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E-commerce (electronic commerce) has changed the entire landscape of how business is transacted, as
consumers are now able to purchase products (and sometimes services) over cyberspace. There is
support for the entire selling cycle: product awareness, filling a “shopping cart,” checking out,
providing shipping information, processing payment, and sending confirmation to an e-mail address.
Retailers compete by trying to make the experience so pleasurable that consumers buy and come
back often. A profile on a user is maintained with information on what products were purchased
and/or viewed, allowing the Internet sites to create shopping experiences specific to the user‟s needs.
E-commerce retailers turn to technology to compensate for the lack of touch-and-feel. Multiple views
of a product are usually offered, including views of a product in different colors. Videos are available
that show how a product might be used. Consumers can build their own 3-D models that can be used
to virtually try on clothes.
When an organization makes the strategic decision to sell its products over the Internet, it is
increasing the strategic importance of its information technology infrastructure and related data. With
e-commerce, one‟s competition is a click away. It is critical for a firm to make sure that a consumer‟s
shopping experience is a positive one. It becomes important to monitor ease of use, timeliness of data,
speed (that a page takes to load), error-free operations, and working links, and to offer features to get
the customer to return.
Traditional retailers (now called “bricks and mortar” because they have physical space) have
become “clicks and mortar” retailers by also selling on the Internet. Customers are able to order over
the Internet and have their purchases delivered to them or pick them up at a nearby store. They can
also return merchandise to traditional stores.
The Internet has also made a significant difference for products such as music and software.
Software that used to be purchased in a shrink-wrapped box with a CD and printed documentation
now can be purchased online and the software itself downloaded instantly. Documentation can be
downloaded to the user‟s computer or the user can use Web links when problems or questions occur.
Music can be downloaded to a computer or a portable media device.
These new opportunities create new challenges for those involved in the operations, accounting, and
finance functions of these virtual marketspace companies. Not only is the order being processed
electronically, but it is also being shipped automatically, sometimes from a third party‟s fulfillment
center. Also, the payment is being processed electronically. The electronic payment, usually through a
third-party clearinghouse, must conform to various security standards in order to protect credit card
information that is transmitted over the Web. Frequently the company selling the goods never receives
the credit card number of the consumer, only an authorization number from the credit card
clearinghouse. The tracking of the merchandise, as well as the payment, not to mention the processes
for handling customer returns and credits, will present significant angst for the auditors and controllers
of these firms.
Whereas most consumers think of e-commerce for physical goods, the financial services industry
has embraced the concept and now offers most of its products over the Internet. Online services
include, among others, the purchase of stocks and bonds, online mortgages, life insurance, and online
banking.