E-commerce – Features, Drivers, Factors, Issues, Applications

E-commerce is the use of electronic communication and digital information processing technology in business transactions to create, transform and redefine relationships for value creation between or among organisations and individuals.

It simply refers to the buying and selling of products, services and information via computer networks including internet.

E-commerce is concerned with system and business processes that support –

• creation of information sources
• movement of information over global networks
• effective and efficient interaction among producers, consumers, intermediaries and seller

It utilizes electronic networks to implement daily economic activities such as pricing, payments, contracting, shipping and delivery.

 

Features of E commerce →

1. Ubiquity – It is everywhere i.e. e-commerce is not restricted to a physical place.
2. Global reach – It is possible to conduct business transactions worldwide.
3. Universal Standards – E-commerce makes use of Internet and World Wide Web to reach customers which has the same technical standards worldwide.
4. Richness – E-commerce provides rich content in form of interactive graphics, videos, animations etc.
5. Interactive –A two way communication between business and customers is possible.
6. Personalisation and customization – It allows for personalization and customization of products.
7. Information density – E-commerce technologies provide useful and quality information thereby reducing information costs.

 

Driving forces behind E commerce

The Major Driving forces behind the growth of E-commerce are 

• Global Customers – Presense of customers of a product worldwide.
• Global Products – Demand for foriegn products by customers.
• Global Operations – Development of Transnational and Multinational Corporations
• Global Resources – Use of foreign raw material, labour, machines for production 
• Global Collaborations – Joint ventures, Mergers, Strategic Alliances 
• Global Competition – Race to capture market share in developing countries

 

Factors Affecting E-commerce –

Key drivers of e-commerce  may be categorized in terms of  4 key business environment factors which influence the e-commerce industry. They are

1. Technological Factors –

• State of telecommunication infrastructure
• Access to new technological developments
• Bandwidth availability and Internet rates

2. Political Factors –  

• Number and type of government initiatives to support use and development of modern technology
• Discouraging rules and regulations of the government
• Ability of the government to to adapt and plan for technological growth and development

3. Social Factors –

• Literacy level of the people and penetration rate of PC`s 
• Number of internet users  
• Willingness and ability of the people to adopt new technology

4. Economic Factors – 

• Economic growth of the country 
• Average income of the people
• Cost of Hardware and Software
• Cost of access to telecom infrastructure
• Commercial Structure and Innovative 

 

Traditional Commerce Vs E-commerce

Traditional Commerce	E – Commerce
Role of middleman add up to the overhead cost	It is cost effective. Total overhead cost is comparative by less
Less convenient. Customer has to directly visit the outlet.	Convenient due to online browsing
Business has to incur a lot of expenses to expand	Easy to expand the size of market
Role of middleman cut down the profits	Helps to increase the sales of the organisation and greater profits by cutting down costs
Physical inspection of goods is possible	Does not allow physical inspection of goods while purchasing
Business is opened for a limit time	24/7 service is available
It is suitable for perishable products	It is not suitable for perishable goods
Face to face interaction between business and customer is possible	Interaction between the business and customer is through a computer
It involves manual processing of business transactions, therefore there are more chances of a clerical error	Automated processing of business transactions to minimizes or eliminates human errors
It takes a lot of time and money to introduce a new product and get proper feedback	It is easy to introduce a new product on website and get immediate feed back
Limited reach	Global reach

 

Issues in implementing E Commerce

Macro Environment Issues (external to an org.)	Micro Environment Issues (internal or within)
Poor Internet infrastructure	Passive attitude of Top management towards use of new technology
Poor Technology infrastructure	Inter-Operability of existing systems with mordern technologies
Poor Commercial infrastructure	Lack of Skilled personnel
Poor Security infrastructure	Lack of a Successful Business Model

 

Advantages of E commerce  

Advantages to business –

1. Increased potential market share and global reach
2. It is easy to expand market with minimal capital outlay
3. It enables a business to procure material and services from other companies
4. It shortens or even eliminates marketing distribution channels, making products cheaper and vendor’s profit higher
5. It enables customization of products
6. Low cost advertising cost and entry barriers
7. It allows lower inventories and other cost savings like cost of creating, processing, distributing, storing and retrieving paper based information
8. No 24 hour time constraint
9. It is easier to launch a new product online

 

Advantages to Consumers –

• It enables 24/7 access
• It saves time, money and effort
• It provides more choices i.e. wide range of products and services
• Price and Product comparisons are available online
• Improved buying experience and delivery processing
• It provides a global market place
• It enables personalization and customization of products and services
• Customer enjoy benefits of a competitive environment

 

A typical E-Commerce Model –

Marketing & Research	Online Surveys, Search Engines, Social Media, Private Browsers, Feedback forms, Planning and forecasting
Information Exchange	Banner Ads, Interactive Ads, Website, E-catalogue
Order Placement	Online order processing, Browsing, Customized orders
Payment & Delivery	Electronic payment system, online delivery, physical shipments and delivery processing
Customer Service	E-CRM, Telephone support, FAQ sheets, Online support, Live chat, After sale service

 

Business Applications of E commerce –

Real Estate	Online Banking
E-Tailing	Stock Trading
E- Procurement	Import & Export
Online diagnosis and Treatment	Hotels & Tourism
Online Education & Training	Advertising & Promotion

 

E-commerce Models –

E-commerce Models	Example
B2B – Business to Business	Oracle, Alibaba, Qualcomm
B2C – Business to Consumer	Intel, Dell, Snapdeal
C2C – Consumer to Consumer	OLX, Quikr, Ebay