e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. A customer can order items from a vendor's Web site, paying with a credit card (the customer enters account information via the computer), debit card, or with a previously established “cybercash” account. The transaction information is transmitted to a financial institution for payment clearance and to the vendor for order fulfillment. Personal and account information is kept confidential through the use of “secured transactions” that use encryption technology (see data encryption).

In an effort to further the development of e-commerce, the federal Electronic Signatures Act (2000) established uniform national standards for determining the circumstances under which contracts and notifications in electronic form are legally valid. Legal standards were also specified regarding the use of an electronic signature (“an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record”), but the law did not specify technological standards for implementing the act. The act gave electronic signatures a legal standing similar to that of paper signatures, allowing contracts and other agreements, such as those establishing a loan or brokerage account, to be signed on line.

Once consumers' worries eased about on-line credit card purchases, e-commerce grew rapidly in the late 1990s. In 1998 on-line retail (“e-tail”) sales were $7.2 billion, double the amount in 1997. On-line retail ordering represented 15% of nonstore sales (which included catalogs, television sales, and direct sales) in 1998, but this constituted only 1% of total retail revenues that year. Although books, software, audio compact discs, and personal computers were the most common on-line purchases in the late 1990s, fashion, travel, mobile, computer, and electronics goods, books and music, and event tickets are now the most common. Other on-line commerce includes trading of stocks, purchases of airline tickets and other travel bookings, and participation in auctions. The importance of e-commerce has continued to increase, reaching 5% of retail sales in the 2000s and tripling during the 2010s, when the value of online retail sales exceeded $500 billion annually. In 2020 during the COVID-19 pandemic, when many stores were at times closed or limited in their hours in attempt to reduce the spread of the disease and also when many consumers avoided stores as a way of minimizing their risk of contracting the disease, there was a significant shift to shopping on line.

The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2024, Columbia University Press. All rights reserved.

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