Elements of E-Commerce
Advantages of E-Commerce
The benefits of e-commerce can be seen to affect three major stakeholders: organizations, consumers and society.
1) Benefits of E-commerce to Organizations
- International marketplace, What used to be a single physical marketplace located in a geographical area has now become a borderless marketplace including national and international markets. By becoming e-commerce enabled, businesses now have access to people all around the world.
- Operational cost saving. The cost of creating, processing, distributing, storing and retrieving paper-based information has decreased.
- Mass customization. E-commerce has revolutionized the way consumers buy well and services. In the past when Ford first started making motor cars, customers could have any color so long as it was black. Now customers can configure a car according to their specifications within minutes on-line via the ford.com website.
- Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain management – this is based on collecting the customer order and then delivering through JIT (just-in-time) This is particularly beneficial for companies in the high technology sector, where stocks of components held could quickly become obsolete within months. For example, companies like Motorola (mobile phones), and Dell (computers) gather customer orders for a product, transmit them electronically to the manufacturing plant where they are manufactured according to the customer’s specifications (like color and features) and then sent to the customer within a few days.
- Lower telecommunications cost. The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organization and its authorized partners. It is also cheaper to send a fax or e- mail via the Internet than direct dialing.
- Digitization of products and processes. Particularly in the case of software and music/video products, this can be downloaded or e-mailed directly to customers via the Internet in digital or electronic format.
- No more 24-hour-time constraints. Businesses can be contacted by or contact customers or suppliers at any time.
2) Benefits of E-commerce to Consumers
- 24/7 access. Enables customers to shop or conduct other transactions 24 hours a day, all year round from almost any location. For example, checking balances, making payments, obtaining travel and other information.
- More choices. Customers not only have a whole range of products that they can choose from and customize, but also an international selection of suppliers.
- Price comparisons. Customers can ‘shop’ around the world and conduct comparisons either directly by visiting different sites. (For example moneyextra.co.uk for financial products and services).
- Improved delivery processes. This can range from the immediate delivery of digitized or electronic goods such as software or audio-visual files by downloading via the Internet, to the on-line tracking of the progress of packages being delivered by mail or courier.
- An environment of competition where substantial discounts can be found or value added, as different retailers for customers.
3) Benefits of E-commerce to Society
- Enables more flexible working practices, which enhances the quality of life for a whole host of people in society, enabling them to work from It also potentially reduces environmental pollution as fewer people have to travel to work regularly.
- Connects people, Enables people in developing countries and rural areas to enjoy and access products, services, information and other people which otherwise would not be so easily available to them.
- Facilitates delivery of public services, For example, health services available over the Internet (on-line consultation with doctors or nurses), filing taxes over the Internet through the Inland Revenue Website.