benefits of e commerce essay

Benefits of E-Commerce

Introduction, advantages of e-commerce, reduction of production cycle, reference list.

E-commerce refers to an electronic system that allows businesses, consumers, manufacturers, and suppliers to buy or sell goods and services via the Internet. Technological advancement has made it possible for firms to interact virtually with customers and gather essential information. As Kurnia, Choudrie, Md Mahbubur, and Alzougool (2015) put it, e-commerce promotes internal and external communication, which is vital in improving organizational efficiency and productivity. Globalization has led to many companies striving to establish their influence in the international market. E-commerce enables multinationals to guarantee consistency in products and services delivery across different foreign markets. This paper will discuss the various benefits that a company can accrue from investing in e-commerce.

The advantages of investing in e-commerce overshadow the drawbacks for many businesses. Nevertheless, Kurnia et al. (2015) argue that most organizations are not familiar with the capabilities of the Internet. They use this resource for advertising and sending emails to customers only. Knowing the benefits of e-commerce is critical to its implementation. Yu, Wang, Zhong, and Huang (2016) insist that it is imperative to make sure that e-commerce corresponds to business goals. One of the benefits of e-commerce is that it allows a business to remain competitive. Yu et al. (2016) maintain that most consumers will continue to purchase products in major outlets. Nevertheless, for an organization to remain competitive, it ought to exploit other modes of consumer buying behaviors. The rise of the Internet has contributed to most customers, particularly millennials and generation X buying their products and services online. Yu et al. (2016) argue that e-commerce is expected to comprise 17.5% of the international retail turnover by 2012. It implies that organizations, which have invested in e-commerce, will have an opportunity to boost their customer share, thus remaining competitive.

One of the demerits of the brick-and-motor outlets is that they are restricted by location, making it difficult for them to reach many clients. It is hard for a business operating under such a setting to exploit the global market. E-commerce enables businesses to reach the international market, therefore increasing their returns. Targeting the global market gives a company a chance to diversify its operations. For example, “if your business is primarily service-based, you may want to complement your local offerings with products that people can purchase online, such as a hairdresser offering specialty accessories” (Savrul, Incekara, & Sener, 2014, p. 37). In other words, investment in e-commerce helps a company target the global market by identifying other business opportunities.

E-commerce allows an organization to tailor its products and services to the needs of individual clients. Savrul et al. (2014) argue that the Internet supports digital selling and marketing platforms that enable a business to gather information from customers. The data collected from clients is helpful in understanding their tastes and preferences, thus enabling a company to improve its products and services to suit consumer needs. E-commerce enables an organization to monitor consumer buying behavior. In return, a company is able to formulate effective promotional and target marketing strategies.

In the past, procurement, design engineering, and production departments communicated via paper-based approaches. This mode of communication was ineffective and contributed to an increased period of the production cycle. The introduction of e-commerce has enhanced communication among these departments, therefore enhancing efficiency. One of the companies that use e-commerce to enhance the duration of the production cycle is Toyota. The company’s engineering department, procurement division, and assembling unit are situated in different locations across the globe. E-commerce helps Toyota to connect the different divisions to expedite production processes (Stanowska, 2018).

The design engineering division sends blueprint sketches and specifications to the purchasing unit via the Internet. The move hastens to buy of the necessary materials that are shipped to the assembling plants, thus guaranteeing prompt commencement of the production processes. Another company that uses e-commerce to enhance production cycle time is Apple Inc. The company sources components from the United States, China, Europe, and Asia (Marinagi, Trivellas, & Sakas, 2014). All the materials are delivered to China where they are assembled to get the final product. Apple uses the Internet to promote communication between plants located in different countries. The production units are also connected to the assembling unit. Communication between the assembling unit and the various plants makes sure that components reach the former on time (Marinagi et al., 2014). It helps to improve the production cycle time and to ensure the timely release of products into the market.

Businesses benefit immensely from investing in e-commerce. The technology enables an organization to boost its competitiveness by identifying and exploiting diverse business opportunities. A company gets a chance to grow its customer base by targeting clients who purchase products online. E-commerce helps businesses target both local and global markets. Additionally, it enables firms to tailor their products and services to the needs of individual clients. The technology is helpful in the formulation of promotional and target marketing strategies. Manufacturing firms use e-commerce to improve the production cycle. They utilize the Internet to expedite communication between different units that are involved in production processes. It helps to ensure that the production divisions receive requisite information and resources on time, therefore speeding up their processes.

Kurnia, S., Choudrie, J., Md Mahbubur, R., & Alzougool, B. (2015). E-commerce technology adoption: A Malaysian grocery SME retail sector study. Journal of Business Research, 68 (9), 1906-1918.

Marinagi, C., Trivellas, P., & Sakas, D. P. (2014). The impact of information technology on the development of supply chain competitive advantage. Procedia – Social and Behavioral Sciences, 147 (1), 586-591.

Savrul, M., Incekara, A., & Sener, S. (2014). The potential of e-commerce for SMEs in a globalizing business environment. Procedia – Social and Behavioral Sciences, 150 (1), 35-45.

Stanowska, N. (2018). An investigation into the development of Toyota’s e-commerce customer journey. Journal of Undergraduate Research at NTU, 1 (1), 146-181.

Yu, Y., Wang, X., Zhong, R. Y., & Huang, G. Q. (2016). E-commerce logistics in supply chain management: Practice perspective. Procedia CIRP, 52 (1), 179-185.

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Essay on E-Commerce: Scope, Importance, Advantages and Limitations

Essay on E-Commerce: Scope, Importance, Advantages and Limitations! Read this essay to learn about essay on e commerce, e-commerce essay topics, essay on ecommerce in india, e-commerce essays advantages and disadvantages, essay on e commerce and online shopping, e-commerce essay conclusion!

Essay on e-commerce:.

Electronic commerce, commonly known as e-commerce, is the buying and selling of product or service over electronic systems such as the Internet and other computer networks. Electronic commerce draws on such technologies as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, Electronic Data Interchange (EDI), inventory management systems, and automated data collection systems.

Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction’s life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchanging of data to facilitate the financing and payment aspects of business transactions.

Even today, some considerable time after the so called ‘dot com/Internet revolution’, electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology.

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There has been and continues to be much publicity and discussion about e-commerce. Library catalogues and shelves are filled with books and articles on the subject.

However, there remains a sense of confusion, suspicion and misunderstanding surrounding the area, which has been exacerbated by the different contexts in which electronic commerce is used, coupled with the myriad related buzzwords and acronyms.

In the emerging global economy, e-commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development. The integration of Information and Communications Technology (ICT) in business has revolutionized relationships within organizations and those between and among organizations and individuals.

Specifically, the use of ICT in business has enhanced productivity, encouraged greater customer participation, and enabled mass customization, besides reducing costs. With developments in the Internet and Web-based technologies, distinctions between traditional markets and the global electronic marketplace-such as business capital size, among others-are gradually being narrowed down.

The name of the game is strategic positioning, the ability of a company to determine emerging opportunities and utilize the necessary human capital skills to make the most of these opportunities through an e-business strategy that is simple, workable and practicable within the context of a global information milieu and new economic environment.

With its effect of leveling the playing field, e-commerce coupled with the appropriate strategy and policy approach enables small and medium scale enterprises to compete with large and capital-rich businesses.

On another plane, developing countries are given increased access to the global marketplace, where they compete with and complement the more developed economies.

Most, if not all, developing countries are already participating in e-commerce, either as sellers or buyers. However, to facilitate e-commerce growth in these countries, the relatively underdeveloped information infrastructure must be improved.

Among the areas for policy interventions are:

(i) High Internet access costs, including connection service fees, communication fees, and hosting charges for websites with sufficient bandwidth;

(ii) Limited availability of credit cards and a nationwide credit card system;

(iii) Underdeveloped transportation infrastructure resulting in slow and uncertain delivery of goods and services;

(iv) Network security problems and insufficient security safeguards;

(v) Lack of skilled human resources and key technologies;

(vi) Content restriction on national security and other public policy grounds, which greatly affect business in the field of information services, such as the media and entertainment sectors;

(vi) Cross-border issues, such as the recognition of transactions under laws of other ASEAN member-countries, certification services, improvement of delivery methods and customs facilitation; and

(vii) The relatively low cost of labor, which implies that a shift to a comparatively capital intensive solution including investments on the improvement of the physical and network infrastructure is not apparent.

It is recognized that in the Information age, Internet commerce is a powerful tool in the economic growth of developing countries. While there are indications of e-commerce patronage among large firms in developing countries, there seems to be little and negligible use of the Internet for commerce among small and medium sized firms.

E-commerce promises better business for SME’s and sustainable economic development for developing countries. However, this is premised on strong political will and good governance, as well as on a responsible and supportive private sector within an effective policy framework. This primer seeks to provide policy guidelines toward this end.

Essay on the History of E-Commerce:

History of ecommerce dates back to the invention of the very old notion of “sell and buy”, electricity, cables, computers, modems, and the Internet. Ecommerce became possible in 1991 when the Internet was opened to commercial use. Since that date thousands of businesses have taken up residence at web sites.

At first, the term ecommerce meant the process of execution of commercial transactions electronically with the help of the leading technologies such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) which gave an opportunity for users to exchange business information and do electronic transactions.

The ability to use these technologies appeared in the late 1970s and allowed business companies and organizations to send commercial documentation electronically. Although the Internet began to advance in popularity among the general public in 1994, it took approximately four years to develop the security protocols and DSL which allowed rapid access and a persistent connection to the Internet.

In 2000 a great number of business companies in the United States and Western Europe represented their services in the World Wide Web.

At this time the meaning of the word ecommerce was changed. People began to define the term ecommerce as the process of purchasing of available goods and services over the Internet using secure connections and electronic payment services.

Although the dot-com collapse in 2000 led to unfortunate results and many of ecommerce companies disappeared, the “brick and mortar” retailers recognized the advantages of electronic commerce and began to add such capabilities to their web sites (e.g., after the online grocery store Webvan came to ruin, two supermarket chains, Albertsons and Safeway, began to use ecommerce to enable their customers to buy groceries online).

By the end of 2001, the largest form of ecommerce, Business-to- Business (B2B) model, had around $700 billion in transactions.

According to all available data, ecommerce sales continued to grow in the next few years and, by the end of 2007, ecommerce sales accounted for 3.4 percent of total sales. Ecommerce has a great deal of advantages over “brick and mortar” stores and mail order catalogs. Consumers can easily search through a large database of products and services.

They can see actual prices, build an order over several days and email it as a “wish list” hoping that someone will pay for their selected goods. Customers can compare prices with a click of the mouse and buy the selected product at best prices.

Online vendors, in their turn, also get distinct advantages. The web and its search engines provide a way to be found by customers without expensive advertising campaign. Even small online shops can reach global markets. Web technology also allows to track customer preferences and to deliver individually-tailored marketing.

History of ecommerce is unthinkable without Amazon and E-bay which were among the first Internet companies to allow electronic transactions. Thanks to their founders we now have a handsome ecommerce sector and enjoy the buying and selling advantages of the Internet. Currently there are 5 largest and most famous worldwide internet retailers- Amazon, Dell, Staples, Office Depot and Hewlett Packard.

According to statistics, the most popular categories of products sold in the World Wide Web are music, books, computers, office supplies and other consumer electronics.

Amazon.com, Inc. is one of the most famous ecommerce companies and is located in Seattle, Washington (USA). It was founded in 1994 by Jeff Bezos and was one of the first American e-commerce companies to sell products over the Internet.

After the dot-com collapse Amazon lost its position as a successful business model, however, in 2003 the company made its first annual profit which was the first step to the further development.

At the outset Amazon.com was considered as an online bookstore, but in time it extended a variety of goods by adding electronics, software, DVDs, video games, music CDs, MP3s, apparel, footwear, health products, etc.

The original name of the company was Cadabra.com, but shortly after it become popular in the Internet Bezos decided to rename his business “Amazon” after the world’s most voluminous river. In 1999 Jeff Bezos was entitled as the Person of the Year by Time Magazine in recognition of the company’s success.

Although the company’s main headquarters is located in the USA, WA, Amazon has set up separate websites in other economically developed countries such as the United Kingdom, Canada, France, Germany, Japan, and China. The company supports and operates retail web sites for many famous businesses, including Marks & Spencer, Lacoste, The NBA, Bebe Stores, Target, etc.

Amazon is one of the first ecommerce businesses to establish an affiliate marketing program, and nowadays the company gets about 40% of its sales from affiliates and third party sellers who list and sell goods on the web site.

In 2008 Amazon penetrated into the cinema and is currently sponsoring the film “The Stolen Child” with 20th Century Fox. According to the research conducted in 2008, the domain Amazon.com attracted about 615 million customers every year.

The most popular feature of the web site is the review system, i.e. the ability for visitors to submit their reviews and rate any product on a rating scale from one to five stars. Amazon.com is also well-known for its clear and user-friendly advanced search facility which enables visitors to search for keywords in the full text of many books in the database.

One more company which has contributed much to the process of e-commerce development is Dell Inc., an American company located in Texas, which stands third in computer sales within the industry behind Hewlett Packard and Acer.

Launched in 1994 as a static page, Dell.com has made rapid strides, and by the end of 1997 was the first company to record a million dollars in online sales. The company’s unique strategy of selling goods over the World Wide Web with no retail outlets and no middlemen has been admired by a lot of customers and imitated by a great number of ecommerce businesses.

The key factor of Dell’s success is that Dell.com enables customers to choose and to control, i.e. visitors can browse the site and assemble PCs piece by piece choosing each single component based on their budget and requirements. According to statistics, approximately half of the company’s profit comes from the web site.

In 2007, Fortune magazine ranked Dell as the 34th-largest company in the Fortune 500 list and 8th on its annual Top 20 list of the most successful and admired companies in the USA in recognition of the company’s business model.

History of ecommerce is a history of a new, virtual world which is evolving according to the customer advantage. It is a world which we are all building together brick by brick, laying a secure foundation for the future generations.

Essay on the Scope of E-Commerce:

There is high scope of e-commerce in each aspect of business, at present it is in the embryonic stage but in future e-commerce would be the part of day to day activity of business firms.

Following are the marketing areas where we seek scope of e-commerce:

(i) Marketing, sales and sales promotion.

(ii) Pre-sales, subcontracts, supply.

(iii) Financing and insurance.

(iv) Commercial transactions – ordering, delivery, payment.

(v) Product service and maintenance.

(vi) Co-operative product development.

(vii) Distributed co-operative working.

(viii) Use of public and private services.

(ix) Business-to-administrations

(x) Transport and logistics.

(xi) Public procurement.

(xii) Automatic trading of digital goods like games, learning material, songs and music etc.

(xiii) Accounting and financial management.

(xiv) Legal advice

Essay on the Need for E-Commerce:

E-commerce and e-business are not solely the Internet, websites or dot com companies. It is about a new business concept that incorporates all previous business management and economic concepts.

As such, e-business and e-commerce impact on many areas of business and disciplines of business management studies:

1. Marketing:

Issues of online advertising, marketing strategies, consumer’s behavior and cultures. One of the areas in which it impacts particularly is direct marketing. In the past this was mainly door-to-door, home parties and mail order using catalogues or leaflets.

This moved to telemarketing and TV selling with the advances in telephone and television technology and finally developed into e-marketing spawning ‘e-CRM’ data mining and the like by creating new channels for direct sales and promotion.

2. Computer Sciences:

Development of different network and computing technologies and languages to support e-commerce and e-business, for example linking front and back office legacy systems with the ‘web based’ technology.

3. Finance and Accounting:

On-line banking; issues of transaction costs; accounting and auditing implications where ‘intangible’ assets and human capital must be tangibly valued in an increasingly knowledge based economy.

4. Economics:

The impact of e-commerce on local and global economies, understanding the concept of a digital and knowledge-based economy and how this fits into economic theory.

5. Production and Operations Management:

The impact of on-line processing has led to reduced cycle times. It takes seconds to deliver digitized products and services electronically; similarly the time for processing orders can be reduced by more than 90 per cent from days to minutes.

Production systems are integrated with finance marketing and other functional systems as well as with business partners and customers.

6. Production and Operations Management:

Moving from mass production to demand driven, mass customization customer pull rather than the manufacturer push of the past. Web based Enterprise Resource Planning systems (ERP) can also be used to forward orders directly to designers and/or production floor within seconds, thus cutting production cycle times by up to 50 per cent, especially when manufacturing plants, engineers and designers are located in different countries.

In sub-assembler companies, where a product is assembled from a number of different components sourced from a number of manufacturers, communication, collaboration and coordination are critical so electronic bidding can yield cheaper components and having flexible and adaptable procurement systems allows fast changes at a minimum cost so inventories can be minimized and money saved.

7. Management Information Systems:

Analysis, design and implementation of E-business systems within an organization; issues of integration of front-end and back-end systems.

8. Human Resource Management:

Issues of on-line recruiting, home working and ‘intra- pruners’ working on a project by project basis replacing permanent employees.

9. Business Law and Ethics:

The different legal and ethical issues that have arisen as a result of a global ‘virtual’ market. Issues are copyright laws, privacy of customer information, and legality of electronic contracts.

Importance of E-Commerce :

Today, we can see e-commerce is becoming a part of study of almost all the courses in management and commerce. It is an integral part of any book or manuscript that is written on retailing, and it claims a significant share in this text also. The reason behind this lies in the fact that e-commerce technology is different and more powerful than any of the other technologies we have seen in the past century.

While these other technologies transformed economic life in the 20th century, the evolving Internet and other ITs will shape the 21st century in many ways. The foremost of these is the rise of a sizeable class of Internet-habituated consumers, and then is the creation of an ecosystem essential for e-tailing’s growth. In India’s case, both these factors are poised to fall into place rapidly.

Prior to the development of e-tailing, the process of marketing and selling goods was a mass- marketing and/or sales force-driven process. Consumers were considered as passive targets of advertising (promotional) “campaigns,” and branding blitzes were intended to influence their long-term product perceptions (brand positioning) and immediate purchasing behavior.

Selling was conducted in typical well-insulated “channels.” Consumers were viewed to be trapped by geographical and social boundaries, unable to search widely for the alternatives with best price and quality. Information about prices, costs, and tariffs could be hidden from the customers to get the resultant profitable “information asymmetries” for the selling firm.

Here, information asymmetry means any disparity in relevant market information among parties in a transaction. E-commerce has challenged much of these traditional retail business norms, assumptions, and behavior.

Essay on the Principles of E-Commerce:

The various principles of e-commerce are as follows:

1. Sell Everywhere – be Seen and be Shopped:

Customer expectations for how and when they buy products have changed substantially over the past few years. Multi-channel selling was once limited to managing direct sales, a call centre, a website, and possibly a partner channel.

With E-Commerce 2.0, this has been expanded and refined to include various online channels. These new channels include additional branded websites, various online marketplaces (such as eBay, Amazon.com, Overstock.com and others), and online shopping comparison engines (such as Shopping.com, PriceGrabber.com and others).

2. The Long Tail -Target Niche Markets:

E-Tailers who can connect with niche markets and provide a better online experience are capitalizing on new-found revenue. In the past, the obvious strategy was to find the bulk of the market and then mass market to them. With so much competition, many online merchants have adapted by discovering new methods and tools that target specific niche markets.

These niche markets are not flooded by the big brands and respond well to content and online experiences directed specifically at them. In many cases, the demands of these niche markets are simply not being met by big brands.

The Long Tail principle of E-Commerce 2.0 is about being able to reach beyond the traditional prospect base and tap the potential of niche markets.

3. Decentralized Content Generation – Data from the Community:

Buyers were once along for the ride in the e-Commerce process. Now they are in the driver’s seat. The content buyers create through forums such as product reviews, blogs and social networks influences other buyers as much or more than any promotion E-Tailers create.

Forums like YouTube and MySpace underscore how content created by consumers has become a viable and valuable part of the promotional and sales cycle for retailers. The Canadian e- Commerce site Wasabi even encourages buyers to submit any offers that they find through social and economic incentives.

While some E-Tailers are frightened by the perceived loss of control over content being published, these new avenues of data acquisition greatly increase the richness and diversity of information available, ultimately helping the buyer make better decisions.

4. Personalized Shopping – Make it Fun to Shop and Easy to Buy:

Shopping has long been considered a recreational activity by many. Shopping online is no exception. In fact, with the sophistication and speed of online shopping tools, consumers are spending more and more on E-Tailer sites.

The best of these shopping tools takes into account that buyers want to be entertained and pleased. Buyers are just as in the brick-and-mortar world do not like long checkout processes. When building your online brand, regardless of channel, remember that speedy checkout equates to happier buyers who are more likely to return and buy again.

5. Mash-Ups -Integrate and Collaborate:

Integration is nothing new, but what is new is how dynamically these integrations need to be initiated, modified, and used. The e-Commerce 2.0 environment is built upon many interrelated systems and processes that require information to be exchanged dynamically.

This happens between many systems based on individual user experience and the context of a particular customer interaction or order. Seamless access and interaction between systems is what promotes increased conversions and buyer loyalty, as well as attracts new buyers.

6. Data is King-Collect a Wealth of Opportunities:

Gone are the days of looking at purely operational reports. Seeing how many listings you have in a marketplace is fine, but it does not tell you how you compare to other E-Tailers, what your performance is like over time, or what other channels may be more profitable.

E-Commerce 2.0 is about collecting and managing data from all online channels to enable better business decisions. Discovering product opportunities relies on being able to define business objectives carefully, identify related key performance indicators (KPIs) and receive continual data to act on it.

In E-Commerce business is possible in various combinations like:

(i) B2B – Business to Business

(ii) B2C – Business to Consumer

(iii) C2B – Consumer to Business

(iv) B2E – Business to Employee

(v) C2C – Consumer to Consumer

(i) B2B – Business to Business:

E-Commerce has been in use for quite a few years and is more commonly known as EDI (electronic data interchange). In the past, EDI was conducted on a direct link of some form between the two businesses where as today the most popular connection is the internet. B2B E-Commerce could be used as a significant enabler in their move towards greater trading partner collaboration. E-Commerce technologies have allowed even the smallest businesses to improve the processes for interfacing with customers. They are now able to develop services for individual clients rather than provide a standard service.

The two businesses pass information electronically to each other.

Typically in the B2B environment, E-Commerce can be used in the following processes:

(i) Procurement

(ii) Order fulfillment.

(iii) Managing trading-partner relationships.

B2B is helpful in reduction in transaction costs and improvement of product quality and customer service and insistence by large businesses that all of their suppliers link into their e-commerce system as a condition of doing business. In addition, there is greater demand by final consumers for fast order fulfillment and the ability to track an order as it is being processed and delivered.

(ii) B2C – Business to Consumer:

Business to Consumer e-commerce is where the consumer accesses the system of the supplier. It is still a two way function but is usually done solely through the Internet.

B2C can also relate to receiving information such as share prices, insurance quotes, on­line newspapers, or weather forecasts. When the product cannot be physically examined, traditional commerce has no advantage over the convenience of electronic commerce. The largest business-to-consumer e-commerce involves intangible product that can be delivered directly to the consumer’s computer cover the network is composed of five broad categories-entertainment, travel newspaper/magazines, financial services, and e-mail. Entertainment, online games, music and video, is the largest category of products sold to consumers.

(iii) C2B – Consumer to Business:

Consumer to Business is a growing area where the consumer requests a specific service from the business. Like reservation in a hotel in a specific time period.

(iv) B2E – Business to Employee:

Business to Employee e-commerce is growing in use it is in practice in business like pharmacy marketing, supply chain management, insurance, IT companies etc. This form of e-commerce is more commonly known as an ‘Intranet’. An intranet is a web site developed to provide employees of an organization with information. The intranet is usually access through the organizations network, it can and is often extended to an entrant which uses the Internet but restricts uses by sign on and password.

(v) C2C – Consumer to Consumer:

These sites are usually some form of an auction site. The consumer lists items for sale with a commercial auction site. Other consumers access the site and place bids on the items. The site then provides a connection between the seller and buyer to complete the transaction.

Essay on the Key Elements Supporting E-Commerce :

Here are seven important infrastructure decisions that ecommerce businesses face:

Of all the infrastructure elements, marketing may be the most important. To succeed, your website must be found. Once visitors are on your site, you need to keep them there and compel them to buy from you. That’s the job of your marketing team.

Whether it is website design, social media, search marketing, merchandising, email or other forms of advertising, it’s all about marketing.

To effectively manage marketing activities in-house is very challenging. Most small ecommerce businesses outsource some element of marketing.

2. Facilitie s:

A key competitive advantage that ecommerce businesses have over brick-and-mortar stores is the investment in their physical offices and warehouses. In many cases, you can host your business out of a home office and your basement or garage.

If you drop ship or outsource fulfillment, you may be able to do that for a long period of time. Even when you grow to have many employees, you can set up your offices in class B or C space, as you have no need for a fancy store in the right location.

A word of advice is to keep your options flexible. Try to find an office park that has a wide variety of spaces in different sizes. You may be able to start in a smaller space and move up to a larger one without penalty, as your needs change.

3. Customer Service :

There are many choices today for delivering high-quality customer service. You can manage those activities in-house or outsource to a third party. Basic customer service for sales and post- sales activities can be handled using email, and by providing an 800 number for more extensive phone support.

A customer-management system will make those activities easier, but for smaller companies it is not a requirement.

Live chat will impact your operations as someone needs to be available during specified hours of operation. Be sure to gauge the impact of that on your organization, if you decide to handle those activities in house.

4. Information Technology :

Choosing the right ecommerce platform is one of the most important decisions you will make in your business. Do you want to build and host your own system, outsource the development and then manage the system going forward, or using a host, software as a service platform that is more turnkey and externally managed?

If you build and host your own system, you may need more cash up front and skilled administrators and developers on your staff. By using a SaaS platform, you will not need to host or manage the system in-house, but you may still need web developers on staff.

Choosing to outsource the development and hosting will reduce your staffing costs, but you will incur higher costs for any future enhancements or changes to your websites.

There are pros and cons to any approach. Just be sure to think through the impacts on both your staffing and your cash flow and bottom line before you move forward.

5. Fulfillment :

Another key decision is whether you will manage your own inventory or outsource those activities to a fulfillment house or through drop shipping arrangements with your suppliers.

Managing your own inventory will provide you with a high level of control, but you will tie up your cash in inventory, warehouse space, and your own fulfillment staff. In some industries like the jewelry supply industry that my previous business was in managing your own inventory was the most logical choice.

We had no alternative for drop shipping, and most items were purchased in bulk and were very small. We did not trust preparation and fulfillment to an outside service.

Select the best fulfillment option to meet your needs. Be sure to understand the costs involved and analyze the other options before moving forward.

6. Finance and Administration :

As with other business operations, you will need to decide if you want to manage your finance and administration activities in-house, outsource, or a hybrid of the two. If your ecommerce platform is tightly integrated to your accounting system, you may have very little need for an in-house bookkeeper.

If you use separate systems for your website, order management and accounting, you may require more help for data entry and making sure that the information is properly managed. Many ecommerce companies use outside services for vendor payments, payroll, and other basic accounting activities.

They decide to focus on the sales, marketing, and customer service. This allows them to maintain a focus on growing their businesses, instead of paying an internal accountant or doing that work you as the business owner.

On the administration side, you need a leadership team and provide direction to them. Good communication is important, whether you have 3 or 100 employees. Whether you choose to be more authoritative or democratic in your management style is up to you.

But choose a style and stay consistent. Be sure that everyone understands their roles, as well as the overall business strategies. You may need to adjust your approach as your business evolves.

7. Human Resources :

Many small-business owners avoid the human resources function. Recruiting, setting up compensation, maintaining compliance and other HR activities are specialized and time consuming.

You may choose to bring the resources in-house to manage those activities, but also evaluate outsourcing them. There are many individuals and agencies well equipped to take on your HR activities.

Impact of E-Commerce on Business:

i. Transformation in the Marketplace:

Now business can be conducted at anywhere any place accessible to internet. Firms can offer their products and services with involvement of intermediaries. Traditional intermediary functions will be replaced, new products and markets will be developed, and new and far closer relationships will be created between business and consumers. It will change the organization of work- new channels of knowledge diffusion and human interactivity in the workplace will be opened more flexibility.

ii. Fast Growth of Business:

E-commerce will serve as a catalyst and diffuse more widely changes that are already under way in the economy, such as the reform of regulations, the establishment of electronic links between businesses (EDI), the globalization of economic activity, and the demand for higher-skilled workers. Likewise, many pectoral trends already under way, such as electronic banking, direct booking of travel, and one-to-one marketing, will be accelerated because of electronic commerce.

iii. Helpful in Globalization:

Information exchange was constraint in transnational business but e-commerce provides facilities to MNCs and global organizations to transfer real time information to employees, stake holders and customers. E-commerce over the Internet greatly increases interactivity in the economy. These linkages support business organization in expansion of business.

iv. Electronic Commerce Growth:

At present, electronic commerce over the Internet is relatively small but is growing very rapidly. At present electronic commerce is in a birth stage, and technology and market dynamics are still casting its basic shape. People resist using e-commerce. This is especially true for the business-to-consumer segment, where people concerns about security of payment, potentially fraudulent merchants, privacy of personal data, etc.

v. New Employment Opportunities:

Electronic commerce will cause changes in the mix of skills required, driving demand for information technology professionals. For electronic commerce, IT expertise also needs to be joined with strong business applications skills, and therefore requires a flexible, multi-skilled works force. Apart from contingent skills needed to support electronic commerce transactions and applications, there will be a requirement of hardware and software professionals.

vi. New Business Opportunities:

Changing industry structures and electronic commerce systems allow for new business models, based on the wide availability of information and its direct distribution-to end customers. Going further than new ones, we also see new business models are new forms of intermediaries, or information brokers. The examples are currently the directory providers or the search engines, such as Yahoo and Lycos, bidding sites like e-bay, Internet shopping, on line trading, online consultancy etc.

E-commerce is a technology driven activity which require an infrastructure that supports the seamless location, transfer, and integration of business information in a secure and reliable manner. Adaptability of e-commerce in small cities and village is very low due to non-availability of basic infrastructure.

vii. Product Promotion:

Through a direct, information rich and interactive contact with customers. The first use of electronic commerce is to provide product information through online electronic brochures and buying guides. This can be seen as an additional marketing channel, allowing reaching maximum number of customers the advantage of electronic commerce as way to deliver product information and its availability anytime, anywhere, provided the customer has right infrastructure to access the information.

viii. New Sales Channel:

Multidirectional approach of e-commerce has created new sales channels by which firms can directly reach to customers, suppliers, and stake holders, considering electronic commerce and in particular the World Wide Web, as a sales channel makes sense for two kinds of products- Physical products sometimes also sold in conventional stores, which can be advertised and for ordered online, such as computer hardware or wine, products which can additionally be delivered over the electronic commerce medium, such as information or software.

Electronic commerce strategies are of primary value in markets where information is of significant added value to the products being brought, rather than in commodity markets. Centralizing, this information digitally is therefore of significant value for customers.

ix. Customer Service:

E-commerce provides on line customer care and support services. The ability to provide online answers to problems, through resolution guides, archives of company encountered problems, electronic mail interaction, in the future audio and video support and all that 24 hours a day, 365 days a year, builds customer confidence and retention. Monitoring how customers use this support information also provides insights on improvement areas in current products and the list of issues encountered with products can be significant source of product feedback for the design of new products.

x. Customer Relationships:

Electronic commerce systems will allow for more personalized relationships between suppliers and their customers, due to their ability to collect information on customer’s needs and behavioural patterns. The role of technology in learning about customers is its ability to record every event in the relationship, such as customers asking for information about a product, buying one, requesting customer service, etc. Throughout all these interactions, either over the phone, in person or online, the needs of the customer are identified and will feed future marketing efforts.

Essay on the Basic Elements of E-Commerce Hosting:

Ecommerce web hosting is gaining swift popularity with every passing day as more and more people use the internet to shop and purchase things. Even traditional brick and mortar businesses are also looking for options to make their products and services available online so as to increase the customer base by allowing geographically dispersed customers to access their online store.

Since an online store is such an important part of the business, you may need to put in a lot of time and effort while selecting your ecommerce hosting company.

Following are the key elements of ecommerce hosting:

1. Security :

You need to bear in mind that while making online sales, you will have access to the credit card information of many clients and such information is very sensitive. Hence, online stores are prone to security issues as hackers try to gain access to such information.

Thus, to ensure that the client information is not at risk, you need to choose an ecommerce hosting provider which offers tight security options such as sophisticated firewalls, valid SSL certificates and anti- phishing software.

2. Flexibility :

If you are a startup business your business demands might not be as high as those of large businesses and you may opt for an ecommerce plan which fulfills your immediate hosting needs. However, as businesses grow, demands increase and you may need more space and bandwidth.

If your current ecommerce hosting provider does not offer flexible plans, you may need to transfer your hosting account to another provider. Thus, keep your expansion plans in mind while selecting a hosting company and make sure your provider offers flexible plans.

3. Reliability :

The key to the success of an online store is convenience and round the clock availability. People generally use online stores because they are accessible at all times from anywhere in the world.

However, if your hosting company does not provide maximum uptime, your online store may not be available to customers hence forcing them to purchase from your competitors. Thus, choosing a hosting provider which offers 50% uptime would mean that you are allowing competitors to lure your customers.

4. Accessibility and Ease :

A website which is easy to browse for products and services is generally liked by customers. Therefore, it is necessary to bring your website at the top in terms of search engine results. Once your website is search engine optimized, you may drive loads of traffic to the website. However, if the hosting servers are down most of the time, making your website search engine optimized would be in vain.

5. Technical Expertise and Customer Support :

Another key element of ecommerce hosting is technical expertise of the hosting provider. This is an essential element especially during peak times as you may need immediate technical help for your online store in order to deal with certain website issues.

Also, ensure the customer support is available 24/7 via live chat, email and phone to assist clients in solving issues.

The above mentioned elements of ecommerce hosting are crucial to the success of any online business and thus should not be ignored.

Now that you know what you need to run a successful ecommerce site, you can buy and sell websites, being sure that you will be able to figure out how to host them on a decent server or offer the best quality possible (in case you sell sites) to your buyer.

Essay on the Advantages, Limitations, and Challenges :

E-tailing can be considered another form of non-store retailing. Its closest “cousin,” in terms of other forms of non-store retailing, is catalog retailing. Catalog retailing still claims a significant part of all retail transactions pie. It is therefore instructive to compare e-tailing to catalog retailing to gain some insight into its potential impact.

Catalog retailing, which evolved over a century ago, grew rapidly in its early stages (similar to e-tailing), and it was assumed to become a very important part of the overall retailing environment and market. It allowed customers to shop from home, when they wanted, at their own convenience. While this proved enticing and comfortable for some consumers and some types of products, there are some limitations that limited its growth further.

Advantages :

1. Customers have a much wider choice at their fingertips (many e-tail sites, etc.). Thus, the web creates a global bazaar-style marketplace that brings together many consumers and many retailers and sellers.

2. With web search capabilities (which need further development), it is easier to find the different types and varieties of goods a customer is searching for.

3. Customers can execute transactions/put orders via the same medium the information is provided, so there is no disconnect between the desire to purchase and the ability to purchase.

4. Payment schemes are still evolving, and therefore, this advantage is likely to become more apparent in the future.

5. E-tailers can use price discrimination more efficiently than other retailers.

6. E-tailers can use previous transactions to identify the likelihood of products being pur­chased at certain price points.

7. Product placement- E-tailers can change the product placement (user display) based on previous transactions, to increase the visibility of goods that the user is more likely to purchase based on their close relationship with previous purchases. Thus, placement can be designed based on the context of the previous purchases.

8. E-tailing includes some advantages to the consumer that no other form of retailing can provide. The hypertext nature of the medium allows for more flexible forms of transactions—the growth of C2B and C2C highlights this point. It allows for ease of comparison across broad product categories with the evolution of shopping bots and allows for more flexible pricing mechanisms that lead to dynamic pricing.

9. This is giving benefit to marketers who provide products with real (perceived) value and consumers in general. It also penalizes the marketers who have thrived in market­places that had “information” barriers to entry, where lack of information for customers restricted their choices and led to inefficient pricing and localized monopolies.

10. Inventory-based e-retailers are known the world over for running highly automated and efficient warehouses, bringing new benchmarks in this function.

Limitations :

1. All the customers may not have access to the web, as they do to the postal system. This is a temporary issue as the evolution of the web continues.

2. Ease of use may be an issue, as the web design may appear to be complex for some users or at sometimes a bit chaotic.

3. Online retail stores are not standardized in design in the way catalogs and retail stores (which use planograms for the same) have become.

4. Therefore, different user behaviors and patterns (navigation schemes) need to be observed for each online store. This is again a temporary issue as the evolution of the web continues.

5. Many times, trust deficit, security, and privacy concerns prevail. Consumers are con­cerned with the exposure of the data they provide/insert during transactions.

6. In Indian context, tax demands and regulatory hassles, coupled with low Internet den­sity and sundry other problems, pose some other challenges.

Related Articles:

• Customer Relationship Management (CRM) and Internet
• Personal Selling: Meaning, Advantages and Limitations
• 8 Examples of E-Commerce around the World | Global Trade
• Advantages and Limitations of Advertising

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10 Advantages of E-Commerce for Consumers & Businesses

July 21, 2020 nici pillemer.

E-commerce always was the way of the future, but now it is more than ever before. The outside world has become a place of uncertainty, caution, and social distancing, bringing to light the many advantages of e-commerce for businesses and consumers. 

At Become , we’ve seen an increase in loan applications from e-commerce businesses that wish to grow and meet this increased consumer demand.

Why is e-commerce set to grow?  

E-commerce was growing predictably up until COVID-19 put it on an expedited trajectory, accelerating the industry’s growth by 4-6 years ! The pandemic shone the spotlight on the many e-commerce advantages, particularly that of convenience. During May alone, during the Coronavirus lockdown, global e-commerce sales reached $82.5 billion, a 77% increase over the previous year.

According to a Deloitte report, 85% of retail sales were through brick and mortar stores up until 2019. Then along came COVID-19, causing traditional retailers to scramble to get online and e-commerce numbers soared. The biggest shift in the US has been in the grocery shopping market. In March 2020, 42% of US consumers shopped for groceries online at least once a week compared to just 22% in 2018 (GeekWire, 2020).

Experts don’t see this as simply a short-term fix for Coronavirus concerns, and it’s been predicted that COVID will increase US e-commerce by almost 20% over the next year . Coronavirus served as a catalyst, propelling consumers into the online shopping world, consumer behavior that’s likely to continue, even once the Corona dust settles . More than 50% of online grocery consumers state that they’re planning on shopping online even after the pandemic.

Top 5 advantages of e-commerce for 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.

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.

Top 5 advantages of e-commerce for 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. 

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.

Online, in-store, or hybrid?

What’s in store for your business in 2020? Based on the advantages of e-commerce to consumers and businesses, as well as the e-commerce statistics, it’s clear that online selling is the way forward. But that’s not to say that physical stores will die out after Coronavirus.

If you’re already online, you’re in a prime position to capture the many consumers that have turned toward online shopping in these uncertain times – make sure to track your profit and expenses so that you can always optimize for profit!

Pro tip:  BeProfit – Profit Tracker is the ultimate expense and profit margin calculator Shopify app. If you sell on Shopify, this Shopify profit calculator allows you to effortlessly track and optimize your store’s profits and expenses. Try BeProfit, the cutting-edge Shopify calculator app, here .

For those of you that are still brick-and-mortar, now’s the time to get your store online, perhaps even using your physical store as an order fulfillment center when foot traffic is low. 

E-commerce funding can help you grow your e-commerce store by ordering higher quantities of stock in advance and expanding your marketing budget so that you’ll be able to capture as much of your target market online as possible and grow –  the demand is already there, you just need to grab their attention!

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Advantages and Disadvantages of E-Commerce Businesses

Is e-commerce right for you?

What Is an E-Commerce Business

• Advantages and Disadvantages

Is an E-Commerce Business Right for You?

Frequently asked questions (faqs).

Jordan Siemens / Getty Images

Consumers worldwide shifted a great deal of their purchasing to online retailers when the COVID-19 pandemic struck in 2020. E-commerce sales increased by 43%, or nearly $250 billion, in 2020.   Although most pandemic restrictions in the United States are gone, e-commerce is still booming. If you run or plan to run a business, make sure your customers can purchase your products and services online.

Key Takeaways

• E-commerce increased rapidly during the COVID-19 pandemic, and it’s still growing.
• An e-commerce store is cheaper to operate than a store with a physical location.
• Take precautions to stay ahead of hackers and malware.
• You’ll be able to reach more customers, but your customers will also be able to look at prices and products from more businesses.

E-commerce refers to the use of the internet to place an order or to negotiate the price and terms of a sale. Although people typically think of e-commerce as a way to sell goods and services to consumers, it is also used in business-to-business (B2B) transactions.

Consumer-to-consumer (C2C) e-commerce occurs when individuals sell to each other on platforms such as Facebook Marketplace and eBay.

The COVID-19 pandemic fueled an increase in online spending that has continued to grow. FTI Consulting projects that U.S. online retail sales will reach more than $1 trillion in 2022. This would be an increase of 11.7% over 2021.

Many smaller consumer businesses rely on e-commerce completely to sell their products. It is more cost-efficient to operate completely online, and advanced digital advertising technology allows businesses to more effectively target potential customers. Understanding the advantages and disadvantages of operating an e-commerce business allows entrepreneurs to determine if it is right for them.

Lower overhead expenses

24/7 selling opportunities

Increased consumer base and ability to scale business

Customer data collection and target marketing capabilities

Preferred method of shopping

No customer in-store experience

Technology and security

Easy price comparison and matching

Pros Explained

• Lower overhead expenses : Many small e-commerce businesses can be operated by a solo entrepreneur, which means you likely won’t need to hire employees until you have sufficient revenue and sales to justify hiring someone. You also won’t need to face the cost of operating a brick-and-mortar store. You won’t need to lease property or face any of the numerous costs that come with operating a physical store.
• 24/7 selling opportunities : E-commerce businesses are open as long as the internet doesn’t crash, since you don’t need to be available every time someone makes a purchase.
• Larger customer base : Anyone your business can deliver to, who has access to the internet, is a potential customer.
• Customer data collection and customer targeting capabilities : You’ll have access to customer data. You should be able to track customer buying habits and send out automated and customized emails encouraging future purchases. Targeting previous customers with carefully selected marketing messages can increase sales.
• Preferred method of shopping : According to a 2022 Raydiant report, 55.6% of customers prefer shopping online.

Cons Explained

• No customer in-store experience : According to Raydiant, 44.4% of consumers still prefer shopping in person when possible. This may be especially valuable to customers who want to try out a product or ask questions about different products.
• Delivery : Many e-commerce businesses offer next-day delivery, and Amazon offers some customers same-day delivery. However, a one-person e-commerce store can’t usually ship items to customers as quickly. To increase your shipping speeds, try to have your products ready to ship ahead of time.
• Technology and security : Phishing, malware, and ransomware can compromise or shut down your e-commerce business. You could be locked out of your systems or data if you don’t have sufficient protections in place. You’ll also need to ensure that attackers aren’t stealing credit card information or personal data from your customers. If your customers don’t trust your site, you won’t be able to sell them products in the future.
• Easy price comparison and matching : Consumers can compare prices almost immediately. They don’t need to go to another store to find out who has the lowest price. Some shoppers will search for the absolute lowest price when deciding where to buy a product from, which means you’ll need to stay on top of competitor’s prices. Selling products online also means your competitors can monitor your prices fairly easily.

The emergence of e-commerce created a means for numerous entrepreneurs to become hugely successful.

As with any business endeavor, starting and operating an e-commerce business requires capital, although the upfront costs are typically lower than those of a brick-and-mortar business. You’ll either need the financial resources to quit your day job and pursue your e-commerce business full-time, or you’ll need to build up your business while also working a day job. Either way, you’ll need emotional and financial support as well as grit and determination.

If you have had success selling goods on a consumer-to-consumer platform such as Etsy, it may make sense to create your own website and sell directly to customers, thereby avoiding the cut that a third-party platform takes. You can also continue to sell products on third-party platforms while operating your own e-commerce website.

When you decide whether or not to launch an e-commerce business, weigh the pros and cons and honestly assess the strength of your business when compared with the competition.

How do you start an e-commerce business?

Starting an e-commerce business is similar to starting a traditional small business . You’ll need to conduct market research to gain insight into prospective customers and competitors. You’ll also need to write a business plan, figure out how to fund your business, and figure out how to promote your business. You’ll also need to register your business and get federal and state tax IDs.

Which e-commerce platform is best for a small business?

Wix, Squarespace, and Shopify are some of the most popular platforms for online businesses. The best e-commerce platform for your business will depend on the price and what your needs are. Platforms may offer a variety of services, including website design and customer communication, and ensure privacy and security. If you can, talk to other e-commerce entrepreneurs to learn from their experiences.

United States Census Bureau. “ E-Commerce Sales Surged During the Pandemic .”

FTI Consulting. “ U.S. Online Retail Sales to Top $1 Trillion in 2022 .”

Nightingale-Conant. “The Power of Passive Income: Make Your Money Work for You.” Entrepreneur Press, 2019.

Raydiant. “ State of Consumer Behavior 2022 .”

Clutch. “ How Consumer Hunger for Two-Day Delivery Impacts Businesses .”

Home — Essay Samples — Economics — Commerce — The Importance of E-commerce

The Importance of E-commerce

• Categories: Commerce E Commerce

About this sample

Words: 531 |

Published: Mar 1, 2019

Words: 531 | Page: 1 | 3 min read

• Knowing when an product was saved or not saved in the shopping cart.
• Returning to different parts of the site after adding an item to the shopping cart.
• Easy scanning and selecting items in a list.
• Effective categorical organization of products.
• Simple navigation from home page to information and order links for specific products.
• Obvious shopping links or buttons.
• Minimal and effective security notifications or messages.
• Consistent layout of product information

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Essay on e-commerce: meaning, advantages and disadvantages.

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Read this article to learn about the meaning, advantages and disadvantages of E-Commerce.

Meaning of E-Commerce:

The fast and dramatic changes in information technology specially in last one decade has given new concept of marketing in which buyer and seller do not see each other face to face nor see the goods physically; the whole transaction is carried out with the help of ‘on line’ communication. The entire deal is carried out with the help of computer – telecommunication and net working with associated hardware.

In the e – commerce internet provides information about goods and services “It is” a way of conducting imaging and executing business transactions and services through elec­tronic media and net working in computers and communication net work, websites, e-mail are resorted.

Customers know about goods and services sitting at home. The manufacturers, distributors, suppliers and services providers let the consumers know about their products quality, price, size, color etc. through multi-colored catalogues on website. The consumers can ‘surface various web sites and compare their relative prices, quality characteristic, features etc.

These details can be obtained from suppliers around the globe. The websites are available beside for goods for direct selling, context selling, financial and other services such as hospitals, education, training, advertise­ments, property, entertainment, product demonstrations, bill payment, exchange and all other ser­vices which one can think of.

The types of selling through the use of internet and other electronic devices can be of following types:

1. Business to Business (B2B):

This implies selling by one business manufactures to other business manufactures, trade, wholesaler or retailer. In India as yet most of the e-commerce is B2B. The number of companies like TELCO, IBM, C1TI BANK, BHEL, ESSAR, TVS, MARUTI, BAJAJ, and many others are doing B2B. In 1998 out of total e-commerce of us$ 210 billion us$ 100 billion was accounted for B2B.

2. Business to Consumer (C2B):

When business sells to customers/consumers it is called B2C and is most important from our point of view. The products include items sold in departmental stores, chemist shops, grocery stores, books, stationery, clothes, vegetables, fruits and what not. As yet in India such sales are only of US$ 100 billion but are expected to go up to US$ 900 billion by 2005 i.e. the growth of 9000 percent. Many service sectors are adopting this mode.

3. Consumer to Consumer (C2C):

Under this system when some consumer want to dispose off his old items, he can take the help of selling through internet. But this type of e-commerce is not very common at least in India and the business is negligible.

4. Business to Government (B2G):

Business house or on individual business has to file income tax and sales tax returns and various types of other returns. As yet this requires filing of return in respective office and apply for approval in concerned office. But now many countries allow this type of activity through e-mail/e-commerce. However, as yet this is not being done in India.

5. Government to Consumer (G2C):

In order to provide facilities to public and speed up information and records government in many cases provide record of information, through this system; sale of documents, passport forms, copies of returns etc are supplied through e-mail. The main features of e-commerce is that one does not physically feel an item nor sees it and places order on the basis of information supplied through website or in response to consumers inquiry, as yet e-commerce has last preference for daily consumption items.

It is largely limited to durable goods like computers, TV’s, automobiles, books, travel reservation. In case of service it is becoming popular for banking and share purchases. The growth of E-commerce is restricted as given in Table 20.1

Key players in e-commerce are consumers and sellers.

E-mail net work :

E-commerce requires visit of website, selection of products, select a payment mode, realization of money (which is done before dispatch) and dispatch of goods.

The process may be depicted as under:

A. Visit of website :

Selection of a product

Selection of payment mode

1. Credit card

2. E-banking

3. VP/courier (who collects the payment at the time of delivery, but this is discouraged.

4. Placement of order through e-mail

5. Realization of money.

Dispatch to the customer can be on line or through courier.

In order that consumer may visit particular website, sellers have to advertise about their website so that consumer may visit the website. The consumer decides which websites have to be visited and after getting the information from various sites he makes a choice and decides which one should be purchased. He then places an order intimating the mode of payment which is generally through credit card or e-banking and advise the bank where he has credit card to debit the amount to his account.

After the seller realizes the amount for the goods order he dispatches the goods. In most of the cases whole process takes couple of minutes and goods reaches the consumer within half an hour to one hour if he is a local consumer, it is claimed so by sellers. In India in this business Rediff(dot)com is most popular and sells products worth Rs. 1340 million every month.

Advantage to Consumers:

The consumer has number of advantages and convenience and therefore the system is becoming popular.

1. Consumer has wider choice not from his town or country but also round the globe unless there are import restrictions.

2. Customized or personalized product and service. For instance if some lady wants a bra of exact size, her size can be measured through internet and stored and she will be supplied bra of her requirement.

3. In case of purchase, one is not required to go from store to store to see the products to collect their details, prices etc. Sitting at home he gets all the required information and that too very fast without spending much time.

4. There is absolute flexibility of time, place and distance is no hurdle; one can open the site any time day or night to get details, there is no problem of shops/stores opening/closing hours. Website can be opened any time. In physical sales place and distance is also a problem which is no problem in e-commerce because one can see sites all over the world without moving out of the house.

5. Goods are available at cheaper price because there are lot of economies of space, rent, interest to the seller Further, he manages with much lesser number of outlets and cost of marketing is reduced. Part of these savings is passed on to consumer and therefore, he gets the products cheaper than from conventional shops/departmental stores, grocers etc.

6. It helps to globalize retail trading. One can buy things without geographical boundaries.

7. It eliminates with the system of distributors, authorized dealers and retailers, the manufac­turer can deal with large territory with one store.

8. The inventory is reduced, and so the cost of carrying goods and distribution cost.

9. Exports to final consumers is possible through e-commerce, not only-just sales but procure­ment, accounts, logistics product development and other related services are also possible through e-commerce

10. The net enables suppliers to introduce and promote new markets and new products to meet the needs of individual buyers.

11. Long distance, travelling and delays, pollution all are avoided because one has not to travel to the shop.

12. Consumer is better informed about products, price etc and therefore can make better choice.

13. Suppliers, competitors and customers come under one roof through internet websites and massive exhibition of various items is possible.

Disadvantages:

1. The biggest disadvantage of e-commerce is that one is not able to see and feel the product.

2. Since consumers are not able to feel and touch the products and therefore business is on trust and as yet business is largely limited to travel, automobiles, PC’s, services, books and CD’s entertain­ment. As yet sales of apparel, food products is largely small percentage of total e-business. For instance in 1999 the maximum ownership of internet was 50 percent in USA, in other countries it varied between 1.8 percent to 45 percent (Table 20.2) But gradually this disadvantage is being reduced but still there is large percentage of population which does not own internet.

3. There is a big problem in on-line payment. It is with regard to time and legality of order to complete the transaction. As yet satisfactory system of payment has not been developed by banks and financial institutions in large number of countries.

4. The electronic signatures acceptance has been legalized by large number of countries but still many more have to take steps in this direction. Further, there are great chances of fraud in-spite of all the precautions.

5. The. e-commerce requires large investment to build a brand image on internet which is esti­mated around us$ 100 million or around Rs. 500 crores which can be invested only by big players. Thus small suppliers cannot get business through internet.

6. The market is restricted to high income and educated population who own and know the use of internet. Thus in poor, illiterate or less educated countries it has limited access.

7. Sometimes there could be flood of orders for any particular product which makes problem of timely supply to consumer. In 2000 there was YK2, problem and customers had to wait to get product of their choice.

8. Consumer has number of problems. He has to search internet/websites information on internet, make the purchase domain and the payment. There are difficulties in searching, surfing, browsing and wandering around the internet which costs both time and money.

9. Privacy of consumer is adversely affected specially in the matter of accounts; he is required to tell his credit card number to supplier or e-banker.

10. E-commerce is good for branded products like automobiles, electronic goods, computers, electrical goods, branded garments, branded food products, music, books etc. If middle class or lower middle class want to buy non branded products which are generally cheaper, they cannot be bought through e-commerce.

In other words e-commerce is for effluent society i.e. why population in USA use is 50%, in Europe 13 percentage, in poor countries only 1-2 percent and in some countries it is negligible. Thus e-commerce is for classes and not for masses.

Related Articles:

• Speech on E-Commerce: Meaning, Characteristics and Other Details
• E-Commerce System: Meaning, Resources Required and Benefits

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The Impact of E-Commerce on Business Research Paper

Executive summary, introduction, problem statement, impacts of introducing e-commerce, draw backs of e-commerce.

Advancement in technology has reshaped and revamped the way business is being done. There is a shift towards using internet as a platform for firms to carryout business. The advantages associated with this technology has left almost all business firms whether big or small in size to consider adopting it with the notion that it will help them stay competitive and relevant in the current world of business.

However, there is little knowledge these firms have with regards to both advantages and disadvantages of adopting e-commerce. This paper has identified the pros and cons of adopting e-commerce. The method used to arrive at the conclusion in this paper is through an analysis of secondary data from existing books, journals and internet sources.

It is apparent that since the inception of computers and internet, everything particularly on how business is carried out has tremendously changed. E-commerce is one of the fastest growing industries worldwide and is one of the most rapidly evolving areas of national and international trade.

Using internet to carryout business has been deemed to be the most current innovation in the world of business and offers an opportunity to businesses to carryout business through electronics. Firms have rushed to adopt e-commerce which entails making transaction online with the belief that it will help them gain competitive advantages and increase their market shares as well as revenue.

Indeed there are numerous advantages associated with this concept such as capturing new markets by allowing firms to go global, 24/7 operation this has been shown to bring with it the advantage of reliability and convenience which allows potential customers who do not have time to buy products and services regardless of time.

It is evident that e-commerce help firm cut the costs of doing business, for instance there will be less paper work which requires human resource, a flexible or telework arrangement can be put in place making working execute their tasks, duties and responsibilities not necessarily in the office among other advantages.

However, it is established that there are a host of drawbacks associated with e-commerce such as increase in criminal activities, ethical issues such as firing employees as a result of automating some tasks, technical issues, compatibility problems as well as legal implications.

For instance there is concern about increase in crime rates that are not easily detected, the real time production of goods and services have and will continue to create stock crisis, there is potential of loss of resources as well as underutilization of the same (people will lose jobs and rates of disposed equipment will increase), unavailability of power, ICT manpower, telecommunication facilities leaves some communities especially in third world countries at a disadvantage, social division and broken human interaction that creates and nurture trust.

Bases on these pros and cons of adopting e-commerce, it would be rational for businesses to critically examine them and develop better strategies to curb some of these drawbacks. Failure to give this concept a serious thought might be a recipe for an organization to fail.

Since the advent of computers, mankind has experienced an unmatched surge in development of new and cutting edge technologies. Additionally the desire for organizational effectiveness as well as using it to attain competitive advantage has made the adoption of these technologies to be deemed paramount in ensuring that organizations do cut themselves an edge in this competitive business world (Sharma & Gupta, 2003).

However, there is need for each and every organization to deeply and extensively consult before embarking in rolling the entire project, this is important as it will dictate the success and sustainability of the project. One notable technology that has propelled a number of organizations to greater height is internet-e-commerce (Coulter & Vogel, 2004).

By definition, e-commerce has been thought of as a employing “electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals” (Bonnett, 2000).

The whole idea centers on buying or transaction via the internet. Generally speaking, e-commerce include; the business will effectively monitor it records, it will be competitive because potential users will be able to place their orders on-line as well as track the progress of the orders they placed, time is saved, it is reliable and convenient, the concept will offer the business an opportunity to reach wider markets, e-commerce will not only be used for transactions but also advertise a firm’s product among others (Karyn & Filson, 2001).

The paper has an introduction where the topic to be covered is succinctly brought to readers attention. Definitions of important terms are also presented. The problem statement is also clearly written down together with the objectives of the entire work. The next section is the main body tackling the impact of e-commerce to businesses. The paper begins with the positive contribution of the technology. After this, the negative effects are succinctly covered. The last section of the paper is the conclusion which entails a brief summary of the work done.

E-commerce is one of the fastest growing industries worldwide and is one of the most rapidly evolving areas of national and international trade. Using internet to carryout business has been deemed to be the most current innovation in the world of business and offers an opportunity to businesses to carryout business through electronics. E-commerce technologies have provided opportunities for business growth but have also presented the business world with many challenges (Nissanoff, 2006). It is worth mentioning that,

[E-commerce enables organizational change and helps organizations to conduct business with improved efficiencies and productivity. E-commerce is credited with empowering employees and knowledge workers, by giving them easy access to virtually unlimited information. E-commerce technologies have helped nations to accelerate their economic growth and to provide more opportunities for the businesses to grow.

Meanwhile, it has also created many challenges and adverse effects, such as concerns over privacy, consumer protection, and security of credit card purchases, displacement of workers (especially low-status ones), and is charged with having a negative impact on quality of work life.] (Sharma & Gupta, 2003, p. 655)

The objective of this task is to critically evaluate the positive and negative impact for a business which adopts e-commerce in doing business. As noted previously, there is need to have this information in the public domain so that organizations are not misled that adopting e-commerce is a bed of roses.

This will be very important since it will help them make informed decision as well as prepare them in developing better strategies that can help them overcome the negative impacts of such technology. Similarly the paper will give recommendations to businesses that desire to adopt e-commerce.

Benefits of e-commerce

It is worth noting from the onset that just like any other business and for that matter a normal concept, there are both benefits and draw backs associated with introduction of e-commerce to any business organization. Therefore, the impact to the whole organization, consumers, current market and legal issues can be very dramatic (Kotler, 2009).

Nissanoff, 2006 believed that E-commerce if introduced in an organization might help a firm to segment its market better by utilizing the demographic characteristics such as age, gender, price, interest, tastes and preferences of its potential customers, information that is usually easily collected online.

This will help the firm to keep track of the required goods and the services, quantity, quality and the time of delivery. This in turn will shape how the business strategizes on production. It is worth noting that what this brings in elimination of the poor timing in production and possibly cutting down on wasting of resources and time.

Additionally, according to Kotler, 2009 e-commerce will cut down the cost of doing market survey. For the simple reason of adopting the innovation, paper work will be tremendously reduced. The later has no doubt been cumbersome, consuming a lot of time that can be utilized by the firm to doing other things that will upgrade their operation. With e-commerce, a business will be able to get various group segments directly especially via internet. This has come with low investment level but in turn high return.

It is also a fact that most customers’ critic some business concerning the products and services it offers. For this reason, the sensitization process that will be generated by online advertisement will make these customers to buy confidently in transacting with any business.

E-commerce has the potential of making a firm cut itself an edge and stay competitive even during economic hard times, as it can learn and promote its image to different market segment depending with their needs, thus promoting market expansion and consequently, high sales volume. It is evident that e-commerce will help an organization to reach to a wider market not initially thought of (Kalakota & Whinston, 1997).

Additionally, information gathered online concerning the desires of customers will aid the firm to be in contact with demand and supply curve hence always striving to stay competitive. This will be attained by novelty to have room for the needs and aspirations of customers from the ground. As a result of trying to meet these demands and needs, there will be room for the firm to develop new products to cope up with ever tightening competition in the business environment.

The ultimate outcome of this is highly satisfied who will be loyal to the firm which translates to doing business with them for a longer period. On the same note, there are higher chances of improved relationship between the firm adopting e-commerce and its customers. This will be brought about due to the multiple roles played by e-commerce (advertising and publicizing) (Bonnett, 2000).

The reason for this is that customers will be provided with all necessary information regarding products and services available, information on progress on orders placed as well as deliveries. Such a relationship will definitely result in a better relationship between the two that might lead to more market segmentation as well as customers’ satisfaction hence a potential to develop into a global market.

On the same note there are organization such as Amazon.com among other that have adopted this technology in ensuring that delivery of placed order is quick hence reaching customers on time. This in itself is a competitive advantage. In most cases the products are delivered in at the customers’ door steps.

On the same note, e-commerce carries with it the advantage of doing business around the clock, 24/7. With this come the concepts of convenience and reliability. It is worth noting that doing business around the clock will attract more potential customers especially those who do not have time to physically come to the offices to place an order.

The implications of this is that more revenue will be generated and at the same time widening customer base. Additionally, the business can benefit by using the whole idea as an alternative source of income. Similarly, a firm that adopts e-commerce can be provided with an easy and very flexible opportunity to maneuver pricing issues.

Mass customization and network production can be made possible by adopting e-commerce. After capturing a global market, a firm can parcel out some production processes to other firms that offer goods and services similar to it. The advantage that will be realized as a result of this is reduced cost, increased strategic target marketing as well as facilitated sell add-on goods and services when need arise.

Another positive force brought forth by introduction of e-commerce may be the link it creates among customers, employees of the business, competitors, suppliers and distributors. The association will be effective if there is a clear supply chain management which will in the end boost sales.

It has been shown that in traditional environment of doing business, it was difficult and cumbersome for a new entrant or a small firm to conquer other geographical locations. However, when a firm adopts e-commerce, this gives it a perfect opportunity to compete globally since there are no geographic boundaries. The only thing a firm needs to do is to develop a well thought and managed website where its products and services can be accessed. This will help even small firms to gain competitive advantage and increase their market shares.

Legal implications

On the other hand, there is need for the business especially if it operates in the United States to carefully evaluate the associated legislations such as the copyright legislation, computer misuse act 1990, trading standards, delta protection act of 1998, freedom of information act of 2002 as well as e-commerce regulation.

This does not mean that other businesses in other geographic locations are exempted. There is also need to adhere to international laws and regulations concerning usage of e-commerce (Miller, 2002). A clear understanding of this legal provision is key in ensuring that any emerging legal issues for instance differing prices advertisement can be handle with clear precedent.

It is worth noting that failure to follow a number of government provisions might land businesses which have adopted e-commerce into serious legal battles (Chaudhury & Jean-Pierre, 2002).

Ethical issues

As suggested by Coulter & Vogel, 2004 with the introduction of e-commerce, managers and line supervisors will be faced with very serious ethical issues that need to be addressed in time. One notable issue is what a firm will do with those employees for instance who work on business paperwork’s now that most of the things have been automated.

Additionally, another issue linked to this is addressing the issue of resistance as well as employees who are difficult to be retrained so that they fit into the system. This is costly and laying them off can imply legal battle on the basis of the contract signed between employees and their employer (Kalakota & Whinston, 1997).

Similarly, issue of confidentiality in using e-commerce will be highly compromised. The is a higher chance again of the business to utilize information technology to closely monitor all activities of its customers as well as workers which amount to invasion of human privacy. It is also a fact that surfing the internet is an interesting as well as time consuming, there is a possibility of an employee to surf during work time which can jeopardize the efforts of adopting the innovation (Mellahi & Johnson, 2000).

To control this, there will be need to limit the kind of information accessible through the internet. This in turn might negative impact the moral of the workers. In recent past, there are cases reported where hackers get into businesses data bases and obtain full details of customers (Chaudhury & Jean-Pierre, 2002).

They later use these details to steal money from unsuspecting customers. This they do by sending customers mails which are fictions for instance one might be told that he or she has won a price and needs to send some cash to a certain bank account. Similarly, with advancement in technology, there are those who after acquiring the full details of customers, hack their bank accounts and transfer money to unknown accounts (Eisingerich & Kretschmer, 2008).

Trust and human contact

Although adopting e-commerce sounds heavenly send solution to doing business in the 21 st century, Lefebvre et al 2001 note that there are very serious issue regarding customer trust and lack of human contact while carrying out transaction might be a blow to the desires of any firm which seek to have a direct contact with its customers.

It is human nature to interact while doing business; this usually fosters the concept of building customer trust. Although the current generation is capable of living up to this kind of idea, the older population is yet to embrace this kind of technology and they still prefer the human contact (Wyckoff & Colecchia, 2000).

It has been argued that online communication can never be a substitute to face-face interaction. Additionally in situations where there are serious complains, there is no perfect opportunity like face to face interaction. Here the complaining party can gain full understanding of the issue at hand which cannot be attained through online communication particularly when the other party is agitated (Laudon & Traver, 2010).

It is worth mentioning that there are a group of people who will resist doing business through this kind of platform and will prefer doing business the traditional way. The major reason why people resist using internet to transact is due to lack of adequate knowledge on how the system works as well as reluctant to buy a product that cannot be physically examined.

As a result, this will call for the firm adopting this kind of technology to set aside funds that will be used to educate potential and willing consumers so that they become confident in using e-commerce. The problem with this is that the firm might incur extra cost and still the group refuses to change.

Technical problems and emerging innovation

Having in mind that changes are always part of human life, advent of new technology will always present a challenge to the business. There are chances that after adopting the innovation, a new one is developed rendering the one adopted to be obsolete leading to a financial draw back especially if the entire project has not repaid the money invested in it (Seethamraju, 2006).

Technical hiccups can also hit the innovation and this might include failure of the web site, problems with the surrounding environment, failure in power systems, failures in hardware and software as well as virus attacks (Bonnett, 2000). When the later happen, it is risky for the business since it can loss all its viable data in case it has not backed it up.

Compatibility problem

Since it is everybody’s anticipation that there will be development of further technological innovation, the business might face problems with compatibility of its old and the emerging innovation. What this will imply is that there will be instances where sharing of information is hindered which will call for installation of entirely new system which will have huge financial implication to the business (Eisingerich & Kretschmer, 2008).

Impact of e-commerce to the entire society

Among the societal implications of adopting e-commerce in doing business are; it has fostered creation of a flexible working environment. This has in turned led to improved quality of life making people to work from their homes. The advantages of this working scenario not only include convenience but also offer a conducive environment to take part in activities that aid in generating revenue.

Similarly, working from home help reduces traffic congestions as well as cutting down air pollution (Bonnett, 2000). Additionally this helps the firm cut down on operation costs in terms of space, power, and food to employees among others

Consequently, people are interconnected which makes sharing of information to be very easy and quick thus making the entire society to make informed choices before engaging in business transactions. Additionally, there is an economic as well as social impact as a result of the rate at which changes occur.

On the same note, e-commerce has facilitated quick delivery of public services for instance plumbing services, banking services and more importantly health care services. It is also thanks to e-commerce that it has been possible to fill tax return forms on line and submit them on time (Seethamraju, 2006).

On the other hand, there are drawbacks that the society has experience as a result of adopting e-commerce. According to Kalakota & Whinston, 1997 these include increase crime rates that are not easily detected, the real time production of goods and services have and will continue to create stock crisis, there is potential of loss of resources as well as underutilization of the same (people will lose jobs and rates of disposed equipment will increase), unavailability of power, ICT manpower, telecommunication facilities leaves some communities especially in third world countries at a disadvantage, social division and broken human interaction that creates and nurture trust.

It is apparent that since the inception of computers and internet, everything particularly on how business is carried out has tremendously changed. Using internet to carryout business has been deemed to be the most current innovation in the world of business and offers an opportunity to businesses to carryout business through electronics.

Firms have rushed to adopt e-commerce the belief that it will help them gain competitive advantages and increase their market shares as well as revenue. Indeed there are numerous advantages associated with this concept such as capturing new markets by allowing firms to go global, 24/7 operation, cutting costs among others.

However, it is established that there are a host of drawbacks associated with e-commerce such as increase in criminal activities, ethical issues such as firing employees as a result of automating some tasks, technical issues, compatibility problems as well as legal implications. Thus businesses need to critically examine the concept of e-commerce and develop better strategies to curb some of its drawbacks. Failure to give this concept a serious thought might be a recipe for an organization to fail.

Bonnett, K. (2000). An IBM Guide to Doing Business on the Internet . New York: McGraw-Hill.

Chaudhury, A. & Jean-Pierre, K. (2002). E-Business and E-Commerce Infrastructure . New York: McGraw-Hill.

Coulter, J. & Vogel, T. (2004). Pets.com, Inc.: Assessing financial performance and risks in the e-commerce industry. Accounting Education, 2(1), 567-582.

Eisingerich, A. & Kretschmer, T. (2008). In E-Commerce, More is More. Harvard Business Review 86, 20–21.

Kalakota, R. & Whinston, A. (1997). Electronic Commerce: A Manager’s Guide. London: Addison Wesley Longman, Inc.

Karyn, W. & Filson, D. 2001. The Impact of E-Commerce Strategies on Firm Value: Lessons from Amazon.com. Web.

Kotler, P. (2009). Marketing Management . Pearson: Prentice-Hall.

Laudon, K. & Traver, C. (2010). E-Commerce 2011. Prentice Hall.

Lefebvre, L., Pierre-Majorique, L., Cassivi, L., Lapointe, R & Pierre, H. (2001). OECD Electronic Commerce Business Impact Project. Web.

Mellahi, K. & Johnson, M. (2000). Does it pay to be a first mover in e-commerce: The case of Amazon.com. Management Decisions , 38(7), 445-452.

Miller, R. (2002). The Legal and E-Commerce Environment Today . London: Thomson Learning.

Nissanoff, D. (2006). Future Shop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want . New York: The Penguin Press.

Seethamraju, R. (2006). Impact of E-Commerce on Business Process Redesign and Integration. International Journal of Electronic Business, 4(5), 380-400.

Sharma, S. & Gupta, J. (2003). Adverse effects of e-commerce. The electronic and social impact of e-commerce. Web.

Wyckoff, A. & Colecchia, A. (2000). The Economic and Social Impact of Electronic Commerce: Preliminary Findings and Research Agenda. London: Org. for Economic Cooperation & Development.

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E-Commerce - Definition, E-Commerce Market & Relevant Facts for UPSC GS-II

What is e-commerce.

E-Commerce is defined as the buying and selling of goods and services including digital products over digital and electronic networks. Electronic commerce (E-commerce) draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.

It is important for IAS Exam from the perspective of current affairs and Indian Polity.

E-commerce – UPSC Notes:- Download PDF Here

Who is an E-Commerce Entity

It means a company that is incorporated under the Companies Act,1956 or the Indian Companies Act 2013 or a foreign company covered under the Companies Act 2013 or an office, branch or agency in India as provided in FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.

Let us study from the image below, the sectors that contribute the most to e-commerce :

Why e-commerce is in the news?

• 100% Foreign Direct Investment ( FDI ) is permitted through the automatic route in the market place model of e-commerce.
• The above development indicates that 100% FDI is not permitted in the inventory-based model.
• This FDI is permitted only for B2B (Business-to-Business) model and not for B2C (Business-to-Consumer).

E-Commerce in India

As in 2019, India has an internet user base of about 40% of the total Indian population, especially with regard to e-commerce. E-commerce in India has been budding since 2009 and many major e-commerce companies have grown their businesses in India. 

There are typically two patterns in which e-commerce works in India:

1. Multi-product E-Commerce – The portals which sell multiple products on the same website or application are Multi-product E-Commerce companies. This includes Amazon, Flipkart, Snapdeal, where garments, furniture, books, stationery, etc. are all available at a single platform

2. Single Product E-Commerce – Under this, the companies which sell only a single type of product online are called Single-Product E-commerce companies. This includes portals like Makemytrip which enables all kinds of tourism-related services, similarly specific e-commerce companies for eyewear, furniture, gadgets, automobiles, etc.

Types of E-Commerce Models

There are mainly four types of E-Commerce Models which are followed in India. Discussed below are the same:

• Business to Business (B2B) – The selling of products between the manufacturer, retailers and wholesalers is called the B2B model of e-commerce. Here the customer is not involved in the transfer of products or goods
• Business to Consumer – This is the generally used online portals where the e-commerce company sells directly to the consumer
• Consumer to Consumer (C2C) – The best example of this is OLX, where consumer can upload their old products and resale them directly to the buyer. There is no interference of the manufacturers or retailers
• Consumer to Business – When a person designs or creates something new, they can sell it to the e-commerce company for further sales. This is called the Consumer to Business model

Also, read FDI in E-commerce: Whom will it benefit?

Aspirants can refer to the linked articles mentioned below which are related to e-commerce:

Under what conditions FDI is granted here?

• A manufacturer will be permitted to sell its manufactured products in India through E-Commerce retail.
• A single brand retail entity operating through brick and mortar store is permitted to undertake retail trading through E-Commerce.
• An Indian manufacturer is permitted to sell its own single brand products through E-Commerce retail. Indian manufacturer would be the investee company, which is the owner of the Indian brand and which manufactures in India, in terms of value, at least 70% of its products in house, and sources, at most 30% from Indian manufacturers.

The conditions levied are as follows:

• E-Commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfilment, call centre, payment collection and other services.
• The E-Commerce entity providing the marketplace will not exercise ownership over the inventory i.e. goods purported to be sold. Such an ownership over the inventory will render the business into an inventory-based model in which FDI is not permitted.
• An e-commerce entity will not permit more than 25% of the sales affected through its marketplace from one vendor or other group companies.
• Post-sales, delivery of the goods, the satisfaction of the customer, warrantee/ guarantee of the goods and services will be the responsibility of the seller.
• In a market-based model, payment for sales may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.
• E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.

The table below how the two models of e-commerce work:

(Source: DIPP)

Market-Based Model:  Under this model, an e-commerce entity acts as a facilitator of goods and services by providing an information technology platform to the buyers and sellers

Inventory Based Model:   Under this model, the e-commerce entity owns an inventory of good and services to be sold to the buyers directly

Implications of FDI in E-Commerce   Good points:

• The B2B business model in the market place has been officially recognized by the government of India and hence ended much ambiguity in the policy.
• The discount wars will end providing some relief to the brick and mortar retailers and provide a level playing field.
• It will allow the traditional brick and mortar sellers to come out of their geographical barriers.
• It will help connect the long chain of demand in India with a long chain of supply.
• Indian offline manufacturers can go online and attract foreign investment now.

Advantages of E-Commerce Industry in India

Discussed below are the advantages of the E-Commerce Industry in India:

• Business can be done from anywhere can the products can be sold both within the country as well as Internationally
• One can promote their work and sell their products directly to the consumers without the interference of middlemen
• Goods can be delivered to the doorstep from any part of the country or the world
• Reduced the investment cost since in many cases money can be saved on buying a storeroom for the display of products
• 24×7 facility to order products online. The only requirement is an internet connection
• Through the four different models of electronic commerce in the country, businessmen can choose their target consumers and sell directly to the customers or to other retailers as well

What are the Challenges of the Indian e-commerce industry?

• High competition:  There are different players in the same area of business leading to decrease in profitability due to reasons such as aggressive pricing strategies, heavy discounts and offers, free delivery, high commissions to affiliates and vendors during sale period to name a few. These firms are losing billions to attracting customers.
• Poor logistic & supply chains:  E-commerce companies need to maintain the stock to get the benefit of reach and the ability to stock more items than physical stores as these are their biggest differentiators. With this benefit also comes the challenge of robust supply chains and logistics networks, which are not comparable and developed to global standards in India.
• Payments:  While offering a wide variety of payment options, Cash on Delivery(CoD) option in India is the most prevalent as customers fear to share information online and do not trust the website for secure payments. Also, the return percentage of orders in CoD is much higher compared to online payments.
• Trust of the customer:  Due to the constraints of quality, colour and texture recognition especially in apparels and luxury products, the customers are not able to trust that what is shown will be delivered.

Frequently Asked Questions on E-Commerce

Q 1. what is e-commerce, q 2. what are the different types of e-commerce models.

Ans. There are a total of 4 types of e-commerce models. These include:

• Business to Business (B2B)
• Business to Consumer
• Consumer to Consumer (C2C)
• Consumer to Business

Q 3. What are the benefits of E-Commerce?

Ans. E-Commerce has benefitted both the consumer and the seller/manufacturer equally. Given below are the advantages of E-Commerce:

• Less Start-up cost for the seller
• 24×7 online access to shop and order
• Goods can be delivered Nationally and Internationally
• One does not need to be physically present at the store to shop
• Easy Access to e-commerce websites and application

Q 4. How does e-commerce works?

Ans. The E-commerce companies create websites and applications where all the available products and goods are uploaded. A consumer can scroll through the products, choose the ones they like, add their delivery address and contact details and pay through online or COD mode for the products.

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Essay on E Commerce in India

Students are often asked to write an essay on E Commerce in India in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on E Commerce in India

Introduction to e-commerce.

E-commerce, or electronic commerce, is the buying and selling of goods and services on the internet. In India, it has become extremely popular due to the rise in smartphone usage and internet access.

Impact on Indian Market

E-commerce has transformed the Indian market. It’s now easy to shop from home, leading to a boom in online businesses. Major players like Flipkart and Amazon have seen tremendous growth.

Advantages of E-Commerce

E-commerce offers many advantages. It provides a wider product range, competitive prices, and the convenience of home delivery. It also allows businesses to reach a larger audience.

Challenges for E-Commerce in India

Despite its advantages, e-commerce in India faces challenges. These include internet connectivity issues, digital literacy, and concerns about online fraud. However, efforts are being made to address these issues.

250 Words Essay on E Commerce in India

Introduction.

E-commerce, or electronic commerce, has revolutionized the way business is conducted in India. It refers to the buying and selling of goods and services, and the transfer of funds, through digital platforms.

Growth and Evolution

E-commerce in India has seen exponential growth in the last decade. The advent of advanced technologies, increased internet penetration, and a shift in consumer behavior have driven this evolution. The Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion in 2017.

Key Players

The Indian e-commerce landscape is dominated by giants like Amazon India, Flipkart, and Snapdeal. These platforms offer a wide range of products, from electronics to fashion, and have become a preferred shopping destination for the Indian populace.

Government Regulations

The Indian government has implemented various regulations to manage this booming industry. The introduction of the Goods and Services Tax (GST) has streamlined taxation, while the FDI policy for e-commerce has attracted foreign investments.

Despite its growth, e-commerce in India faces challenges like logistics and infrastructure issues, digital illiteracy, and data privacy concerns. Cybersecurity is another significant concern that needs to be addressed.

E-commerce in India is a dynamic and rapidly evolving sector, offering immense opportunities. However, it is essential to address the challenges to ensure sustainable growth. The future of e-commerce in India promises exciting prospects, given the increasing digitalization and evolving consumer preferences.

500 Words Essay on E Commerce in India

Introduction to e-commerce in india.

E-commerce, or electronic commerce, has been a transformative force in India’s economic landscape. It refers to the buying and selling of goods and services over the internet, which has revolutionized traditional commerce by providing unparalleled convenience, variety, and cost-effectiveness.

The Growth of E-commerce in India

India’s e-commerce sector has seen exponential growth in the past decade. This surge can be attributed to several factors. Firstly, the proliferation of smartphones and the internet has made online shopping a viable option for a large segment of the population. Secondly, the rise of digital payments, facilitated by initiatives like the Unified Payments Interface (UPI), has made transactions seamless and secure. Lastly, the growing middle class with increasing disposable income has fueled demand for a wide range of products and services available online.

Impact on Businesses and Consumers

E-commerce has had a profound impact on both businesses and consumers in India. For businesses, it has opened up new markets and opportunities. Small and medium enterprises (SMEs), in particular, have benefited from the vast reach of e-commerce platforms, enabling them to overcome geographical limitations and reach customers nationwide, or even globally.

For consumers, e-commerce has expanded choice and convenience. They can now compare products, read reviews, and make informed decisions before making a purchase. Moreover, the convenience of home delivery and easy returns has made online shopping an attractive alternative to traditional retail.

Challenges and Future Prospects

Despite the impressive growth, e-commerce in India faces several challenges. Infrastructure bottlenecks, such as inadequate logistics and supply chain, can hinder delivery and customer satisfaction. Cybersecurity is another concern, as cases of online fraud and data breaches can erode consumer trust in online transactions.

However, the future of e-commerce in India remains promising. The government’s Digital India initiative aims to further improve digital infrastructure and promote online transactions. Additionally, emerging technologies like artificial intelligence, machine learning, and blockchain are expected to revolutionize e-commerce, offering personalized shopping experiences, enhanced security, and greater transparency.

In conclusion, e-commerce has transformed the commercial landscape in India, offering unprecedented opportunities for businesses and consumers alike. While challenges persist, the e-commerce sector in India is poised for continued growth, driven by technological advancements and supportive government policies. As such, it will continue to play a pivotal role in India’s economic development in the years to come.

That’s it! I hope the essay helped you.

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