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E-commerce fundamentally changing American business

OXFORD — There is not a business in the nation that will not be touched by electronic commerce. From banking to retailing, the way that Americans are doing business is fundamentally changing now that a click of the computer mouse can have virtual mall goods delivered to the door with far more ease — and often less cost — that a trip to an actual mall.

Currently e-commerce represents about $43 billion annually in sales, with estimates that e-commerce will reach spending totals of $1.3 trillion in 2003.

“In the past it has been mostly business-to-business transactions,” said Dr. Brian Reithel, associate professor of management information systems at the University of Mississippi (UM). “Now we are starting to see more business-to-consumer sales. It is accelerating rapidly, and we don’t know where it is going to end. But we do know it is going to touch every aspect of society.”

To understand the magnitude of e-commerce, look at the statistics: about 90 million people in the U.S. and Canada have access to the Internet on a daily basis. More than half of the homes in the U.S. have a personal computer. An estimated 75% of Americans aged 16 to 60 have access to the World Wide Web on a daily basis either at home or at work.

Reithel said the Internet is increasing people’s expectations for services. For example, instead of waiting for a monthly bank statement, more consumers are expecting access to their banking accounts 24 hours per day, seven days a week. They want not only up-to-date account information, but the convenience of paying bills electronically rather than writing out a check and sending payments snail mail.

“I read a recent article on Citibank planning for the digital economy,” Reithel said. “They are planning to have one billion customers in the next few years. The only way they can do that is to have a large market share not only in the U.S., but also around the world. If you are a local banker, you would certainly want to look at this trend in financial services.”

Currently Citibank is offering a $25 rebate for customers who open an electronic bank account, and pay two bills electronically. Reithel said many banks have been spending a lot of resources in recent years getting ready for Y2K computer compliance. He expects that over the next year that investment stream will be redirected into Internet banking services.

No aspect of business will be untouched by the Internet revolution. Don’t like haggling with car dealers over pricing? Check out the Web site www.autonation.com, a site that allows you to order a car online.

“It is just incredible,” Reithel said. “At autonation.com, they will allow you to order new or used vehicles through their dealer network, and they have several hundred dealers across the country. You can click on the Used Vehicles Megastores icon to see what makes and models are available depending on where you are willing to go to pick them up. You can find out the value of your trade in, and do financing arrangements online.”

Prescriptions can be ordered over the Internet, and there are even sites where you can see a virtual doctor, and get a prescription written. While there are understandable concerns about physicians prescribing medicine without doing a physical examination, it also makes health care available to people who might otherwise skip going to the doctor. People may also quickly come to prefer the virtual doctor to sitting for long periods of time in the waiting room while being exposed to viruses from other sick patients.

Retailing is also changing with the Web revolution. Retailing giant Wal-Mart, for example, has a Web site with 55,000 different items for sale. For people who don’t enjoy hunting all over the store to find something, ordering online is the perfect option. Instead of walking across the store from sporting goods to baby supplies, you can surf through Wal-Mart’s site online, order with a click of the mouse, and have it all shipped to your house in as little as 24 hours.

“They ship a lot of things for free,” Reithel said. “This is changing the way people do business, and changing the expectations that people have for other businesses. People expect to be able to do things when they want to do them.”

Because e-commerce is an increasingly vital part of business, studying different aspects of e-commerce is a key part of the MBA program at Ole Miss.

“E-commerce is fundamentally changing things at a breakneck speed,” said Dr. John Holleman, director of the UM MBA program. “It is altering the business landscape dramatically. The establishment of the Internet has been likened to the change that discovering electricity brought in the last century. It is a pervasive change in business. For example, the vast majority of TV business news is Internet related.”

Holleman said their MBA program emphasizes e-commerce in terms of marketing, distribution and technology. At Ole Miss, all MBA students are required to have laptop computer, and to create a Web site and a Web-oriented business. Each classroom has modem connections, and students are often online during lectures as professors discuss various aspects of e-commerce.

“That is how fundamentally things are changing things in academia,” Holleman said. “We’re relying much on the Web for instruction. We certainly believe that is vital. E-commerce is emphasized throughout the curriculum. It isn’t just one little component. In MBA programs, cutting-edge instruction must address e-commerce or you are not connecting with the real world.”

Holleman said understanding e-commerce isn’t necessary only if you go to work for a Web-based business such as amazon.com. Just about any type of business either has a Web page, or needs the Internet to seek and conduct business.

Contact MBJ staff writer Becky Gillette at mullein@datasync.com.

About Becky Gillette

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