E-Commerce Essay, Research Paper

Electronic Commerce

Electronic commerce, also known as e-commerce, has developed rapidly in the last few years. In this paper, I will talk about the advantages along with the disadvantages of e-commerce. E-commerce consists of many things. People today are aware of the common phrase ‘e-commerce’, but there is a lot more to it then they are aware of. “Most people think e-commerce is just about buying and selling things over the Internet” (Wareham, 2000). E-commerce is a broad term describing the electronic exchange of business data between two or more organizations’ computers. E-commerce includes buying and selling any item over the Internet, electronic fund transfer, 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). Putting companies on the Internet to sell products or to organize any type of business has many advantages and disadvantages.

With the quick growth of the Internet, many companies are finding new and exciting ways to expand their business opportunities. To emphasize the point that the effect of the Internet is so widely spread in today’s business communities, one online article I found stated that more than 100,000 companies have Internet addresses, and 20,000 companies have home pages on the Internet as of February 1999 (DataQuest, 1999). These numbers have tripled since 1995, and this growth shows no signs of slowing down.

To the average web surfer, e-commerce means online shopping. Internet surfers go on the web purchasing anything from books to baseball tickets. 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.

The Internet was conceived in 1969 when the Department of Defense began funding the research of computer networking. In the mid 1980’s, the introduction of the ATM card was the newest addition to electronic commerce. The Internet did not really start to become a way of commerce until the 1990’s. Before this time, it was mainly used in the Army. It grew popular when it proved to become a fast and efficient way to make long distance transactions, as well as an effective way to distribute information.

E-commerce will change the face of business forever. Companies that are thousands of miles away can make business transactions in a matter of seconds, and also exchange information. As one online article explained:

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).

“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 number one advantage that e-commerce possesses is speed. The Internet and World Wide Web give businesses a chance to exchange messages or complete transactions almost instantaneously. Even with the slowest connections, doing business electronically is much faster than traditional ways. Increased speeds of communication allow for more efficient delivery times. In addition, you can find practically any product available for sale on the Internet, as one author put it “from books and compact disks (from www.amazon.com) to french bread (available from www.sourdoughbread.com)” (Buskin, 1998). Even more important 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.

The second advantage of the electronic commerce is the opportunity it offers to save on costs. By using the Internet, marketing, distribution, personnel, telephone, postage and printing costs, among many others, can be reduced. You can start doing business on the Internet 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. Think about all the things that are required for a physical store: warehouse space, renting space, money for the appearance for the store, alarm systems, people to work the phones and keep the place clean

Another major advantage of e-commerce is that the Internet has no national boundaries. That means you can do business all over the world as easily as you can in your own neighborhood. Distance becomes meaningless, which makes you able to connect to anyone on the globe and anyone on the globe can connect to you. The ability to provide links on web pages makes doing business on the Internet attractive to customers.

Using the web to provide customer support is an excellent way to help build the reliability and effectiveness of your product or service. The ability to provide on-line answers to problems through email or to provide an archive section of frequently asked questions 24 hours a day, 365 days a year, builds customer confidence and retention. This is extremely helpful and it is a service that many of us have used at least once. In fact, a whole series of IBM E-commerce commercials were based on this one single point. The Internet tends to be a more personal environment. People expect to get a real person when they send mail. Problems are solved faster and more thorough through the advantages of the Internet and e-commerce.

One of the main concerns that people have with doing business over the Internet has to do with privacy and security. Anything sent over the Internet is sent through several different computers before it reaches its destination. A concern many have is that a hacker will capture credit card information as it is transferred, or break into computers that hold the same information. Here is an example of this type of situation: My best friend at home ordered concert tickets online. Two weeks later, the cops showed up at her house because the credit card company noticed some unusual spending patterns. They then found out that the credit card information was stolen and the web site was a fraud.

The main concern that web sites have is making a customer feel safe. “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, or paying for something with the use of a 1-800 number” (unknown author, 1999). Think about this: Every time you throw away a credit card receipt, you make yourself vulnerable to fraud. What precautions do e-commerce websites take to avoid such problems? The answer is encryption. Transactions can be encrypted using Secure Sockets Layer (SSL). This is an Internet language that creates a secure connection to the server, protecting the information as it travels over the Internet. SSL uses public key encryption (which we learned about in our text book), one of the strongest encryption methods around. A way to tell that a Web site is secured by SSL is when the address comes up on the web site, it begins with https instead of http. “Obviously no e-commerce system can guarantee 100-percent protection for your credit card, but you are less likely to get your pocket picked online than in a real store” (Weiss, 1999).

Setting up a simple web site can be inexpensive, but if you don’t know how to go create one, it may not be so simple. In addition, if you do not know what you are doing, your site will definitely not be effective.

Finally, a possible disadvantage to e-commerce is not having a strong your business be ready to make the commitment that major changes may occur. A usable web site that is going to be successful will need additional resources in technology and skills. New types of jobs will be offered. Many jobs that aren’t needed will be omitted. Of course, many companies may not be willing to make this commitment. E-commerce is happening at a very rapid rate and the business owner must be willing to change with it. Newer and more advanced technology will cost a lot. In addition, 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 list of Web sites to help people navigate the Web. However, 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. Like electricity, antibiotics, or the car, the Internet is a revolutionary technology” (France, 1999). It is obvious that e-commerce is growing extremely quick. As one article stated, “The growth of e-commerce will not 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 our decisions we make. Smaller companies have an equal chance to compete with large ones with a lot more money. On the web, every business is just as big as the other. The only thing separating them is a web address. An example of this would be the launch of Wal-Mart’s new web site that is trying to compete with Amazom.com. Amazon.com is a huge on the web compared to Wal-Mart. “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 tools and options, warrants and shares that is essential to attracting top talent” (Veverka, 2000). As I already have said, the Internet and e-commerce provide many opportunities for even the smallest businesses to compete with large corporations, on the same level. With the steady growth of the Internet, and the fact that every year more and more families are “signing on” and surfing the web, a big question in the future will be: can a company survive without the use of the Internet and e-commerce? Probably, but not really for long. The Internet and e-commerce are here to stay, so businesses either can change with the times, or are left out in the dust. The choice is theirs to make. The Internet has changed the face of communications and how business is conducted. To remain competitive, a business must take advantage of this rapid growth.