What forces are fueling e-commerce?

There are at least three major forces fuelling e-commerce: economic forces, marketing
and customer interaction forces, and technology, particularly multimedia convergence

Economic forces. One of the most evident benefits of e-commerce is economic
efficiency resulting from the reduction in communications costs, low-cost technological
infrastructure, speedier and more economic electronic transactions with suppliers,
lower global information sharing and advertising costs, and cheaper customer
service alternatives.
Economic integration is either external or internal. External integration refers to the
electronic networking of corporations, suppliers, customers/clients, and independent
contractors into one community communicating in a virtual environment (with
the Internet as medium). Internal integration, on the other hand, is the networking
of the various departments within a corporation, and of business operations and
processes. This allows critical business information to be stored in a digital form
that can be retrieved instantly and transmitted electronically. Internal integration is
best exemplified by corporate intranets. Among the companies with efficient corporate
intranets are Procter and Gamble, IBM, Nestle and Intel.

Market forces.
Corporations are encouraged to use e-commerce in marketing and
promotion to capture international markets, both big and small. The Internet is likewise
used as a medium for enhanced customer service and support. It is a lot
easier for companies to provide their target consumers with more detailed product
and service information using the Internet.


Technology forces. The development of ICT is a key factor in the growth of ecommerce.
For instance, technological advances in digitizing content, compression
and the promotion of open systems technology have paved the way for the convergence
of communication services into one single platform. This in turn has made
communication more efficient, faster, easier, and more economical as the need to
set up separate networks for telephone services, television broadcast, cable television,
and Internet access is eliminated. From the standpoint of firms/businesses
and consumers, having only one information provider means lower communications
costs. 20
Moreover, the principle of universal access can be made more achievable with
convergence. At present the high costs of installing landlines in sparsely populated
rural areas is a disincentive to telecommunications companies to install
telephones in these areas. Installing landlines in rural areas can become more
attractive to the private sector if revenues from these landlines are not limited to
local and long distance telephone charges, but also include cable TV and Internet
charges. This development will ensure affordable access to information even by
those in rural areas and will spare the government the trouble and cost of installing
expensive landlines.