Unit 8 P2 E-Commerce

Understanding the impact of introducing an e-commerce on organisation.

Unit -8

Introduction

E-commerce is a trading in products using the internet. E-Commerce over the past 15 to 20 years has had a major impact on society and the way business is done on a global scale. There are three transactions business to business, consumer to consumer and consumer to business. I will be writing about the advantages and the disadvantages of each one.

Advantages

Global marketplace

An impact of introducing an e-commerce system to an organisation is that they get more customers as they are promoting their product out there; this means that customers will increase and the company will have more demands. This will make the business make revenue as the sales

will increase. The business will expand worldwide if more customers buy their product.

24/7 trading
Another advantage is that customers are buy item online 24/7 which means they can buy products any time they want, no staff will be required to help the customers, which means less cost going out to the business and there will be more revenue into the business.

Unlike a transitional business, there are closing times as it is not 24/7 trading site. If a customer has queries, they can send an email. This can be answer by the employees when they are working.

Relatively low start-up and running costs

If a business starts up an online shopping site for customers the cost will be low because the fee of starting an online shopping site compared to an original store the running up cost will be high as the owners has to pay the actual store, the staff, the rent of the store, purchasing stock, paying utility bills (electricity, gas and water etc.) If it is a brand new business theses cost has to be paid up front. For an online store it does not have such high cost, as there no premises to purchase, less employees.

Competitive

edge
E -commerce business has more competitive edge to a traditional store, any e-commerce organisation will always have a competitive advantage over any company that does not have an e-commerce site. For example, when a customer wants to buy an item like headset. EBay have headsets approximately for £20 and PC world have headsets around £40. That why e-commerce sites have more competitive edge than a traditional store. Another way of securing a competitive edge is that if your competitors are advertising their products online. For example EBay can see the type and level of services Amazon are offering their customers. This will enable eBay to find out ways of making their offers more attractive to their customer like offer cheaper deals (2 for 1) , no delivery and lower prices.

Search facilities.
Most e-commerce sites have search facilities built into them. This makes it easy for customers to find products; they only have to use the search bar. Which links it to the certain item; customers can also save their most brought product to their favourite, which save time for them. Also a proper shop might run out of a product, but on a website they can order the product and when the business brings in the stock, the customer that ordered the product will be the first one to get the product. It save time for customer to use the search facilities, rather than going around the shop picking up the entire item the customer needs. When a customer searches for a product the system will the use to look for matches the product.

Gathering Customer information
Gathering customer information is hard in traditional store, most store use loyalty card for example Tesco use loyalty card to their customers, it allows them to track there purchase. For online customers they need to register, to purchase product and services. This allows business like Tesco to find a lot about their customers and what kind of service they prefer. Another example is when a customer’s wants to buy something of eBay; as soon as they log in they will get a greeting with a message and list of products the customer might like to purchase. EBay use cookies to gather all the information about the customer they need to advertise more of the similar products they have already brought. This way the business will be increasing revenue and decreasing cost, so they make profit.
Alternative income sources
Once a business l has an e-commerce site, extra sources of income becomes available. One way of adding additional sources of income is Pay-per-click advertising many businesses use it, this directs customer away from the site and directly to the adverts but each time the customer click on the adverts money will put into the business.
Pricing opportunities
For a bricks and click business, there are a price difference between the traditional stores and the online store. Generally e-commerce business has more freedom with pricing as they have lower overheads than brick and mortar. Business with an ecommerce site might give online discounts to persuade their customers, so the customers can use that method of purchasing.

Fluid pricing
Fluid pricing is when the price products decreases or increases, on a ecommerce site the changes automatically change the price of the product. An e-commerce site is more useful to the customers, as in a real store the employees will have to go around the shop and re-price every product.

Disadvantages

Consumer trust
The disadvantage of e-commerce system to an organisation is that customers don’t like organisations keeping their personal details and think it is risky, some customers do prefer business keeping their personal details as it saves time. Therefore it is hard for business to know if their customers trust them or not. Gaining the trust of the customers is very important, if the customers are satisfied with the item then the business in satisfied. Some customers don't really trust e-commerce site as they think that they have order something with touching the material or how good the product is. If they complain that their customers is not in good condition or becomes faulty within their guarantee. How will the company respond to the complaints?

Security issues
One major disadvantage of having an e-commerce business is to ensure a safe and secure environment for customers to order online. Customer trust is important in terms of making sure that the customer details are kept securely. Putting the consumers first is essential, and providing a guarantee that their details will not be shared to anyone except the customer and the business. Some customers know when it is safe to put in their details, as they can see in the URL the colour turns green, it has a padlock and also the website is safe when it has HTTPS in the URL. The customers know that is a SSL protected page. Customers don’t know if the site is safe to use, as they believe that hackers can access their financial details, so customers don’t trust the website and think it is unsafe to hand in their personal details to the e-commerce site.
Lack of human contact
Also many customers like to talk to the employees and get more information about the item. This indicates that they cannot speak to anyone from the business as they are shopping online. One thing you could say about using e Commerce as a means to sell your products could be that some customers could worry of not having direct face to face contact with the employee. if there is a small business, therefore they might not have any contact with the outside world.
Delivery issues
Another drawback is that customers order and buys item online and will like to get them on a certain day.

This is a disadvantage because the company has to give more money and cost to hiring delivery vans is so high that they can satisfy their customers, also the delivery vans will use petrol and will release carbon Emission into the atmosphere which is a disadvantage. Also in a regular store, customers can purchase their item home immediately. When customers shop online, they have to wait until the purchase is delivered.

International legislation

Business nowadays has increased globally and they will have a growing number of laws. legislation for e-commerce business are very complex as most companies like eBay have international legislation laws that say that they cannot sell certain items to people that are younger than 18, in America you have to be 21 to buy certain products like alcohol.

Description

problems
Despite all the advantages of e-commerce, reducing overhead costs. There are some major disadvantages, when it comes to displaying product detail. So many websites lack product description, so they can sell the item as quick as possible. They also use high-tech vocabulary to complicate and confuse the readers, to make them think that the item is either in a good condition or does what it say in the description. Customers worry that what is described on the e-commerce site might not actually show on the real product. Most e-commerce site can exaggerate their description of the product. This is a problem for the customers and the business’s reputation.