Electronic commerce or e-commerce, refers to business activities like buying and selling of products and services carried out over electronic systems like the Internet and computer networks. e-commerce has proved to be a suitable alternative for people who want to shop and transact from the confines of their home. However, there are certain challenges concerning the security of a customer’s confidential information that need to be taken care of.
The history of e-commerce dates back to 1970, when for the first time, electronic data interchange (EDI) and electronic fund transfer were introduced. Since then, a rapid growth of e-commerce has pervaded almost every aspect of business such as supply chain management, transaction processing, Internet marketing, and inventory management. But like any conventional business, electronic commerce is also characterized by some advantages and inherent drawbacks. Let’s have a look at some of these important advantages and disadvantages of electronic commerce.
The greatest and the most important advantage of e-commerce, is that it enables a business concern or individual to reach the global market. It caters to the demands of both the national and the international market, as your business activities are no longer restricted by geographical boundaries. With the help of electronic commerce, even small enterprises can access the global market for selling and purchasing products and services.
Even time restrictions are nonexistent while conducting businesses, as e-commerce empowers one to execute business transactions 24 hours a day and even on holidays and weekends. This in turn significantly increases sales and profit.
Better Deals for Customers
Electronic commerce gives the customers the opportunity to look for cheaper and quality products. With the help of e-commerce, consumers can easily research on a specific product and sometimes even find out the original manufacturer to purchase a product at a much cheaper price than that charged by the wholesaler.
No Hassles of conventional Shopping
Online commerce also offers buyers a wider range of products and services to choose from, as opposed to conventional shopping, without the hassles of lugging around heavy shopping bags and getting stuck in messy traffic jams, which turns out to be more convenient and time-saving. Besides these, people also come across reviews posted by other customers, about the products purchased from a particular e-commerce site, which can help make purchasing decisions.
Lower Costs for the Business
- For business concerns, e-commerce significantly cuts down the cost associated with marketing, customer care, processing, information storage and inventory management.
- It reduces the time period involved with business process re-engineering, customization of products to meet the demand of particular customers, increasing productivity and customer care service.
- Electronic commerce reduces the burden of infrastructure to conduct businesses like physical store setups and thereby raises the amount of funds available for profitable investment.
- It also enables efficient customer care service by collecting and managing information related to customer behavior, which in turn helps develop and adopt an efficient marketing and promotional strategy.
Authenticity and Security
- Due to the lack of trust, a large number of people do not use the Internet for any kind of financial transaction.
- Many people have reservations regarding the requirement to disclose personal and private information for security concerns.
- Some people simply refuse to trust the authenticity of completely impersonal business transactions, as in the case of e-commerce.
The time period required for delivering physical products can also be quite significant in case of e-commerce. Hence it is not suitable for perishable commodities like food items. A lot of phone calls and e-mails may be required till you get your desired products.
People prefer to shop in the conventional way than to use e-commerce for purchasing food products and objects that need to be felt and touched before actually making the purchase. So e-commerce is not suitable for such business sectors.However, returning the product and getting a refund can be even more troublesome and time-consuming than purchasing, in case you are not satisfied with a particular product.
Thus, evaluating the various pros and cons of electronic commerce, we can say that the advantages of e-commerce have the potential to outweigh the disadvantages. A proper strategy to address the technical issues and to build up customers’ trust in the system can change the present scenario and help e-commerce adapt to the changing needs of the world.