It is better to be warned....

Today development pace of electronic commerce is so high that a number of market participants are on happy roll thanks to such a headlong growth. Just look at the figures characterizing the growth of e-commerce turnovers in China – market of the celestial country grows for 110% a year starting from 2002.

But such optimism is just a top of an iceberg. Those who present on the market long ago start facing the problems the importance of which grows every day. Today there are many talks about the new formats of trade on the Internet, about overall penetration of web 2.0 into a social life of the internet, about the next generation of the Internet, but such growth is connected with a number of threats of modern e-commerce. We tried to systematize all the factors which can affect or have already started to affect the modern trade online.

One more niche where one can observe the exceeded supply is a content market. Even today the online consumers face the situation when content price is either equal or lowered to 0 that gives owner an opportunity to earn on advertisement. And here the root of all evil is in the source of content itself but not in people’s desire to open Internet shop. The thing is that for example the suppliers of music and graphic content on the Internet buy the bases from one narrow circle of sources. And on account of this the similarity of content makes sellers to lower their prices to the critical point. All these make the profits of sellers the minimum ones and hence decrease the attractiveness of content trade. Here it is also necessary to say about such event on the Internet as overproduction of content. Today there is a situation when software, scripts, templates, graphics, books, music and other content can be found both for money and for free. Such state of affairs puts electronic commerce on the way of dead development.

But one of the most spread and always important problems of electronic commerce is a fraud. Constant perfection of criminal schemes of fraudsters makes secure functioning of electronic trade more and more difficult. When increasing sales for example by means of introduction of payment via plastic cards, the owner of Internet-business automatically put himself to an interest of carders and phishers. According to NetNames beginning from December of 2002 to January of 2008 the number of phishing attacks has increased to 77%. It’s worth remembering one simple thing: if you have got a successful shop accepting cards or payment via merchants of electronic payment systems, some day thousand of people worldwide will get in their e-mail a phishing letter with offer to buy something on the clone of your website. Cardering is not less dangerous than phishing. It’s even more dangerous as having fallen for the bait of phisher the client can still return to the site, but having lost once all the money in account due to the card ID thief any person will never use this or that Internet shop for sure. It is understandable as having fallen for a trick of some phisher the person is guilty somehow for his losses himself. But the theft of funds from the plastic card is like a robbery and cannot be forgiven by the card holder.

But most fatal and obvious disaster that threatens profitable online business today is DDoS. No one is protected from the latter and the only possible remedy from this plague of the Internet of 21 century is dollar. It is money and some sophisticated actions that can protect you against DDoS. Competition is rising in all markets and DDoS protection means the life for your business. Money spare is irrelevant, one car trading site owner (to be undisclosed) says that two week DDoS can reduce turnovers and site constant visitors at more than 50%.

However in view of the fact that online and offline businesses are interconnected the current economy status had an impact on the virtual sector. Liquidity crisis, dollar downfall and lowering of the living scale according to some assessments may cause in the near future lowering of turnovers of some Internet shops.

In addition there is one more problem for the e-commerce, which becomes more and more important. It is an administrative pressure of the government on Internet business. As online market turnovers increases more and more states are getting concerned about the regulation of online sector by law. Tightened legislation in the USA as well as in Estonia is a glaring example. The latter has destructed a part of business structures due to the decree adopted to prohibit any sales without documentation originals. Patriotic act and ban of online gambling in the US turned out even worse as these rules made a number of companies to suffer great losses. But the most depressing is a trend to stricken rules of online payment transactions. Many debit systems endeavoring to display the transparency of their activity are increasing the frequency of requiring the customers to submit the documents and blocking accounts with no reason explanation which is intended to force the users to hand in their identity certificates. This is especially true for PayPal, E-bullion and WebMoney. The negative spot in here is the fact that some users preferring to make their online transactions in private are not taken into account. Such a form of Government-payment system-online users’ relationship leads to the decrease of merchants’ accounts volume in the e-commerce.

The dynamics of online commerce is so high that the industry does not keep up with the contemporary tempo and continually dangers arising. It is only due to practicing the principle “It is better to be warned” you may be a success in the Internet. You should always follow external economy state and technology advance in order to stay safe. Yet there is a place for an optimistic view taking in consideration that the e-commerce growth opportunities are very high hence it is a skillful hand that will make a profit in inline business covering any turnover losses.