In this article the author gives a review of history of e-commerce standards, its development, analyzes reasons of its slow development and proposes a concept of the net of distributed connected e-commerce systems based on web-services that target enterprises, retailers and customers. By author’s opinion such concept will cause essential development of e-commerce and will make it more convenient and easy to use.

Introduction

In today world it is hard to imagine enterprise that operates without using some kind of software. There are many software solutions on the market today that target different aspects of enterprise activities: accounting, finance management, customer relationships management and many others. But the most interesting among them is a system that provides electronic way of commercial interactivity between enterprise and its contracting parties and customers relying on Internet and Intranet as a means of intercommunication. Since 1980-s a lot of different e-commerce standards and technologies were created in order to allow enterprises to widen their electronic commercial activity and let consumers to make electronic purchases using Internet. Many software companies suggest e-commerce solutions and many companies use them today. But figures indicate slow development of e-commerce and its use by ordinary users against the background of intensive development of Internet itself. By analyzing this problem the author proposes a solution that is about to change traditional concept of e-commerce and bring new opportunities to businesses and internet users.

1. History of E-Commerce development

The first e-commerce systems in their simplest form appeared in late 1960-s in USA and were mainly implemented in transport companies for ticket booking and also for flight preparation data exchange between different transport services. Originally electronic commerce was relying on net communications not related to Internet and was characterized by using different self-defined standards and protocols. However the first common standard accepted was EDI (Electronic Data Interchange) in early 1980-s. It defines how typical business transactions and documents (orders, invoices, customs declarations, bills and others) should be processed over digital networks. In early 1990-s ISO developed new standard called EDIINT (Electronic Data Interchange for Administration, Commerce and Transport over Internet) based on EDI that describes the ways to transmit EDI transactions using IP and internet protocols. Many large trade organizations have been investing in development of EDI but it has never reached the level of popularity of web-based e-commerce for several reasons: 1) high cost of deployment of EDI solutions prohibited small and medium-sized companies from participating in e-commerce; 2) slow development of EDI standards; 3) complexity of development of EDI applications caused a lack of specialist.

With evolution of Internet in 1990-s a web-based e-commerce appeared that allowed Internet users to make purchases of goods and services on the web with credit card payments. Evolution of Internet made it possible to dramatically cut costs of handling electronic commerce processes due to low prime cost of information transfer. That led to emerging of new kinds of e-commerce such as: “Business-to-Business” (B2B), “Business-to-Customer” (B2C) and others.

2. Advantages of E-Commerce

In many cases e-commerce allows to shorten the way of product flow from producer to end consumer. Products can easily be delivered directly from producer to end consumer passing by traditional distribution channels such as retail stores and shops. The reason for this is the ability for companies to effortlessly play a role traditionally performed by intermediaries because the use of Internet gives much more effective abilities to interact with end consumers and at the same time allows to gather and track information about each sold item and customer. Gathered information can be used to make a comprehensive business analysis and market research.

Electronic environment is widely used for delivery of digital entertainment products (music, movies, magazines, newspapers subscriptions and so on), information, education materials and also effectively used by software development companies to sell their software. The major advantage e-commerce is reduction of cost for committing a deal and its further service. Therefore any business process that may be transferred to electronic environment has a potential to reduce its costs which in its turn reduces the prime cost of products for consumers. Very well known implementation of e-commerce is internet shop (or simply e-shop) which is a website with catalog of products and ability to interactively order and pay for desired products. More and more companies apply e-commerce solutions in their business. For instance a world known company CISCO does not have a traditional net of distributes. Instead it accepts order only in electronic in particular form from its website. Another example are producers of notebook computers. On their website they put a interactive page where customer can configure the notebook by his needs and commit order and payment.

3. Reasons of slow development of E-Commerce

According to report of E-consultancy agency there are more than 1 billion internet users in the world and about 60% of users from western countries made a purchase in internet-shop at least once [1]. In Canada the total retail turnover of internet shops reached only 8.3 billion US dollars in 2006 and grows every year for approximately 23% which is a very low figure due to potential of Internet capabilities [2]. It is worth to indicate the main factors that motivate internet-shop users (by order of priority):

• 1) usability (this implies user interface convenience, ease of use, responsiveness and so on);
• 2) absence of pressure from people (sellers) during purchase;
• 3) need to save time;
• 4) possibility to obtain detailed information about products (that also includes search tools).

Analyzing these factors we can conclude that users mainly care about usability, time saving and about getting comprehensive information. Those factors tightly depend on each other.

By analyzing today internet-shops it becomes obvious that the driving problem in motivation of internet customers is convenience (overall usability) of using internet-shops. The reason for this lies in concept of implementation of absolute majority of internet-shops — they are all build as websites which are basically static and not flexible enough to provide complete interactive usability and data exchange.

However there are other major factors that hinder the development of e-commerce:

• 1) high total cost of deployment, setup and maintenance of e-commerce software solutions (for example Enterprise Edition of Microsoft BizTalk Server costs 30K USD not including setup costs);
• 2) absence of unified worldwide e-commerce information environment that could provide permanent commercial metadata availability between potentially mutually interested parties;
• 3) most of today e-commerce solutions require intensive manual work to enter and update information.

4. Development of concept of distributed connected e-commerce systems

By analyzing problems described above, author proposes a concept of distributed connected e-commerce systems that rely on web-services [3] and software-oriented architecture [4]. The results and advantages of implementation of suggested concept are considered in comparison with existing ones.

In this concept the main idea is an e-commerce server (further called as EC-server) and e-commerce service (further called as EC-service). EC-Server is a special kind of web-server hosting EC-services — software working in compliance to proposed unified e-commerce interaction standard (further called EC-Interaction standard) that is based on SOAP protocol [3]. This proposed standard describes data formats, interaction procedures and rules, meta-information exchange principles, typical business-processes, search and others.

From an architectural view a complete distributed net of e-commerce systems will consist of the following basic components:

• 1) common public web-servers which will host registries (databases) of all discoverable EC-services and web-services for access, synchronization and search of meta-data of EC-services registered on a given particular server;
• 2) EC-Servers that will host: 1) EC-services itself; 2) web-site for interaction through Internet-browser; 3) web-services with public APIs for interaction with EC-services through custom software applications; 4) web-service with APIs for administration of EC-Server by means of special software application;
• 3) software for administration of EC-Server called EC-Administrator;
• 4) software for interacting with EC-Server called EC-Client.

The typical structure of its implementation is shown on Figure 1.

In comparison to existing principles given concept exposes a new way for Internet users to run electronic commerce activities and interact with Internet-shops — by means of specific software application — EC-Client which is universal and able to interact with any discoverable EC-server. It is meant to be compliant to proposed EC-Interaction standard and provides the following functionality:

• 1) search and interaction with any discoverable EC-Server accessible through Internet;
• 2) unified search and metadata exchange about available products and services, its prices, statuses etc. with any of EC-Servers using meta-base of intermediary EC-server;
• 3) provide performance of unified transactions: put/decline orders, commit payment etc.;
• 4) ability to operate in online and offline modes thus providing convenient user experience. Being disconnected in offline mode user is still able to do most common commerce task (browse companies and products, make orders, bid for tenders etc.) but with cached data and synchronize his work results with according EC-Servers upon connecting and becoming online.

Figure 1. Typical structure of example of implementation of proposed concept

Proposed concept opens new opportunities for organizing and simplifying business. For example it can be used to quickly find desired products from alternative producers and compare their prices, create manageable retail and supply chains, create virtual auctions and tenders — all by convenient unified software using Internet. It differs from today concepts of building and organizing e-commerce solutions such as: B2B (Business to Business), B2C (Business to Customer), E-Markets etc. The essential differences are the following:

• 1) mutual discovery (using WSDL and UDDI technologies [3]) and interaction of EC-Servers with each other using unified standard;
• 2) one common meta-base of commercial data that eliminates necessity for manual data transfers;
• 3) unified authentication system and authorization for participants;
• 4) the highest possible reliability of complete net of those systems.

Conclusion

Proposed concept suggests essential development of means of organizing interaction and integration of participants of electronic commerce and end consumers. In particular it will allow to greatly improve processes of distributing and exchanging commercial information, considerably enhance search abilities and mutual discovering of acting commercial parties. And one of the major innovations is a new unified way of acting as part of commercial processes regardless of the role played — either as producer or retailer or consumer — due to facing user experience as a main motive factor. The technology has offered everything for today needed to make it possible to implement in reality the proposed concept.

References

1. Internet Statistics Compendium. — http://www.e-consultancy.com/publications/internet-stats-compendium/
2. eMarketer Inc. — http://www.emarketer.com
3. Understanding Web Services. — http://msdn.microsoft.com/webservices/webservices/understanding/default.aspx
4. Software Oriented Architecture (SOA) — http://www.service-architecture.com/