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History of eBusiness

With the advent of the World Wide Web (WWW), or the "web," traditional business organizations that had relied on catalog sales had a new sales vector. Other businesses found that the web was a good place to put customer service information, such as manuals and drivers, as well as a place to help create a consistent corporate image. As the web developed, a number of Internet-based businesses developed, including companies like eBay and Amazon, and web-based information repositories.

Early Use of the Web for Business

Business began using websites for marketing shortly after graphical-based web design became available in the early 1990s. Most of these websites served to provide visitors basic information about a company's products and services, and included contact information, such as phone numbers and email addresses, to assist consumers in contacting a company for services. The move from providing simple business information to soliciting business via the web occurred almost as soon as marketing departments realized that company websites were available to millions of people. Online sales began in 1994 with the ability to encrypt credit card data.

Early Online Sales

With the advent of the Secured Socket Layer (SSL), developed by Netscape in 1994, websites developed the ability to encrypt sessions, thus making credit card transactions over the Internet more safe. With an encrypted connection between a company's server and a client computer, credit numbers could be masked so they could not be intercepted by a third party, thus making theft of card information less likely. This security led to an increased number of businesses offering products for sale via the web.

Birth of Modern Web Sales

Developments in server technology, including the ability to build websites from product databases, resulted in creation of large Internet-only businesses like eBay and Amazon. In previous product-sales websites, each product had to be manually posted on a web page. With database-driven sites, companies could use web-page templates to display tens of thousands of products on-the-fly. As the number of available products increased, so did traffic and sales on these websites.

Payment System Advances

Early SSL implementations were good, but many people still did not trust them to secure credit card payment information. In addition, it was too expensive to process micropayments, through traditional credit card systems. As a result, a number of micropayment sites came and went. One has remained and has done very well because of its ability to transfer money from a variety of funding sources, including credit cards and bank accounts, without revealing the payer's credit card information to the merchant. That company is PayPal. PayPal has enabled credit card processing by many small businesses that would otherwise not be eligible for a traditional credit card merchant account.

Dot-Com Bubble of March 2001

In March of 2000 the Nasdaq lost half of its value on 1 day. Notable denial of service (DOS) attacks on prominent websites made customers worry that their credit card data might not be safe. Throughout this period, online businesses received large capital investments via Initial Public Offerings (IPOs), and saw their stock selling at prices far above the actual value of their companies. Many companies had good ideas but poor business plans, and speculators bid up the prices of stocks in Internet companies. The initial blows came as some on-line companies began reporting large losses and investors began examining the viability of online business plans. Fearful investors started to sell their stocks, causing the overinflated stock prices of the Nasdaq to plummet below their actual value. A number of well-known companies closed, such as boo.com. Many other companies that lacked solid business plans failed between 2001 and 2002.

Beginning in the 1970s government and business sectors began to make better use of the computer technology. For example, commercial banks began to use electronic funds transfer to speed a payment.

But ebusiness becomes a global phenomenon only in the later 1970s ad 1980s. Companies began to apply electronic messaging technologies such as EDI and S.W.I.F.T.

These messaging tools streamlined processes by reducing paperwork, facilitating communication, and perfecting payment.

EDI and Swift did not reach all companies. Before the late 1990s, the systems required for electronic transactions were proprietary, complex, and exorbitant. Only large companies and organizations could realize a financial return on these initiatives.

Small companies processed transactions electronically to do business with larger companies, but they often invested just enough not get locked out.

While companies were adopting methods for ebusiness, another technology emerged. Online services targeted educational, technical, and other special interest communities by offering news, email and chat capabilities gained popularity.

Many of these special interest communities used a common communication backbone, known as TCP/IP. TCP/IP enabled communities to readily access each other's online information, giving rise to the Internet as we know it.

Until 1995, the Internet served largely special interest groups. Other online services, like AOL, targeted the general consumer.

In 1995, the browser and its key associated protocol, known as HTTP, were commercialized. Corporations saw that the web offered a new channel for doing business, the home page.

Initially, companies built home pages to serve as online corporate brochure. The first Web home pages, however, only provided outbound information about a company.

But during the late 1990s, the technologies needed to transact business on the Web matured, and companies began to initiate commercial transactions.

The dot com appeared. Dot-coms use the Web as their primary channel for product distribution and they impacted only established consumer markets but also the string of business processes behind all consumer purchases called the supply chain.

So the first eBusiness revolution of the Web involved B2C. Today, however, there is an even more widespread eBusiness revolution in the area of B2B.

The popularization of the browser brought together the academic- and government-oriented internet and the large islands of proprietary online services.

Despite its academic, governmental, and technical roots, corporations quickly saw that the web offered a new channel for doing business, namely the home page.

Initially, companies built home pages to serve as an online corporate brochure. Today, over 90% of companies headquartered in highly developed nations have a corporate home page on the Web.

The home page, however, was merely the first step in adopting the Web for corporate use. The first home page only provided outbound information about a company and did not provide transaction capabilities.

Little by little, during the late 1990s, the technologies needed to transact business on the Web matured, and companies began to take risks.

In particular, a new type of company, the "dot coms" appeared. Dot-coms such as Amazon.com used the Web as their primary channel for product distribution, and they directly attacked well-established markets and players. The business community grew aware that practically all markets were vulnerable to the entry of dot-coms.

The dot-coms did not merely impact consumer markets. Behind every consumer purchase are processes that are required to develop and deliver the product to the end-buyer.
Before there is one final B2C, a long list of complex business-to-business transactions occurs. The first eBusiness revolution of the Web involved B2C. Today however, there is an even more widespread ebusiness revolution in the area of B2B.