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What is e-commerce and where is it heading?

It is trade conducted online, and it is growing in Korea and the world.

Dec 30,2008

The National Statistical Office announced recently that the size of electronic commerce grew to a new high, 166.8 trillion won ($128.1 billion), between July and September. This is an increase of 33.7 percent from a year ago.

Last year e-commerce totaled 516.5 trillion won, nearly double the country’s yearly budget of 238 trillion won. Considering the growth of electronic commerce, this year’s electronic trade is expected to increase to three times the national budget.

Not just in Korea but around the world, e-commerce has been on the rise. In 2002, the world’s electronic commerce was worth $936.4 billion. By 2007, it had risen to $7.1 trillion. The rise is due to the many benefits e-commerce brings. People can buy anything from anywhere at any time on the Internet.

Perhaps you have heard the term “e-commerce” a lot but don’t know what it actually entails, or if you have some idea of what it is, you may be curious to read more about the types of industries that are booming or declining as a result of e-commerce’s rapid development.

E-commerce is by definition the online trade of goods and services among economic entities such as individuals, companies and governments. There are many types of electronic commerce.

Business-to-customer (B2C) commerce began first. Individuals buying goods from Internet malls like Gmarket, Auction and Interpark are all examples of B2C.

Electronic commerce involving business-to-business (B2B) transactions is huge and growing rapidly. And individuals selling goods to other individuals is an example of customer-to-customer (C2C) commerce, whereas selling and supplying public goods is an example of business-to-government (B2G) transactions.

The effects of e-commerce on industry are enormous, with many global industries being revamped. The industries most affected by electronic commerce are finance, gaming, travel and retail. In a word, information- or service-oriented industries are becoming more competitive and increasing their business scope. New business models are also being developed.

However, there are industries that are declining because of e-commerce. These are mostly traditional industries that are unrelated to the Internet or information technology or are not keeping up with customer needs. Large retailers with diverse products and advanced IT are flooded with customers, but small mom-and-pop supermarkets that do business the old way are on the decline.

Now the “ubiquitous” concept is being applied in electronic commerce. At some Homeplus discount stores around the country, the prices of items in a shopping cart are calculated instantly when the cart passes a cash register.

Radio frequency identification chips are embedded in all products sold at the stores, and a reader installed at the cash register recognizes the chips and sums up the total price. The RFID chips are used at some Prada stores in the U.S. When customers select a product, the product’s information shows up on a screen, detailing the product’s color, size, texture and design. This is ubiquitous commerce.

The word “ubiquitous” originated from a Latin word meaning “anywhere and anytime.” The ubiquitous concept was introduced by Dr. Mark Weiser, who was chief technologist at the Xerox Palo Alto Research Center. Weiser anticipated that the computing environment would evolve to emphasize human relationships rather than technology itself.

In addition to cash and credit cards, electronic money is on the rise these days. Unlike coins and bills, the value of money is stored electronically. Transportation cards that we use to pay bus or subway fares are a type of electronic money. Electronic money is believed to be less at risk of hacking or leaking personal information because it does not involve typing in bank account or credit card numbers. However, it is not entirely safe.

After computers first began being commonly used, IT-related crimes started to surface. Likewise, since e-commerce has become more popular, IT-related crimes such as violations of privacy have begun to spread. This is attributed to the increasing use of the Internet.

Some time ago, Hanarotelecom, now known as SK Broadband, leaked the personal information of its customers without their consent. The nation’s second-biggest broadband operator was ordered in June by the Korea Communications Commission not to sign up new subscribers to its high-speed Internet service for 40 days and to pay a total of 178.8 million won in fines after releasing the personal information to telemarketing companies.

The Auction Web site was hacked by China-based hackers and personal information was stolen.

The nation’s No. 2 Internet marketplace reported on April 17 that personal information, including social security numbers of more than 10 million members, was leaked due to the February hacking.

A conflict settlement committee under the Korea Consumer Agency said on Dec. 5 that Auction must compensate a total of 5,747 customers after their personal information was stolen by four Korean and Chinese hackers.

In 2004, an Internet site called ShadowCrew was used for trafficking private information and committing large-scale financial fraud.

ShadowCrew was a message board that offered a haven for international criminals, such as hackers, to trade, buy and sell anything from stolen personal information to credit card numbers and false identities.

ShadowCrew emerged from another underground site, counterfeitlibrary.com in early 2002 and would be replaced by carderplanet.com, a primarily Russian site.

In November 2005, six men who ran the site, one of the largest online centers for trafficking in stolen credit and bank account numbers and identity information, pleaded guilty in U.S. federal court.

The one-stop online marketplace operated by the defendants was taken down in October 2004 by the U.S. Secret Service, closing an illicit business that trafficked in at least 1.5 million stolen credit and bank account numbers that resulted in losses in excess of $4 million.

With e-commerce-related crimes becoming more rampant, governments and private businesses around the world will need to be more vigilant and develop technologies to protect individuals from such crimes.



By Lee Dong-man Contributing Writer [jbiz91@joongang.co.kr]




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