For any society to sustain itself, its citizens have to produce a variety of goods and services that leverage the natural resources of the area and innate capabilities of the people. But production is only one half of the story. The other half is trade. Once created, the products have to be exchanged and traded at a mutually agree price between the producers and consumers through a chain of middlemen. This basic concept is still the bedrock on which any modern economy rests.

For thousands of years, barter was the only way by which goods and services were traded. This was cumbersome and soon became unsuitable as the world economy evolved. Then products began to be traded for coins, mostly of precious metals such as gold and silver. Later, finally, the era of the paper currency dawned. One thing though remained unchanged all these years. The buyers and sellers had to meet each other physically to carry out the transaction. Money and goods changed hands over the counter, face to face.

In the last decade or so, there has been a paradigm shift in how business is transacted. The arrival of the Internet has revolutionised the business world and ushered in the era of e-commerce. Since the seventies, the enabling mechanisms for e-commerce such as electronics fund transfer and electronic data interchange have been put in place. Now, with the proliferation of broad-band Internet and plastic money, the entire infrastructure exists that makes ecommerce possible.

E-commerce involves buying and selling of goods and services over the Internet. In the last few years, this method of trade has seen a major boost, with its turnover running into billions of dollars. Indeed many companies such as amazon.com and eBay do business only in cyberspace and are phenomenally successful. There are very popular magazines that exist only in the virtual world. The way e-commerce is going, it seems that the world economy is headed for a fundamental shift in the way business is transacted.

For example, in 2006, the global e-commerce turnover was estimated at a whopping USD 13 trillion, which accounted for almost 20 percent of trade in commodities. The Western world and other developed countries are leading the e-commerce surge but the developing countries such as China are gaining fast. The online success of the latter’s e-commerce portal Ali Baba is well known.

There are many factors that are responsible for the growth of e-commerce in the world. Some of these are:

* Most countries around the globe have put in place a proper legal and regulatory framework for e-commerce and streamlined financial infrastructure to enable online transactions
* The logistics of e-commerce such as electronic funds transfer has improved a lot along with the popularity of credit and debit cards
* The introduction of broad-band Internet and the vast increase in the number of Net connections have made it easier to browse the Web
* More and more brick-and-mortar companies selling goods and services are offering their products online by setting up e-commerce websites. This gives consumers a wide choice in cyber world
* The trend of global convergence and integration is helping boost e-commerce

With ecommerce, both the buyer and seller gain tremendously as all the drawbacks associated with production and distribution of goods and services the traditional way vanish into cyberspace.

Death of Distance: E-commerce ensures the death of distance. No matter in which part of the world a website is created, it can be accessed from anywhere else as long as there is an Internet connection. E-commerce has brought the buyers and sellers from all parts of the world together. It has made the geographical divide irrelevant.

No Middlemen: E-commerce brings the seller and customer together face to face. There is no middleman or distribution chain. All transactions are between the producer and consumer.

Low Costs: The ability of sellers to have direct interaction with the end customer has one huge benefit – low costs. Since there are no middlemen and the goods are shipped direct from the factory to the customer’s premises, prices are not jacked up midway to account for the commission of distributors and retailers.

Quick Transactions: With e-commerce, the sellers gain because their money does not get stuck in the distribution chain. The customers pay them directly through their debit or credit card and the money goes straight into their bank account, thus allowing them to recoup their investment quickly.

Comfort: With e-commerce, the customers can window-shop from the comfort of their homes. They do not have to travel to the market and hunt for a product from shop to shop comparing prices and features. This results in huge savings in terms of time and transport costs.

Make no mistake. E-commerce is here to stay and is the next big wave of the future.