current developments to assertions that e-commerce would be, or already was, "a bust." A 1997 article in The Economist observed that:
Analysts reckon that consumer Internet transactions in 1996 were worth a total of only around $500m-600m, about the same as was spent on computer publications full of glowing articles about Internet commerce. In the three years since the Internet has taken off, the slow growth of electronic commerce has been one of its greatest disappointments ("Electronic commerce: In search of the perfect market," 1997).
The article in The Economist went on to make two general observations. One, perhaps more precisely a prediction, is that "for starters, the big money is not in consumer shopping but in business-to-business commerce." The other is that "the industry has defined electronic commerce too narrowly. Most analysts include only transactions actually carried out on the Internet; but many consumers research their purchases online and then buy in some other way."
The explosive growth of Amazon.com and other online booksellers may have reversed this last argument, at least for some products such as books. There is much anecdotal evidence, in the complaints by smaller independent booksellers, that customers now only browse their shelves, going elsewhere to purchase the book at a discount. "Elsewhere" may be a chain, but increasingly it may also be online. (As will be further discussed below in this essay, books represent a particularly sharp distinction between the customer who is "browsing" and the customer who is shopping for a particular item.
Regarding The Economist's first point, the distinction between consumer shopping and "business-to-business commerce" may, in the context of electronic selling, be less relevant than a distinction between transactions between individuals and what may be called institutional transactions. By the latter is meant transactions, typically between large or...