E-commerce and Its Importance in Business - Dissertation Example

? E-commerce and Its Importance in Business Table of Contents Table of Contents 2 Introduction 3 E-Commerce and Business Transformation 4 Drawbacks of E-Commerce 8 Benefits of E-Commerce to Customers 11 Conclusion 14 References 15 Introduction Electronic commerce (e-commerce) is fundamentally described as the conduct of various business transactions through the execution of telecommunication network (Sage Publication, 2012). Almost, all the sectors including finance, retail and communication segments of businesses are enormously being affected by e-commerce activities. In other words, it can broadly be stated that e-commerce has dramatically changed the business modes by a significant level. With the increase in the number of internet users, the popularity of e-commerce has been significantly increased by a greater extent. Customers and organisations are now much attracted towards performing e-commerce activities and are considering the use of internet as an important alternative over the traditional modes of business. In relation to the perception of e-commerce, the online marketing has provided a new paradigm to consumer behaviour. Online stores have offered customers with wide choice of products and convenient ways of shopping as well as payment modes (OECD, 1999). The emergence of e-commerce has relatively removed the barriers of customers and online traders to efficiently cooperate with each other irrespective of geographically distance. E-commerce enhanced the speed of business transactions and reduced the time that is consumed by the organisations while making business transactions. However, the intensified dependence on e-commerce has also raised significant concern over certain crucial factors like privacy along with security of customers’ vital information. Customers willing to conduct online transactions are worried about the fear that the online websites do not assure adequate security of their information at large (Arab British Academy for Higher Education, 2012). This paper intends to conduct a literature review about the aspects such as the importance, drawbacks and benefits of e-commerce. E-Commerce and Business Transformation DeLone & McLean (2004) stated that the rapid explosion of information technology and the widespread execution of internet have radically affected the business operations throughout the globe. The industries, markets and businesses are rapidly transforming themselves into technologically oriented from traditional approach due to extensive use of paper works that ultimately consumes much time while conducting any business transactions. Accordingly, the notion of e-commerce enhances the association between the customers and the suppliers and makes the buying as well as selling decisions of the customers more convenient to execute. Conversely, it can also be affirmed that e-commerce might pose serious impact almost on all the parties involved in a business transaction such as individual users, organisations, buyers and sellers (DeLone & McLean, 2004). Zhu (2004) proclaimed that the intensive use of internet imposes radical impact upon enterprise value chain system with respect to its inbound as well as outbound costs. Moreover, internet enabled initiatives undertaken by large companies will strengthen the online relationship with customers and will immensely help in disseminating product information, facilitating smooth product transactions, improving customer services and efficiently managing inventory electronically. Moreover, it has also been claimed that efficient use of e-commerce also intends to improve the utilisation of valuable assets by the organisations in the best possible way. Consequently, effective execution of precious assets will ultimately help the organisations to reduce their different costs, secure greater returns and enhance productivity along with profitability (Zhu, 2004). According to Pires & Aisbett (2003) e-commerce changes the behaviour as well as the attitudes of both the customers along with the suppliers within the marketplace. Accordingly, e-commerce possesses the capability of modifying competitive environment by a greater extent. The notion of e-commerce provides opportunities to different business organisations in terms of operations, marketing and services necessary for sustaining in this highly competitive business environment (Pires & Aisbett, 2003). Cloete & et. al (2002) stated that the adoption of e-commerce immensely benefits the organisations at large. In this similar context, the benefits might include direct or indirect and short-term or long-term. The use of internet often acts as cost reducing initiative and helps the organisations to obtain significant competitive position over the chief business market competitor’s (Cloete & et. al., 2002). Phan (2003) revealed that in recent times, e-commerce has attracted rigorous attention from various business entrepreneurs, executives, managers and investors across the world. The advancement in technologies and the emergence of e-commerce has resulted in creating rapid changes at the marketplace. The execution of web technology such as internet has led towards the emergence of innovative business processes which is ultimately attributed with effective cost saving and market penetration along with better profit and market share (Phan, 2003). According to Srinivasan & et. al (2002), the rapid growth of electronic retailing (e-retailing) as a form of e-commerce has resulted in several advantages for the organisations which include greater market reach, quick business transactions, superior flexibility, highest degree of customer convenience and broader development of product lines. E-commerce provides the customers with broad array of products and enables them to buy their preferred products easily without visiting in the marketplaces. Buyers are benefitted with quickly assessing the products related information and building better as well as rapid communication with the sellers through the execution of online means as a form of e-commerce (Srinivasan & et. al., 2002). Lee (2001) argued that e-commerce has immensely changed the business conducting process of many companies. It has been identified that e-commerce does not serve as an alternative to traditional business but it is an imperative requirement for the modern business to be successful in present dynamic and competitive market conditions. Contextually, many of the companies have understood the urgency of adopting e-commerce facilities for sustaining their business and most significantly accomplishing significant competitive position (Lee, 2001). As stated by Chang & et. al (2003) e-commerce has created some fundamental changes in modern business conditions. The integration of e-commerce with corporate strategies has resulted in enhanced organisational performance as well as productivity of several companies. Moreover, e-commerce has enhanced the organisational abilities to realise and to respond towards vivid market needs by allowing the companies in collecting and disseminating relevant market information quickly and in a timely manner. The easy access towards broad array of market information and demand for products have enabled the organisations to search and penetrate into new business markets and perform their operational functions successfully (Chang & et. al., 2003). According to Besim (2009) electronic way of handling financial transactions has benefited the modern business environment with secured and quickest way of doing payments. As noted by Zwass (2003) the web, as a form of e-commerce in relation to business activities, has emerged as a global practice for different customers groups and individuals. Uses of e-mails within the organisation has made quite easier for the parent companies to effectively coordinate with their respective subsidiaries that are remotely located. E-commerce has made the organisations much more agile towards identification and absorption of market opportunities (Zwass, 2003). According to Kerstan & Noronha (2000) it has been noted that electronic auctions (e-auctions) have been gaining immense popularity in recent days. In this context, e- auctions have provided a vehicle for conducting complex business transactions more conveniently as compared to early years. The advancement in e-commerce enables both the consumers as well as the organisations to involve in any business transaction at any given point of time. Consequently, such interactions between the customers and business entities have consolidated the relationship between the two and helped the organisations to gain customers loyalty as well (Kerstan & Noronha, 2000). Lewis & Cockrill (2002) noted that e-commerce has emerged as an important means of trading particularly in present retail segments. Accordingly, the adoption of e-commerce has positively influenced retail segments in gaining competitive advantages, creating new business markets, identifying new channels of sales and improving the overall business performances of an organisation. Furthermore, the emergence of e-commerce has enabled the organisations to bring vendors, suppliers and customers together which eventually resulted in improved customers’ service along with increased profitability by a considerable level. It is worth mentioning that the use of internet will further result in creating effective business opportunities in near future (Lewis & Cockrill, 2002). According to Shang & Seddon (2002) e-commerce has enabled the organisations to attract new and potential customers and also helped them to get much closer to the existing customers along with fulfilling their requirements. Moreover, direct feedback from customers relating to organisations’ products and services through the execution of internet has contributed towards improved product design and enhanced customer services. Consequently, involvement of e-commerce with business process has considerably resulted greater satisfaction and fulfilment of customers’ requirements (Shang & Seddon, 2002). Drawbacks of E-Commerce Uzoka & et. al (2007) stated that e-commerce is being widely adopted throughout the business world and at the same time its popularity is also rapidly increasing in global marketing circumstances. However, complexities in accessing the features of e-commerce ultimately restricted the organisations to avail the significant functions or facilities of e-commerce. It has been observed that especially the developing countries faced much difficulty in availing e-commerce facilities due to lack of infrastructure, unstructured socio-economic as well as political framework and shortage of technological advancements (Uzoka & et. al., 2007). According to Zott & Donlevy (2000) e-commerce is associated with minimum physical contacts between the different parties while conducting business transactions. Moreover, the customers can buy their preferred products through online only by viewing rather than touching or feeling the products physically. This can generate a huge level of dissatisfaction amid the customers as there lays no guarantee of product quality. Moreover, a level of dissatisfaction may also arise among the customers if the online purchased products of an organisation fail to comply with their expectations. This significant issue can be viewed as one of the major drawbacks of e-commerce (Zott & Donlevy, 2000). According to Fariborzi & Zahedifard (2012) electronic mail (e-mail) marketing in recent times is rapidly gaining popularity. “E-mail marketing is a form of direct marketing which uses E-mail as a means of communicating commercial or fund-raising messages to an audience”( Fariborzi & Zahedifard, 2012: pp. 232). Moreover, e-mails sent to customers are often reluctant to view due to suspicious or malicious programs like worms and viruses that may impose threat to their computer systems as well as the network (Fariborzi & Zahedifard, 2012). According to Liliana (2006) the web technology such as internet has created the possibilities of fraudulent activities. The lack of direct contact between client and traders may result in accessing valuable and secret information relating to clients’ identity (Liliana, 2006). According to Rajaraman (2000) dramatic transformations have been occurred due to the application of e-commerce. The revolution can be attributed with intensive use of computers, application of advanced technological advancements and most importantly widespread execution of internet. In relation to the drawback of e-commerce, Rajaraman (2000) affirmed that e-commerce and the use of internet for business transaction does not provide secure mode of transaction. It is because of the present of hackers who misuse the advantages of technologies for stealing credit card numbers which may result in customers to bear major monetary losses. Moreover, in developing countries like India and other African nations, it has been noted that the role of e-commerce is limited due to its high implementation costs (Rajaraman, 2000). According to Al-Nasrawi (n.d.) e-commerce has been adopted by many organisations. Nonetheless, the utility of e-commerce is limited to certain extent. Contextually, it can be stated that e-commerce does not help in selling a few of valuable products that are of high costs. Moreover, the people with limited technological knowledge find it hard to understand and execute the applications of e-commerce (Al-Nasrawi., n. d.). With regard to the drawbacks of e-commerce, Ackerman & Davis (n.d.) stated that both privacy and security are major concern related with e-commerce. While performing online transactions, customers are required to provide their personal data in a comprehensive manner. However, the online business practice does not guarantee the confidentiality of customers’ private information. Moreover, failure to ensure sufficient security to online shoppers may often act as a crucial factor deterring the widespread use of e-commerce (Ackerman & Davis, n.d.). According to Yazdanifard & et. al (2011) the conception of e-commerce is not a new concept but has relatively gained immense popularity in recent times. It has emerged as an important alternative over the traditional business and simultaneously supported the buyers and the sellers to conduct their business transactions with ease. Apart from supporting the buyers and the sellers; the notion of e-commerce is also concerned with security factor related to online business transactions. Furthermore, Yazdanifard & et. al. (2011) identified that internet act as an electronic chain which links customers with e-commerce source. The messages that are exchanged between the customer and e-commerce service providers are passed through numbers of computers present on the network before they are reached to the final destination. Consequently, it cannot be guaranteed that the messages that have been passed over the number of computers on the internet are safe and can be prevented from any sort of intruder’s attacks (Yazdanifard & et. al., 2011). In relation to the drawbacks of e-commerce, MacGregor & Vrazalic (2004) identified that e-commerce has been burdened with the stigma of poor privacy as well as security issues. Moreover, the practice of e-commerce has reduced the flexibility of human work and at the same time it has created more reliance upon technologies by a considerable level. Moreover, it is estimated that adoption of e-commerce technology involves high costs for its maintenance such as updating software and hardware annually (MacGregor & Vrazalic, 2004). According to Reichheld & Schefter (2000) retaining customers and gaining substantial profit largely depends upon the improved online channels of the organisations by a significant level. Benefits of E-Commerce to Customers According to Ratnasingam (2002) evolution of e-commerce has compelled organisations to explore and expand their business in new business markets. Moreover, the execution of e-commerce brought dramatic changes within the marketplace in terms of facing extreme competitions, retaining customers and delivering goods along with services to discriminating customers. In relation to the benefits of e-commerce, it has been viewed that the various e-commerce applications have enabled improved and accurate flow of product information to the customers. This important feature ultimately helped the customers to make effective purchasing decisions much easier than it was ever before (Ratnasingam, 2002). Similar context was presented by Andam (2002) who postulated that e-commerce applications involves an easy mean of ordering system which allows the customers to choose products based on their own preferred specifications (Andam, 2002). According to Bauer & et. al (2006), the rapid implementation of web technology such as internet in different business activities has viewed to be an important trend in the modern business environment. Furthermore, the availability of wide range of online product information has enabled the customers to compare and contrast the prices of different articles without physically interacting with traders. In addition, e-commerce activities facilitated the customers with spending less time and efforts for searching products in order to make effective purchasing decisions (Bauer & et. al., 2006). According to Lee (2008) online banking system as a form of e-commerce has dramatically attracted the attention of many banking companies and at the same time it is spreading at rapid pace in both developed and developing countries of the world. Online banking has offered the customers to monitor and conduct their business transactions with them at any time. Moreover, the online banking also permitted the customers to conduct faster transactions with minimum efforts and saves considerable time (Lee, 2008). Jun & et. al. (2003) affirmed that the web technology i.e. internet as a form of e-commerce is regarded to be a powerful tool that offers online customers with number of significant benefits. In this similar context, customers can order their preferred products with ease, periodically monitor the product prices and can adopt effective purchase decisions (Jun & et. al., 2003). According to Schafer & et. al (2001) e-commerce sites like Amazon.com and Flipkart among others proved to be much beneficial for the customers as they remain frequently updated about the new features along with the pries of the products (Schafer & et. al., 2001). According to Lee & Ahn (n. d.) online customers are eligible to access number of websites and can make purchases of various items such as books, groceries, apparels as well as conduct banking and insurance activities without being visiting to stores or banks. Consequently, online business transactions help to save considerable time and effort of customers. Moreover, the competitive prices, assurance of quality products and fast delivery of ordered products ensures greater customer satisfaction (Lee & Ahn, n. d.). According to Fruhling & Digman (2000) online mediums as a form of e-commerce enables the customers to access as well as buying and selling broad assortment of products 24/7. As stated by Alzola (2008) e-commerce has emerged as an attractive and profitable mode of interacting with geographically dispersed customers. E-commerce provides discriminating customers with varieties of product offerings with convenience and at competitive prices. Furthermore, e-commerce also offers the cheapest means of business transactions in the modern business context and customers are freed from the barriers of distance (Alzola, 2008). Conclusion E-commerce is regarded to be a significant alternative over the traditional business mechanisms. It has immensely facilitated the online buying and selling of products as well as services. Today, in this contemporary world, customers are more inclined towards conducting e-commerce activities for it’s certain decisive characteristics such as low cost, less time consumption, wide choice of products and easy accessibility as well as convenience in making payments. Apart from the customers, the modern business organisations are also emphasising more upon conducting e-commerce activities in order to reap considerable benefits such as improved market share as well as profitability and amplified customer base levels. Conversely, the widespread use of e-commerce has reduced the dependence of organisations on human resource and simultaneously increased their reliance upon technology which ultimately decreased the work opportunities of the individuals by a considerable level. Integrating business with internet as a form of e-commerce increased the efficiencies of the organisations particularly in the fields of processing and delivering of customers’ orders. 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