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Chapter 1  Internet Era: E-Commerce 5

The concept of tangible vs. intangible goods is not speciﬁc to e-commerce; it has

existed for almost as long as commerce has. Unlike most humans, computers work

with binary values, zeros and ones, and digital entities. With the introduction

of e-commerce, we have had to create yet another dichotomy to delineate what

can be transported in computer-understandable format and what cannot. This

is where the distinction between digital and hard goods is made. Computer-

transportable products are referred to as digital goods, and all other products

are hard goods (perhaps they are still resistant to becoming digitized).

Now we can have our very own deﬁnition of e-commerce as transporting any

part of commercial tasks into the digital world so that computers can handle

them. Seen from this perspective, then, it doesn’t matter whether you are deal-

ing with tangible products and hard goods online or going to brick-and-mortar

stores, or whether you need to make a payment on your computer or walk into

a banking branch. For example, it was not too long ago that if you wanted to

have an album of your favorite rock star, you had to go to a store and buy the

album in the vinyl or cassette formats. These were analog formats. Then with

the advent of compact discs (CD) the music became digitized. The next step

was for the Internet infrastructure to become more ubiquitous and offer higher

bandwidths, and also for the computers to have proper programs to receive and

play music tracks right on a user’s personal computer. Once those requirements

were satisﬁed, then the entire music delivery and consumption started to go

online: hard goods gone digital. TV programs and other multimedia contents

are following suit. In some parts of the world, you no longer need to buy a

separate device (television) to watch your favorite programs; you can do all that

on your personal computer.

The point is, the line between traditional and e-commerce is solid in some

parts (for example you will always go to a dealer to purchase a car), but there are

other parts of this line that are still blurred; you may at some point in the future

have a hardware device on your personal computer that generates program-

mable odors in a digital form, so you won’t need to buy perfumes anymore! The

recent improvements in three-dimensional (3D) printing technologies, where

you can actually print out 3D objects might be seen as a step in this direction. All

that said, the objective of e-commerce is to take what was once part of tangible

commerce and re-envision it for the digital world.

Payment

Payment is one of the cornerstones of any commercial activity, including e-com-

merce. At the end of a successful commercial exchange the buyer wants to receive

his goods and the merchant her money. As humans engaged in commercial

activities throughout history, the need to ﬁnd creative ways to scale and expand it

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