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Electronic Commerce Technologies Management - ELECTRONIC COMMERCE, TYPES OF EC, Classification According to Participants, Classifications According to Task, E-Shopping

internet layer services infrastructure

Shawren Singh
University of South Africa, South Africa


The first e-commerce (EC) applications were started 30 years ago, in the early 1970s. The original applications were in the form of electronic fund transfers (EFT). These applications were limited to larger corporations and financial institutions (Turban, Lee, King & Chung, 2000). This type of transaction later included electronic data interchange (EDI). There is a marked difference between EDI and EC in that EC involves much more than EDI (Greenstein & Feinman, 2000).

There is no standard definition for EC, although a number of researchers have attempted to define it (Greenstein & Feinman, 2000; U.S. Department of Commerce, 1999). In principle, however, most authors are in agreement that EC uses some form of transmission medium through which exchange of information takes place in order to conduct business (Barnard & Wesson, 2000).


There are different types of classifications of EC; for instance, by participants, task and technology.

Classification According to Participants

Turban, King, Lee, Warkentin and Chan (2002) provide the following definitions for the different types of EC, together with additional types that researchers have identified:

  • Business-to-Business (B2B): This includes inter-organizational information systems and electronic transactions between organizations. An example of B2B is General Electric’s Trading Process Network (TPN)(www.tpn.geis.com).
  • Business-to-Consumer (B2C): B2C transactions are mostly retailing transactions with individual customers or consumers. An example of B2C is Amazon.com (www.amazon.com).
  • Consumer-to-Business (C2B): In this category one will find consumers who sell to organizations. It also includes individuals who seek sellers with whom they may interact in order to conclude a transaction. An example of C2B is Priceline (www.priceline.com).
  • Consumer-to-Consumer (C2C): C2C involves consumers selling directly to other consumers. This type of application includes auction sites and advertising personal services on the Internet. It can also include intranets and other organizational networks to advertise items and services. An example of C2C is eBay (www.eBay.com).

The additional types of EC identified by the above researchers are:

  • People-to-people (P2P): This type of transaction is a special type of C2C where people exchange CDs, videos, software and other goods (www.napster.com).
  • Non-business EC: Many institutions or organizations also use EC to improve their operation and customer services.
  • Intrabusiness (organizational) EC: All internal organizational activities involving exchange of goods, services or information usually performed on intranets are included in this category.
  • Business-to-employees (B2E): This is a subset of the intrabusiness category, where the organization delivers services, information or products to individual employees.
  • Government-to-citizen (G2C): and to others: In this type of EC, a government entity buys or sells goods, services or information to businesses or individual citizens.
  • Exchange-to-exchange (E2E): With the proliferation of exchanges and portals, it is logical for exchanges to connect to one another. E2E is a formal system that connects exchange.
  • Collaborative commerce (c-commerce): C-commerce is an application of an interorganizational information system for electronic collaboration between business partners and organizational employees.
  • Ultimate commerce (u-commerce): U-commerce is the use of ubiquitous networks to support personalized and uninterrupted communications and transactions between a firm and its various stakeholders to provide a level of value over, above and beyond traditional commerce (Watson, 2000).
  • Mobile commerce (m-commerce): When EC takes place in a wireless environment.

Classifications According to Task

EC can also be classified by the nature of the task. There are many different types of EC, such as e-shopping, e-banking and e-investments.


Among the different EC activities, an e-shopping task has the following two unique phases: the look-see-and-decide phase (LSD), and the checkout phase (Renaud, Kotze, & van Dyk, 2001), as depicted in Figure 1.1. The LSD allows the user to browse, while a commitment to buy takes place in the checkout phase.

  • LSD: This stage typically will be used to look at available products, compare them and then make a decision about whether to purchase products. This may be done once or more, often until the consumers have found products that satisfy their needs. This phase is intensely user-driven, because the user is looking at and assimilating information continuously. It has the following substages, which can be traversed iteratively and in varying sequences: welcome, search, browse and choose.
  • Checkout: When users trigger this stage, they have made their choice of offered products and have decided to make a purchase. They now have to provide certain details, such as their address and credit card details. This stage is system-driven and changes the paradigm of the interaction process from user initiative to system initiative. Feedback is of critical importance during this stage—users who feel that they have lost control can simply leave the site without any embarrassment—unlike a user who is standing at a checkout in a supermarket. This stage is typically composed of at least the following steps, which should be navigated in a serial fashion: identifying the user, where the delivery should take place, how it should take place, payment, confirmation of order and completion (closure).


Internet-based services allow banking clients to obtain account information and balance enquiries; execute account payments and inter-account fund transfers; make queries on account balances; obtain statements; and, in some cases, view images of checks (Chan et al . , 2001) from the comfort of their homes or offices. Additionally, by linking their accounts to personal finance software (such as Intuit Quicken and Microsoft Money), they will be able to track their spending offline, and later reconcile that with their bank statements online.

A typical e-bank task would be: Launch browser => Go to this bank’s page: (URL to bank; e.g., www.absa.co.za) => Locate Internet banking and click that option => Login using this account number and password: (account_number), (password) => Choose type of transaction to conduct (this could consist of several steps)(user may choose to conduct more than one transaction) =>Logoff from bank’s Web site => Close browser.


E-investments is a process that allows a user to trade stocks, bonds, mutual funds and other financial equities on the Internet. These companies offer users the opportunity to trade at a very small cost compared to discount brokers or full-service brokers. This has resulted in online trading companies grabbing an increasing market share (Chan et al., 2001).

A typical e-investment task to purchase stocks would be: Launch browser => Go to this broker’s page: (URL to bank; e.g., www.Datek.com) => Locate trade stocks and click that option => Login using this account number and password: (account_number), (password) => Choose type of transaction to conduct (this could consist of several steps)(user may choose to conduct more than one transaction) => Compare products (product A) and (product B). Determine which product has the highest performance in terms of (key product performance dimension) => Purchase chosen product => Confirm purchase => Logoff from Web site => Close browser

Figure 1 is but a small sample of the e-revolution. There are other e-activities, such as: e-tailers, e-insurance, e-travel, e-consulting, e-training, e-sup-port, e-recruitment, all the way to e-cooking!

Classification with Technology

The Internet economy can be conceptualized as a collection of IP-based networks, software applications and the human capital that makes the networks and applications work together for online business, and agents (corporations and individuals) who are involved in buying and selling products and services in direct and indirect ways. There is a natural structure or hierarchy to the Internet economy that can be traced to how businesses generate revenue. Based upon this type of structure, Whinston, Barua, Shutter, Wilson and Pinnell (2000) broadly classify the Internet economy into infrastructure and economic activity categories, as seen in Figure 2.

The infrastructure categories are further divided into two distinct but complementary “layers”: the Internet infrastructure layer, which provides the physical infrastructure for EC, and the Internet application infrastructure, which includes software applications, consulting, training and integration services that build on top of the network infrastructure, and which make it feasible for organizations to engage in online commerce.

The economic activity category is also subdivided into two layers: electronic intermediaries and online transactions. The intermediary layer involves the role of a third party in a variety of capacities: market maker, provider of expertise or certification that makes it easier for buyers to choose sellers and/or products, search and retrieval services that reduce transaction costs in an electronic market, and other services that facilitate conducting online commerce. The transactions layer involves direct transactions between buyers and sellers like manufacturers and e-tailers.

Layer One: The Internet Infrastructure Indicator

The Internet infrastructure layer includes companies that manufacture or provide products and services that make up the Internet network infrastructure. This layer includes companies that provide telecommunications and fiber backbones, access and enduser networking equipment necessary for the proliferation of EC. This layer includes the following types of companies: National and regional backbone providers (e.g., Qwest, MCI WorldCom); Internet Service Providers (e.g., AOL, Earthlink); network equipment for backbones and service providers (e.g., Cisco, Lucent, 3Com); conduit manufacturers (e.g., Corning); and server and client hardware (e.g., Dell, Compaq, HP).

Layer Two: The Internet Applications Infrastructure Layer

Products and services in this layer build upon the above IP network infrastructure and make it technologically feasible to perform business activities online. In addition to software applications, this layer includes the human capital involved in the deployment of EC applications. For example, Web design, Web consulting and Web integration are considered to be part of this layer. This layer includes the following categories: Internet consultants (e.g., MarchFIRST, Scient); Internet commerce applications (e.g., Microsoft, Sun, IBM); multimedia applications (e.g., RealNetworks, Macromedia); Web development software (e.g., Adobe, Allaire, Vignette); search engine software (e.g., Inktomi, Verity); online training (e.g., Sylvan Prometric, SmartPlanet); Web-enabled databases; network operating systems; Web hosting and support services; transaction processing companies.

Layer Three: The Internet Intermediary Indicator

Internet intermediaries increase the efficiency of electronic markets by facilitating the meeting and interaction of buyers and sellers over the Internet. They act as catalysts in the process through which investments in the infrastructure and applications layers are transformed into business transactions.

Internet intermediaries play a critical role in filling information and knowledge gaps, which would otherwise impair the functioning of the Internet as a business channel. This layer includes: market makers in vertical industries (e.g., VerticalNet, PCOrder); online travel agencies (e.g., TravelWeb, Travelocity); online brokerages (e.g., E*trade, Schwab.com, DLJ direct); content aggregators (e.g., Cnet, Cdnet); portals/content providers (e.g., Yahoo, Excite); Internet ad brokers (e.g., DoubleClick, 24/7 Media); online advertising (e.g., Yahoo, ESPN Sportszone); Webbased virtual malls (e.g., Lycos shopping).

Layer Four: The Internet Commerce Indicator

This layer includes companies that generate product and service sales to consumers or businesses over the Internet. This indicator includes online retailing and other business-to-business and business-to-consumer transactions conducted on the Internet. This layer includes: e-tailers selling books, music, apparel, flowers and so forth over the Web (e.g., Amazon.com, 1-800-flowers.com); manufacturers selling products direct such as computer hardware and software (e.g., Cisco, Dell, IBM); transportation service providers selling tickets over the Web (e.g., Delta, United, Southwest); online entertainment and professional services (e.g., ESPN Sportszone, guru.com); shipping services (e.g., UPS, FedEx).

It is important to note that many companies operate in multiple layers. For instance, Microsoft and IBM are important players in the Internet infrastructure, applications and Internet commerce layers, while AOL/Netscape has businesses that fall into all four layers. Similarly, Cisco and Dell are important players in both the infrastructure and commerce layers.

Each layer of the Internet economy is critically dependent on every other layer. For instance, improvements in layer one can help all the other layers in different ways. As the IP network infrastructure turns to broadband technologies, applications vendors in layer two can create multimedia applications that can benefit from the availability of high bandwidth.


Understanding the classification of one’s e-activity could possibly improve a company’s strategic/competitive edge in the market.

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Explain each of the following e-business terms and their internet technology layer or layers?
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