Annals of the University of Petroani, Economics, 9(2), 2009, 301-306

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THE ELECTRONIC COMMERCE IN THE GLOBALISATION ERA

DRAGO STUPARU, TOMI VASILE *

ABSTRACT: Globalisation, the unavoidable process which the world entered, is affecting everyone of us in different ways. Globalization means growing permeability of all the boundaries such as time and space, national and state borders, borders of economy, branches and organizations and less tangible boundaries such as cultural standards and their assumptions. The advent of Internet has also a large effect on the acceleration of globalisation and the commerce in special. Electronic commerce (e-commerce) refers to forms of transactions which are based on electronic data processing, among other things text, sound and picture, with the participation of organizations and individuals, on the Internet. Goods sold through the internet are: travel, clothes, groceries, consumer electronics and the pay of the invoices This paper present some aspects of the e-commerce process in Europe and Romania in 2006-2011 periods. KEY WORDS: globalisation, computer network, Internet, e-business, e-commerce

1. THE E-COMMERCE AND THE GLOBAL ECONOMIC INTEGRATION Globalisation describes an ongoing process by which regional economies, societies and cultures have become integrated through globe-spanning network of exchange. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. However, globalization is usually recognized as being driven by a combination of economic, technological, socio-cultural, political and biological factors. The term can also refer to the transnational dissemination of ideas, languages, or popular culture. Globalisation has spread in a huge way since the end of the Second World War and will continue to do so as technology and communication improve between nations.

Lecturer, Ph.D., University of Craiova, Romania, d_stuparu@yahoo.com Assoc.Prof., Ph.D., University of Craiova, Romania, vasiletomita@yahoo.com

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The emergence of a global marketplace is a fairly recent phenomenon that is having huge effects on both developed and developing nations. There are many people and organizations that are all for this economic integration and also those who stand defiantly against it. Technology is playing a big part in this global dialogue by altering the scope of these economic transactions. Global economic integration generally speeds up when trade restrictions have been lifted between nations, allowing a freedom of trading opportunity that may not have been previously there. Those on the pro side of the globalisation divide argue that this can increase economic prosperity in all countries and leads to more opportunity among developing nations. Because opportunity costs can be assessed in any terms, technology differences between countries must be considered when analyzing these transactions. For example, a person who is doing a calculation on a pen and paper can only perform one at time. Whereas a person using a computer can perform multiple calculations in the same time frame and therefore will have more opportunity to do other things when they are finished, the person with the pen and paper is at a disadvantage as they will be busy for some time and thus foregoing the opportunity to do other potentially profitable things. The true cost of any action involves not just the economic cost but also involves the opportunity that is lost in performing the transaction. Technology differentials are the biggest factor involved in the manipulation of global economic transactions. These differences must be taken into consideration when analyzing the potential advantage that one nation may have over another. Electronic commerce (e-commerce) usually refers to forms of transactions which are based on electronic data processing, among other things text, sound and picture, with the participation of organizations and individuals. It is a process of mutual sharing of information with the use of different, available information technologies among organizations and individuals which exchange goods and services. Electronic commerce means also the influence exerted by electronic information exchange on companies and processes connected with business. The idea is widely understood and covers definitions of e-business and electronic commerce. Some writers assume that ebusiness is a wider term and is defined as safe, integrated and flexible approach to delivering different business values through the combination of systems and processes leading to appropriate business operations (transactions) with the use of Internet technology [1]. E-commerce can be described as an area of electronic commercial activity covering all possible forms of economic activity which, partially or wholly, takes place by electronic, interactive network data exchange. Such exchange substitutes 'physical' exchange of information or products and personal human contacts. It covers electronic trading which is usually associated with Internet area in business, exchange of correspondence and documents, tele-working or tele-conferences. Electronic trading is described as an activity in which the supplier shows and sells their products and services through electronic media. If the final recipient and not a company (e.g. trading company) is the consumer, then the supplier does electronic retailing. The most characteristic feature of presented here electronic trading is its global (supranational) character, which originates from the features of computer networks. This feature is

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very important for both suppliers and potential consumers. Possible advantages of electronic commerce can be, for example, increase of competitiveness, lower costs, individualization of products and servicing, etc. 2. SPECIFIC CHARACTER OF GOODS SOLD THROUGH THE INTERNET After business was introduced in the Internet on a large scale in March 1996, the turnover and profits generally began to grow. At present, on the Internet (also, using other multimedia) nearly everything is sold. But, there is a group of goods which is especially preferred at on-line shopping - it also depends on a consumers group, country or region. Generally, the best sold goods on the Internet throughout the world are books, CDs, computers, electronic goods, VHS equipment, women's clothes, investments, plane tickets, hotel reservations, etc. In Romania people most often buy that way books and CDs. It all depends on consumers' preferences and those preferences depend also on the country. Thus, 53% of Belgian Internet users and 52% of German Internet users buy books on-line, the Dutch have the largest share in CD buyers (40%), the French are next in turn (39%). Hong Kong consumers have the largest share in buying food products (32%) and furniture (21%). France has the largest share in buying holidays (44%). The Japanese are the largest group of consumers buying cosmetics and toilet accessories (12%) [4]. It can be stated that nearly everything, even more than in supermarkets can be bought on-line. There is only one condition: the product must exist. More hopes for the increase of turnover and profits from on-line shopping are connected with the trade between the companies (business-to-business) rather than with standard retail consumer trading (business-to-customer). Net business platforms contact companies exchanging products. Consumers of products and services have the possibility of a quick glance at offers from all over the world and making the best possible choice without the necessity of several phone call, faxes or letters. It is foreseen that in future the largest net turnover will be generated by energy distributors, chemical industry and producers and distributors of food products, computer and electronic goods. Costs in firms using e-business solutions are, on an average, lower by several percent than those of firms operating in a traditional way. However, for the mass service of consumers and companies, on countries and world scale, it is necessary to develop computer networks, improve them and protect them better. It is necessary to build the so-called information highways which will be fast and reliable. It has been generally assumed that there are three kinds of products in on-line commerce: the so-called search goods, experience goods and credence goods. Search goods are products which can be tested with senses: touch, taste and smell (e.g. food, perfumes, etc.). The next group is the so-called experience goods. These are the products the quality of which can be tested after the first buy (e.g. books, CDs, etc.). On the other hand, credence goods are these products the quality of which is difficult to be tested even after many buys (or uses). Another division of on-line products covers; indirect electronic commerce, i.e. ordering material goods on the Internet and then delivering them to the client using

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traditional channels (mail, delivery services) and direct electronic commerce which covers ordering non-material goods and services on the Internet and where payment and delivery are also made on-line, (i.e. instructions, advice, elaborations, works of art, software, etc.). Another, very important function of computer networks and other multimedia is advertising and public relations which works in such a way that the product exists not only physically and medially but also in the psychology of potential consumers which can induce specific activities in future, namely the wish to buy the advertised product. The conditions created by new technologies have made it necessary to use new economy not only in a given country but also around the world, within the framework of globalization processes and free exchange of goods, services and information 3. PROSPECTS FOR E-BUSINESS IN EUROPE AND ROMANIA In the coming years, the number of Europeans shopping online will grow from 100 million to 174 million. Their average yearly Net retail spending will grow from around 1,000 to 1,500, as UK Net consumers outspend even their US counterparts online. Overall, this will cause European eCommerce to surge to 263 billion in 2011, with travel, clothes, groceries, and consumer electronics all above the 10 billion per year mark. [5] European business-to-consumer (B2C) e-commerce sales totalled 106 billion Euros ($133 billion) in 2006 and will grow at an annual growth rate of 25 percent over the next 5 years, tripling in amount to reach nearly 323 billion Euros ($407 billion) (table 1).
Table 1. E-commerce in Europe* in 2006-2011 Year 2006 2007 2008 2009 2010 2011 E-commerce sales in Europe (billions $) 132.9 196.9 255.7 307.1 357.4 406.8 % increase vs. prior year 37.2 28.0 25.6 20.0 15.6

Note: * includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the UK Source: eMarketer, July, 2007

At present, leading roles in Europe are played by e-businesses of England, Germany and France (Table 2). The three countries together now account for 72 percent of Europe's online sales: The UK is by far the largest of the three major markets, with 2007 sales of 42 billion pounds ($84 billion). Germany, however, has the most online buyers, with 27.2 million, but produces less than half the online sales volume of the UK.

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France, in turn, produces less than half Germany's e-commerce sales volume and has 14.5 million online buyers.
Table 2. B2C E-commerce Metrics for the Top Three Markets in Europe in 2006

Country UK Germany France

Sales* (billions $) 55.6 27.1 12.5

CAGR** 2006-2011 (%) 22.7 24.1 27.4

Online buyers (millions) 24.8 27.2 14.5

Note: * includes online travel, event ticket and digital download sales ** CAGR Compound Annual Growth Rate Source: eMarketer, July, 2007

On average, German and French buyers are spending considerably less online per person than their UK counterparts. Table 3 shows the percentage of e-commerce in total retail sales in selected countries of Europe.
Table 3. E-commerce in total retail sales in 2008 Country 1 2 3 4 5 6 7 8 9 Sweden UKs Netherlands Germany Belgium France Italy Spain Portugal E-commerce as % of total retail sales 0.68 0.37 0.34 0.30 0.16 0.14 0.09 0.06 0.06

Source: eMarketer, 2009

The first European e-commerce wave began with the UK, Germany and France, and the next wave, over the next years, will begin in smaller markets - Italy, the Netherlands and Spain - eMarketer forecasts. The third wave will follow early in the next decade, as Eastern European states - Russia, Poland, and the Czech Republic begin to embrace e-commerce, it said. In Romania, the first online shop was CyberShop.ro in 1997 who sale music CDs but hardly in 2004 is implemented the standard of security 3D Secure - moment from which the owners of cards can pay online. Thus, in 2004 they accomplished a total of 19,410 transactions in the online shops with sales of approximate 3, 5 millions USD. The year 2008 finished with approximate 100,000 online transactions and 60 of millions Euro results from the online pay with the card [6]. The areas which generate most big volumes on sale in Romanian electronic commerce are in order: touring

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services and reservations of air-travel tickets, the pay of the invoices of mobile telephony and IT&C and electronic products, consumer electronics. 4. CONCLUSION The use of e-business, of course, brings many new possibilities or changes in economy and management, but requires modern, technological infrastructure - this requirement is connected with large, financial investments. As it can be seen from the data presented, e-business develops fastest in rich areas, such as the USA and EU, where 2/3 of the world's GDP (Gross Domestic Product) is produced, causing and additional large economic growth using multimedia (like the loop of positive feedback) in spite of the fact that in rich, developed countries the growth dynamics of GDP is very small (0.1-3%) per year. However, non-material values, like in a typical information society, begin to dominate. Although American and EU goals are similar (information society) the way to their achievement is different. The Americans believe more in market self-regulation and business profits, the EU also stresses state regulations and social values - hence the program e-Europe. Probably, a certain compromise to achieve mutual goals (within the frames of globalization) and fulfil the rowing needs of the population can be made. The basic rule of on-line services 24/7/365 means constant access of the client to the Internet, 24 hours, 7 days a week and 365 days a year. It ensures constant access to information, possibility of choice, comfort of use, individuality of use, relative savings, social integration, entertainment, possible confidence guarantee, etc. It is worth noticing that Romania is trying to catch up with the developed countries in e-business, therefore the strategy e-Romania, based on e-Europe program, was made. Still, the Romanian share is still small and requires large investments. From this point of view, Romania is at the beginning of its way to information society and ebusiness on a large scale, which however gives some advantages because old mistakes should not be repeated. REFERENCES:
[1]. Bucur, C.M. - Comerul electronic, Bucureti, Editura ASE, 2002 [2]. Cable, V. - Globalisation and Global Governance, Royal Institute for International Affairs, 1999 [3]. Wachol, J. - E-business in the View of Globalisation Process, microCAD 2004, International Scientific Conference, Miskolc, Hungary, 18-19 March 2004, pp.151-156 [4]. Westland, J., Clark, T. - Global Electronic Commerce, Cambridge, MA: MIT Press, 1999 [5]. http://www.emarketer.com [6]. http://www.ancom.ro

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