Rise of E-Business - Essay Example

?Running Head: Rise of E-Business Rise of E-Business [Institute’s Rise of E-Business Ever since humankind realized the need forbarter, it has been on a constant search for innovation and improvement in this area. First, the mode of transaction was manipulated, going from exchange of goods, to exchange of gold, to exchange of deposit notes, to exchange of money and now to exchange on credit terms. Next, the place of transaction was changed. People went from trading within their localities, to intercity trading, to international trade, and then finally virtual trade. This last category has received much importance lately, due to its tremendous potential in the fast-moving world of today. E-business receives due attention due to several reasons. These reasons belong to two main categories: benefits for the suppliers and benefits for the customers. Each of these categories shows how beneficial this new mode of conducting business is. Briefly, e-business is the market for goods and services, which exists online. The suppliers make their goods and services available online, through the websites of their companies. Customers visit these websites, go through the online catalogues and finally select and order their chosen product online. They usually make the payment for these goods and services online as well, after which the supplier couriers the goods to their physical addresses. The efficiency and speediness of this innovative new medium of trade has gained it much popularity throughout the world, as people in both developed and developing countries benefit from this advantageous new option today (Berreby, 2010). Firstly, e-business has led to immense profitability for the supplier side of the market. These suppliers rejoice the numerous advantages virtual trade has over store-based, physical trade. It eliminates the need of large amounts of tangible capital, thus making it a very profitable venture. It replaces the need for inventory and stock collection concerning future predictions of demand. Apart from this, it is also an effective way to keep track of all transactions, since they are all recorded online. Finally, the e-business is one that helps tap into markets all over the world, that is, to reach customers in every country; instead of just the country, the supplier lives in (Li, 2007). These numerous benefits to conducting a business online have led to a sharp rise in e-business over the last decade. Whenever a business is set up, one of the most essential factors to consider is how much startup capital it will require. This refers to the land, buildings, offices, stores, etc. This property needs to be bought or rented, maintained, paid taxes for and depreciated. All these costs can combine to form a significant chunk of the costs of the business. Apart from this, a large number of employees are required for the upkeep and maintenance of the property, be it repair people, janitors, or other maintenance staff. These numerous employees increase the costs of running a business greatly, and are sometimes responsible for a great cut in profits. E-businesses, however, do not require such buildings and property. The costs of maintaining an online website, although substantial, are not as great as the costs of hiring or buying and depreciating physical property (Karake-Shalhoub, & Qasimi, 2006). This is a major attracting factor for people who choose to start e-businesses. Apart from this, the inventory needs of a physical business are also huge. The seller needs to budget according to the next month, and for this she needs to predict demand for the following period and then order and store that amount of goods in inventory, until they are sold. If any of these inventories is not sold by the end of the next period, it needs to be accounted for, check for expiry and included in the calculations of the following month’s inventory. This procedure takes up a lot of time, money, and effort, and often leads to wastage of goods and shortage of storage space (Stanford-Smith, & Chiozza, 2002). In contrast, a virtual business will not have such inventory demands. It will operate though a simpler inventory system, where goods are ordered from the primary supplier only when they have already been ordered by the customer, saving time, effort as well as storage space. This reduced hassle is another major reason why sellers in several markets are causing a rise in the e-business. Apart from this, there is small disadvantage, which small-store owners often have to face. This is the proper documentation and recording of all their daily transactions. While this factor does not apply for large stores which have sophisticated recording methods for every small transaction, it poses a major problem for smaller businesses, which conduct several small transactions for the hour. This is especially relevant to small convenience or grocery stores, which often fail to keep proper records of their dozens of daily transactions, which take place in one day. Whereas, every transaction made online is automatically recorded and saved. These records are not only easy to locate at moment’s notice, but also save a lot of hassle for when the company is being audited. Finally, the fact that a seller can advertise and sell their goods to willing consumers all around the world is a great advantage of e-businesses to the seller. A business idea, which introduces a potential moneymaking good or service to the market, is bound to earn the entrepreneur a respectable profit. Moreover, as the customer base of the business increases, so do the profits. It is no wonder, therefore, that there has been such a sharp rise in online businesses. Judging by the numerous advantages available to the supplier, one can easily predict a further rise or at least a sustained level of growth in these kinds of businesses. The rise in e-businesses, however, cannot alone be explained by the numerous advantages it presents to the supplier. There is another party, which is equally responsible for this rise. That is the customer side. The question this poses is that how do e-businesses benefit the customer. While, perhaps the advantages to the supplier were more plenty and obvious, there are also several benefits for the customer. First is, of course, the ease of access that an online shopping place presents to the customer. Secondly the customer can access, through just a few clicks of the mouse, an array of customer reviews about the product they are interested in purchasing. Apart from this, the customer will be able to save a lot of time by shopping online, as they will not need to make any trips to the store and will rather have the good delivered to their doorstep. These reasons have attached a significant level of convenience to shopping online, and there is no question as to whether this added convenience has been a contributing factor in the rise of e-business. It has always been a pet peeve of customers to have to travel to the market when they want to purchase a certain good. Another factor, which makes it even worse for them, is the amount of window-shopping involved before they actually locate the good they desire. This is a ritual the shopper often has to observe when shopping for clothes or presents. E-businesses offer a convenient solution for this problem. They provide the customer with a selection of online catalogues of the goods they are selling. These catalogues are accessible at any time of the day, and as many times as needed. Instead of walking from shop to shop, wasting precious energy and time resources, the shopper finds all his or her available choices, along with price ranges, displayed on their computer screen. This advantage is greatly responsible for having increased the popularity of e-businesses recently. Another reason why customers have so greatly contributed to the increase of e-businesses is that the internet provides them with customer reviews of every product, in which they are interested. The average consumer will have to either consult her handful of friends who have previously owned the same product, or rely on luck to buy the product and be satisfied with the outcome. However, the online shopper can make use of the hundreds of customer reviews and customer ratings available to him for every product. This feature is available on several online shopping websites, such as Amazon.com. It is very helpful for the consumer to make the correct decision when making a purchase, leading to greater consumer satisfaction and further popularity of e-businesses. One final question poses itself regarding e-businesses. That is, if virtual businesses are so profitable as well as convenient, why have they not completely replaced all other types of marketing in the world? This question shed light upon quite a few setbacks to e-business, which may make a several people reluctant to venture into online businesses and others hesitant to purchase from online stores. One such major setback is that due to continuous advancement in technology, the world of e-business is constantly improving and subject to innovation. Therefore, it is important for any entrepreneur who enters this market, to keep up-to-date. The slightest delay in updating the system to match the latest one can shift customer interest from website to another, thus pushing the outdated business out of the picture completely. Numerous e-businesses have seen failure due to this fact, even though there was no other flaw in their set up (Stanford-Smith, & Kidd, 2000). Apart from this, it is extremely risky to keep online-based transactions. Whereas numerous protection software are available to keep the companies online banking system and confidential information safe from hackers, there is still the major risk that comes with this form of online banking. Apart from this, IT professionals are required for most of the functions of an online business. While in a manual store, any person could be taught the ropes of how to manage a store and maintain the business, for an e-business, all employees have to be qualified enough to manage and update an online business. This poses a problem while hiring employees, since these skills are not in abundance in all labor markets (Glover, Liddle, & Prawitt, 2000). The rise in e-business is thus a phenomenon, which has received considerable importance recently. It provides great efficiency and profitability to the dealings of businesspersons. It has also earned the favor of several customers all over the world, due to the ease and convenience with which it provides them. Finally, is has aroused a certain caution in people about the dangers of conducting an online business, as it could be a potential loss-maker if mismanaged. It is however, a spectacular stepping-stone made possible by advancement, which one could not even dream of seeing just a few decades ago. References Berreby, D. (2010). Special report: the rise of e-business. Retrieved on February 05, 2011: http://domino.research.ibm.com/comm/wwwr_thinkresearch.nsf/pages/ecommerce199.html. Website. Glover, S, L., S, & Prawitt, D. (2000). E-business: principles and strategies for accountants. Prentice Hall. Print. Karake-Shalhoub, Z, & Qasimi, L. (2006). The diffusion of e-commerce in developing economies: a resource-based approach. Edward Elgar Publishing. Print. Li, F. (2007). What is e-business? How the internet transforms organizations. Wiley-Blackwell. Print. Stanford-Smith, B, & Chiozza, E. (2002). Challenges and achievements in e-business and e-work. IOS Press. Print. Stanford-Smith, B, & Kidd, P. (2000). E-business: key issues, applications, and technologies. IOS Press. Print. Read More