Ecommerce Essay, Research Paper

Many new and exciting business and purchasing opportunities are becoming available due to the phenomenal growth of the Internet and peoples interest to save time and money by purchasing goods via the web. If you think about all the companies that you know that don’t use computers for their everyday business than you either are stumped or just thought of one that will soon be forced to evolve or will soon go out of business. There are very few successful companies that do not use computers in their everyday business activities. There are also few companies do not use some form of e-commerce. Just as an example to hit home this point, the effect of the Internet is so widespread in today’s business communities, one online article stated that more than 100000 companies have Internet addresses, and 20000 companies have home pages on the Internet as of February 1999. (DataQuest, 1999). Since the beginning of the 1990’s these numbers have quadrupled. Now you might be thinking, “Just what exactly is e-commerce?” To most casual Internet surfers, e-commerce means online shopping or simply purchasing Christmas presents via your personal computer and any Internet browser. As we will soon find out this is not exactly the definition of e-commerce but rather on entity of its capabilities.

In Layman’s terms, e-commerce is the exchange of business information between two or more organizations. An example of this would be buying and selling products or services over the Internet. After e-commerce proved to be an efficient means to conduct long distance transactions it became very accepted. This paper shall discuss some of the advantages and disadvantages of e-commerce, as well as predicting its potential for the future of business.

Electronic commerce, or e-commerce has developed exponentially in the last few years and has left some in the cold. The majority of people think e-commerce is just about buying and selling things over the Internet like through auctioning sites such as E-Bay and U-Bid. However, E-commerce is a broad term describing the electronic exchange of business data between two or more organizations’ computers. Some examples might be the electronic job applications, on-line services like America online, and on-line billing that automatically pays specified bills each month so you don’t have to mail a check. E-commerce also includes buying and selling any item over the Internet, electronic banking so you can transfer funds between accounts or stocks, smart cards, and all other methods of conducting business over digital networks. “The primary technological goal of e-commerce is to integrate businesses, government agencies, and contractors into a single community with the ability to communicate with one another across any computer platform.”(Edwards, 1998)

Electronic commerce started 130 plus years ago by telegraph technology. This is similar to wiring money though an electronic agency for a small fee. The advent of credit cards as a payment system began the revolution of the automated process of commerce that we are so familiar to today. The introduction of the ATM card in the mid 80’s was one of the most recent improvements to electronic commerce and its capabilities. In 1969 when the Department of Defense began funding the research of computer networking and the idea Internet was conceived. By the 80’s the Internet was still in its youth and very few households had access to the Internet, but at very grueling speeds. The Internet, as a means for commerce, did not become reality until the 1990’s. Before this time, it was mainly a tool for the army, and a research device for some American universities. When faster more readily available and relatively cheep means of accessing the Internet were introduced, it was only then did people start to realize how they could capitalize on a greater market and also use the Internet for a fast and efficient means to conduct long distance transactions, as well as an effective way to distribute information

Clearly, E-commerce will change the face of business forever. Companies that were one thought too far away to conduct business, can complete business transactions in a matter of seconds as well as exchange information. ”Dell Computers sells more than $14 million worth of computer equipment a day from its web-site. By taking their customer service department to the web Federal Express began saving $10,000 a day. The Internet provides businesses with the opportunity to sell their products to millions of people, 24 hours a day.” (Baxton, 1999)

In 1998, revenue equaled almost 74 billion dollars and experts predicting that it will climb to as much as 1,234 billion dollars by the year 2002. With statistics like this, anyone can see that e-commerce will be the thing of the future. One article stated, “Without a doubt, the Internet is ushering in an era of sweeping change that will leave no business or industry untouched. In just three years, the Net has gone from a playground for nerds into a vast communications and trading center where some 90 million people swap information or do deals around the world. Imagine: It took radio more than 30 years to reach 60 million people, and television 15 years. Never has a technology caught fire so fast.” (Edwards, 1998)

The advantages of e-commerce are its speed, savings, international distribution and customer service available. However, the disadvantages are privacy and security, consumer willingness to pay, technical challenges for new e-businesses and the organizational commitment. These advantages and disadvantages will be discussed henceforth.

The number one advantage that e-commerce possesses is speed. The Internet and World Wide Web give businesses opportunities to exchange messages or complete transactions almost instantaneously. Even with the slowest connections, doing business electronically is much faster than traditional modes. With increased speeds of communication, the delivery time is expedited and that makes the whole transaction from start to finish more efficient. Also, you can find practically any product available for sale on the Internet, from books and compact disks to, performance car parts. Even more significant is the fact that information appearing on the Internet can be changed extremely rapidly. This gives business owners the ability to inform customers of any changes to the service that you are offering. This also allows for you to update marketing and promotional materials as often and as frequently as you would like.

The second advantage of the electronic commerce is the opportunity it offers to save on costs. By using the Internet, marketing, distribution, personnel, phone, postage and printing costs, among many others, can be reduced. You can start doing business in cyberspace for as little as $100. Most businesses will spend more than this but compared to the cost of opening a physical store, the savings are tremendous. These funds can then be diverted to marketing and advertising of your product or service.

Cyberspace knows no national boundaries. That means you can do business all over the world as easily as you can in your own neighborhood. Since the Internet connects everyone in cyberspace, information is transmitted at the speed of sound or the speed of light, depending on your connection. Either way, distance becomes meaningless, which makes you able to link to anyone on the globe and anyone on the globe can link to you. The ability to provide links makes doing business on the Internet attractive to customers in any part of the world.

Using the web to provide customer support is an excellent vehicle to help build the reliability and effectiveness of your product or service. The ability to provide on-line answers to problems through email or an provide an archive section of frequently asked questions 24 hours a day, 365 days a year, builds customer confidence and retention. Many companies actually pride themselves on the fact that the online customer support is there to help them out. People expect to get a real person when they send mail. This can work to your advantage as a small start-up company, or when you are a large corporation. No matter what business you are involved in, an online-help feature is an extraordinary advantage to have.

A potential source of trouble is customer concerns with privacy and security. Anything sent over the Internet is sent through several different computers before it reaches its destination. The concern regarding Internet security and privacy is that unscrupulous hackers can capture credit card or checking account data as it is transferred or break into computers that hold the same information. Security on the Internet is much like security for your home. There is a point when the effort outweighs the advantages. As with your home you usually stop adding security features when you feel safe. Making a customer feel safe is what is important in doing business on the Internet. Even though no one can guarantee 100% security of transferring financial information over the Internet, e-commerce is still safer than using credit cards at an actual store or restaurant. Also, every time you throw away a credit card receipt you could make yourself vulnerable to fraud. What precautions do e-commerce websites take to avoid such problems? The answer is simple: encryption. Ever since the 2.0 versions of Netscape Navigator and Microsoft Internet Explorer, transactions can be encrypted using Secure Sockets Layer (SSL), an Internet protocol that creates a secure connection to the server, protecting the information as it travels over the Internet. SSL uses public key encryption, one of the strongest encryption methods around. A way to tell that a Web site is secured by SSL is when the URL begins with https instead of http. Browser makers and credit card companies are also promoting an additional security standard called Secure Electronic Transactions (SET). SET encodes the credit card numbers that sit on vendors?? servers so that only banks and credit card companies can read the numbers. Obviously no e-commerce system can guarantee 100-percent protection for your credit card, but you sure don’t have 100 percent protection walking the streets either.

E-commerce is based on the assumption that the participants will pay for what they buy. There has been a noted reluctance among Internet users to actually pay, particularly for the digital goods and services. As a result, much of the current business on the Internet is funded using business models other than user-pays, primarily advertising and sponsorship. If a company is selling something, then they need to find a way to accept payment that is not only convenient for them, but most importantly, convenient for the customers.

Setting up a simple web site can be very inexpensive, but if you are unsure of how to go about creating one, a simple web site thus may not be so simple. And if you don’t know what you are doing, your site will definitely not be effective. A functional web site with online ordering requires expertise in four different areas. If a business owner does not have HTML, CGI scripting, ODBC, and special programs for online clearing options experience, they may want to consider outsourcing. Outsourcing is the use of a third party service company to provide the missing pieces to complete the total functionality of the business. This is a cost-effective way to allow a site to get up and running much faster and concentrate on the product or service rather than getting overwhelmed with the technical challenges.

Finally, a possible disadvantage to e-commerce is not having a strong organizational commitment. A functional web site that is going to be successful will soon need additional resources in technology and skills. E-commerce is evolving at a very rapid rate and the business owner must be willing to evolve with it. Newer and more advanced technology will cost more, but should be supplemented by additional revenues. Also, the company must be willing to change the entire business or start a new one when they can see the need for change. “Yahoo started as a commercial operation in 1995, with a simple, if enormous, list of Web sites to help people navigate the Web. But like the Web itself, Yahoo is changing fast. The once amazing ability to search the entire World Wide Web became outdated in a Net instant, so Yahoo, at the tender age of two years, began reinventing itself as a place to trade stocks, make travel reservations, and conduct commerce.” (Hof, 1998)

Rest assured the future of e-commerce is intact and ever changing. It is quite evident that e-commerce is only gaining speed. As one article stated, “The growth of e-commerce won’t diminish, it will become such a pervasive influence on how a company works that all functions within an organization will have a stake in their e-commerce strategy.” (Wareham, 2000) With Internet traffic doubling every 100 days the digital economy is alive and growing. The huge growth of virtual communities is causing shifts in economic power from large corporations to smaller businesses. “Virtual communities erode the marketing and sales advantages of large companies. A small company with a better product and better customer service can use these communities to challenge larger competitors–something it probably could not do in the real world.” (CommerceNet, 1999) With many of the technological advances in the banking, on-line trading and retail industries, e-commerce will soon become the foundation of our life just as radio, telephone and television have in the past.

Technology has a place in everyone’s day-to-day activities and soon e-commerce will be a major factor in the decisions we have to make. Remember, e-commerce is more complex than just buying Christmas presents. E-commerce, along with the Internet, is an outlet for business. It is a way for the new guy to compete with the proven giants in the industry. An example of this would be the launch of Wal-Marts new web site intended to compete with industry monster Amazon.com. Their new business venture allows Wal-Mart to go outside its usual corporate sphere for Web-savvy talent geared for dot.com commerce, such as engineers, programmers and marketers. It also provides them with the necessary Web-wampum ?V such as options, warrants and shares that’s essential to attracting top talent. (Veverka, 2000)

Simply put, the Internet and the use of e-commerce provides many opportunities for even the smallest of businesses to compete with large corporations, in essence leveling the playing field. With the steady growth of the Internet, and the fact that every year more and more families are plugging in and surfing the web, can a company survive without the use of the Internet and e-commerce? Probably, but not for long. The Internet and e-commerce are here to stay, so businesses can either change with the times, or get left behind. The choice is theirs to make.

Baxton,J. Electronic Commerce [online]. Available: http://www.people.virginia.edu/~jwb7w/icomm/home.html. (April 15, 1999)

CommerceNet. Questions and Answers about Electronic Commerce Basics [online]. Available: http://www.commerce.net/resources/efaq.html. (1999)

Dataquest Technologies. E-commerce An Overview [online]. Available:

http://www.dqindia.com/nov3099/ (1999)

Edwards,P. Making Money in Cyberspace. New York: Penguin Putnam Inc. (1998)

Hof,R. The Click Here Economy [online] Available: http://www.businessweek.com/1998/25/itspec98.htm. (January 22, 1998)

Veverka, M. Plugged In: Wal-Mart gets serious about the Web, Amazon shrugs, but maybe it should watch its back, Barron’s, Volume 80, issue 2, pg. 37 (January 10, 2000)

Wareham, E. E-commerce makes the grade, Computing Canada, Volume 26, issue 1, pg. 35 (January 7, 2000)