Electronic commerce, normally referred to as electronic commerce or electronic marketing, is the process of trading (buying and selling) of products and services through the use of electronic means such as computer networks like the internet (Chau 1). Such transactions are ranging from electronic funds transfer, internet marketing, and online transaction marketing Transacting processing, supply chain management, inventory management, and automated data collection system to electronic data interchange (Abijit $ Kuilboer 4). Businesses through this means have grown exponentially in the past few years and still continue to grow today.
According to Forrester Research Study (2008) presented by Chau, “online retail will continue to be a bright spot in the industry with retail sales rising 17 percent ($204 billion) in 2009” despite the expected slow growth in the general retail industry in the world’s recession crisis (p.1). Less surprisingly, it was also found out that using the online as a channel of purchase, individuals will mainly buy apparels, computers, and autos leading the pack, and respectively taking $26.6 billion, $23.9 billion, and 19.3 billion.
As the executive director of Shop.com, Scott Silverman puts it, “the fact that online sales will increase substantially this year demonstrates the resilience of the channel and is a testament to the value and convenience most customers find when shopping online.”(Kessler 2). It has therefore become popular due to the convenience and overhead cost reduction that is seen in the traditional ways of transacting business.
However, the growth has been mostly seen in the business- to-consumer (B2C) especially in buying and selling of books and music more than Business-to-Business (B2B), the latter’s success being hindered by inadequate standards of operations that is accepted by all in the business world (Abijit $ Kuilboer 41). In this case most organizations have been mentioning elements such as lack of infrastructure of trust and inadequate channel of inter-operability as their main concern for not venturing fully in online business-to-business transactions (Chau 3). In other words, since business to business is operated between industry-sponsored market places and private exchanges that are organized by large companies, it simply accounted for a minimal percentage of the total e-business in the early 2000s (Kessler 4).
This is because the industry- sponsored marketplaces got it difficult to convince the traders (both buyers and sellers) to use it when transacting business (Kessler 5). Many companies were also reluctant to apply it because they feared revealing information on their propriety details that would be accessed by their competitors, thereby giving their competitors undue advantage over them (Kessler 6). The small businesses also got it hard to compete fairly in this area since large companies would have advantage in terms enjoying large economy of scale hence they only used it to buy small commodity goods, supply chain management, and only conducting procurement indirectly that are not touching the core of their business (Chau 7)
In line with the above challenge facing Business-to-Business electronic commerce, the creativity to find their solutions has not eluded the technology and the business community, at least with emergence of open buying on the internet (OBI), which has promised to leverage the standards for its successful application (Leo 12). The governments of the United States and other countries have also strived to pass some legislative measures that are intended to help the online transaction of business more secure, i.e. by passing and enforcing privacy laws (FTC Act) that would curtail any attempt by big businesses to take advantage of their economy of scale, hence attempting to boost the small businesses that entail the majority of businesses.
E-Commerce standard for Open Buying on the Internet
There have been proposed standards to promote Open Buying on the Internet that would see and facilitate the business to business electronic commerce. According to OBI Consortium, Open Buying on the Internet is “an open, flexible framework for Business-to-Business internet commerce solutions that account for 80% of most organizations’ purchasing activity” (Leo 14). The goal of the standard is to leverage and/or streamline the “non-mission critical procurement processes of organization by specifying a standard set of roles that OBI-compliant selling and buying parties must conform to (Leo 16).
The expected standards are to make the achievement of compliance easier so that companies can universally accept technologies that are based on standards that include HTTP, digital certificates (X509), secure socket layer (SSL), and EDI (Leo 18)
Structure of Open Buying on the Internet
Open Buying on the Internet is structured in a manner that is useful to address the major challenges facing Business-to-Business online commerce. Basically, it has four components that entail Buying organization, Selling organization, Requisitioner, and Payment Organization (Abijit $ Kuilboer 39-41). The buyer (buying organization) is charged with process of procurement, while Requisitioner is to procure some specific items “as part of their non-mission critical process of the organization within his or her command” (Abijit $ Kuilboer 42).
In this case the Requisitioner is a member of the buying organization. On the other hand, the selling organization is tasked with the process of supplying the goods and services to the partner businesses. The other component that completes the “circuit” is the Payment Organization. The payment organization is normally not part of the Open Buying on the Internet network and mostly works as an independent organization. In this system, all the four organizations have unique digital certificates connected in the internet that identifies them and makes them accessible at the click of a button on the net (Abijit $ Kuilboer 44)
Merchant server and Open Buying on the Internet
There are certain merchant servers that exist like Net.Commerce that belongs to IBM, which has proved useful to the development of electronic commerce through provision of user management, cataloging, and payment facilities provision (Leo 9). For complete compliance, there has been an effort to establish a new front end to handle digital certificates that is based on user processing procedures as well as a back-end engine that would be used to complete the transactions (Leo 11).
This has been a revolutionary since many organizations are mainly in need of simple, but standardized interaction procedure between them and the clients especially business partners. They therefore look at OBI and other systems as a way of filling the gap that exist for complete transaction (Abijit $ Kuilboer 61).
The currently existing merchant servers only support mostly Business-to-Consumer that includes services include; Basic and secure web server, user management system with user ID and password, a catalogue that shows all the goods and services offered by the merchant, support for a shopping cart, searching engine and a browser to assist clients search for that goods and services they want, purchase order form to fulfill delivery of goods and services, and the actual payment procedure that is integrated in the system (Abijit $ Kuilboer 19-20).
However, most of these services can be advanced to support B2B electronic commerce and other new features when added; the Business-to-Business e-commerce will be complete successfully (Leo 13), thereby revolutionizing the visibly popular but less ventured business-to-business e-commerce.
More advanced services (OBI/SELL)
In order to sufficiently furnish the success of business-to-business e-commerce, the stakeholder organizations have continued to spearhead the establishment of the more advanced form of technical services to enhance and promote online commerce. One such technological advancement is the OBI selling server (OBI/SELL) that would be able to support more of the e-commerce in an advanced form for the efficiency for Business-to-Business e-commerce (Leo 7). OBI/SELL is able to offer services such as; more secure and reliable message exchange with OBI/SELL, relationship management between trading partners, a POR and PO conversion system, and finally a plug-in into the approval of buying organization and the back-end processes (Leo 8)
Privacy enforcing laws
In the United States, there have been some legislative regulations set to monitor the e-commerce, just like in many other countries in the world (Miller 241). These regulations are normally set by the Federal Trade Commission (FTC). Since the fear among the businesses have been to reveal much of their information without being assured of their security, the Federal Trade Commission have passed some laws to regulate areas such as the use of E-mails, online advertising and the privacy of the consumer ( Frieden & Roche 4).
It saw the passing of the CAN-SPAM Act of 2003 that established the standards in marketing through the internet such as online advertising (Frieden & Roche 5). It requires that any state that is planning to advertise must be truthful and non-deceptive. In the section 5 of the FTC Act, therefore prohibits any form of deceptive practices that are likely to infringe the rights of other states or consumers, hence must be ready to protect the corporate privacy of all the trading organizations (Frieden & Roche 6).
There is also the Ryan Haight Online Pharmacy Consumer Protection Act (1998) came into law in the same year 1998. It was the amendments to the Controlled Substance Act that is meant to streamline the online pharmacies (H.R. 6353). This Act covers the actual challenges that happen to the issues like state of the pharmaceutical products that may be found inappropriate as pre-agreed between the trading partners. It therefore addresses the actions that are taken in case such scenario occurs.
In conclusion online business especially business to-business e-commerce is a very special channel for doing of business as seen in the efforts made by organizations and governments to highlight and find the solutions to the challenges, hence the need to make it more viable and practical in order to address all these challenges that affect its success. The main worry of many organizations have been on the security of their information or data they would be posting on their web pages for business transactions as they may be used by their competitors to wage business wars and undue competition.
Once this is addressed, this form of business transaction is likely to move up and reinforce more e-business not only in the United States but also in the world over; that has proved a global village. There is also the speed of transacting business that would be up in the e-business, like it has been seen in Business-to-customer e-commerce’s success. The expansion of technological know-how is needed further to address the challenges of internet crimes like bugging so as to ensure safety.
Chau Patrick, Y. “Business-to-Business E-Commerce”. The Eighth International Conference on Electronic Commerce, 2006, Delta, Fredericton, Fredericton, New Brunswick, Canada.
“H.R. 6353: Ryan Haight Online Pharmacy Consumer Protection Act of 2008”. Govtrack. Web.
Abijit, Chaudhury $ Kuilboer, Jean-Pierre. “e-Business and e-Commerce Infrastructure”, 2002, McGraw-Hill, ISBN 0-07-247875-6.
Frieden Jonathan D. & Roche Sean P. “E-Commerce: Legal Issues of the Online Retailer in Virginia”, 2006, Richmond Journal of Law & Technology 13 (2)
Kessler, M. More shoppers proceed to checkout online. p. 1-6. Web.
Miller, Roger. “The Legal and E-Commerce Environment Today”: Thomson Learning. 2002, p. 241-248. ISBN 0-324-06188-9.
Leo Zhong, Tian. “The State of Retailing Online 2008”. Forrester Research, Inc. “Enforcing Privacy Promises: Section 5 of the FTC Act”. Federal Trade Commission. Web.