E-commerce - a glossary of terms

Internet development

E-commerce would not have developed so rapidly without the global network of computers which we now call the Internet. In the 1960s, the US government developed the connectivity standards to network computers for defence research purposes. The agency responsible for managing and developing the network, and linking together universities and defence research establishments, was called the Advanced Research Project Agency (ARPA).

The ARPANET became the Internet. At the core of its design philosophy was flexibility and resilience - enabling new computers to be easily linked and, in the event of any catastrophe destroying one or more computers, for the remainder of the network to be able to continue to function.

Over the following 30 years, the US National Science Federation (NSF) played a guiding role in developing the network. The developing Internet was mainly used as a communications tool in the scientific and academic communities for electronically transferring and exchanging research materials.

In 1989, the NSF opened the Internet to commercial network traffic. Then, in 1992, Tim Berners Lee, working at the European Laboratory for Particle Physics, created the World Wide Web (www).

While we tend to use the terms Internet and World Wide Web interchangeably, the Internet describes the entire system of networked computers and the World Wide Web describes the method used to access information contained on computers connected to the Internet.

The availability of a common Internet infrastructure - of computers, networks and protocols - and the development of an easy to use Graphical User Interface (GUI) have been the catalysts for the growth of e-commerce. It has created an open community - easy to join and easy to use.


This is the highlighted text on a web page. You can click on a hyperlink and be routed to another web page, either on the same website or to a different website anywhere in the world. Hyperlinks are designed and set up to enable consumers to easily navigate and find information and purchase products.


This term refers to a closed community of users, often within an organisation. Intranets are designed to be used for internal business purposes only. It uses the same standards and protocols as the Internet, but with increased password and security protection. Intranet websites can look just like the Internet websites, but normally a firewall surrounds the Intranet to prevent access by unauthorised users. A firewall examines all requests and messages entering and exiting the Intranet and blocks any not conforming to specified criteria.


An Extranet is an extension of an organisation's Intranet. The difference is that an Extranet is accessible to selected people or groups outside the organisation. Many B2B transactions are made over Extranets. An individual can enter an organisation's public website on the Internet, obtain a password authorisation and then be routed to the organisation's Extranet to conduct transactions and obtain information not available to the public.

Extranets are frequently used to connect an organisation's corporate Intranet with the Intranets of the organisation's suppliers, distributors and corporate customers.

Web browsers

Internet users (private or corporate) communicate through their web browsers (such as Microsoft Explorer or Netscape Communicator) with websites. The web browser is a software utility program with a Graphical User Interface which helps users navigate through the web.

It takes a request and then transmits and receives information from other users or information providers. Using a browser, the user does not need to know the format and location of the information required. They can jump from site to site by clicking on hypertext links.

Navigation aids

Website developers create navigation aids to enable customers to navigate their way around a website. A navigation aid can be hyperlink text, buttons, and tables of contents or graphical symbols such as icons or pictures. Navigation aids are designed to allow users to visit a website and conduct their transactions instinctively, quickly and easily, moving between pages and re-tracing steps as necessary.
Website search tools
An online store can use a search tool to help customers quickly find products. Techniques include simple features such as drop-down lists, where customers click a downward pointing arrow to display a list of products or specifications from which they may choose. Another technique is inviting the entry of key words which trigger a site search. The challenge for the designer is to pre-identify as many alternative (or even misspelt) versions of potential key words as possible. Most website search tools use indexing robots - software which electronically visits a site, follows all links contained therein, and automatically indexes the contents.


Online businesses need to access, store, retrieve, amend, and generate data in a wide variety of formats. A database is defined as a collection of information that is organised so that the required information can be quickly retrieved, amended if necessary, and then the electronic image updated. There are a number of proprietary database management systems that can provide the necessary functionality - and operate in a real time processing environment, with high volumes - while maintaining security and availability.

Form design

An e-commerce enabled website must include mechanisms for customers to enter information such as their name, address, and credit card number. This information is then stored in a database. Website developers create forms for customers to complete. Most electronic forms comprise text boxes combined with drop-down lists to simplify tasks for the customer and to avoid transcription errors where possible.

Shopping carts and checkout

Many online stores use the image of a shopping cart (or trolley) to characterise the online shopping process. The shopping cart is now considered a standard component of all online stores. A shopping cart records the ongoing results of the ordering process, generated from a database, and is effectively the interface between the customer and the database.

In the browser, these results appear on a web page that is updated every time a customer adds an item to the cart. Shopping carts are usually set up so that the customer can view all details of the ongoing transaction on request, at any time. When all transactions are complete, the customer is invited to go to the checkout to complete the purchasing process.

The checkout is usually located on a secure server that protects customer payment information during its transmission. For small businesses, standard software modules can be bought in for the shopping cart and checkout processes. In such cases the payment process is routed to a secure server managed by a specialist company, eg PayPal.

Although a small number of products and services can be distributed electronically, most products need to be physically delivered. Once a commitment to purchase has been made, ensuring that distribution is controlled, speed and visibility are critical success factors for the online store.

Most online stores offer a variety of shipping methods with different timescales and prices. Some online stores will choose shippers who have 'track and trace' monitoring procedures available online. Customers are provided with the identity of the shipping agent and a reference for their package. They can then track its progress.

Jim Stone is subject coordinator for the business management papers