School of Information Systems

E-Commerce – Part 2

C. Benefits of E-Commerce

  1. Benefits to organizations
  • Makes national and international markets more accessible
  • Lowering costs of processing, distributing, and retrieving information
  1. Benefits to customers
  • Access a vast number of products and services around the clock (24/7/365)
  1. Benefits to Society
  • Ability to easily and conveniently deliver information, services and products to people in cities, rural areas and developing countries.

D. Limitations of E-Commerce :

  1. Technological Limitations
  • Lack of universally accepted security standards
  • Insufficient telecommunications bandwidth
  • Expensive accessibility
  1. Non-technological Limitations
  • Perception that EC is unsecure
  • Unresolved legal issues
  • Lacks a critical mass of sellers and buyers

 E. Impact on Markets and Retailers

Economists have theorized that e-commerce ought to lead to intensified price competition, as it increases consumers’ ability to gather information about products and prices. Research by four economists at the University of Chicago has found that the growth of online shopping has also affected industry structure in two areas that have seen significant growth in e-commerce, bookshops and travel agencies. Generally, larger firms are able to use economies of scale and offer lower prices. The lone exception to this pattern has been the very smallest category of bookseller, shops with between one and four employees, which appear to have withstood the trend.[56] Depending on the category, e-commerce may shift the switching costs—procedural, relational, and financial—experienced by customers.

F. Impact on Supply Chain Management

E-commerce has the capability to integrate all inter-company and intra-company functions, meaning that the three flows (physical flow, financial flow and information flow) of the supply chain could be also affected by e-commerce. The affections on physical flows improved the way of product and inventory movement level for companies. For the information flows, e-commerce optimised the capacity of information processing than companies used to have, and for the financial flows, e-commerce allows companies to have more efficient payment and settlement solutions.

G Social Impact

To understand how the e-commerce has affected the society and economy, this article will mention six issues below:

  1. E-commerce has changed the relative importance of time
  2. E-commerce offers the consumer or enterprise various information they need, making information into total transparency, and enterprises are no longer is able to use the mode of space or advertisement to raise their competitive edge.
  3. In fact, during the economic activity in the past, large enterprises frequently had the advantage of information resources at the expense of consumers.
  4. The new economy led by e-commerce changes humanistic spirit as well, but above all, employee loyalty.
  5. Online merchants gather purchase activity and interests of their customers.
  6. Online merchandise is searchable, which makes it more accessible to shoppers.
Marisa Karsen