Ecommerce Compare and Constrast Essay

This essay has a total of 2726 words and 13 pages.


Table of Contents

I. E-Commerce: An Introduction
II. History of E-Commerce
III. Economic Impact
IV. Advantages of E-Commerce
V. Disadvantages of E-Commerce
VI. The Future of E-Commerce
E-Commerce ¡V An Introduction
With the astonishing growth of the Internet, many companies are finding new and exciting
ways to expand upon their business opportunities. There are very few successful companies
that do not use computers in their everyday business activities, which also means there
are few companies that do not use e-commerce. To emphasise the point that the effect of
the Internet is so widespread in today¡¦s business communities, one online article stated
that more than 100000 companies have Internet addresses, and 20000 companies have home
pages on the Internet as of February 1999. (DataQuest, 1999). These numbers have more than
tripled since 1995, and the trend shows no signs of slowing. But what exactly is
e-commerce? To most casual Internet surfers, e-commerce means online shopping ¡V
¡§workaholics pointing their web browser to to order an emergency present
because they forgot someone¡¦s birthday again.¡¨ (Weiss, 1999) As we will soon find out,
this is far from the case.

Simply put, e-commerce is the exchange of business information between two or more
organizations. An example of this would be buying and selling products or services over
the Internet. E-commerce became very popular soon after it proved to be an efficient means
to conduct long distance transactions. The purpose of this report is to discuss some of
the advantages and disadvantages of e-commerce, as well as examining its potential for the
future of business.

Electronic commerce, or e-commerce has developed very rapidly in the last few years and
has left some people wondering what it is all about. "Most people think e-commerce is just
about buying and selling things over the Internet." (Wareham, 2000) E-commerce is a broad
term describing the electronic exchange of business data between two or more
organizations' computers. Some examples might be the electronic filing of your income tax
return, on-line services like Prodigy, and on-line billing for services or products
received. E-commerce also includes buying and selling any item over the Internet,
electronic fund transfer, smart cards, and all other methods of conducting business over
digital networks. ¡§The primary technological goal of e-commerce is to integrate
businesses, government agencies, and contractors into a single community with the ability
to communicate with one another across any computer platform.¡¨(Edwards, 1998)

History of E-commerce
Electronic commerce was built on a foundation that was started more than 125 years ago
with Western Union's money transfer as an example of telegraph technology. In the early
1900¡¦s the advent of credit cards as a payment system revolutionised the process of
automated commerce functions. In the mid 1980¡¦s the introduction of the ATM card was the
latest improvement to electronic commerce. The Internet was conceived in 1969 when the
Department of Defence began funding the research of computer networking. The Internet, as
a means for commerce, did not become reality until the 1990¡¦s. Before this time, it was
mainly a tool for the army, and a research device for some American universities. Its
popularity grew when it proved to become a fast and efficient means to conduct long
distance transactions, as well as an effective way to distribute information.

Economic Impact
Clearly, E-commerce will change the face of business forever. Companies that are thousands
of miles away can complete business transactions in a matter of seconds as well as
exchange information. As one online article explained:

¡§Dell Computers sells more than $14 million worth of computer equipment a day from its
web-site. By taking their customer service department to the web Federal Express began
saving $10,000 a day. The Internet provides businesses with the opportunity to sell their
products to millions of people, 24 hours a day.¡¨ (Baxton, 1999)

Figure #1 shows the amount of revenues generated by the on the Internet dating back to
1996 as well as estimating possible revenues through the year 2002. With 1998, revenue
equalling almost 74 billion dollars and experts predicting that it will climb to as much
as 1,234 billion dollars by the year 2002, anyone can see that e-commerce is the wave of
the future.

Figure #1- Internet generated revenues in US dollars. Source: NUA Internet Surveys
"Without a doubt, the Internet is ushering in an era of sweeping change that will leave no
business or industry untouched. In just three years, the Net has gone from a playground
for nerds into a vast communications and trading centre where some 90 million people swap
information or do deals around the world. Imagine: It took radio more than 30 years to
reach 60 million people, and television 15 years. Never has a technology caught fire so
fast." (Edwards, 1998)

Advantages of E-commerce
„h Speed
„h Savings
„h International Distribution
„h Customer Service
The number one advantage that e-commerce possesses is speed. The Internet and World Wide
Web gives businesses opportunities to exchange messages or complete transactions almost
instantaneously. Even with the slowest connections, doing business electronically is much
faster than traditional modes. With increased speeds of communication, the delivery time
is expedited and that makes the whole transaction from start to finish more efficient.
Also, you can find practically any product available for sale on the Internet, as one
author put it ¡§from books and compact disks (from to French bread
(available from¡¨, (Buskin, 1998) Even more significant is the
fact that information appearing on the Internet can be changed extremely rapidly. This
gives business owners the ability to inform customers of any changes to the service that
you are offering. This also allows for you to update marketing and promotional materials
as often and as frequently as you would like.

The second advantage of the electronic commerce is the opportunity it offers to save on
costs. By using the Internet, marketing, distribution, personnel, phone, postage and
printing costs, among many others, can be reduced. You can start doing business in
cyberspace for as little as $100. Most businesses will spend more than this but compared
to the cost of opening a physical store, the savings are tremendous. These funds can then
be diverted to marketing and advertising of your product or service.

Cyberspace knows no national boundaries. That means you can do business all over the world
as easily as you can in your own neighbourhood. Since the Internet connects everyone in
cyberspace, information is transmitted at the speed of sound or the speed of light,
depending on your connection. Either way, distance becomes meaningless, which makes you
able to link to anyone on the globe and anyone on the globe can link to you. The ability
to provide links makes doing business on the Internet attractive to customers in any part
of the world.

Using the web to provide customer support is an excellent vehicle to help build the
reliability and effectiveness of your product or service. The ability to provide on-line
answers to problems through email or an provide an archive section of frequently asked
questions 24 hours a day, 365 days a year, builds customer confidence and retention. In
fact, a whole series of IBM E-commerce commercials were based on this one single point.
The Internet tends to be a more personal environment. People expect to get a real person
when they send mail. This can work to your advantage as a small start-up company, or when
you are a large corporation. No matter what business you are involved in, an online-help
feature is an extraordinary advantage to have.

Disadvantages of E-commerce
„h Privacy and Security
Continues for 7 more pages >>