growth. While the western industrialized nations dominate Internet development and use, by the year 2003 more than half of the …