Understanding of Different E-Commerce and E-Business Concept - Literature review Example

Running Header: Gain an Understanding of Different E-Commerce and E-Business Concept Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Table of contents Introduction……………………………………………………………………………..…….3 E-commerce……………………………………………………………………………………3 Advantages of e-commerce……………………………………………………………………4 Low costs……………………………………………………………………………….4 Better customer relation and customer loyalty…………………………………………4 Expanded geographical reach…………………………………………………………..5 Disadvantages…………………………………………………………………………………5 Lack of knowledge………………………………………………………………………5 Not suitable for perishable good………………………………………………………...5 Insecurity………………………………………………………………………………...6 Solutions to e-commerce risks………………………………………………………………...6 Awareness creation……………………………………………………………………….6 Strict penalties ………………………………………………………………………..….7 B2B and e-supply chain……………………………………………………………………….7 Advantages and disadvantages of e-supply chain……………………………………….10 Conclusion…………………………………………………………………………………....11 Introduction Business transaction is changing very quickly globally; many business transactions are carried out online, as a result of globalization and technology advancement in all sectors of the world economies. Individuals, organizations, and private investors are all moving to e-commerce. This is the main reason for coming up with this report; which is aimed at exploring the world of e-commerce; bringing out a clear picture of what e-commerce entails, explaining its merits and demerits as well as identifying the solutions to the pitfalls encountered in e-commerce. This report will also explain the B2B plus the supply chains; giving a viable suggestion of a supply chain for the company. E-commerce definition William (2006) gives a broad explanation of e-commerce as electronic commerce whereby, products and services are sold through the net and some other computer networks-commerce is similar to the conventional commerce; the purchaser and the vendor comes together to exchange trade goods and in return they get money, in most of the cases there is a physical contact between the buyer and the seller in shops, shopping malls, and even via a mail order. On the other hand e-commerce is a totally different mode of conducting transaction; the transaction is conducted through computers networked together. Many online transactions happen when a buyer visits different websites comparing prices of the goods to make an order. E-commerce involves product and service such online; it is also very effective in advertising and paying for products. For a company to venture effectively in the global world of e-commerce the first and most important development is to have a well designed and attractive website. This will serve as the online advertisement site, where all interested customers will place their orders. Payment is also made online. There has been a success in online retail, financial transaction, consumer electronics, shipping and travel industry. Like all other traditional business, e-commerce has various advantages and vaults. Some of these are discussed below. Advantages of e-commerce The costs are low Businesses conducted through e-commerce are effective in their costs as they tend to reduce many logistical troubles, e-business positions small businesses or company in the same level with big and established companies. Online promotions are easier to have them created as well as deletion; this allows flexibilities as the company will stick to what will work best. E-business has a reduced staff expenses especially in phone time, mail preparation as this has been replaced by emails. In e-business costs are reduced as there is no need for physical stores, security and investments in infrastructure; all that is needed is to have a good idea, products which are unique and an attractive web to reach the purchaser globally. This makes e- business very economical (Harambos and Piotr, 2010). Better Customer services and customer loyalty As indicated by Arch (2010), customer service in e-commerce is quick; a customer spends less time and money as all that I needed is for the customer to have an account with the company instead of spending money making phone calls. Customers are able to make orders and purchases throughout regardless of the time or events. This increases reliability and efficiency. Through technology a company will be able to effectively create an automated program to retail royal customers. It is very easy for a customer to find all the information needed, for online stores, information regarding to the product and get answers to common questions thus creating a positive relationship with the customer. Shopping online is a convenient mode of business to both the customer and the seller. E-commerce expands the geographical reach This is one of the greatest merits of e-commerce; it goes beyond individuals and reaches the global market. E-commerce provides for local and international demands. No business transaction is limited by the geographical boundaries, small businesses and enterprises are get access to global market through the e-business. This increases the chances of development for small enterprises by expanding it to reach the global market as no restrictions are existent while conducting online business, significantly increasing profits. Disadvantages of e-commerce Lack of internet access and lack of knowledge As Chandramita (2009) asserts that, e-commerce has been a success in various countries but it has been face by some vaults and limitations technologically, limiting the users of this crucial technological advancement and revolution. Very many countries especially the developing one has not been able to utilize e-commerce effectively due to lack of internet connection. A great number of people is yet to enjoy this revolutionary system; mostly due to little knowledge and lack of trust towards the on-line shopping. There are still many people out there who hold strong doubts regarding disclosure of personal details as they feel insecure. The genuineness of some e-commerce sites have been over along time been questioned. This is a major drawback to the success of e-business. Suitability for perishable commodities This is a limitation to industries or companies trading in goods which are perishable; for example food items. Many people prefer the traditional way when shopping for perishable goods. E- Commerce is not dependable due to the period between making an order and delivery of the product. Perishable commodities require very quick means of transaction as their consumption is also immediate. Insecurity Security is a major problem for businesses conducted online; many customers lack confidence in the whole process of e-commerce, from making an order to delivery with the being the main point of concern. Before a customer is committed to make payment, an assurance has to be provided to gain confidence of the customer plus the seller. There is concern on data protection and mainly on the integrity of data handling. Due to viruses the e-commerce has been seen as insecure as they cause delays unnecessarily, hackers also access private files. In some instances customers get goods off low quality; there is a challenge of returning the goods to the vendor as the process may consume a lot of time, at the same time getting a refund for unworthy goods is a tedious process. Many customers have that fear of receiving goods of low quality; this leads to lack of trust on e-commerce. Remedies for risks involved in e-commerce Awareness creation and mass education Education is the key to success in almost all the sectors of our economy. To begin with awareness creation is the key remedy to reduce risk in e-commerce. As we realize that majority of the people do not by their products online; not because they can not be able to but they lack the necessary information regarding e-business and all it entails. Therefore the most crucial idea is to offer mass education via media and social gathering to reach as many people as possible. Awareness will increase the willingness and promote embracement of the revolutionary e-commerce. Technology advances at a very high speed such that only a few people are able to catch up with that pace. Illiteracy especially among the older generation and the underprivileged in the society is the leading cause of neglecting e-commerce by a larger portion of the world’s population. This calls for basic education on technology and its importance in promoting trade and especially online trade which has been highly adopted globally. Strict penalties for defaulter of agreements Many vendors default the agreements especially by delivering goods of low quality. There should be very strict penalties for individual traders as well as companies which deliver good contrary to the orders given. Consumer laws are vital in protecting both the consumer and the seller. Investigation of B2B and E-Supply Chains According to Peter and Aleis (2006), B2B in full is business-to- business and it can also be referred to as e-biz; it is the exchange of commodities, services and information through the internet mainly between businesses unlike where products are exchanged between vendors and consumers: The exchange of computer data processing and net communication in getting labor services in major economic transactions. The main audience for company’s products is other companies. Company websites are the main source of information whereby companies involved in B2B gets information regarding a particular product. B2B business involve various intercompany dealings, among them include trading in wholesale, as well as businesses buying services , manufactured commodities or parts, technology plus capital equipments. Business-to –business also entails financial transactions between companies, for example buying bonds, securities, and getting commercial credits. According to Cynthia (2003) supply chain is the business processes involved in creation and delivery of a product, through conversion of raw materials to final products until when the end product reaches the consumers. An E-supply chain involves the design of services and products, the forecasting of sales, buying, and production management of orders, dispersion, customer relation and satisfaction. The main focus of e-supply chain is the coming up with a framework for business development; the description of how a business is able to shift from internal direction to external direction. Anybody, anything, and anywhere influencing products existence in the market, the product price, quality, exchange of information, and delivery of a product is said to be part of the entire supply chain. E-supply chain is a digital connection to the whole world into one major supply chain. Figure1. An overview of e-commerce design, the arrows shows the direction of transaction and information exchange. Note. From business to business market research: Understanding and measuring business market (p.423), by Ruth, M. 2005. United Kingdom: Kogan Publisher. As it was discovered by Arch (2010), good management of e-supply chain is healthy for the growth, expansion and success of a company; it is a good measure of performance of many company’s as it holds multiple organizations accountable. This extended working of companies encourages closer collaborationism as well as coordination of various companies in the supply chain. For a good e-supply chain to work effectively there must be incentives for all members. The supply chain strategies have been changed over the recent years due to integration of internet in the supply chain. Integration of information is the key forms the base of a supply chain, most importantly the integratioin of electronic information. It is important for companies to have accurate information regarding their supply chain; information is crucial in coordination of products, information and financial flows. Therefore, the potential for all supply chain partners to have access to share information in the e- supply chain on a well timed basis is a key to raising the standards of an e- supply chain. Information sharing is vital in ensuring that a supply chain is controlled by real consumer demands. Before a company is embarked on a mission to fully develop its e-supply chain, the main area of focus is how this company will connect to the dispersion centers, suppliers, transportation companies worldwide and most importantly the consumers; so as to determine how to ameliorate the experience of their customers, transaction cost of the supply chain, end-to-end visibility, perfect real time optimization, technological investments returns, and measurement of the companies performance. Figure 2.supply chain Note.From Interdisciplinary Journal of Information, Knowledge, and Management (vol.1.p.3) by Peter, T. and Aleis, G. 2006. The above figure clearly shows how a manufacturer manages the supply chain downstream as indicated by the direction of the arrows. From the manufacturer there is the physical distribution of products, both upstream and downstream. The collaboration of supply with the manufacture and the manufacturer with the consumer is well indicated. There is the B2B relationship between the manufacturer and the supplier as well as the consumer. This process involves information exchange and the final transaction of business transactions. This serves a the best case study for the company’s transaction as it integrates the consumers and suppliers in the main production process as well as effective information sharing. Advantages of e-supply chain The e-Supply Chain will enable customers and the suppliers to link together in unlined manner through out the whole world, exchanging the right information instantly. The movement of important information is so fast thus giving a response to changes which are a must when dealing with the expectations of a customer and the actual customer demand; this mandates a company to focus on demand driven manufacturing, providing immediate changes in the flow of materials to fit the demand. Quick access to valid and relevant information through out the supply chain leads to improved quality of decision making, better customer service as well as less inventory. This saves a lot as the more and more paper work is done away with. Disadvantage The supply chain is made useless by information distortion through out the supply chain; this effect is referred to as bullwhip effect. This involves giving consumers in the supply chain wrong information regarding a product or the process of developing a particular product. Barrat (2004) expounds misinformation as the major disadvantage of the e-supply chain; giving misguided information denies potential customers, suppliers and even decision makers and opportunity to explore the right development for the company. This leads to loss of revenue and consumer royalty, as a result, growth of companies are adversely affected. Conclusion Weighing the merits and demerits of e-commerce it is important to note that; e-business has many advantages than the disadvantages; most importantly because of the global market reach. Therefore adoption of e-commerce is the best step a company can make towards profit maximization and minimization of costs. E-commerce is the way forward in the modern world and this era of technological advancement. An E-commerce and e-supply chain is effective for all kind of businesses or companies regardless of the size or the market size and target of a company. E-commerce will be inevitable in sometimes soon, therefore, embracing it is preparing for the future. References Arch, G. (2010).Organizational culture, Business-to-Business relationships, and interfirm networks. United Kingdom: Emerald Group Publishing. Barrat, M. (2004). Understanding the meaning of collaboration in the supply chain.Supply Chain Management. An International Journal, 9 (1), 30-42. Cynthia, M. (2003).E-supply chain: Using the internet to revolutionize your business. Journal of Business Logistics, 15 (2), 14-27. Chadramita, B. (2010) Advantages and Disadvantages of Electronic Commerce (e-commerce) retrieved 31 March, 2011, from http://www.buzle.com/ articles/advantages-and -disadvantages -of-electronic- commerce-e-commerce.html Haralambos, M. and Piotr, C. (2010).Practitioners challenges in designing trust into online system. Journal of Theoritical and Applied Electronic Commerce, 5 (3), 65-77. Ruth, M. (2005).Business to Business market research: Understanding and measuring business market. United Kingdom: Kogan Publisher. William, K. (2006).What is e-commerce: Advantages and drawbacks. Retrieved March 31, 2011 from Peter,T. and Aleis, G. (2006). Measurement of supply chain integrated benefits. Journal of Information, Knowledge, and Management, 1, 2006. Read More