The invention of new telecommunication networks and modern online devices has resulted in a new business. In fact, electronic commerce has become one of the most popular activities on the web. Electronic commerce created many benefits for companies and users however, some disadvantages and serious problems stem from this issue.
Advantages 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. In effect all e-commerce businesses have become virtual multinational corporations.
• Operational cost savings. The cost of creating, processing, distributing, storing and retrieving paper-based information has decreased (see Intel mini-case).
• Mass customization. E-commerce has revolutionized the way consumers buy good and services. The pull-type processing allows for products and services to be customized to the customer’s requirements. 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 www.ford.com website.
• 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 organisation and its authorised partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialling.
• Digitization of products and processes. Particularly in the case of software and music/video products, which 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.
Advantages of e-commerce to consumers
• 24/7 access. Enables customers to shop or conduct other transactions 24mhours a day, all year round from almost any location. For example, checking balances, making payments, obtaining travel and other information. In one case a pop star set up web cameras in every room in his house, so that he could check the status of his home by logging onto the Internet when he was away from home on tour.
• 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, or by visiting a single site where prices are aggregated from a number of providers and compared (for example www.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 vie for customers. It also allows many individual customers to aggregate their orders together into a single order presented to wholesalers or manufacturers and obtain a more competitive price (aggregate buying), for example www.letsbuyit.com.
Advantages of e-commerce to society
• Enables more flexible working practices. It enhances the quality of life for a whole host of people in society, enabling them to work from home. Not only is this more convenient and provides happier and less stressful working environments, 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.
