Advantages and Disadvantages of E-commerce
November 22, 2010
In today’s economy, business moves at a rapid pace and shows no sign of slowing down. Many of the revolutionary changes that have taken place and supplied this economic engine with fuel are due to electronic commerce. The introduction of the computer into the workplace has brought about manifold changes and seemingly unlimited possibilities for merchants. This new technology offers many advantages for businesses but there are disadvantages as well. Each company must weigh the pros and cons while determining what direction they will take. Advantages and Disadvantages of E-commerce
Electronic commerce is a fundamental part of today’s business world. It has undergone many changes since its inception and will continue to do so. The information technology field has always moved rapidly and businesses must align themselves with these changes in order to remain competitive. E-commerce has many advantages and has transformed business, as we know it. Although fewer in number, there are also disadvantages associated with e-commerce. The advantages of e-commerce are great in number and have quite a range of variation. E-commerce is still fairly young but has brought manifold changes in the way business is conducted. Businesses great and small have taken advantage of the new opportunities afforded by electronic transactions. As we move on in the twenty first century, we will see more and more participation and advancement in this very important field of commerce. Firms are interested in e-commerce because it can increase profits. There are countless opportunities for increases in sales and also decreases in cost. In the past, businesses were limited to a physical location. Now that business can be conducted electronically, this is no longer a factor. Anywhere on the globe that has a connection is now a potential customer. Individuals can be reached but also groups of people called virtual communities are now paying customers. A virtual community is a gathering of people who share a common interest but instead of gathering in the physical world, they gather on the Internet. (Schneider, 2010) E-commerce increases purchasing power for the buyer. In business-to-business applications, competitive bids can be efficiently obtained as well as negotiation of prices and delivery terms. Both speed and accuracy of exchange information is accelerated which can reduce costs. Many costs have been reduced by companies, such as handling sales inquiries and determining product availability. New suppliers and business partners can also be identified through the Internet. Prices can be compared side-by-side and choices can be made within a shorter time frame. (Schneider, 2010) This can reduce many of the front-end costs that are incurred in the traditional business. Procurement staff can be smaller, therefore reducing costs. E-commerce provides buyers with more variety from a larger number of sellers. Buyers can now search for products twenty-four hours a day, seven days a week. Purchasing power for the individual consumer has also increased exponentially. One can sit at a computer and shop anywhere in the world for any available product. (Weinclaw, 2008) E-commerce may allow for a more centralized location that could reduce inventory demand. Turnover rates will also be increased. For example: In 1998, the turnover rate for Barnes and Noble was 3.2 per year as opposed to 20.7 per year for Amazon. A company may also be able to purchase land at a remote location for less money and save on construction costs as well. The business could be built more for efficiency of employees and not for aesthetics. If the business could function as a warehouse-style operation, it would be enabled to hold more products and be set up to sell according to volume and not category. There would be no need for a display area or...