E-COMMERCE
What is e-commerce?
E-commerce (electronic commerce) is the buying and selling of goods and services, or the
transmitting of funds or data, over an electronic network, primarily the internet.
Common applications of Ecommerce
Retail and Wholesale
Ecommerce has numerous applications in this sector. E -retailing is basically a
B2C, and in some cases, a B2B sale of goods and services through online stores
designed using virtual shopping carts and electronic catalogs. A subset of retail
ecommerce is m-commerce, or mobile commerce, wherein a consumer purchases
goods and services using their mobile device through the mobile optimized site
of the retailer. These retailers use the E -payment method: they accept payment
through credit or debit cards, online wallets or internet banking, without
printing paper invoices or receipts.
Online Marketing
This refers to the gathering of data about consumer behaviors, preferences,
needs, buying patterns and so on. It helps marketing activities like fixing price,
negotiating, enhancing product features, and building strong customer
relationships as this data can be leveraged to provide customers a tailored and
enhanced purchase experience.
Finance
Banks and other financial institutions are using e -commerce to a significant
extent. Customers can check account balances, transfer money to other
accounts held by them or others, pay bills through internet banking, pay
insurance premiums, and so on. Individuals can also carry out trading in stocks
online, and get information about stocks to trade in from websites that display
news, charts, performance reports and analyst ratings of companies.
Manufacturing
Supply chain operations also use ecommerce; usually, a few companies form a
group and create an electronic exchange and facilitate purchase and sale of
goods, exchange of market information, back office information like inventory
control, and so on. This enables the smooth flow of raw materials and finished
products among the member companies and also with other bu sinesses.
Online Booking
This is something almost every one of us has done at some time – book hotels,
holidays, airline tickets, travel insurance, etc. These bookings and reservations
are made possible through an internet booking engine or IBE. It is used the
maximum by aviation, tour operations and hotel industry.
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Online Publishing
This refers to the digital publication of books, magazines, catalogues, and
developing digital libraries.
Digital Advertising
Online advertising uses the internet to deliver p romotional material to
consumers; it involves a publisher, and an advertiser . The advertiser provides
the ads, and the publisher integrates ads into online content. Often there are
creative agencies which create the ad and even help in the placement. Different
types of ads include banner ads, social media ads, search engine marketi ng,
retargeting, pop-up ads, and so on.
Auctions
Online auctions bring together numerous people from various geographical
locations and enable trading of items at negotiated prices, implemented with e -
commerce technologies. It enables more people to partic ipate in auctions.
Another example of auction is bidding for seats on an airline website – window
seats, and those at the front with more leg room generally get sold at a
premium, depending on how much a flyer is willing to pay.
ADVANTAGES OF E-COMMERCE TO CONSUMERS
1. Lower prices
The lower costs of running an e-commerce store versus a physical store translate to cost
savings for the consumer. This is one of the biggest e-commerce advantages. Online prices
are typically lower than traditional store prices, and e-commerce sites are able to offer more
discounts and promotions that are easier to claim.
2. Convenient and safe
Shopping when you want from where you want is far preferable (and a whole lot safer) than
heading out in this COVID reality we’re now living in. Coronavirus aside, there’s also
something to be said about shopping from your bedroom, without having to venture out,
wait in lines, battle cold weather, and all the other challenges that go along with
consumerism.
3. Wide product variety
In the global marketplace that is the internet, consumers can buy electronics from China,
books from England, clothes from Paris, and good old US products all from the comfort of
home. The width and depth of products sold online are unbeatable.
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4. More informed decision-making
Information is literally at your fingertips when buying online, including:
Reviews from real customers – this is probably the most effective
Product descriptions
Usage videos
Product guides
Social validation
Comparison shopping is another one of the top benefits of e-commerce to consumers, who
can easily compare products, brands, and websites with even side-by-side comparison
possible. Many comparison shopping sites exist with the sole purpose of enabling consumers
to compare products side-by-side based on price and discount metrics.
5. Saves time
In an age where time is a rare commodity, shopping online provides massive time savings to
the consumer. Since 63% of consumers start their shopping journey online, it makes sense to
be able to buy where you already are (Thinkwithgoogle, 2018).
No need to head out, shop in-store, wait in line, and then journey back home when you can
access a greater product variety at a lower price from the comfort of home.
ADVANTAGES OF E-COMMERCE TO A BUSINESS
1. Lower costs
Going online eradicates the need for a physical storefront, meaning lower fixed costs for the
business. Also, since most e-commerce is automated, fewer staff members are required.
Marketing an e-commerce store, using Google Adwords, e-commerce Facebook
advertising, and social media marketing, for example, is much more cost-effective than
promoting offline These cost savings translate to lower prices for the consumer and more
sales for the business. This is one of the key benefits of e-commerce for businesses.
2. Customer data
Selling online gives the retailer access to a goldmine of customer data that is just not
accessible through brick-and-mortar retailing.
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Not only do online consumers typically provide their name, email address, and phone
number when checking out or registering on a site, but they also provide a wealth of
consumer behavior and demographic data, available through Google Analytics, that can
help online retailers optimize the consumer journey and market more effectively and
accurately.
E-tailers are also able to nurture and retarget consumers precisely, based on their stage in the
journey. For example, using data insights, an online retailer can email potential customers
who have abandoned their carts, motivating and reminding them to check out their
purchase, and can even use retargeting advertising to nurture leads that have not yet
purchased.
3. Wider customer base
Going online with e-commerce sites makes geographical boundaries become
inconsequential. You could sell your products to online shoppers across the country or even
across the globe. You’re not limited to shoppers in your physical location.
The internet also opens up your retail store to different niche audiences that you wouldn’t
have access to. By using multiple online touchpoints, you can access customers from all
angles by going where they already are, such as social media, forums, and Google search.
4. Open always
When you sell online, your business is open 24/7/365. Even though your customer support
may be sleeping, automation ensures that the rest of the sales process is always flowing and
consumers can buy on any day, at any time.
5. Easier to scale up
Scaling up or growing a physical store requires more floor space (and the expense that
comes with it!), employees, and shelf space. In contrast, it’s very simple to grow an online
store, which is one of the less obvious benefits of e-commerce for businesses.
All you need is more inventory, a few digital tweaks, and possibly more storage space,
which is far less costly than storefront space. Being online also eliminates the need for
opening a new store in another location as you’re already within the reach of a global
marketplace.
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DISADVANTAGES OF E COMMERCE
1. Security
The biggest drawback of e-commerce is the issue of security. People fear to provide personal
and financial information, even though several improvements have been made in relation to
data encryption. Certain websites do not have capabilities to conduct authentic transactions.
Fear of providing credit card information and risk of identity limit the growth of e-
commerce.
2. Lack of privacy
Many websites do not have high encryption for secure online transaction or to protect
online identity. Some websites illegally collect statistics on consumers without their
permission. Lack of privacy discourages people to use internet for conducting commercial
transactions,
3. Tax issue
Sales tax is another bigger issue when the buyer and seller are situated in different locations.
Computation of sales tax poses problems when the buyer and seller are in different states.
Another factor is that physical stores will lose business if web purchases are free from tax.
4. Fear
People fear to operate in a paperless and faceless electronic world. Some of the business
organizations do not have physical existence, People do not know with whom they are
conducting commercial transactions. This aspect makes people to opt physical stores for
purchases.
5. Product suitability
People have to rely on electronic images to purchase products. Sometimes, when the
products are delivered, the product may not match with electronic images. Finally, it may
not suit the needs of the buyers. The lack of ‘touch and feel’ prevent people from online
shopping.
6. Cultural obstacles
E-commerce attracts customers from all over the world. Habits and culture of the people
differ from nation to nation. They also pose linguistic problems. Thus, differences in culture
create obstacles to both the business and the consumers.
7. High Labour cost
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Highly talented and technically qualified workforce are required to develop and manage the
websites of the organization. Since internet provides a lot of job opportunities, business
organizations have to incur a lot of expenses to retain a talented pool of employees,
8. Legal issues
The cyber laws that govern the e-commerce transactions are not very clear and vary from
country to country. These legal issues prevent people from entering into electronic contracts.
9. Technical limitations
Some protocol is not standardized around the world. Certain software used by vendor to
show electronic images may not be a common one. It may not be possible to browse
through a particular page due to lack of standardized software. Insufficient
telecommunication bandwidth may also pose technical problems.
9. Huge technological cost
It is difficult to merge electronic business with traditional business. Technological
infrastructure may be expensive and huge cost has to be incurred to keep pace with ever
changing technology. It is necessary to allocate more funds for technological advancement
to remain competitive in the electronic world.
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