IT Best Practices for Financial Managers

Chapter 13. E-Commerce

Ryan C. Jones

E-commerce has rapidly grown in importance for businesses and consumers over the past several years. From the dot-com bubble of the late 1990s to a major economic growth engine today, e-commerce has been a large contributor to the growth of our global economy. Businesses and consumers alike are rapidly adopting e-commerce as a primary means to find information, compare products and pricing, and transact commerce in the virtual world.

For a finance executive, an understanding of e-commerce is essential, particularly as the e-commerce channel may be a material source of revenue and cost reduction for your organization. Additionally, you may need to provide financial oversight related to e-commerce investments, sales, reporting, and controls. Therefore, the purpose of this chapter is to provide an overview of e-commerce, its impacts on the business world, how it contributes to shareholder value, and how to calculate and measure financial results. So, whether yours is a pure-play e-commerce business or a traditional bricks-and-mortar business, this chapter contains something for you.

E-Commerce Defined

The term e-commerce involves the systems and processes that enable businesses and consumers to transact commerce electronically. E-commerce includes web sites (.com), mobile commerce, and electronic data interchange (EDI) media used to conduct business transactions. The terms business-to-business (B2B) and business-to-consumer (B2C) are often used to describe ...