E-Commerce Definition & Advantages

Definition of E-Commerce

E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet, especially the World Wide Web. In practice, this term and a newer term, e-business, are often used interchangeably. For online retail selling, the term e-tailing is sometimes used.

eCommerce, which is short for electronic commerce, is the process used to distribute, buy, sell or market goods and services, and the transfer of funds online, through electronic communications or networks. Electronic commerce is commonly referred to as Online commerce, Web commerce, eBusiness, eRetail, eTailing, e-tailing, ecommerce, eCommerce, e-commerce, ecom or EC.

 E-commerce advantages and disadvantages

E-commerce provides many new ways for businesses and consumers to communicate and conduct business. There are a number of advantages and disadvantages of conducting business in this manner.

E-commerce advantages

Some advantages that can be achieved from e-commerce include:

• Being able to conduct business 24 x 7 x 365: E-commerce systems can operate all day every day. Your physical storefront does not need to be open in order for customers and suppliers to be doing business with you electronically. • Access the global marketplace: The Internet spans the world, and it is possible to do business with any business or person who is connected to the Internet. Simple local businesses such as specialist record stores are able to market and sell their offerings which they are communicating.

• Speed: Electronic communications allow messages to traverse the world almost instantaneously. There is no need to wait weeks for a catalogue to arrive by post: that communications delay is not a part of the Internet / e-commerce world.

• Market space: The market in which web-based businesses operate is the global market. It may not be evident to them, but many businesses are already facing international competition from web-enabled businesses.

• Opportunity to reduce costs: The Internet makes it very easy to 'shop around' for products and services that may be cheaper or more effective than we might otherwise settle for. It is sometimes possible to, through some online research, identify original manufacturers for some goods - thereby bypassing wholesalers and achieving a cheaper price.

• Computer platform-independent: 'Many, if not most, computers have the ability to communicate via the Internet independent of operating systems and hardware. Customers are not limited by existing hardware systems'.

• Efficient applications development environment: 'In many respects, applications can be more efficiently developed and distributed because the can be built without regard to the customer's or the business partner's technology platform. Application updates do not have to be manually installed on computers. Rather, Internet-related technologies provide this capability inherently through automatic deployment of software updates'. Internationally using e-commerce. This global opportunity is assisted by the fact that, unlike traditional communications methods, users are not charged according to the distance over.

•  Allowing customer self service and 'customer outsourcing': People can interact with businesses at any hour of the day that it is convenient to them, and because these interactions are initiated by customers, the customers also provide a lot of the data for the transaction that may otherwise need to be entered by business staff. This means that some of the work and costs are effectively shifted to customers; this is referred to as 'customer outsourcing'.

• Stepping beyond borders to a global view: Using aspects of e-commerce technology can mean your business can source and use products and services provided by other businesses in other countries. This seems obvious enough to say, but people do not always consider the implications of e-commerce. For example, in many ways it can be easier and cheaper to host and operate some e-commerce activities outside Australia. Further, because many e-commerce transactions involve credit cards, many businesses in Australia need to make arrangements for accepting online payments. However a number of major Australian banks have tended to be unhelpful laggards on this front, charging a lot of money and making it difficult to establish these arrangements- particularly for smaller businesses and/or businesses that don't fit into a traditional-economy understanding of business. In some cases, therefore, it can be easier and cheaper to set up arrangements which bypass this aspect of the Australian banking system. Admittedly, this can create some grey areas for legal and taxation purposes, but these can be dealt with. And yes these circumstances do have implications for Australia's national competitiveness and the competitiveness of our industries and businesses.

As a further thought, many businesses find it easier to buy and sell in U.S. dollars: it is effectively the major currency of the Internet. In this context, global online customers can find the concept of peculiar and unfamiliar currencies disconcerting. Some businesses find they can achieve higher prices online and in US dollars than they would achieve selling locally or nationally. Given that banks often charge fees for converting currencies, this is another reason to investigate all of your (national and international) options for accepting and making online payments.

In brief, it is useful to take a global view with regard the potential and organization of your e-commerce activities, especially if you are targeting global customers.

A new marketing channel:

The Internet provides an important new channel to sell to consumers. Peterson et al. (1999) suggest that, as a marketing channel, the Internet has the following characteristics:

• The ability to inexpensively store vast amounts of information at different virtual locations.
• The availability of powerful and inexpensive means of searching, organizing, and disseminating such information.
• Interactivity and the ability to provide information on demand.
• The ability to provide perceptual experiences that are far superior to a printed catalogue, although not as rich as personal inspection.
• The capability to serve as a transaction medium.
• The ability to serve as a physical distribution medium for certain goods (e.g., software).
• Relatively low entry and establishment costs for sellers.
• No other existing marketing channel possesses all of these characteristics.