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Electronic Commerce

Electronic Commerce
Project team:

Riehm, Ulrich (Project leader); Carsten Orwat; Bernd Wingert; Thomas Petermann ; Christoph Revermann; Christopher Coenen; Constanze Scherz

Funding:

Deutscher Bundestag

Start date:

2000

End date:

2002

Research area:

Innovation processes and impacts of technology

Project description

On behalf of the Bundestagsausschuss für Wirtschaft und Technologie (Bundestag committee for economy and technology), the Office of Technology Assessment of the German Bundestag has carried out a project on the perspectives of e-commerce in Germany. The project was accomplished in close cooperation between ITAS and TAB staff.

The main subjects of the study were the expected diffusion processes, structural changes, and their consequences. While discussing the chances and risks of the further development, a lot of questions were addressed. Among these were:·

  • What perspectives does e-commerce (business to business, business to customer, as well as business to public sector) offer for growth and employment in Germany?
  • What legal deregulation and regulation is necessary to let these potentials develop fully in Germany?
  • What chances and challenges will develop for small and middle sized companies as a consequence of more e-commerce?
  • What possibilities of reducing bureaucracy, of increasing efficiency in public administration, and of enhancing service quality will develop through e-commerce and similar processes? How can public procurement be optimized?
  • What consequences for the labor market and the world of employment will have to be expected from increased e-commerce?  
  • How will structures within businesses change through e-commerce? Will there be more small and middle sized companies or will e-commerce lead to more concentration in economy?  
  • How and to which extent will the manufacturing industries, intermediary trade, and retail react to the changing order and shopping habits (online, twenty-four-seven) of the customers?  
  • With what manufacturing concepts, logistics strategies, and infrastructural measures could the growing traffic be met adequately so that there will be no diffusion bottleneck?  
  • How well are e-commerce offers and new e-commerce marketing functions accepted by the consumer?  
  • How important are alternatives to the Internet-based e-commerce as e.g. e-commerce on television or on mobile phones?  
  • What are the consequences of e-commerce with regard to ecological considerations in the broadest sense (traffic-related aspects, dematerialization, waste prevention, energy efficiency, etc.)?

In October 2002, the final report was accepted by the Bundestagsausschuss für Bildung, Forschung und Technikfolgenabschätzung (Bundestag committee for education, research, and technology assessment) and published as TAB-Arbeitsbericht (work report) Nr. 78 and also as Bundestagsdrucksache (printed matter) 14/10006.  

A revised and updated edition of the final report was published as part of the series "Studien des Büros für Technikfolgen-Abschätzung beim Deutschen Bundestag" in May, 2003. Bibliographical data:


Riehm, U.; Petermann, Th.; Orwat, C.; Coenen, Chr.; Revermann, Chr.; Scherz, C.; Wingert; B.: E-Commerce in Deutschland. Eine kritische Bestandsaufnahme zum elektronischen Handel. Berlin: edition sigma (Studien des Büros für Technikfolgen-Abschätzung beim Deutschen Bundestag, Bd. 14)
more on the book

Results

Results

 

The TAB project consisted of two working phases. During a preparatory phase, the current knowledge and research status on selected dimensions of the group of themes was surveyed by a panel of experts by means of brief assessments. During a second phase, starting from summer 2001, e-commerce and its impact on individual economic sectors was analyzed more profoundly. The project was terminated with a comprehensive final report in July, 2002.

The first project phase was focused on the following topics:

  • Conceptual explanations and a first broad survey on e-commerce
  • Infrastructural and logistic prerequisites for the innovation of e-commerce
  • Initial deepening analysis of the status of development and of the further perspectives on electronic commerce among businesses via electronic market places and on commerce with digital goods
  • E-commerce politics

 

 Selected results of the first project phase were presented to the interested delegates of the German Bundestag in spring, 2001. Additionally, these works were documented in three TAB background papers on the prerequisites for the innovation of e-commerce.

The assessment of the comprehensive second project phase was focused on the analysis of selected economic sectors and industries. It was meant to record the variety of e-commerce forms that had been developed in the context of the specific conditions within the industries. All of the eight industries and economic sectors where selected with the objective of reproducing the e-commerce scenery, preferably systematically and broadly conceived. Beside these topic areas around economic sectors, horizontal issues of e-commerce were taken up and topics from phase one were updated and deepened.

 

 

 

Definitions, forms, and players

The term “e-commerce” is often used in a very broad sense of meaning. Even the information on e-commerce on the Web aiming at sale is already labelled e-commerce, or even the support of internal business processes by information- and communication technologies. In the frame of this study, by e-commerce should be meant only processes involving transactions on public markets accessible via interactive electronic media, e. g. the Internet, that originate the exchange of goods against payment. The definition of electronic commerce used in the TAB project emphasizes the fact that the trade agreement (the contract formation) was enforced via an electronic medium (e. g. WWW). However, delivery and payment do not have to be concluded likewise, conventional procedures can be used therefor.

 Four characteristics, at least, have become established regarding e-commerce:

  • Trade between two companies (business-to-business or B2B)
  • Trade between a company and a private household (business-to-consumer or B2C)
  • Trade between companies and public authorities (business-to-government B2G) and
  • Trade between two private households (consumer-to-consumer or C2C).

 

 According to the the consistent assessment of experts, trade between companies will account for the greatest part of electronic commerce, even if trade with consumers gets more attention in public. Trade between companies and public authorities is addressed for two reasons: On the one hand, public authorities are meant to assume a leading role, on the other hand, they are most probably in need of catching up on making procurement more effective. Trade between two private individuals maybe covers the greatest potential for winning new markets.

 

 

 

Sogwirkung ohne Gewöhnungseffekt: Zwar verzeichnet das Internetshopping in Deutschland seit 1998 rasante Zuwächse. Der Anteil der häufig online Einkaufenden ist jedoch - laut einer Erhebung des Instituts für Demoskopie Allensbach - relativ gering geblieben.

Pull effect without habituation effect: Indeed, internet shopping has been increasing in Germany since 1998. However, the share of the ones who shop online frequently has remained relatively small, according to a survey of the Institut für Demoskopie Allensbach. (Source: Riehm et al.: E-Commerce in Deutschland, Berlin 2003)


Industry analysis

  • Technology and innovation research have shown that particularly information and communication technologies correlate strongly with the context of their application, especially during the initial phases of their innovation processes. On the one hand, they have to be adapted to the respective context of application that can be of technical, organizational, or of institutional nature. On the other hand, they also change that context of application, directly and indirectly. When compared to the initial state, the results of these adaption processes are usually not only changed but differentiated “technological” systems that are to be understood rather as techno-social configurations since the respective IuK system, the standardized product catalogs, the informal and the formal commercial customs, the legal frame conditions, and much more constitute a part of electronic commerce. Therefore, the analysis of e-commerce cannot be done any longer comprehensively and independent of application in a mere technical way. The potential and consequences of e-commerce do not show “clearly” but always just as part of the specific application and under consideration of the respective frame conditions. 
  • An adequate possibility of dealing with an application context is looking at industries analysis. These industries are shaping e-commerce crucially through their specific structure, the status of EDP employment, the product range and the regulating frame conditions, as well as through the possibilities of implementation. 
  • For the TAB study, eight industries were selected for a detailed analysis. The selections were made according to a number of criteria: Traditional manufacturing industries as well as information oriented new industries were meant to be part of this, industries in which e-commerce is already far advanced, and such ones where it is just starting, industries with frame conditions that restrict commerce strongly and relatively unrestricted ones, such ones with strong and such ones with weak competition, such ones with concrete and such ones with digital products. It was not aimed at a systematical virtually experimental variation of the features but rather at a selection by sophisticated criteria. The eight industries selected in this way can be characterized as follows: 
  • Food trade stands for industries characterized by very strong competition, strong concentration processes, tight margins, and high customer demands regarding product quality and supply. The conditions for e-commerce are particularly difficult, especially regarding B2C. 
  •  Automotive industry represents the established “old economy” that has always been innovative with regard to IT. Internet and e-commerce seamlessly fitted into this technology-oriented innovation process. Nevertheless, automotive industry also stands for special challenges regarding distribution structures, with free competition seriously constrained by heavy regulation. 
  • In Germany, pharmaceutical trade, at present, is also subject to provisions that prohibit mail order selling, B2C, and with it electronic commerce. Due to transnational offers on the Internet, but also due to the prospect of cost reduction for pharmaceuticals regarding the budget of health insurance institutions, and due to the prospect of savings for the patients deregulation is discussed in the political environment, strongly opposed by affected pharmacists. 
  •  Trade with media products (esp. books, musical and cinematic works) is of special interest as these products can in fact be digitalized and because an entirely electronic commerce, supply phase included, is conceivable in this case. This industry is also interesting as books are offered at the same price everywhere (price maintenance) while CDs and videos are subject to price competition. 
  • Only since 1998, companies and private households have had the possibility to purchase electricity on the open market. This new electricity market stands in a close relationship to the possibilities of e-commerce. Electricity as a commodity has special characteristics and a special status in between material and digital goods. Stock exchange trading is one of the pioneers of electronic commerce. Electronic trading has already existed at a time when e-commerce was not even talked about yet. 
  • Stock exchange is for another reason predestined for e-commerce: it is about mere accounting processes without the occurrence of any materiality. 
  • Services are part of those commodities that, basically, can be digitalized. Through the intense relationship between suppliers and customers, the requirements regarding the implementation of e-commerce seem to be especially high. Additionally, many sectors of the service industry are restricted by special legal regulations and, therefore, not part of the open market. 
  • Public procurement processes are of special interest especially for two reasons. First, electronic procurement is seen as a very promising field of application for electronic commerce with a high saving potential. Second, the public sector is not only one of the most important buyers but he also is subject to the necessity of saving and of rationalization. 

Differentiated problem solving potential

The employment of e-commerce has got to offer a highly differentiated problem solving potential. Accordingly, in a specific case, process integration is in the foreground, in another case, it is more transparency, and in another case, ordering processes have to be made more effective while, in a further case, e-commerce has to be adapted to the requirements of the customer.

Especially in manufacturing industry, there is a focus on a better integration of supply processes with manufacturing processes. Here, e-commerce systems have to be integrated entirely into the companies’ EDP systems. E-commerce is a constituent of a comprehensive business networking strategy.

In market situations, where a variety of relatively fragmented suppliers and buyers encounter each other, e-commerce can promote trade by creating a higher market transparency. In this way, electronic stock exchange can e.g. match requirements that are appearing on a short term with the existing offers. Pricing and completion of a business transaction can then be concluded even automatically. 

Rationalization of ordering processes regarding bulk goods by implementing a differentiated product line and relatively low prices is another typical objective of e-commerce employment. Such systems are mainly used between retailers, whole sale, and the producers. They occur e.g. in the food retail sector, with pharmaceuticals, and with books.

Valuable goods that are rarely purchased, like cars, furniture, insurances, travels etc., are not in the focus of purchase process rationalization as the order value is much higher. E-commerce rather serves here as an aid for personalized product configuration (color, equipment details), for the evidence of availability of a product, or for the negotiation of terms and conditions.

Research- and political demand for action

The final report points to a number of open research questions and to political fields of action that are presented here in extracts.  

Particular significance is attributed to the research area of logistics and traffic. The future success of e-commerce depends crucially on the efficiency of the logistics systems. A central issue for research is which of the e-logistics strategies currently under discussion or being tested has the potential not only to optimize processes in individual enterprises but also to meet transport, economic, and ecological policy objectives. Research could develop technological and organizational options here. Promising variants could then be tested and evaluated in pilot trials. Knowledge of the transport impacts of e-commerce on both, the B2B and B2C segments, is so far still rudimentary. Methodologically defensible analyses on the basis of current, valid data are needed, i. a. to study the formation of innovative transport chains under the influence of eco-friendly transport systems, the generating of additional transport based on minimal orders, and door-to-door delivery of consumer goods, as well as possibly fewer shopping trips. Extensively neglected to date are the role of aviation and the potential of rail transport for e-logistics. Quantitative estimates at the macroeconomic level of the impacts of e-commerce on logistics and transport are very difficult, and a more detailed segmentation of national statistics would be helpful here. 

The areas for political action relating to e-commerce cover a wide range of aspects, extending from the material prerequisites for an easily accessible network infrastructure and the social prerequisites for qualified design and use competence among firms and consumers, through the regulatory frame conditions to ensure confidence and security to the general conditions and consequences in business, transport, and the environment. 

In terms of technical e-commerce infrastructures, the political and legal environment requires ongoing further development; and political initiatives to strengthen the Internet need to be continued. In addition, consideration could be given to a new broadband initiative and, if necessary, actions should be better coordinated and promoted more intensely. 

In competition policy, the development of e-commerce gives rise to a range of new needs. For example, the digitization of products may promote the trend to greater industry concentration. Other issues are corporate links between producers of complementary goods, corporate alliances for promotion on the Internet and the examination of electronic market places, and so-called virtual companies in individual cases. 

On the international level, there is a need for political action with regard to global service trade (WTO, GATS), tax and customs policy, data security, as well as copyright protection. With regard to taxes and customs, to refer just to this aspect, future technological developments will show how far automatic online taxation procedures can be found which will achieve acceptable and effective taxation of virtual markets with reasonable administrative investment. In the longer term, a lack of agreement on taxation of electronic trade in goods would cement the preferential treatment of e-commerce compared to traditional commerce. 

The structural change caused and promoted by e-commerce proceeds in an entirely different way depending on the industry in question; overall, it seems to be rather moderate. Nevertheless, e-commerce stays on the agenda of economy, society, and policy as thorough analysis has revealed the necessity of broad and differentiated action and research.

Selected publications

Final report

Riehm, U.; Petermann, Th.; Orwat, C.; Coenen, Chr.; Revermann, Chr.; Scherz, C.; Wingert, B.
E-Commerce in Deutschland - Eine kritische Bestandsaufnahme zum elektronischen Handel. Berlin: edition sigma 2003
(Studien des Büros für Technikfolgen-Abschätzung beim Deutschen Bundestag, Bd. 14)
more on the book

This printversion of the final report is a revised and updated version of TAB-Arbeitsberichts (work report) Nr. 78 that was also published as Bundestagsdrucksache 14/10006:

Riehm, U.; Petermann, Th.; Orwat, C.; Coenen, Chr.; Revermann, Chr.; Scherz, C.; Wingert, B.
E-Commerce - Endbericht. Berlin: Büro für Technikfolgen-Abschätzung beim Deutschen Bundestag (TAB) 2002
(TAB-Arbeitsbericht Nr. 78)
Summary/htm

 

TAB background paper on the conditions of innovation in e-commerce

In the framework of the TAB project "E-commerce" three background papers where issued under the title "Innovationsbedingungen des E-Commerce" that document partial results of the project. 

Petermann, Th.
Innovationsbedingungen des E-Commerce - Das Beispiel Produktion und Logistik. Berlin: Büro für Technikfolgen-Abschätzung beim Deutschen Bundestag (TAB) 2001
(TAB-Hintergrundpapier Nr. 6)
Summary/htm

The report analyses the transformation of the functional areas production and logistics as crucial requirements for a further growth of the electronic commerce. 

Riehm, U.
Innovationsbedingungen des E-Commerce - die technischen Kommunikationsinfrastrukturen für den elektronischen Handel. Berlin: Büro für Technikfolgen-Abschätzung beim Deutschen Bundestag (TAB) 2002
(TAB-Hintergrundpapier Nr. 7)
Summary/htm

The report covers the question which of the three biggest communication infrastructures - Internet, mobile communications, radio - are suitable for e-commerce and how their further development will look like.

Orwat, C.
Innovationsbedingungen des E-Commerce - der elektronische Handel mit digitalen Produkten. Berlin: Büro für Technikfolgen-Abschätzung beim Deutschen Bundestag (TAB) 2002
(TAB-Hintergrundpapier Nr. 8)
Summary/htm

An analysis on whether the expectations for economical success and high efficiency of digital goods are justified in the course of the implementation of the "digital economy" resp. of the "New economy".

While stocks last, printed versions can be ordered with the secretariat (bueroSro8∂tab-beim-bundestag de).

 

"TA-Datenbank-Nachrichten Nr. 4/2001" Schwerpunkt E-Commerce-Politik (focus point e-commerce policy)

In the context of the project, the focus point of issue 4/2001 of "TA-Datenbank-Nachrichten" became "E-Commerce-Politik" (e-commerce policy) by  Ulrich Riehm and Carsten Orwat with contributions by H. Hauser, S. Wunsch-Vincent (on the significance of UN organizations), V. López-Bassols, G. Vickery (on the role of OECD), C. Santos, M. Perogianni (on the view of the EU commission), R. Pichler (on the e-commerce policy of the USA), R. Hochreiter (on the e-commerce policy of the German government), G. Fuchs (on regional e-commerce policy), J. Rieß (on self-regulation form the economy's perspective), M.G. Cowles (on the global business dialog on e-commerce), and by M. Rothgang, M. Scheuer (on the question if autonomous e-commerce policy is needed or not).

The table of contents and the complete articles you will find here.

Further selected publications

Riehm, U.
E-Commerce: Begriff, Geschichte, aktueller Stand und Ausblick. In: Kübler, H.-D.; Elling, E. (Hrsg.): Wissensgesellschaft. Neue Medien und ihre Konsequenzen. Bonn: Bundeszentrale für politische Bildung (bpb) 2004
(Medienpädagogik - auf CD-ROM sowie im Internet)
Volltext/pdf

Riehm, U.
E-Commerce bleibt auf der Agenda von Wirtschaft und Politik. TAB-Brief (2002)23, S. 12-15
Volltext/pdf

Orwat, C.; Petermann, Th.; Riehm, U.
Elektronischer Handel und Nachhaltigkeit. In: Grunwald, A. (Hrsg.): Technikgestaltung für eine nachhaltige Entwicklung. Von der Konzeption zur Umsetzung. Berlin: edition sigma 2002, S. 245-275
(Global zukunftsfähige Entwicklung - Perspektiven für Deutschland, Bd. 4)

Riehm, U.; Orwat, C.; Petermann, Th.
Stand, Perspektiven und Folgen des E-Commerce. In: Weinhardt, Ch.; Holtmann, C. (Hrsg.): E-Commerce - Netze, Märkte, Technologien. Heidelberg: Physica 2002, S. 1-18
Volltext/htm

o.A.: Handel mit digitalen Produkten. In: TAB-Brief 21 (Dezember 2001), S. 23-26 hier

o.A.: Elektronischer Handel bereits fest etabliert? In: TAB-Brief 20 (Juni 2001), S. 23-25 hier

Publications

Contact

Dipl.-Soz. Ulrich Riehm
Karlsruhe Institute of Technology (KIT)
Institute for Technology Assessment and Systems Analysis (ITAS)
P.O. Box 3640
76021 Karlsruhe
Germany

Tel.: +49 721 608-23968
E-Mail