Electronic Commerce

Benefits to Consumers

Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location. For example, checking balances, making payments, obtaining travel and other information. In one case a pop star set up web cameras in every room in his house, so that he could check the status of his home by logging onto the Internet when he was away from home on tour.

  • Electronic commerce provides customer with more choices; they can select from many vendors and from many more products.
  • Electronic commerce frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.
  • In some cases, especially with digitized products, E-Commerce allows quick delivery.
  • Customers can receive relevant and detailed information in seconds, rather than days or weeks.
  • Electronic commerce makes it possible to participate ate in virtual auctions.
  • Electronic commerce allow customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.
  • E-commerce facilitates competition, which results in substantial discounts.
  • An environment of competition where substantial discounts can be found or value added, as different retailers vie for customers. It also allows many individual customers to aggregate their orders together into a single order presented to wholesalers or manufacturers and obtain a more competitive price.

Benefits of e-commerce to society

  • Electronic commerce enables more individuals to work at home and to do less travelling for shopping, resulting in less traffic on the roads and lower air pollution.
  • Electronic commerce allows some merchandise to be sold at lowest prices, so less affluent people can buy more and increase their standard of living.
  • Electronic commerce enables people in third world countries and rural areas to enjoy products and services that otherwise are not available to them.
  • Electronic commerce facilitates delivery of public services, such as health care, education, and distribution of government social services at a reduced cost and/or improved quality. Health care services, e.g., can reach patients in rural areas.
  • Enables people in developing countries and rural areas to enjoy and access products, services, information and other people which otherwise would not be so easily available to them.


These again will be dealt with according to the three major stakeholders –

  • Organisations
  • Consumers and
  • Society

Limitations of e-commerce to organizations

  • Lack of sufficient system security, reliability, standards and communication protocols. There are numerous reports of websites and databases being hacked into, and security holes in software. For example, Microsoft has over the years issued many security notices and ‘patches’ for their software.
  • Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch up’ and not be left behind.
  • Under pressure to innovate and develop business models to exploit the new opportunities which sometimes leads to strategies detrimental to the organisation. The ease with which business models can be copied and emulated over the Internet increase that pressure and curtail longer-term competitive advantage.
  • Facing increased competition from both national and international competitors often leads to price wars and subsequent unsustainable losses for the organisation.
  • Problems with compatibility of older and ‘newer’ technology. There are problems where older business systems cannot communicate with web based and Internet infrastructures, leading to some organisations running almost two independent systems where data cannot be shared. This often leads to having to invest in new systems or an infrastructure, which bridges the different systems. In both cases this is both financially costly as well as disruptive to the efficient running of organisations.

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