Advantages of electronic commerce
All the advantages of electronic commerce for businesses can be summarized in one statement:
Electronic commerce can increase sales and decrease costs. Advertising done well on the web can get even a small firm’s promotional message out to potential consumers in every country in the world. A firm can use electronic commerce to reach narrow market segments that are geographically scattered. The web is particularly useful in creating virtual communities that become ideal target markets for specific types of products or services. A virtual community is a gathering of people who share a common interest, but instead of this gathering occurring in the physical world, it takes place on the internet.
♦ A business can reduce the costs of handling sales inquiries, providing price quotes, and determining product availability by using electronic commerce in its sales support and order-taking processes.
♦ Electronic commerce provides buyers with a wider range of choices than traditional commerce.
♦ Electronic commerce provides buyers with an easy way to customize the level of detail in the information they obtain about a prospective purchase.
♦ Electronic payments of tax refunds, public retirement, and welfare support cost less to issue and arrive securely and quickly when transmitted over the internet.
♦ Electronic payments can be easier to audit and monitor than payments made by cheque, providing protection against fraud and theft losses.
♦ Electronic commerce can also make products and services available in remote areas.
Disadvantages of electronic commerce
Some businesses are less suitable for electronic commerce. Such businesses may be involved in the selling of items which are perishable or high-cost, or which require inspection before purchasing. Most of the disadvantages of electronic commerce today, however, stem from the newness and rapidly developing pace of the underlying technologies. These disadvantages will disappear as electronic commerce matures and becomes more available to and accepted by the general population.
♦ Return-on-investment is difficult to calculate.
♦ Many firms have had trouble recruiting and retaining employees with the technological, design, and business process skills needed to create an effective electronic commerce presence.
♦ Difficulty of integrating existing databases and transaction-processing software designed for traditional commerce into the software that enables electronic commerce.
♦ Many businesses face cultural and legal obstacles to conducting electronic commerce.