Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction’s lifecycle, although it can encompass a wider range of technologies such as e-mail as well.
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A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.
Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a form of electronic commerce where the buyer is directly online to the seller’s computer usually via the internet. There is no intermediary service. The sale and purchase transaction is completed electronically and interactively in real-time such as Amazon.com for new books. If an intermediary is present, then the sale and purchase transaction is called electronic commerce such as eBay.com.
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions.
Electronic-commerce means selling products online via the Web. Also called “e-business,” “e-tailing” and “I-commerce.” Although in most cases e-commerce and e-business are synonymous, e-commerce implies that goods can be purchased online, whereas e-business might be used as an umbrella term for a total presence on the Web, which would include the e-commerce shopping component.
E-commerce may also refer to electronic data interchange (EDI), in which one company’s computer queries the inventory and transmits purchase orders to another company’s computer.
Investopedia Financial Dictionary
Electronic Commerce 'ecommerce' is a type of business model, or segment of a larger business model, that enables a firm or individualÂ to conduct business over an electronic network, typically the internet. Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business.
Also sometimes written as “e-commerce” or “eCommerce”.
E-commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. A customer can order items from a vendor’s Web site, paying with a credit card (the customer enters account information via the computer) or with a previously established “cybercash” account. The transaction information is transmitted (usually by modem) to a financial institution for payment clearance and to the vendor for order fulfillment. Personal and account information is kept confidential through the use of “secured transactions” that use encryption technology
Impact of e-commerce
Studies in the developed economies have shown that e-commerce will eventually have a far-reaching effect on the world economy because it will revolutionize the way businesses and consumers conduct their business transactions.
Some have argued that e-commerce will deepen disintermediation process as producers can sell direct to consumers. For example, Christensen and Tedlow published in Harvard Business Review (January-February 2000) suggest that e-commerce will change the structure of retailing in the US in favour of fewer number of traditional intermediaries.
The wide-spread impact of e-commerce is due to lower transaction costs. Using the transaction costs theory, studies have shown that e-commerce will reduce transaction costs of firms and hence final product prices.
According to the transaction costs theory, price of a product has three elements: production costs, coordination costs, and profit margin. As firms find better ways to coordinate their activities through electronic channels, their transaction costs will fall.
As the industry better manages real time information based on e-commerce, firms can also improve their inventory management and thus reduce inventory costs.
Reduced transaction costs benefit both consumer and producer. While consumers will gain access to a broad-based selection of lower priced goods, producers are likely to see higher demand for their products.
Furthermore, in the Internet age, people and firms will be connected with highly capable interactive capacity. Through the information highway, consumers will have free market choices, and firms will have almost unrestricted market access. This offers opportunities as well as poses threats to businesses.
The impact of e-commerce can be traced at the industry and consumer levels. It can also be traced at the macroeconomy level. It is however important to note that the full impact of e-commerce on an economy depends on several factors such as the rate at which the economy (i.e. firms and the population) adopts e-commerce. This in turn is determined by other factors such as the cost of computers and software, computer and telephone penetration rates, security, manpower, and telecommunication infrastructure.
At the industry level, e-commerce will result in some rationalization of activities. Firms will need to undertake investment in an appropriate computer system to implement e-commerce. They will undertake new activities which are knowledge-intensive.
Through the adoption of e-commerce, firms will demand for a new kind of workforce, particularly those with a higher level of computer literacy. This new demand will have an immediate and far-reaching implication on the provision of training in the country.
Firms will be pre-occupied with technology selection and investment. This task is quite demanding, particularly when the telecommunications and computer technologies are changing at a rapid pace. To keep up with modern technologies, firms cannot ignore continuous investment in human resource.
E-commerce will further shorten product cycles of the industry. Through e-commerce, firms will have fast knowledge of what customers want. Firms can use this knowledge to guide the development of their product lines and to identify new growth areas at their earlier stages. With customer information in hand, firms can promote both up-selling and cross-selling.
It is expected that e-commerce will also help small- and medium-sized enterprises (SMIs) to gain greater market reach for their products and services. In fact, e-commerce can be an efficient and economical way for many SMIs to enter an export market.
E-commerce offers consumers a wide range of new opportunities to do direct shopping and banking using the convenience of a home computer or other communication devices. Consumers will also benefit in terms of lower final prices due to lower transaction costs as described above.
Looking ahead, e-commerce will lead to some fundamental changes in the way firms relate to consumers and the way firms compete with each other. This is because, through e-commerce consumers will have a wider and direct access to producers of goods and services without intermediaries. With a wider choice of products and services offered to them, they can cast their preferences by describing what they want. In this environment, e-commerce will hasten the shift of market power of consumers, from a “product taker” to a “product maker”. As a result, this process will lead to greater competition among firms to protect their market share.
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For the economy as a whole, e-commerce will result in higher investment by the Government, firms and consumers. Coupled with higher investment in IT, e-commerce will result in higher efficiency and productivity of the economy. In this light, e-commerce will contribute to higher total factor productivity of the Malaysian economy which is needed to sustain economic growth in the long term.
E-commerce will create new activities and a variety of new industries which utilize IT. This will lead to the creation of new job opportunities. The increased investment mentioned above and the emergence of new IT-based industries will lead to a higher level of economic activity to support economic expansion and growth.
Following the reduction in the transaction costs, e-commerce will also improve the level of efficiency and productivity in the economy. Industries will re-organize their activities to conform with the emergence of a new industrial structure of the country.
Definitions and differences of e-commerce and e-business
E-commerce describes the process of buying, selling, transferring or exchanging products, services or information via computer networks, including the Internet.
E-business is somewhat broader concept. In addition to the buying and selling of goods and services, e-business also refers to servicing customers, collaborating with business partners and performing electronic transactions within an organization.
In my opinion, the differences between two of them are not obvious. E-commerce refers to all transactions of business that being made through Internet. It involved money transaction between organizations and customers in a buying and selling process using the Internet.
Meanwhile, e-business refers to all of type of businesses entity such as company, enterprise and others which are doing business using the Internet. Business entity use the Internet and other electronic network in all of their operations and daily processes involved.
E-business becoming e-commerce when a transaction happens between two organizations. There is no e-commerce without e-business and e-business need e-commerce to survive.
Issues, problems and threats in e-commerce and e-business
In e-commerce, it is difficult to apply law that usually done in physical world. Many cyber crimes made cannot be justified in court because of lacking the law itself, geographical factors that separate different countries with different laws, and others. People are free to do whatever they like in the Internet including pornography and drugs selling without even caught or sued just because the physical law cannot be applied in Internet.
Besides that, there are many frauds that we can find in e-commerce. Sometimes the company is not even exist but still it offer something to sell and people realized after a transaction was made, the product is still do not reach to them. Some business offer product that cost you price that unacceptable high compare to others even if the quality and features are same. Frauds can happen in many ways especially when it involving cyber product.
In Internet, there is too much information that hard for us to filter and absorb. An information overload is one of the problems that e-commerce face nowadays. People find it difficult when it has too many websites that offer same product even they have right to choose but it also take time to filter all the related websites.
In addition, certain areas do not have Internet coverage so e-commerce cannot reach the people in there. This happen due to certain geographical factors like people live in the mountains, desert, rural areas and others. They must go to nearest city to get Internet coverage and this is difficult to done if it will cost them effort, time and money to do that.
Threats in e-commerce must be tackled seriously because in Internet, people can do anything without having fear to be caught or sued. Such threats like human trafficking, drugs selling firearms smuggle, child pornography and others are serious crime in physical world. Yet there are happening and still growing due to Internet usage in e-commerce and this is why we cannot let it done freely without observation and law practice on the threats.
Opportunities, advantages and benefits in e-commerce and e-business
The importance of both is to catch up with globalization that require IT as medium to doing business as the world has no border anymore with the Internet application. People nowadays are connecting with each other around the world easier than decades ago with Internet and other electronic networks. The world has no boundaries anymore and it offer very much opportunities to businesses around the world to develop.
The benefits that we can get is we can have as many customer as we can if we are the organization that doing business using Internet. People all around the world are using Internet as their new medium of shopping and searching for something new. Companies took advantages on it and try hard to sell their products and services although there are companies that fail to achieve their target on e-commerce.
Besides that, consumers now have bigger power to choose products. They can easily online and choose their favourite products from different companies which usually undone in physical world. We usually find it difficult to choose from one product to another or from one company to another, but Internet make it simpler and easier for customers so they do not even go to shop by shop to buy what they like. They just click.
The advantage of e-commerce and e-business to organization is we can make the transactions easier between customers and our organization by simply clicking the computer and do it online. We can also buy certain product that is difficult to find in certain area such as Kashmir fabrics in East Asia or a product that doesnââ‚¬â„¢t offered in physical world such as e-book. In addition, the transactions done become faster and require no attendance to the outlet itself by customers. People who using Internet to shop realize that it become useful to them as the Internet is free, and you can shop at anytime, anywhere and at any situation,
The opportunity of both is we can spread our business and market worldwide to increase profit and maximum the knowledge of customers about our company/ organization/ business. Many ordinary people or small business makes huge profit in e-commerce such as the founder of Amazon.com. New medium of marketing is created and organizations all around the world are taking advantages in e-commerce and e-business. Whether they set up a new business or upgrading the existing one, they are all realize that this is the time to grab big opportunity to gain high profit including customer satisfaction.
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