Disadvantages of E-Commerce

ВАРИАНТ 18

What is E-Commerce?

There exists no exact definition of e-commerce. Generally it is described as any kind of business transaction where information is exchanged electronically.

To some people it means shopping at a website and buying products online, to other people it means just designing a web page in a way to increase the customers' interest. It does not necessarily describe a process of ordering and paying online.

Electronic trading, in which a supplier provides goods or services to a customer in return for payment is just one special case of electronic commerce.

Other equally valid examples include internal transactions within a single company or provision of information to an external organization without any charge.

E-commerce is concerned with attracting new customers and therefore it involves advertising, public relations and collecting information for and about customers.

It's not enough to get an online order for a product, it's also necessary to have this product and to deliver it to the customer. So e-commerce includes, besides of interacting with customers electronically, all the things a "normal" business would also need.

Categories of E-Commerce

There are 3 categories of e-commerce:

- business-to-business (B2B)

- business-to-consumer (B2C)

- business-to-administration

- consumer-to-administration

An example in the business-to-businesscategory would be a company that uses an electronic way for ordering from its suppliers, receiving invoices and making payments.

The business-to-consumercategory means selling things to consumers via Internet. It is the most well-known form of e-commerce.

The business-to-administrationcategory covers all transactions between companies and government organizations.

The same category exists for consumers and administration, though it is rather seldom.

As the B2C category is the most popular one, we will talk about it.

Advantages of E-Commerce

The following list describes of what may be the main advantages of e-commerce:

· lower transaction costs (if an e-commerce site is organized well, you won't even need any office equipment - however, it is rather seldom)

· availability (people from everywhere and at any time of the day can visit your site, get information and put orders)

· large quantity of information (a company can build a very large catalogue with a lot of information on the web - just think of Amazon with it's 3 Mio. articles)

· providing "up-to-date" information (you can update your site quickly and make important information available in time)

· comparing prices and products

· quickness (the customers' orders and enquiries can be handled immediately)

Disadvantages of E-Commerce

There are a lot of hard aspects about e-commerce as the recent failures in this branch show:

- making people to visit your site (getting traffic to come to your web site)

- how do you make yourself different from a (large) competition

- getting people to buy something at your site (people usually feel VERY uneasy about buying via Internet)

- you still need money (capital) to maintain your system and provide an effective customer support

So e-commerce does not mean that you can make profits easier than in a "normal" business. You have to manage all the activities concerned with marketing, finance, distribution, purchase and public relations.

These problems are the most relevant ones as competition grows all the time and people still try to avoid buying online. Stories about hackers using your credit card number or even large companies making losses in trying themselves in e-commerce - all this makes people even more skeptical about buying anything online.

However, these problems are also common in the old economy. So there are a few other hard aspects about e-commerce:

- legality (concerning international e-commerce companies; business contracts are defined

differently by law in every country)

- ownership (the copyright problem is a very big one)

- privacy and security