The Development and Growth of Electronic Commerce
Economists describe four distinct waves (or phases) that occurred in the Industrial Revolution. In each wave, different business strategies were successful. Electronic commerce and the information revolution brought about by the Internet likely go through such series of waves. Refer Figure 15.5
The Dotcom companies of first wave are mostly American companies. Thereby their websites were only in English. The Dotcom bubble had attracted huge investments to first wave companies.
As the Internet was mere read-only web (web 1.0) and network technology was in its beginning stage, the bandwidth and network security was very low. Only EDI and unstructured E-mail remained as a mode of information exchange between businesses. But the first wave companies enjoyed the first-move advantage and customers were left with no option.
The second wave is the rebirth of E-Commerce after the dotcom burst. The second wave is considered as the global wave, with sellers doing business in many countries and in many languages. Language translation and currency conversion were focused in the second wave websites. The second wave companies used their own internal funds and gradually expanded their E-Commerce opportunities. As a result E-Commerce growth was slow and steady. The rapid development of network technologies and interactive web (web 2.0, a period of social media) offered the consumers more choices of buying. The increased web users nourished E-Commerce companies (mostly B2C companies) during the second wave.
The third wave is brought on by the mobile technologies. It connects users for real-time and on-demand transactions via mobile technologies. The term Web 3.0, summarize the various characteristics of the future Internet which include Artificial Intelligence, Semantic Web, Generic Database etc.
The Dotcom Bubble was a historic excessive growth (excessive assumption) of economy that occurred roughly between 1995 and 2000. It was also a period of extreme growth in the usage and adaptation of the Internet as well.
In the late 1995, there was a tremendous development in US equity investments in Internet-based companies. During the dotcom bubble, the value of equity markets grew exponentially with the NASDAQ composite index of US stock market rising from under 1000 points to more than 5000 points.
NASDAQ Composite Index (1990-Present)
The Nasdaq-Composite stock market index, fell from 5046.86 to 1114.11. This is infamously, known as the Dotcom Crash or Dotcom Burst. This began on March 11, 2000 and lasted until October 9, 2002. During the crash, thousands of online shopping companies, like as Pets.com failed and shut down. Some companies like Cisco, lost a large portion of their market capitalization but survived, and some companies, like Amazon declined in value but recovered quickly.