Over the past decade, the Internet has risen from humble beginnings to become the driving force of the U.S. economy. The Internet was originally created as a common database. Universities and departments of the U.S. government shared it. It was a sophisticated method for these organizations to communicate and share research results. As technology progressed, the Internet developed into a medium of commerce between nations, businesses and individuals. Currently, the Internet provides users access to the global market at the push of a button or the click of a mouse. Transactions between organizations in different nations occur instantaneously. The Internet provides a new medium not only to sell products, but also to market them. In a few short years, the Internet permanently altered international trade.

CS Question #1: What was the original purpose of the Internet?

The Internet allows for seamless transactions. The term "seamless transaction" describes the sale of a product in relation to the paperwork required to complete the transaction. Statoil is the name of the state oil company of Norway. This company ships two million barrels of oil to customers all over Europe and the United States. These transactions require many separate pieces of paperwork. Transporting one cargo ship of oil can involve dozens of documents. The transaction can require over 30 intermediaries. Intermediaries are the freight forwarders, port authorities, inspection agents, customs officials and the banks that supply the financing for the whole transaction. Often products like oil are bought and sold while still in transit. This creates even more paperwork. The Internet can provide a medium in which all of the intermediaries can communicate instantly. Instead of passing actual documents from port to port, all the documentation would be sent over the Internet. The information is transmitted and received instantly. In addition, it is uncorrupted by human errors that occur during manual processing of paperwork.

CS Question #2: How does the Internet create "seamless transactions"?

In the world of Internet commerce, international borders become transparent. Since the Internet can be accessed through any telephone line, it is possible for buyers to access foreign suppliers. Products that were once available only regionally can now be sold globally. As Internet commerce increases, the number of trade possibilities will also increase. Products from China can be sold to consumers in France, and the transaction can be completed within seconds. Taxes, tariffs and local laws only slow the interaction of commerce between nations. In some cases, the Internet creates a loophole allowing the free trade of information across borders. Some nations are encouraging Internet commerce by limiting the taxes on Internet sales. In the United States, there are no sales taxes on goods purchased on the Internet. This makes the products less expensive for consumers and increases the level of commerce.

CS Question #3: How does the Internet exist beyond borders?

Internet commerce also creates new methods for marketing goods and services. Companies can advertise their products on the Internet. The Internet gives them the opportunity to make the ads available worldwide. Businesses can also create huge databases of customer information. Companies can observe users on the Internet. They can learn about the type of products that consumers inquire about or purchase. Then, these companies can market directly to each consumer. Instead of mass marketing, a company can tailor its ads to those consumers who might be interested in their products. If a particular user is always purchasing books over the Internet, then a company can send emails advertising books. If a user requests information on clothing, a company can email clothing catalogs. Using the Internet allows companies to save money by focusing their marketing on potential customers.

CS Question #4: How has the Internet changed the methods used to market new products?

Further Thought:

1. How will Internet commerce change consumption patterns?
2. How can local governments control their markets as the Internet's popularity increases?
3. Why do you think the U.S. government allows Internet sales to be tax-free? How does this encourage Internet retailers and consumers?