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Q. 2 List the advantages and disadvantages of eCommerce

Advantages and Disadvantage of E-commerce

Advantage of E-Commerce
Some of the key strengths of using the Internet for businesses include the following:
1. 24 x 7 operation. Round-the-clock operation is an expensive proposition

Web Client TCP/IP Web Server
In the 'brick-and-mortar' world, while it is natural in the 'click-andconquer' world.
2. Global reach. The net being inherently global, reaching global customers is relatively easy on the net compared to the world of bricks.
3. Cost of acquiring, serving and retaining customers. It is relatively cheaper to acquire new customers over the net; thanks to 24 x 7 operation and its global reach. Through innovative tools of 'push' technology, it is also possible to retain customers' loyalty with minimal investments.

4. An extended enterprise is easy to build. In today's world every enterprise is part of the 'connected economy'; as such, you need to extend your enterprise all the way to your suppliers and business partners like distributors, retailers and ultimately your end-customers. The Internet provides an effective (often less expensive) way to extend your enterprise beyond the narrow confines of your own organization. Tools like ERP, SCM and CRM easily deployed over internet, permitting amazing efficiency in time needed to market, customer loyalty, on-time delivery and eventually profitability.

5. Disintermediation. Using the Internet, one can directly approach the customers and suppliers, cutting down on the number of levels and in the process, cutting down the costs.

6. Improved customer service to your clients. It results in higher satisfaction and more sales.

7. Power to provide the 'best of both the worlds'. It benefits the traditional business side-by-side with the Internet tools.

8. A technology-based customer interface. In a brick- and-mortar business, customers conduct transactions either face-to-face or over the phone with store clerks, account managers, or other individuals. In contrast, the customer interface in the electronic environment is a 'screen-to-face' interaction. This includes PC based monitors, ATM machines, PDAs, or other electronic devices such as the DoCopMo iMode in Japan and the Nokia 7100 in Europe. Operationally, these types of interfaces place an enormous responsibility on the organization to capture and represent the customer experience because there is often no opportunity for direct human intervention during the encounter. If the interface is designed correctly, the customer will have no need for a simultaneous or follow-up phone conversation. Thus, the 'screen-to- - customer' interface has the potential to both increase sales and decrease costs. When the interface does not work, not only is the revenue lost but the organization also incurs the technology costs. Thus, a poorly designed customer interface has both negative revenue and cost implications.

9. The customer controls the interaction. At most websites, the customer is in control during screen-to-face interaction, in that the Web largely employs a 'self service' model for managing commerce or community based interaction. The customer controls the search process, the time spent on various sites, the degree of price/product comparison, the people with whom he or she comes in contact, and the decision to buy. In a face-to-face interchange, the control can rest with either the buyer/seller or the community member. At a minimum, the seller attempts to influence the buying process by directing the potential buyer to different products or locations in the store, overcoming price objections and reacting in real item to competitive offering. The virtual store can attempt to shape the customer experience with uniquely targeted promotions, reconfiguration of storefronts to reflect past search behaviour, recommendations based on previous behaviour of other similar users, and access to proprietary information.

10. Knowledge of customer behaviour. While the customer controls the interaction, the firm has unprecedented access to observe and track individual consumer behaviour. Companies, through a third-party measurement firm such as Vividence and Accrue, can track a host of behaviors on web sites visited, length of stays on a site, page views on a site, contents of wish lists and shopping carts, purchases, dollar amounts of purchases, repeat purchases behaviour, conversion rates of visitors who have completed transactions and other metrics. This level of customer behaviour tracking, in contrast with tracking consumer attitudes, knowledge or behavioral intentions, is not possible in the brick-and-mortar world. Armed with this information, companies can provide one-to-one customization of their offerings. In addition, companies can dynamically publish their storefronts on the Web to configure offerings to individual customers. In a tactical embellishment, electronic retailers can welcome a user back by name. In more strategic terms, an online business can actually position offers and merchandise in ways that uniquely appeal to specific customers.

11. Network economics. In information intensive industries, a key competitive battleground centres on the emergence of industry standard products, services, components, and or architecture. Network effects, as described by Metcalfe's law, can best be expressed as the situation where the value of a product or service rises as a function of the number of other users who are using the product. A classic example is the fax machine of other people who adopt the technology.

A key characteristic of network's economic is positive feedback, that is, as the installed base grows, more and more users are likely to adopt the technology because of the installed base. Many commercial wares in the digital economy revolve around setting a standard, growing the installed base and attempting to 'lock-in' customers to the standard because of rising switching costs. This applies to both hardware (e.g. cable modems versus DSL lines) and software (e.g. MP3 versus streaming audio). A key result of network effects and positive feedback is 'increasing return' economies as compared to the traditional decreasing-returns model often associated with the brick-and-mortar world. It also means that the traditional realities of marketing such as the importance of word-of-mouth (WOM) among potential customers, become greatly magnified in this new environment. It is this turbo charged WOM phenomenon that makes viral marketing a reality for consumer-oriented e-commerce business such as ICQ in instant messaging system.

Disadvantages of E-commerce
Some business processes may never lend themselves to electronic commerce. For example, perishable foods, and high-cost items (such as jewellery, antiques, and the like), may be difficult to inspect from a remote location. Most of disadvantages are from the newness and rapid pace of underlying technologies, which would disappear as e-commerce matures and becomes more and more available to and gets accepted by the general population. Many products and  services require a critical mass of potential buyers who are well-equipped and willing to buy through the Internet.

Businesses often calculate the return-on-investment before committing to any new technology. This has been difficult to do with e-commerce, since the costs and benefits have been hard to quantify. Costs, which are a function of technology, can change dramatically even during short-lived ecommerce implementation projects, because the underlying technologies are changing rapidly. Many firms have had trouble in recruiting and retaining employees with technological, design, and business process skills needed to create an effective e-commerce atmosphere. Another problem facing firms that want to do business on the Internet is the difficulty of integrating existing databases and transaction-processing software designed for traditional commerce into a software that enables e-commerce. In addition to technology and software issues, many businesses face cultural and legal obstacles in conducting e-commerce. Some consumers are still somewhat fearful of sending their credit card numbers over the Internet. Other consumers are simply resistant to change and are uncomfortable viewing merchandise on a computer screen rather than in person. The legal environment in which e-commerce is conducted is full of unclear and conflicting laws. In many cases, government regulators have not kept up with the trends in technologies.


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