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B2B & B2C: Recent Developments in E-Commerce

by W. Michalak

Much has changed since the last CSCA report on e-commerce business (Michalak, 1999). Gone are doubts about the pace of change in the global marketplace and rate of expansion of business-to-consumers (B2C) and business-to-business (B2B) models of e-commerce. Very few brick-and-mortar retailers or, in fact, businesses of any kind do not follow the developments in the e-commerce with a mixture of excitement and fear. Excitement because, without doubt, e-commerce offers a new opportunity to expand market share, product lines, geographical reach, or productivity. Fear, because few also doubt that, among many other things, the hugely successful shares of new 'pure' or 'brick-and-click' e-commerce companies introduced a new degree of instability and higher level of risk into the global marketplace. The advanced economics of highly industrialized countries are, yet again, undergoing a structural change. Despite all the new e-jargon, the old laws of economics apply without exception. The structural change squeezes from the established business models the last drops Of Productivity and invents new ways of making business along the way (Tapscott, 1999). The much debated 'new economy' creates value, demand, and markets in new and innovative ways. Although the change is not revolutionary - this much abused phrase does not describe accurately the impact of e-commerce on the economy it nevertheless presents the most important technological and cultural challenge early in the twenty-first century. As it should become clear from this report, e-commerce is only one of many economic phenomena emerging as the result of commercialization of the Internet in 1994. AU the same, it is probably c-commerce in its countless guises that will determine the wealth of nations, including Canada, for years to come.

"In five years' time all companies will be Internet companies or they won't be companies at all," said Andy Grove (chairman of Intel quoted in Symonds, 1999, p.1). This quote very well summarizes the present mood of the business community. Very few large, medium, or small companies do not have some sort of opinion on the subject. These, of course, can be very different. Perhaps, one of the most striking contrasts is between two North American competitors; Canada and the United States (Mexico, although it lags behind both, behaves much more like the United States). Although the two countries differ very much in demographic terms, their technological infrastructures are roughly similar. Both Canada and the United States have the best telecommunication systems in the world, the highest rates of Internet adoption and use anywhere on earth, and some of the most technologically literate and adept people anywhere. However, the responses of the respective business communities to the e-commerce challenge are vastly different. The United States took an early lead in e-commerce business and, even though, some European or Asian economies are on the verge of challenging the U.S., its superiority for the time being is assured. By contrast, Canada is falling behind. Despite the massive technological advantage and geographical proximity to the U.S., Canadian business has not been able to take a full advantage of the early lead. This report attempts to summarize the recent developments in the e-commerce business in the U.S. and other major markets. This serves as a background against which the Canadian response is examined.

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