E-Commerce: The New Ways of Doing Business

The business phenomenon that we now call electronic commerce ( or e-Commerce for short) has had an interesting history. Its concept has been widely investigated since its advent in the early 1990s and the history has proven that it is hard to image organisations today, beyond those very small size, that would be well served by ignoring the Internet as a vehicle for commerce, be it as a tool for back-office operations (e.g., purchasing and logistics), a channel of distribution (e.g., online sales), or a complement to the customer service experience. (Piccoli, 2008).

Various definitions of the terms electronic commerce (e-Commerce) and electronic business (e-Business) have been proposed over the years. Perhaps the simplest definition of the terms electronic commerce is the broadest one: an online exchange of value. A more comprehensive one: e-commerce is the process of distributing, buying, selling, marketing, and servicing products and services over computer networks such as the Internet. (Poccoli, 2008). 

Electronic business or e-business, refers to the use of digital technology and the Internet to execute the major business processes in the enterprise. (Laudon & Laudon). E-business include activities for the internal management of the firm and for coordination with suppliers and other business partners. It also includes electronic commerce, or e-commerce.

IBM defines electronic business as “the transformation of key business process through the use of Internet technologies. Internet technologies include the Internet, the World Wide Web, and other technologies such as wireless transmission on mobile telephone networks. Companies that operate online are often called dot-com or pure dot-com businesses to distinguish them from companies that operate in physical locations (solely or together with online operations). 

Categories of Electronic Commerce 

Some people find it useful to categorize electronic commerce by the types of entities participating in the transactions or business processes. The five general electronic commerce categories are business-to-consumer, business-to-business, business processes, consumer-to-consumer, and business-to-government. The three categories that are most commonly used are: 

Business-to-Consumer (or B2C): Consumer shopping on the Web. Involve a for-profit organization on one side and the end consumer on the other. This category includes online retailers, such as Amazon.com or Target.com, as well as business models where a firm offers value to a consumer without selling any physical goods. For instance, Edmunds.com provides information and referrals to consumer seeking to purchase automobiles. 

Business-to-Business (or B2B): Transactions conducted between businesses on the Web. The transactions can range from one-time interactions, or they can be highly unique and tailored to the relationship between two firms. For instance Dell.com offers a B2C site, where all consumers can purchase computing equipment. Dell also offers an extensive B2B site, called Premier Pages, which offers services tailored to the individual needs of its larger business customers. 

Customer-to-Customer (C2C): transactions that enable individual consumers to interact and transact directly. The classic example of a firm that enable C2C transactions is eBay, Inc., the marketplace that lets anyone of us trade goods with other customers.

Consumer-to-Business (C2B): It occurs when individuals transact with business organisations not as buyers of goods and services, but as suppliers. eLance.com represents an example.

E-Government: refers to the application of the Internet and networking technologies to digitally enable government and public sector agencies’ relationships with citizens, businesses, and other arms of government. 

In the late 1990s, electronic commerce was still emerging as a new way to do business; however, some companies had established solid footholds online. Amazon.com was rapidly glowing bookseller, eBay had taken the lead as a profitable auction site, and the business of providing Internet search was populated by a few well-established sites, including AltaVista, HotBot,Lycos and Yahoo!. By 1998 two Stanford University students, Lawrence Page and Sergey Brin started Google. Google’s page ranking system, which has been continually improved, turned out to be much better at providing users with relevant results than other search engines. Today Google is one of the most successful online companies in the world. The Web provides a quick path to potential customers for any businessperson with a unique product or service. (Schneider, G. 2011).

Advantages and Disadvantages of Electronic Commerce

Advantages

Firms are interested in electronic commerce because, quite simply, it can help increase profits. electronic commerce can increase sales and decrease costs. advertising done well on the Web can get even a small firm's promotional message out to potential customers in every country in the world. A firm can use electronic commerce to reach small groups of customers that are geographically scattered. The Web is particularly useful in creating virtual communities that become ideal target markets for specific types of products or services (Schneider, 2011). Just as electronic commerce increases sales opportunities for the seller, it increases purchasing opportunities for the buyer. Businesses can use electronic commerce to identify new suppliers and business partners.

Cisco Systems, a leading manufacturer of computer networking equipment, currently sells almost all its products online. Because no customer service representatives are involved in making these sales, Cisco operates very efficiently. Today, Cisco conducts more than 99% of its purchase and sales transactions online.

Most digital products, such as software, music and video files, or images, can be delivered through the Internet, which reduces the time buyers must wait to begin enjoying their purchases.

The benefit of electronic commerce has been extended to the general welfare of society. Electronic payments of tax refunds, public retirement and welfare support cost less to issue and arrive securely and quickly when transmitted over the Internet (Schneider, 2011).

Disadvantages 

Some business processes might never lend themselves to electronic commerce. For example, perishable foods and high-cost, unique items such as custom-designed jewelry can be impossible to inspect adequately from a remote location, regardless of any technologies that might be devised in the future. 

Many products and services require that a critical mass of potential buyers be equipped and willing to buy through the Internet. Example of it could be the of it are the online grocers such as Peapod, the traditional grocery chains in the United Stated such as Albertsons and Safeway which offer online ordering and delivery services. With the high demand of groceries Peapod had to go offline for few weeks in 2000. Perishable grocery products, such as fruit and vegetable, and others are harder to sell online because customers want to examine and select specific items for freshness and quality (Schneider, 2011).

Overall, the rapid adoption of the Internet and the emerge of the network economy have had some significant implications for established organisations. New technologies continue to define and/or redefine business models as well as many organisational and managerial strategies and how organisations can create value in the network economy.

References

Beynon-Davies, P & (2004) e-business. Palgrave MacMillan. New York.

Piccoli, G. (2008). Information Systems for Managers: Text & Cases. John Wiley & Sons,Inc: United States. 

Schneider, G. (2011) E-Business: Course technology. Cengage Learning. 9^th edition. China Translation & Printing Services  Limited.