New commercial uses of electronic media have proliferated over the past few years, as has the volume of electronic transactions. The value of hard goods purchased online grew at about 25 percent between 1993 and 1994, while subscriptions to online services increased by about 50 percent. The use of electronic data interchange (EDI) between companies has continued to rise.

While technology providers are actively promoting electronic commerce (E-commerce), much is still at the test stage. Understanding what electronic commerce means, how key technologies will evolve, and what roles players might adopt will be critical to the strategies of companies in a wide range of businesses in the future.

Domains and application categories

Electronic commerce can be defined as the exchange of information, goods, services, and payments by electronic means. It has two primary domains: business-to-business and business-to-consumer. Within each domain there are three subcategories: messaging/EDI; online information services; and marketplaces/transactions (Exhibit 1).

Several enabling trends suggest that there will be a decisive acceleration in E-commerce over the next few years. They include bandwidth availability and affordability; penetration of modem-equipped PCs; and availability of user-friendly graphical browsers and agent software. In...