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E-COMMERCE
IT430
VU
Lesson
29
E-BUSINESS
Advantages
of E-business
Some
advantages of an e-business are given as
under:
Personalized
service
Product,
place, price and promotion
are generally recognized as the 4
P's of marketing in relation to
traditional
offline businesses. However,
personalization is the 5th
`P'
added to the other 4 P's when we
talk
about an
e-business. In fact, the nature of
internet technology is such that the
information about the online
customers
including their buying
behavior can be recorded in the
databases. This information can
be
utilized
by the e-commerce site to study the
needs of a particular customer. Based
upon that the site can
do
customization
and provide a personalized
service to the customer.
High-quality
customer service
Customers
can provide their feedback
or register their complaints
quite conveniently in case of
online
business
as compared to offline business,
and in light of that an
e-business can improve its
customer
services.
No
inventory cost
An
e-business can have minimum
overhead cost. You do not
need to have any special
physical place to
start
your
business or hire any staff to
operate the business as required in
offline business. One can
start an e-
business
as an intermediary or a middle man. In
that case one does
not require any warehouses
for holding
the
inventory. An e-business can
receive orders and get them
fulfilled by procuring the ordered goods
form
open
market without bearing the
inventory cost.
Worldwide
reach of your business
An
online business has global
reach. In a way people living
anywhere in the world are
potential customers
of an
e-business. Moreover, the e-commerce
site is open 24 hours a day, so shopping
can be done from
there
at any time.
Electronic
catalogues
Electronic
catalogues are used in case
of an online shop. They have
many advantages over paper
catalogues.
Therefore,
online shopping can be done more
quickly and in a more convenient
environment.
Bulk
transactions
One
can do bulk transactions
during one visit to an
e-shop, since there is no
limitation of collecting,
packaging
or carrying goods in contrast to shopping
from a traditional offline
shop.
Improved
supply chain management
Typical
members of a supply chain
management are suppliers,
manufacturers and end
customers. If
suppliers
of raw material have online
presence, the manufacturers can
place emergency orders to
them,
which
can be electronically/quickly processed
on the supplier side. Thus, just in time
delivery of raw
material
is possible without requiring the
manufacturer to arrange for the
accommodation to hold the
inventory.
Ultimately, the goods can be
quickly delivered to the end customers
due to the improved supply
chain
management.
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E-COMMERCE
IT430
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Disadvantages
of E-business
Some
disadvantages of an e-business are given
as under:
Less
security
The
biggest obstacle in the growth of
e-commerce is the issue of security.
Internet is not a secured
medium
of communication.
There are tools or options available to
hackers whereby they can not
only monitor but
also
control any data
communicated over the internet.
Particularly, people are not comfortable
while
providing
their financial information (credit card
no. etc.) online due to the
fact that this information can
be
hacked
and misused.
Less
privacy
The
nature of internet technology is such
that private information of the
online customers can be
easily
collected
and recorded on the server
side. The buying pattern of a
customer can be known to an
e-shop
with
the help of certain sophisticated tools.
You know that cookies
can be used to track
customers online.
On one
hand these technologies are
useful for doing customization
but on the other, they can be
said to
have
caused the breach of informational
privacy rights of a person.
No physical
proximity with items
purchased
In
certain cases the customers cannot
decide about buying a thing before they
can physically examine it.
For
example,
a customer would ideally want to touch
and feel the texture of a piece of cloth
before buying.
Similarly, a
customer would actually want to
smell a perfume before purchasing it. In
the above or any
similar
case, people cannot expect to physically
examine/test the thing while buying it
online. Rather, they
would
prefer to buy such things
from physical shops. An
e-business has a limitation in this
regard.
Online
catalogues vs. Paper
catalogues
Paper
catalogs
Advantages
Easy
to create a catalog without
high technology
Reader
is able to look at the catalog
without computer system
More
portable than electronic
catalog
Disadvantages
Difficult
to update changes in the product
information
Only
limited number of products can be
displayed
Online
or electronic catalogs
Advantages
Easy
to update product
information
Able
to integrate with the purchasing
process
Good
search and comparison
capabilities
Able
to provide timely, up-to-date product
information
Can
provide broad range of product
information
Possibility of
adding voice and motion
pictures
Cost
savings
Easy
to customize
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IT430
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Disadvantages
Difficult
to develop catalogues
Large
fixed cost if used for
small no. of products
Need
for customer skill to deal
with computers and
browsers
E-Business
Models
Following
are some popular online
businesses that one currently
finds on the web:
Storefront
Model
It
represents basic form of
e-commerce where buyers and
sellers interact directly. Merchants need
to
organize
online catalog of products,
take orders through their
websites, accept payments in a
secure
environment
and send items to the
customers. They can also
store and manage customer
data in databases.
A
storefront model uses the shopping cart
technology which allows customers to
accumulate items they
want to
buy during shopping. This is
quite popular in B2C
transactions.
Auction
Model
In this model
there are auction sites to
which the users can log-on
and assume the role of a
bidder or seller.
As a
seller, one has to specify
the minimum price to sell
one's item (called reserve
price), the description of
the item
and the deadline to close the auction. At
the end of the auction, the seller and
the bidder are
notified
by the auction site and the payment
mechanism and delivery mode is
worked out. Auction
sites
charge
commission on sales.
Online
Banking
There is an
online bank providing banking
services to the customers through
internet including services
of
electronic funds
transfer.
Online
Trading and Lending
Online
trading is buying and
selling of stocks/shares of listed
companies using internet.
Many brokerage
houses
have established an online
presence. Online lending is
providing loan through an
internet
transaction.
Online
Recruiting
Employers
can recruit and job
searchers can search for
jobs effectively through
online recruiting web
sites.
Online
News Services
Many
newspapers/magazines have online
presence, providing 24-hour
updates. Online publishing
is
attractive
because printing and
distribution costs are not
involved in it.
Online
Travel Services
One
can make travel arrangements
online without going to travel agent. It
is convenient and less
costly.
There
are online businesses which
help customers find discount
fares for airline tickets,
hotel rooms and
rental
cars or assist in case of lost
luggage.
Online
Entertainment
Internet
technology can quickly provide
information with high
quality multimedia. Therefore, such
e-
businesses
have emerged which sell
music albums, movie tickets,
video films etc. The
content can be easily
downloaded by the
customer in this case.
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IT430
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Online
Automotive Sites and Energy
Online
Certain
web sites allow users to
search and purchase new
and used cars and
their spare parts. Also,
there are
sites
where buyers and sellers
can buy, sell and distribute
energy (oil, electricity etc.) on the
web.
Selling
Intellectual Property Online
Some
e-businesses deal in the sale of
intellectual property rights of companies
such as patents, trade
marks,
trade
names etc.
Online
Art Dealers
Artwork
can be bought from the web
at a discount, e.g pictures, paintings,
posters etc.
E-
Learning
Universities
and various training institutes
are offering high-quality
distance education over the
web. E-
books
and other reading material
can be easily downloaded to one's
computer. is an
example
of this type of business model.
Online
Service Providers
These
e-businesses help improve
policies, procedures, customer
service and general operations of
other
businesses.
They can provide consultancy/professional
services, for example, web
site development
services,
online legal consultancy
services etc.
Online
Shopping Malls
Online
shopping malls are those web
sites which present customers
with a wide selection of
products
and
services at a single place.
Thus, Instead of making several separate
purchases, customers can use
the
mall's
shopping cart technology to purchase
items from many stores in a
single transaction.
Portal
Model
Portals
are the web sites which
provide chance to the visitors to find
almost everything in one
place.
Horizontal
portals provide information about a very broad
range of topics. Search
engine is the
example
of a horizontal portal. Vertical portals
provide information pertaining to a
single area of
interest.
Community Portals such as
those related to medical or
legal profession are the
examples of a
vertical
portal. Online shopping is a popular
addition to the some portals such as
`yahoo.com'. Portals
allow
users to browse independently owned storefronts
unlike online shopping
malls.
Brick-and-Mortar
vs. Click-and-Mortar
businesses
These
two terms refer to the offline
and the online businesses,
respectively. Where a company is
doing its
business
both online and offline,
there is often the problem of
lack of proper integration
between the two
different
channels of business.
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