Electronic commerce as known as E-commerce is the process of buying, selling, transferring, or exchanging products, services or information via computer network, including the internet. It does not include payments made online for transactions whose terms were negotiated offline. It can be business to business (B to B) or business to consumer (B to C). Electronic commerce is the paperless exchange of business information using electronic data interchange (EDI), or E-mail.
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E-commerce can be defined from five perspectives. First, business process. E-commerce is doing business electronically by completing business process over electronic network, thereby substituting information for physical business process ( Weill and Vitale 2001). Second, services. It is a tool that addresses the desire of governments, firms, consumers, and management to cut service costs while improving the quality of customer service and increasing the speed of service delivery. Third, learning. It enables online training and education schools to the customers. Fourth is collaborative which is framework for inter- and intra organizational collaboration. Final is community, which provides a gathering place for community members to learn, transact, and collaborate.
There are few reason that the companies use E-commerce to support their business. First, it enables the company’s business to reach the global market. It can cater demand for both the national and international market. By using E-commerce, it can allow the company business operate their business 24 hours a day even at holiday or weekends. So, it can significantly increase the sales and profit.
Besides that, companies also can reduce some costs by using E-commerce. It is because companies can run with less employees such as sales staff .Other than that, companies also can reduce the cost of phone bills, utility costs and others.
Furthermore, it can let the company gain the loyalty of the customers. Through the E-commerce, companies can always make it to customer’s wish and fulfill the customers’ requirement with fast and reasonable cost. Customers will feel satisfy with the service of the company, so it will gain the loyalty from the customers that will increase the sales and profit.
General situation in Malaysia
Internet start introduced in Malaysia since 1990 when Internet Service provider (ISP) JARING introduced in Malaysia. Follow by TMNET in 1996, the growth in the number of internet hosts in Malaysia increase. In March 2002, 21 percent of Malaysia’s populations of 22.2 million people were internet users. (Nua, 2002). However, the application of e-commerce just starts at year 1998. There was a growth rate of users from 303.9% (2000-2007) in Malaysia itself.
In Malaysia, government and business bodies have put much attention on E-commerce. Since 1997, Inter-Agency task Force on E-commerce established to develop national strategic action plan, and suggested that the security, encryption technology, policy measures to promote e-commerce and transaction tracking system.
Although E-commerce in Malaysia is still in infancy, it is a potential business for today’s market. Compare to USD 22.15billion in 2009, it is grow about 32% during 2010 which is USD 29.24billion. Most revenues of E-commerce are made by airlines, travel and financial sectors. In 2009, there are more than 8million internet users used transaction online which is more than half of Malaysia’s internet users.
However, on the other side, the E-commerce business in Malaysia is still far from maturity level. The general public still does not have the habit to online shopping. The Malaysia market lacks of smart customers which will cause customers have the high risk of deceived. Besides, Malaysia lack of giant suppliers in E-commerce market such as Amazon. They could well kick starts local e-commerce mass adoption. Giant suppliers will have the ability to pull the financial resources to educate the local public and gaining trust from their customers.
For smaller or medium sized online retailers, they faced the challenge on how to attract traffic to their online store. It is hard to pull traffic from the public unless the product sell is something niche.
From the pie chart above, 66% of Malaysian interested in E-commerce is males while males below 30years own the 42% of E-commerce market. However, there is only 4% of people used internet to make money, 26% just start their business and a total of 70% of people are new to the E-commerce. Besides, 53% of people willing to start do their E-commerce business now and 17% will just have the curious to know more about E-commerce.
Is the use of e-commerce increasing, declining or remained stagnant?
Recently, the number of internet users is increasing. From year 2000, there are only 15 percent in internet usage, but the amounts of internet users continually rising until it reach 64.6 percent in 2010 year. Internet is the largest shopping mall that allows users to do their business such as buy and sell transaction.
Simultaneously, the use of E-commerce is also increasing. In year 2009, half of Malaysia’s internet users which more than 8 million are buying, selling or transacting online. Among the E-commerce users, 19.7 percent are contributed by the teenagers who are 26-30 years old. Follow by age of 31-35 is 18.7 percent, and 36-40 is 16.5 percent. The ages that are the least online purchase is the group of age 21 or below, which only 4.9 percent.
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Nowadays, online buy and sell activities which is called E-commerce are popular by the internet users. At the same time, a lot of online stores are growing, with fashion is appear as most popular market. Besides, viewing and purchase clothes online already become a trend for Malaysia. Furthermore, credit card, PayPal and internet banking that can use for online payment which is convenience for internet users to make their payment cause internet users more and more rely on E-commerce activity.
Among the high percentage of E-commerce, most of the numbers are contributed by Air Asia, a low cost airline tickets. Air Asia attracts their customers by doing promotion such as low cost ticket, free ticket exclude taxation. Customers are allowed to purchase their ticket through online method. On the other hand, Lelong website acts same function to increasing of their sales. Indirectly, the user of E-commerce is increasing. Other popular goods include online sold book, movie tickets, and technology gadgets stimulate the customer entering themselves into the world of E-commerce.
E-commerce is rapidly increasing in the businesses all over the world. E-Commerce in Malaysia is moving towards uptrend direction and has received much attention from governments, businesses and regional bodies. This tread exist has been attributed to several converging factors.
The main reason is the development of the use of the Internet in Malaysia. Malaysian government has created some institutions that help industries and people to adopt E-Commerce. The government has implemented the Multimedia Super Corridor (MSC) to bring the process of electronic business trading to the country. As a result, Malaysia shifts from the Industrial Age to a borderless Information Age. The government agencies and institutions have provide many programmers for small and medium enterprises such as offer a short course or campaign about how to widely use E-commerce in the world of E-business that have to competition in the business world and tell benefits that they have with using the E-commerce against the old traditional business trading.
The second main reason is the affordability of personal computers in Malaysia household. Malaysian government is popular promoted One household, one PC camping. The Malaysia government has collaborated with financial institutions to make available financial aid to enable families to purchase a computer. Individuals have also been encouraged to use a certain portion of their employee provident fund to make such a purchase. This will directly increase the Malaysian computing capability which would able result to the increasing population of internet user in Malaysia. Besides that, most of the Malaysian can understand and speak English, thus the government developed a good IT infrastructure in Malaysia together improve the new technologies.
E-commerce has changed the conventional way of doing business. It overcomes geographical limitations to allow market expansion, decreases administrative, marketing and logistics costs, increases efficiency and provides a competitive environment to improve quality of service. Benefits like accessible and convenience improve customer services, updates and keep latest information about products and services, low transaction cost, ability to provide supply chain for larger companies and many more out there. Many people are grabbing the benefits from this technology. This will provide entrance to new seller and buyer while mounting sales and profits. For example, buyer or customer can able purchase more cheaper product due to elimination of intermediaries. As for sellers, they able gain greater efficiency selling their product to the market.
Development of information and communication technologies one of the forces is also pushing E-commerce in Malaysia. New technologies are providing easy and fast online transactions which are enhancing consumers to go online buying. Geographical position also helps to promote businesses around the globe. Besides that, foreign investment also helps in promoting e-commerce technology and introduces new technologies which are effecting on the growth of E-commerce. These initiatives and developments are pushing the businesses in Malaysia towards this new and beneficial for their businesses.
What are the solutions to the situation?
Security and privacy issues are the key obstacles for online businesses which protect the personal information of consumers while also facilitating trans-border data flows. Security issues have been creating unnecessary anxieties for many businesses and consumers. The Malaysian government put great effort in build up the trustworthy and credibility in network transaction among online consumers. Malaysian government has introduced the Cyber laws to ensure the security and safety of internet environment. The Computer Crimes Act 1997, Digital Signature Act 1997, Communications and Multimedia Act 1998, Digital Signature Act 1997, and Digital Signature Regulations 1998 provide protection from fraudulent transactions and allow complaints to be lodged. Consumers who have been faced in fraudulent transactions via the Internet are able to lodge their complaints to the Consumer Claims Tribunal.
The Malaysia government provides the education for the consumers regarding to the benefits of e-commerce. The government has been implements several programs that to ensure the younger generation have facilities to access the Internet. For those who are interested in starting their own business or gain more information on internet, they can access to the web site http://e-trainingsite.com which is set up by the government. In addition, the National Internet Literacy Campaign was organizing to increase the level of Malaysians’ Internet literacy to help them utilize the Internet productively and effectively.
On the other hand, in order to encourage the uptake of e-commerce and enhance Malaysia’s e-commerce competitiveness, the government needs to provide the basic infrastructure and favorable environment such as setting regulatory, technical and institutional preconditions smooth the progress of electronic transactions.
In conclusion, Electronic commerce as known as E-commerce is used to buy, sell, transfer or exchange products, services and information via computer network and internet. There are five perspectives used to defined E-commerce which is business process, services, learning, collaborative and community. Companies use E-commerce to support their business because E-commerce enables the company’s business to reach the global market. Furthermore, E-commerce helps increase the sales and profit by reduce the cost and provide efficiency business method. Additionally, E-commerce will help to get loyalty of customer as the company able to know the needs and wants of customers.
In general situation, E-commerce market in Malaysia is infancy but potential to growth. An increase of 32% in revenues in 2010 from 2009 and the amount of E-commerce customers had been increase o 24.24 billion. More than half of internet users are now purchase online.
However, the general public has less knowledge in E-commerce. Besides, Malaysia E-commerce markets less of giant suppliers. For the smaller sized online retailers, they need to attract traffic to their online store.
The number of internet and E-commerce users increased since 2000. In 2009, there are more than half of internet users in Malaysia. Hence, a lot of online stores are growing, with fashion is appear as most popular market. Besides, viewing and purchase clothes online already become a trend for Malaysia
Malaysia government help industries and people to adopt development of the Internet use in Malaysia by created some institutions. Besides, Malaysia Government help Malaysia household to own personal computers by promoted ONE household and ONE PC campaign.
E-commerce is increase rapidly in Malaysia due to development of the use of the Internet in Malaysia, Malaysia government put much of effort to promote E-commerce. Besides, the affordability of each household to own their personal computer, development of information and communication technologies and the changes of the conventional way of doing business also will lead Malaysia E-commerce into
In order to increase the reputation of E-commerce, security and privacy issues will be emphasized and put great effort in build up the trustworthy and credibility in network transaction among online consumers. Besides, government also provides the education for the consumers regarding to the benefits of e-commerce to encourage the uptake of e-commerce and enhance Malaysia’s e-commerce competitiveness, the government needs to provide the basic infrastructure and favorable environment such as setting regulatory, technical and institutional preconditions smooth the progress of electronic transactions.
We suggest that the company should employ E-commerce system. This is because through E-commerce, more people will get to know the company’s product and the cost is much more lower compare to traditional business.
To improve the situation, security problem must be solved to build up the trustworthy of the business. Beside, more promotion need to do to let people aware of the business.
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