Electronic Commerce - Research Paper Example

Electronic Commerce Abstract The advent of globalization has necessitated the abandoning of old models of doing business and embracing new ones. One of the areas that this has been seen is in the area of electronic commerce. This innovation has seen the ease of doing business by everyone from large corporations to ordinary consumers. Electronic commerce is seen to break down barriers which served to limit businesses and individuals from enjoying a variety of products. This paper will look at the benefits befalling companies that have adopted this medium of transaction and benefits enjoyed by ordinary consumers by using this medium. This paper will also look into the challenges electronic commerce faces especially in the matters of infrastructure, user privacy concerns and the antiquated legal framework that still governs it. Electronic Commerce The dawn of the World Wide Web has led to many innovations; one of them is on the new ways of transacting business. Electronic commerce has enabled an easy and efficient platform for the transaction of business among various stakeholders using the internet. The ubiquitous nature of electronic commerce allows companies and consumers the ability to transact anywhere and anytime (Bingi, Mir, and Khamalah, 2000). Electronic commerce can be seen to have rewritten the traditional mode of transacting, which is the business to business model, and ushered in an era where multiple parties can transact without having to physically engage with each other. This paper will explore the cost and benefits to firms and consumers, together with job creation brought by this form of medium. The paper will also highlight challenges in infrastructure, privacy concern and legal framework that electronic commerce faces. Benefits Businesses main objective is to grow in size and increase profit margins. One of the ways electronic commerce has assisted businesses to achieve this is by allowing them to save on costs by linking them directly with their customers thereby eliminating the need for intermediaries (Bingi, Mir, and Khamalah, 2000). The net effect of this cost saving measure is the improved bottom line that companies will be enjoying. Businesses may choose to reduce prices for shoppers who employ this medium in order to attract more consumers consequently growing their revenue. Electronic commerce also enables businesses to move into the cyber world by establishing cyber stores which are cheaper to establish than physical shops. Bingi, Mir, and Khamalah (2000) point out to the fact that businesses that have embraced electronic commerce, have shifted their expansion strategies to the cyber world by establishing cyber stores which have the potential of reaching a much wider consumer group than physical stores. They are viewed as being convenient as they always remain open and can attract a global consumer base. In contrast, physical stores are expensive to start and have numerous operational costs which affect profits. This is a testament of the economic potential of electronic commerce in spawning economic activity. Electronic commerce has also enabled Small and Medium Enterprises to have a much wider audience for their goods. Due to the operating platform on which electronic commerce exists, small businesses have been able to penetrate the international markets. SMEs have been able to cross the invisible barrier which had served to separate their products and services from consumers. They have been afforded the opportunity to geographically broaden their reach; a preserve which was normally enjoyed by larger firms. Small and big businesses are now seen to operate at an equal playing field with the quality of products and services being the differentiating factor. Electronic commerce also portends greater convenience to consumers when it comes to after sale and customer services. OECD (1999) in their research indicate that electronic commerce enables firms to relocate their support departments online where they adopt ways in which customers can access them to find all their support needs. This has the capacity to make it more convenient for consumers due to the ease they will enjoy in attending to these services. Firms which have adopted the use of electronic commerce can be offering low prices thereby benefitting consumers in regards to cost saving. There is an apparent perception that electronic commerce will contribute to job losses. This is a misplaced notion as evidenced by the research of OECD (2010) which shows that jobs may be created from the need by companies to have a presence in both the cyber commerce world and the physical world thereby an increase in staff. Instead of job losses, what is envisaged is growth in a new segment of the job market as there now will be need for informational technology professionals whose expertise will be used to develop the electronic commerce medium. Lubbe and Maria Van Heerden (2003) point to the fact that the progressive use of electronic commerce actually necessitates the need for professionals who will develop applications needed to help its running. Challenges Electronic commerce being a mode of business transacted over the internet, its imperative therefore that the technological level of an area be able to support this. Although this problem is not quite significant in the developed nations, insufficient bandwidth and poor telecommunications infrastructure portends a huge stumbling block for the growth and penetration of electronic commerce especially in developing nations. Kamel (2000) agrees with this contention stating that telecommunications infrastructure will hinder the growth of electronic commerce. There is need for an infrastructural overhaul as the present facilities are inadequate to fully support electronic commerce. A major challenge that electronic commerce faces is in matters of user security. Due to breaches that companies have experienced stemming from their electronic commerce platform, consumers are increasingly becoming apprehensive in using electronic commerce as a transaction medium. Bingi, Mir, and Khamalah, (2000) explain that companies seldom factor in security concerns when setting up electronic commerce platforms. The overall effect has been erosion in consumer confidence level in online business. A legal and regulatory framework serves to issue guidelines and protect individuals and companies when carrying out transactions. However, with the advent of the World Wide Web, it is seen that the legal framework does not apply here and has to be modified to factor in the new developments. Sadly this has not been the case. The manner electronic commerce operates has been affected since the existing legal framework did not envisage its unique nature. Chissick and Kelman, (2002) contend that evidencing of contracts in the traditional way cannot be applicable in electronic commerce. Laws need to be amended in order to factor in the unique nature of electronic commerce. Intellectual property issues are another concern area in electronic commerce. Questions to do with patents and copyright have arisen on how they can be protected in the realm of electronic commerce. Okerson 1996 points to the fact that components found in a web page can originate from various sources rendering the question of ownership and royalty payments quite difficult. Electronic commerce being a new development the patent laws have not yet been amended to determine what constitutes a patentable product. Conclusion In review it can be seen that electronic commerce has served and still continues to serve consumers and businesses. The huge savings businesses will receive from adopting this mode of transactions cannot be underestimated. Costs can be minimized thereby increasing profits by the elimination of unnecessary business channels. Growth in revenue by small and medium businesses by accessing far markets is now a possibility. Consumers also benefit from this medium through price reduction and convenience occasioned by firms moving their after sale and customer service online which enables consumers to save time. Although challenges arising from issues touching on infrastructure, privacy issues and legal regulations can be seen, these are not insurmountable matters and can be addressed by investment and amending of the legal framework to encompass the unique issue of electronic commerce. The benefit that electronic commerce stands to present for the whole world is quite huge not to develop this form of commercial transaction. References Bingi, P., Mir, A., and Khamalah, J. (2000). The challenges facing global e- commerce. Information system Management, 17 (4), 1-9. Chissick, M., & Kelman, A. (2002). Electronic commerce: Law and practice (3rd ed.). London, Sweet and Maxwell. Kamel, S. (2006). Electronic in developing countries: opportunities and challenges. London, Idea Group Inc. Lubbe, S., & Maria Van Heerden, J. (2003). The economic and social impact of e- commerce. London, Idea Group Inc. Okerson, A. (1996). Who owns digital works, Scientific American Magazine, .1-4. Organisation for Economic Co-operation and Development, (1999). The economic and social impact of electronic commerce. Retrieved from . Read More