Development Of Ecommerce In China Information Technology Essay

E-commerce usually indicates that the traditional sales channel is moved to the Internet by the means of electronic techniques. E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet, especially the World Wide Web. (Coppel, 2000)With the development of e-commerce, the buyers and sellers conduct various business activities on the basis of the application of browser and server. E-commerce is a new type of commercial business model, which can achieve the consumer online shopping, transaction activities, financial activities and activities related to integrated services. However, e-commerce could break the national and regional barriers and make the enterprises realize globalization.

E-commerce is a process that optimizes various activities continuously by adopting digital information technology. E-commerce covers a wide range. Generally speaking, e-commerce can be divided into two forms, including Business-to-Business and Business-to-Consumer. Recently, new models of e-commerce are in a growth stage, including Consumer-to-Consumer, Business-to-Manager, Business-to-Marketing and Manager-to-Consumer. (Kohavi, 2001) With the increase of domestic Internet users, online shopping and bank card payment consumption in Internet are becoming more popular. At the same time, market share is rapidly growing and e-commerce web sites become more and more. The most common security system of e-commerce has two types, including SSL (Secure Socket Layer) and SET (Secure Electronic Transaction).

E-commerce is an evolving concept. IBM Corporation, as the pioneer of e-commerce, proposed the concept of Electronic Commerce E-commerce owns three stages in the whole development. The first stage is the electronic mail stage. This stage started from 1970s and the average communications capacity grew at the speed of several times every year. The second stage is the information promulgation stage. Since 1995, the information promulgation system grew rapidly. Web technology is an obvious representation. At present, the information promulgation system becomes the main application technology of the Internet. The third stage is electronic commerce. Electronic commerce just developed in U.S.A. The ultimate objective of Internet is the commercial purpose, which is electronic commerce. (Yannis, 2001) From the three stages of e-commerce, it can be seen that the application of Internet plays a critical role in the development of e-commerce.

2.1.2 Development of E-commerce in China

The e-commerce in China began in 1997. If the e-commerce in U.S.A is “business push model”, e-commerce in China relies more on “technology pull push”. This is a large difference between Chinese e-commerce and American e-commerce. In the U.S.A, the practice of e-commerce originated from the concept of e-commerce. The business demands of enterprises push the advancement of network and e-commerce technology, finally contributing to the formation of the concept of e-commerce. When the Internet age comes, the United States has owned a more advanced and developed e-commerce foundation. In China, the concept of e-commerce emerged earlier than the application and development of e-commerce. “Torchbearer” of e-commerce is IBM and other IT vendors. (Scott, 2006) The network and e-commerce technology requires continuously to pulling the business demands of enterprises, thereby causing the application and development of Chinese e-commerce. It is very important to know the difference and this is a major feature of e-commerce development in China. Meanwhile, knowing the difference between Chinese e-commerce and American e-commerce is also a key to understand the development of Chinese e-commerce.

In 1997 and 1998, the main body of Chinese e-commerce is the IT vendors and the media. The IT vendors and media implemented the “elementary education” concerning e-commerce. As a result, this could inspire and guide people’s understanding, interests and needs towards e-commerce. After this stage, in 1999 and 2000, the e-commerce service merchants that feature the websites became the first application under the involvement of venture capital. With the deepening application and development of e-commerce, the website e-commerce began to fall into the bottom. At the same time, enterprises, especially large-scale traditional enterprises, started to enter e-commerce field. Since 2001, Chinese e-commerce entered the third stages. Since then, the enterprises e-commerce becomes a new subject in China.

In recent years, Chinese e-commerce has the rapid development. In 2007, the total volume of national e-commerce transactions achieved RMB 2.17 trillion yuan, increasing 90% than the past year. The online shipping in China also has a rapid development. By the end of June 2008, online shopping users reached 63.29 million subscribers and increased by 36.4% within six months. Till December 2008, the entire users of e-commerce websites have been covered from 90,000,000 to 98,000,000. (Gregory, 2008)

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2.1.3 Developed Stages of E-commerce in China

Generally speaking, e-commerce in China can be divided into six stages. These six stages are starting stage, adjusting stage, resuscitating stage, rapid developing stage, upgrade stage and maturity stage.

Starting Stage

This stage lasted from 1997 to 1999. The first scale of e-commerce websites were established within these three years in China. At that time, the concept of “new Internet” encouraged the first scale of business owners. These business owners thought the traditional business would reply on the Internet to communicate. (Angelov, 2001) Therefore, they believed that the e-commerce would have a large potential in the future. From 1997 to 1999, some famous e-commerce websites emerged. Of the current e-commerce websites, 5.2% were established in 1990s.

Adjusting Stage

The adjusting stage lasted from 2000 to 2002. Under the background of Internet bubble, the development of e-commerce suffered large shock. Under this circumstance, the confidence of business owners experienced serious challenge. Within these three years, few business owners established new e-commerce websites.

Resuscitating Stage

The resuscitating stage lasted from 2003 to 2005. Since 2003, the e-commerce in China has resuscitated. However, parts of e-commerce websites were more careful to treat the profit model and reduce the operation cost. According to the investigation by B2B researching center, 30.1% of e-commerce websites were built from 2003 to 2005. During this period, the enterprise members who adopt the e-commerce enhanced increasingly.

Rapid Developing Stage

The rapid developing stage lasted from 2006 to 2007. The improvement of Internet environment and popularization of e-commerce in China brought large opportunities to the e-commerce. In this stage, the members of various e-commerce platforms increased sharply. Most of B2B e-commerce websites realized the profits. The dream of IPO, good competition in the industry and investment emotion stimulates the e-commerce industry in China to enter in rapid development stage. (Kenneth, 2003) Within two years, the numbers of e-commerce websites increased largely. It is investigated that the e-commerce websites built in 2007 exceeded 30.3% of current websites.

Upgrade Stage

The upgrade stage lasted from 2008 to 2009. Between 2008 and 2009, global financial crisis influenced many industries. Under the guidance of expanding domestic demand and reducing the costs, B2B gained more development. However, C2C field made online users own more choice spaces. It is researched by B2B researching center that the e-commerce websites in this stage took up the 22.3% of current total quantities.

Maturity Stage

Maturity stage started since 2009. After 2009, e-commerce in China will meet new development. With the economic development and technology development, e-commerce will deeply change the consumer behavior in future.

2.2 Online Shopping

2.2.1 Introduction of Online Shopping

Online shopping is the process that the consumers purchase the products by the Internet without any intermediary. In this situation, the consumers do not go to the shopping centers and spend much time. An online shop, e-shop, e-store, internet shop, web-shop, webstore, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping mall. (Bigne, 2005) This process is known as Business-to-Consumer (B2C) online shopping. Business-to-Business (B2B) online shopping is formed when a business purchases from another business. Both B2C online shopping and B2B online shopping are the main forms of e-commerce.


In 1990, Tim Berners-Lee created the first World Wide Web server and browser. (Jarvenpaa, 2007) In 1991, the commercial use has been created and was applied to the business. With the technological development, more improvement in Internet was adopted in the business. For example, online banking was opened and brought the convenience to the consumers. Pizza Hut opened an online pizza shop. In 1994, Netscape fetched in a secure system to maintain the online shopping, which is called SSL encryption of data transferred online. In 1995, e-Bay emerged in the online shopping. During the same year, Amazon enlarged the online shopping. Recently, Overstock has also become one of the world’s largest and reliable online shopping stores. (Davis, 2001) As a result, online shopping is in a continuous developing process.


The emergence of web-shop appears with the development of online shopping. The web-shop refers to an online retailer. Web development, hosting and other activities related with web are known as “web-shops”. (Falk, 2005) The growth of online shopping is mostly because transportation costs went up and telecom costs went down. (Chaudhury, 2001) Therefore, as time goes past, the Internet is a commonplace. Online shopping provides consumers with large ranges of selection and thus consumers could choose the goods and services with an optimal price. However, online shopping has the limitations that consumers can not see the actual goods what they want to buy. Sometimes there are some differences between the pictures shown on the Internet and the goods consumers finally receive.

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Online shopping is very popular in recent years. Online shopping usually caters to the middle and upper class. (Bucklin, 2002) The premise of online shopping is that one must be access to a computer, a bank account and a debit card. Online shopping can not leave with the advanced technology. According to research which focused on the demographic characteristics of the in-home shopper, in general, the higher the level of education, income, and occupation of the head of the household, the more favorable the perception of non-store shopping. (Moe, 2003)

Initially, the main target audience of online shopping was young men with a high level of income and education. In the process of social development, women became more independent in the value. Today, the online shopping was used by both men and women in the middle class.

2.2.2Advantages and Disadvantages of Online Shopping

Nowadays as the rapid change of technology, e-commerce has developed fast. Unlike with the “bricks and mortar” retailing, online shopping has only virtual stores. Due to the development of e-commerce, online shopping has become a new business and gone to maturity. It is necessary for the marketers to know the advantages and disadvantages of online shopping respectively.


No Space and Time Limit

Traditional retailing business is based on fixed locations and time. It is few that the stores could do business in the whole 24 hours. However, online shopping business is no time limit, operating 24 hours a day. Its time is decided by the online users who are consumers. Therefore, online shopping business has the advantage of the new space-time, which could be an even greater extent on the wider internet to meet the needs of users and consumers. In addition, online sales can be carried out in the world with the internet, and there are no geographical barriers. In the face of the global market, without having to spend exorbitant costs of international marketing conditions, it may create an international brand, launching the least costs or services to the world. (Andy, 2004)

Services of All-round Display of Product

For the common daily use product, there are no advantages for e-commerce. But for other durable goods or complex and industrial goods, online shopping will be able to use on-line multi-media performance to display products’ appearance, performance and quality. Meanwhile, online shopping could determine the function of internal structure in order to help consumers fully understand the goods or services, then buying it.

Specific Information and Convenient Comparison

Internet provides comprehensive, specific, effective and strong information and reliable low-cost. It is easy to use search technology and fast transmission of the process to make consumers acquire access to information simply.

4) Close Relationship with Consumers and a Better Understanding of Consumers

As the Internet’s interactive communication, there is no outside interference about expressing their feelings. It makes consumers to express more evaluation about product or service. This kind of the evaluation, on the one hand, let on-line retailers can be better understanding of the internal needs of internet consumers; on the other hand, consumers’ interactive communication with online retailers could promote their close relationship.

Cheaper Products

As the online shopping retailers are virtual intermediary agencies, they do not need stores, decorating, and the display of goods on the shelves, attendants and so on. It leads the costs of their products to be cheaper. Therefore, their price is lower that the product’s price in the traditional stores. It is also an advantage that can attract more consumers.


1) A Lack of Feeling and Human Communication

In traditional shopping, consumers judge and choose products through looking, hearing, smelling, touching and other sensor. But in the process of online shopping, it only offers two ways–to look or hear. For a number of people, the feeling of shopping is a social practice and a kind of social contact with the opportunity to enjoy a kind (Christopher, 2005). Online shopping has lost the fun of wandering the streets, meanwhile, the fun of shopping process will greatly discounted.

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2¼‰Lack of Psychological Satisfaction

In traditional shopping, as the relationship between population, people like to display their personality and life situation in costume and make-up to enjoy and appreciate other people’s envy. In the way of online shopping, no one know the consumers’ appearance, dress, wealth, so that shopping’s psychological satisfaction can not be attained.

3) The Limited Scope of Application

Although in theory, any product can be on-line transactions, in actual operation, there is still not suitable for many products sales. This involves product’s attributes and characteristics. Some products are easy to be damaged in the process of transportation. For these products, consumers would not purchase online.

2.2.3 Online Shopping Development in China

With the application of Internet, online shopping gradually becomes one of online activities for Chinese. The online shopping development in China can be divided into four stages, including flush stage, growth stage, rapid developing stage and maturity stage.

Flush Stage

Before 1999, the prophets of Chinese Internet began to establish the B2C websites, which contributed to promote the online shopping. However, this action was questioned by the economic field at that time. The questions were sourced from three aspects. Firstly, economic filed thought there were no enough consumers to select the online shopping. It was investigated that the Internet users only reached 8.9 million till 2000 in China and most of people have not formed the habit of online shopping. Therefore, many economists thought the online shopping would not have large market in China. Secondly, they believed that online shopping could not solve the logistics problem at that time. The online shopping requires national logistics distribution system. But the express industry in China before 1999 was just in a starting stage. Thirdly, online shopping could not solve the Internet payment problems. Before 1999, Chinese were used to cash transactions and did not form the habit of bank card. As a result, online shopping was really difficult to develop in China before 1999.

Growth Stage

The growth stage lasted from 2003 to 2005. In 2003, SARS shocked China seriously. However, SARS explored a new era of online shopping in China. Attacked by SARS, most people trapped in the house. If they wanted to go out to buy things, they needed to rely on the network. Even people with a strong sense against online shopping began to try. Then more and more people realized the convenience of “online ordering, home delivery.” (Frieden, 2006) At the same time, more and more people would like to accept online shopping. After SARS in 2003, consumers in China increasingly participated in online shopping. Online shopping business has gradually established the market in China and entered into the growth phase.

Rapid Developing Stage

This stage lasted from 2006 to 2007. Going through the growth stage, online shopping in China entered into the rapid developing phase. Many people experienced the online shopping and the entire e-commerce environment was broke. After 1999, some problems related to the online shipping were improved continuously, including the logistics distribution, payment and so on. In 2006, logistics distribution system was already mature and became a critical role in the Chinese online shopping. The online payment also made the large advancement. The third party payment tool could ensure the payment safety of consumers. During this time, the original stumbling block to online shopping did not exist. (Miller, 2002) According to the official statistics, in 2006, the market size of online shopping in China reached over RMB 20 billion. 2007 is the year when online shopping developed the most rapid. In 2007, the market size of B2C online shopping achieved RMB 4.3billion. Meanwhile, the market size of B2B online shopping reached RMB 51.8 billion. Above statistics meant the online shopping in China has been very optimistic from 2006 to 2007.

Maturity Stage

Since 2008, the online shopping entered into a maturity stage. With the promotion of Olympic Games, the online market kept 95% of increasing rate. From 2008 to now, the online shopping is in a stable increasing process. In the future five years, the market size of online shopping will expand stable.

2.3 Consumer Behavior

2.3.1 Introduction

2.3.2 Characteristics of Consumer Behavior

2.3.3 Factors that Impact on Consumer Behavior

2.4 Cultural Factor

2.4.1 Introduction

2.4.2 How Cultural Factors impact on Consumer Behavior

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