By Henry N. Dreifus and Judy A. Henderson, Dreifus Associates Limited (DAL)

Electronic commerce is on the rise in the United States and around the world, but there are still some very significant issues yet to overcome. Generations "X" and "Y" are changing the predictability of customer behavior. Customer loyalty and security on the Internet is now more important and more difficult to achieve. It is a challenge with the horror stories that are emerging about items bought online that fail to arrive on-time, credit cards that are charged for items never purchased, and inadequate customer service to handle such problems. The e-market is demanding improvements in security and in customer satisfaction methods.

Recently Martha Stewart, a prominent homekeeping television "guru," graced the cover of Newsweek magazine promoting E-commerce. The cover confirms that E-commerce is not only on the rise between businesses, but also in many other aspects of consumer life. According to Greenfield Online, an Internet market research company, Internet shopping has increased by 32 percent and online purchasing by 38 percent since early 1998. E-commerce soared during Christmas time as millions of new first time U.S. customers tried buying online. The estimated U.S. holiday sales were over $3 billion (USD). The leading products were computer software, CDs, books, computer hardware, videos, games, and subscriptions.

With the increase in E-commerce, it is important for companies to stay competitive and create loyal customers. Multiple applications will include self-service order tracking, library of product documentation, and roadmaps for customer service. Online customer care will be an emerging market. Unlike traditional web-based business support that depends on frequently asked questions (FAQ) and electronic mail, requiring customers to wait, live on-line chat interface allows customers to communicate by "speaking" or "chatting" in real time, 24 hours a day. The new "eReps" will be a key to "replicate" a retail environment and increase customer satisfaction.

It is important to "think outside the box." It is not good enough to "replicate" a retail environment. Many companies are currently confining their E-commerce strategy to credit and debit acceptance schemes, hoping to mimic the successes that they have had in the physical retail world. These payment methods raise some security concerns with consumers. It has opened the market to alternative payment options like electronic cash and digital money. Telecommunications and other companies are exploring other avenues to reach younger markets with no credit, i.e. charging items to a telephone bill.

The e-businesses of tomorrow can get started almost immediately on the web and have millions of customers within hours. The traditional systems and methodologies are designed and optimized for the "atomic" world of storefronts and physical points-of-sale. New E-commerce situations may be managed virtually without a single physical meeting between suppliers, vendors, and customers.

Security is crucial to the enterprise, and even more critical to the electronic entrepreneur. Debates are raging over the various technical approaches, especially with Microsoft now entering into the chip card realm. Microsoft, which already developed the PC-SC interface to enable smart cards within the Windows environment, now has begun to collaborate with several industry partners to evolve a "Windows for Smart Cards." Although the banking industry may be slower to change on where, when, and how to invest in the electronic age, access to electronic commerce is expected to soon be common in cable television boxes, telephones, WebTV terminals, retail (loyalty) payment terminals, and most importantly, in the personal computer.

The smart card chips' logic and memory capabilities leave magnetic stripe cards in the dust and create openings for assuring a higher degree of security using tools such as digital certificates and biometrics. Digital certificates provide a mechanism for binding a public key to some identity or set of attributes where there is no existing infrastructure. Corporations' use of identity cards combined with digital ID techniques are expected take off soon. A digital certificate in the card would authorize access to a given computer or database, whether at one's own desktop or when traveling with a laptop. It would be a small technical step from there to mainstream industrial E-commerce and consumer-level activity.

With E-commerce on the rise, it is imperative to face the challenge and issues at hand in order to have a strategic impact in the future. At least there is one fact that most businesses can count on happening:
E-commerce in the United States will continue to become a larger and larger part of every consumer's life.