Ecommerce Concepts   «Prev  Next»

Lesson 1

Basic ecommerce Theory and Concepts

Our brief history of ecommerce begins around 1965 with the mainframe computer. During this time period there existed four types of computational devices.
  1. Mainframes: Mainframes are large and powerful computers linking large sets of computers and peripheral devices. In the mid 1960's these devices were as large as ho urses. Today the size has shrunk so that a mainframe is many times more powerful than what was used in the 1960s and can fit into a refrigerator
  2. Midrange computers: A medium-sized computer system or server. Midrange computers encompass a very broad range and reside in capacity between high-end PC servers and mainframes. For example, IBM's Power Systems are its midrange line for both business and scientific applications
  3. Personal Computers: A personal computer (PC) is a multi-purpose electronic computer whose size, capabilities, and price make it feasible for individual use. PCs are intended to be operated directly by an end user, rather than by a computer expert or technician. Computer time-sharing models that were typically used with larger, more expensive minicomputer and mainframe systems are not used with PCs.
  4. LANS/WANs: A local area network (LAN) is a computer network that interconnects computers within a limited area such as a residence, school, laboratory, university campus or office building. By contrast, a wide area network (WAN) not only covers a larger geographic distance, but also generally involves leased telecommunication circuits. An even greater contrast is the Internet, which is a system of globally connected business and personal computers.

The Popularity of the Internet grows

By 1995, information technology looked like a vast ocean of unconnected applications.
  1. Some applications used mainframe and dumb terminals as client/server architectures
  2. Some applications operated exclusively on PC client machines.
  3. Some applications used client/server designs.
Despite three decades of increasing sophistication in computing architectures, most communities of users might as well have been on different planets. During this time, computer systems typically operated only within their owners's secure boundaries.

Early Web-based Applications

Bulletin Board Services enabled small communities of users sharing a specific interest, regardless of geographic location, to dial-in to an application. BBS[1] allowed users to:
  1. Meet virtually
  2. Share information
  3. Conduct transactions, albeit in an informal fashion

SEMrush Software

Earlier Computing Models

In earlier computing models such as client-server, the processing load for the application was shared between code on the server and code installed on each client locally. In other words, an application had its own pre-compiled client program which served as its user interface and had to be separately installed on a user's personal computer. An upgrade to the server-side code of the application would typically also require an upgrade to the client-side code installed on each user workstation, adding to the support cost and decreasing productivity. In addition, both the client and server components of the application were usually tightly bound to a particular computer architecture and operating system. Porting them to others was often prohibitively expensive for all but the largest applications.

Web Applications

In contrast, web applications use web documents written in a standard format such as HTML and JavaScript, which are supported by a variety of web browsers. Web applications can be considered as a specific variant of client-server software where the client software is downloaded to the client machine when visiting the relevant web page. Client web software updates may happen each time the web page is visited. During the session, the web browser interprets and displays the pages, and acts as the universal client for any web application. In the early days of the Web, each individual web page was delivered to the client as a static document, but the sequence of pages could still provide an interactive experience, as user input was returned from the web form elements embedded in the page markup. However, every significant change to the web page required a round trip back to the server to refresh the entire page. In 1995, Netscape introduced a client-side scripting language called JavaScript allowing programmers to add some dynamic elements to the user interface that ran on the client side. So instead of sending data to the server in order to generate an entire web page, the embedded scripts of the downloaded page can perform various tasks such as input validation.

An early attempt at an inter-organizational transaction system was Electronic data interchange (EDI)[2] allowed organizations to automate order and payment processing. EDI and BBS were exceptions in a world filled with island-like Web-based applications.
Electronic Data Interchange
Electronic Data Interchange

EDI Standards

The EDI process requires that business documents be in a standard format. The first instances of EDI relied upon proprietary formats to exchange business documents. Wal-Mart and K-Mart used proprietary formats when they first implemented EDI (Choudhury, 1997). The problem with proprietary standards is that it is difficult to exchange transactions with many trading partners because of all the format conversions. Having standard formats for business documents means that all trading partners can understand the document structure and interpret it correctly.
There are two major sets of standards for EDI: the American National Standards Institute Accredited Standards Committee X12 (ANSI ASC X12, or more usually, X12) standard, and the United Nations Electronic Data Interchange For Administration, Commerce, and Transport (EDIFACT) standard.

Early attempts at on-line applications usually took the form of bulletin board services (BBS). The Internet[3] was one of many services that fell under the BBS umbrella. Originally, the Internet served governmental and educational communities of interest. However, the audience quickly changed in 1995 as businesses and the general public became aware of the capabilities of the Internet and the World Wide Web[4].
Web browsers enter the picture
The creation of the commercial Web browser, developed and popularized by Netscape, and the re-purposing of on-line services into Internet on-ramp service providers (also known as ISPs, like AOL) made it possible for any PC with a modem to get onto the Web. At first, the Internet and the Web were viewed as fun and/or useful services for academia, government, and consumers. Little by little, however, corporations began to realize that the architecture of the Internet and the Web could be used to deploy certain types of applications that were difficult or impossible to deploy on existing architectures (like client/server). Organizations and their technology architects began to grasp that a combination of universal networking through TCP/IP[5] and the graphical user interface (GUI) of the Web offered a compelling architectural platform for a new class of applications.
What type of applications?
Organizations found that the architecture of the Internet was a useful tool for creating and using internal applications. One of the more popular organizational applications was a new kind of intra-organization bulletin board system known as an Intranet[6].

ecommerce infancy
In addition, organizations realized that they could create Web-based applications that reached beyond the boundaries of their organization. Organizations began to use the Web to communicate and conduct transactions electronically with:
  1. Consumer customers (Business to Consumer (B2C): Commerce is conducted between a consumer, such as a home user on a PC, and a business. business to consumer or B2C)
  2. Business customers and suppliers (Business to business (B2B): An online relationship where one business sells goods or services to another business. For example, the United States Postal Service sells its delivery services to Thus, the back end ordering system of is connected to the United States Postal Service.

  3. The focus of this course is on the tools and technologies of today's ecommerce world are the subjects of this course.
[1]Bulletin board services: An electronic message database where people can log in, read, and leave messages.
[2] Electronic data interchange (EDI): Transferring data between different companies using networks, such as the Internet.
[3]Internet: A global network connecting millions of computers that are joined through a high-speed backbone of data links
[4]World Wide Web: A system of Internet servers supporting specially formatted documents that support links to other documents, graphics, audio, and video files. The documents are formatted in special language (HTML, DHTML, XML, etc.).
[5]Transmission Control Protocol/Internet Protocol (TCP/IP): A suite of communications protocols used to connect computer systems and transfer data over the Internet.
[6]Intranet: A private Internet reserved for use by people who have been given the authority or passwords. These people are typically employees and often customers of a company.