Any entrepreneur or company that decides to practice electronic commerce must develop a strategy to do so effectively. The first step is to determine exactly why you want to do business over the Internet using a Web site.

There are several reasons for employing Web sites:

• To sell goods and services
• To induce people to visit a physical location
• To reduce operational and transaction costs
• To enhance your reputation

A Web site can accomplish any of these goals. Unless a company (or you) has substantial resources, however, it is difficult to accomplish all of them at the same time.

The appropriate Web site for achieving each goal will be somewhat different. As you set up your Web site, you must consider how the site will generate and retain traffic, as well as a host of other issues.

The point here is that, when you are studying the various aspects of electronic commerce, you should keep the strategy of the organization or entrepreneur in mind. This will help you determine the type of Web site to use.

Definitions and Concepts

Recall that electronic commerce describes the process of buying, selling, transferring, or exchanging products, services, or information via computer networks, including the Internet.

Electronic business (e-business) is a somewhat broader concept. In addition to the buying and selling of goods and services, e-business refers to servicing customers, collaborating with business partners, and performing electronic transactions within an organization.

Electronic commerce can take several forms depending on the degree of digitization involved. The degree of digitization is the extent to which the commerce has been transformed from physical to digital.

This concept can relate to both the product or service being sold and the delivery agent or intermediary. In other words, the product can be either physical or digital, and the delivery agent can be either physical or digital.

In traditional commerce, both dimensions are physical. Purely physical organizations are referred to as brick-and-mortar organizations. In contrast, in pure EC all dimensions are digital. Companies engaged only in EC are considered virtual (or pure-play) organizations. All other combinations that include a mix of digital and physical dimensions are considered partial EC (but not pure EC).

Clicks-and-mortar organizations conduct some e-commerce activities, yet their primary business is carried out in the physical world. A common alternative to the term clicks-and-mortar is clicks-and-bricks. You will encounter both terms. Therefore, clicks-and-mortar organizations are examples of partial EC.

E-commerce is now so well established that people generally expect companies to offer this service in some form. Purchasing a shirt at Walmart Online or a book from Amazon.com is an example of partial EC because the merchandise, although bought and paid for digitally, is physically delivered by FedEx or UPS.

In contrast, buying an e-book from Amazon.com or a software product from Buy.com constitutes pure EC because the product itself as well as its delivery, payment, and transfer are digital.