E-commerce

Definition of 'Electronic Commerce - ecommerce'

A type of business model, or segment of a larger business model, that enables a firm or an individual to carry out business over an electronic network through the internet.

Explanation:-Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business. It can be thought of as a more advanced form of mail-order purchasing through a catalog. Almost any product or service can be offered via ecommerce, from books and music to financial services and plane tickets.Example :-Dell is a leader in electronic e-commerce, it leads in the computer industry as its one of the first companies that allows its customers to customize, configure, and purchasing computers online. And now its extending their system to Enterprise Resource Planning (ERP) system for true Business to business commerce.

Advantages of e-commerce for customers :-Ecommerce has allowed firms to establish a market presence, or to enhance an existing market position, by providing a cheaper and more efficient distribution chain for their products or services.When you purchase a good or service online, you are participating in ecommerce.

Some advantages of ecommerce for consumers are:

1. Convenience.Ecommerce can take place 24 hours a day,seven days a week.

2. Selection.Many stores offer a wider array of products online than they do in their brick-and-mortar counterparts. And stores that exist only online may offer consumers a selection of goods that they otherwise could not access.

3. Exclude Travel Time and CostIt is not unusual for customers to travel long distances to reach their preferred physical store. Ecommerce allows them to visit the same store virtually, with a few mouse clicks.

4. Locate the Product QuickerIt is no longer about pushing a shopping cart to the correct aisle, or scouting for the desired product. On an ecommerce website, customers can click through intuitive navigation or use a search box to immediately narrow down their product search. Some websites remember customer preferences and shopping lists to facilitate repeat purchase.

5. Offer Comparison ShoppingEcommerce facilitates comparison shopping. There are several online services that allow customers to browse multiple ecommerce merchants and find the best prices.

6. Allow Deals, Bargains, Coupons, and Group BuyingThough there are physical equivalents to deals, bargains, coupons, and group buying, online shopping makes it much more convenient. For instance if a customer has a deep discount coupon for turkey at one physical store and toilet paper at another, she may find it infeasible to avail of both discounts. But the customer could do that online with a few mouse-clicks.

Disadvantages of e-commerce for customers :-But ecommerce also has its disadvantages for consumers:

1. Limited customer service.If you want to buy a computer and youre shopping online, there is no employee you can talk to about which computer would best meet your needs.

2. No instant satisfaction.When you buy something online, you have to wait for it to be shipped to your home or office.

3. No ability to touch and see a product.Online images dont always tell the whole story about an item. Ecommerce transactions can be dissatisfying when the product the consumer receives is different than expected.

4. Credit Card FraudConsumers and businesses alike suffer from credit card fraud. Some doomsayers go so far as to predict that fraud will lead to the demise of online business.

5. Security IssuesConsumers run the risk of identity fraud and other hazards as their personal details are captured by ecommerce businesses. Businesses run the risk ofphishing attacks and other forms of security fraud.

6. Delay in Receiving GoodsIf shopping is about instant gratification, then consumers are left empty-handed for some time after making a purchase on an ecommerce website.

Advantages of e-commerce for producers :-1. Overcome Geographical Limitations.If you have a physical store, you are limited by the geographical area that you can service. With an ecommerce website, the whole world is your playground. Additionally, the advent of mcommerce, i.e., ecommerce on mobile devices, has dissolved every remaining limitation of geography.

2. Increase New Customers with Search Engine VisibilityPhysical retail is driven by branding and relationships. In addition to these two drivers, online retail is also driven by traffic from search engines. It is not unusual for customers to follow a link in search engine results, and land up on an ecommerce website that they have never heard of. This additional source of traffic can be the tipping point for some ecommerce businesses.

3. Reduced ExpensesOne of the most tangible positives of ecommerce is the lowered cost. A part of these lowered costs could be passed on to customers in the form of discounted prices. Here are some of the ways that costs can be reduced with ecommerce: Advertising and MarketingOrganic search engine traffic,pay-per-click, andsocial mediatraffic are some of the advertising channels that can be cost-effective.

4. Deliver Plentiful InformationThere are limitations to the amount of information that can be displayed in a physical store. It is difficult to equip employees to respond to customers who require information across product lines. Ecommerce websites can make additional information easily available to customers. Most of this information is provided by vendors, and does not cost anything to create or maintain.

5. Produce Targeted CommunicationUsing the information that a customer provides in the registration form, and by placing cookies on the customer's computer, an ecommerce merchant can access a lot of information about its customers. This, in turn, can be used to communicate relevant messages. An example: If you are searching for a certain product on Amazon.com, you will automatically be shown listings of other similar products. In addition, Amazon.com may also email you about related products.

6. Generate Markets for Niche ProductsBuyers and sellers of niche products can find it difficult to locate each other in the physical world. Online, it is only a matter of the customer searching for the product in a search engine. One example could be purchase of obsolete parts. Instead of trashing older equipment for lack of spares, today we can locate parts online with great ease.

7. Greater Inventory ManagementIf ecommerce businesses can tune into the order processing systems of their suppliers, they can maintain lower inventories and still not face stock-out situations.

8. Reduced Employee CostsSince ecommerce processes are automated to a large extent, fewer employees are required for lower-end jobs. Human resources can be used more effectively for higher-level functions.

Disadvantages of e-commerce for producers :-1. Need for an Internet Access DeviceEcommerce can only be transacted with the help of an Internet access device such as a computer or a smartphone. If a lot of customers do not have access to internet the e-business is not very helpful for a producer, but everyone can buy from a geographically present store.2. Expense and Expertise Needed for Ecommerce InfrastructureSubstantial information infrastructure is required to run an effectiveecommerce website. And when you factor indenial-of-service attacks, the scale of infrastructure needs to be still greater.3. Delivery of Each Individual ItemThe consumer experiences the convenience of having goods home-delivered. But the logistics involved with delivering each individual item adds substantial strain to the ecommerce business operation.

E-commerce Managers:-The growth of electronic commerce and the knowledge economy means organizations must have electronic business systems at the heart of their operation.Every department and individual in an organization has specialist knowledge that is vital for company performance, but often there is a lack of co-ordination between these departments and people. A good electronic business systems manager can change that by gathering and distributing data more efficiently and therefore influencing strategic decision-making.

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