E L E C T R O N I C COMMERC E : T H E S E C O N D WAV E

The business phenomenon that we now call electronic commerce has had an interesting
history. From humble beginnings in the mid-1990s, electronic commerce grew rapidly until
2000, when a major downturn occurred. Many people have seen news stories about the
“dot-com boom” followed by the “dot-com bust” or the “dot-bomb.” In the period from 2000
to 2003, many industry observers were writing obituaries for electronic commerce. Just as
the unreasonable expectations for immediate success fueled the high expectations during
the boom years, overly gloomy news reports colored perceptions during this time. Beginning
in 2003, with the general economy still in the doldrums, electronic commerce began
to show signs of new life. Companies that had survived the downturn were not only seeing
growth in sales again, but many of them were showing profits. Although the rapid expansion
and high levels of investment of the boom years are not likely to be repeated, the
second wave of electronic commerce is well under way. This section defines electronic commerce
and describes how it is growing once again in its second wave.