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Electronic Business Vs Traditional Business Information Technology Essay

2982 words (12 pages) Essay in Information Technology

5/12/16 Information Technology Reference this

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1. Introduction to e-Commerce

Electronic commerce, commonly known as (e-shopping) 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”(Wikipedia). 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.

2. Definition of E Commerce

A while back, e commerce referred to any type of business conducted over the Internet. ”The meaning of the phrase has changed though, and now it means selling an actual product (hard goods) online. This is different from selling a service, such as article writing”. (Masteringwebsitemarketing.com)

3. Some Examples of E Commerce

This list will show you some products and services-all considered to be a part of e commerce.

Online Goods and Services

EBooks (Sample example below):

CLICK HERE TO DOWNLOAD eBOOK

Software

Retail services

Ordering flowers, food or clothes

Marketplace Services

Auctions

Online wallet (“An online wallet is a program or web service that allows users to store and control their online shopping information, like logins, passwords, shipping address and credit card details, in one central place.” Wikipedia)

Advertising

4. More on Definition of E Commerce and Introduction to E Commerce- Its History

Ecommerce began in 1994 when a man named Jeff Bezos started Amazon.com, selling things out of his garage. Ever since, more and more businesses have attained a reputation online-companies like eBay and Target.

Across the world there are around 8 million people who shop online. A study has shown that by 2011, profits from online retail sales will pass a quarter of a trillion dollars! So, you can see how important e commerce is to the lives of many people.

5. E Commerce characteristics

The understanding of the e commerce paradigm varies among academics and practitioners. According to ALTER (2002) e-commerce is the practice of performing and coordinating critical business processes such as designing products, obtaining supplies manufacturing selling and fulfilling orders and providing services through the extensive use of computer and communication technologies and computerized data, DRUCKER (2002) however talks about ecommerce as the explosive emergence of the internet as a major world wide distribution channel for jobs and services, which in the end results in changes in markets and industry structure as well as economics in general.

An extensive study shows that ecommerce do not have a common accepted definition which is a sign of research area that is still emerging and maturing and one that involves different research domains as marketing, computer science or strategic management (WILKINS 2000).

Summarizing the definitions of ecommerce and in accordance with the organization of economic cooperation and development, 5 major characteristics can be concluded, (OECD1999):

Use of information and communication systems to standardize, automate and integrate transactions.

Transformation of marketplaces and creation of new industries

Increased connection and interactivity of and between the business partners over electronic networks.

Alteration of the relative importance of time and resources

Catalytic effects of inter and intra organizational transaction

6. Benefits

Starting an e commerce store has benefits to you, the merchant, and to your customers. Some of the biggest benefits are cheaper products and setting up and maintaining your online store-all done more easily than you can with a brick-and-mortar store. To conclude the introduction to and definition of e commerce, let’s look at its benefits.

24 Hours a Day, 7 Days a Week

With an e commerce website, you can serve your customers 24/7! They can order any time of day or night. Want to sleep in? Go on a vacation?

No problem! Your customers can keep shopping and ordering, even when you’re not there. (Powertips.com.au)

Opportunities to Create Relationships

E commerce opens the door to new opportunities for relationships with your customers, both new and old. When your business is online, it is accessible to customers the world over; so there are many new opportunities for new relationships. You would not have most of these customers if your business wasn’t online.

Increase in Sales

Starting an e commerce site is a great way to increase the sales for your brick-and-mortar store. Many store owners don’t think of how much their business could increase if they attain an online presence. It just doesn’t occur to them! However, it is a great way to increase sales at your offline store.

Brand Awareness

The ability to reach millions of potential customers all over the world will increase knowledge of your product line. You can get people talking about your products, which is free, word-of-mouth advertising!

Expands Your Customer Base

As we mentioned briefly, having an e commerce business means that you can get customers from all over the world. There are almost no limits as to who you can sell to, and where. Offline stores are limited to getting customers locally. But e commerce removes these restrictions! At the very least, target Canada, the UK and Australia as well as the USA.

Builds Customer Loyalty

With an e commerce store, it’s simple to show off your goods to customers in a unique way. If your store is easy to access and shop with, you will have loyal, lifetime customers.

Promotion is Easy!

It’s easy to deliver information to your customers over the Internet! Make your promotions, data, and information easily accessible. Of course, you’ll want to put a lot of this information in a newsletter that you send to your customers on a regular basis.

Decreases Your Expenses

Going online can decrease your costs, too. If your business is online, you won’t need much staff (if any!) Plus, there’s no real location necessary, so you won’t have to pay for rent or maintenance.

Increases Your Earnings

If you have a Business already, opening an e commerce site can be a big pick-me-up for your business. It’s important to increase your profits, and going the e commerce route can be a big help. More sales = More profits = Bigger budget for your business.

Smaller Target Group

While your customer base can extend well beyond your local area using e commerce, it’s also easy to tighten your niche. Online, you have more control over who your business targets. You can target young couples, singles, teens, seniors, men, women, or a specific ethnic group. This type of targeting is done by using keywords that are popular to the demographic you are trying to reach.

The meaning of Electronic Commerce (e-commerce) has changed over the past 30 years as today it is considered to be the buying and selling of products or services over an electronic system i.e. the internet.   Since the spread of this, the amount of trade conducted electronically has grown tremendously. Now the World Wide Web (WWW) is being used by modern e-commerce, which is generally considered to be the sales aspect of electronic business and consists of the exchange of data to facilitate the financing and payment of business transactions.  

7. Comparing electronic business to traditional business

Now days, technology has made human life easier and better. It has developed many fields to perform their task easier such as, manufacturing, constructions and many more. Business sector has also changed a lot with the improvement of technology from traditional business it evolves to e-business and bringing a big difference in three major areas that is time, trust and as we all know that time is precious for many people, the same thing is applied in by the entrepreneurs in their businesses. The advantage of e-business is convenient because people do not need to go out and talk to customer or find for customers instead they can sit in the house and do their work through internet. Besides, e-business makes our life easier because any business transaction can be done through the internet and also safe our time from travelling up and down. Some example of e-business is e-shops; e-commerce and e-auctions, with this new technology on e-business people are able to make their life even better.

Where as, on the other hand traditional business is totally opposite then e-business because it is not so convenient because we need to go out and find customer, the advantage of this traditional business is that they provide good service and gain customers trust but amount of energy wasted is not really worth it sometimes. Further more, traditional business waste energy because need to travel a lot and quit a lot of paper work need to be done for one transaction and sometimes time and also waste time because lets say if the supplier want to buy a product from the manufacturer the supplier need to send letter to get the quotations and he must survey around which manufacturer offer the cheapest and etc. by doing this way the supplier is actually wasting a lot of time. (E-business amazon vs. borders)

”One simple thing that certainly differs e-business from traditional business is the technology that underpins the business itself”.

E-business is built electronically on a network; therefore, without a network it’s completely impossible for an e-business to survive. The use of technology will bring a huge impact on the way of a business communicates with its customers.

This business communication models are categorized by Schneider into three different types [1]

Personal contact (one to one)

In this type of communication model, the organization assigns its employees to identify and reach the prospective customers [1]. The simplest example for this approach is the sales person who calls the potential customer and introduces the products offered by his company. This approach has been widely implemented by traditional business.

Mass media (one to many)

The mass media approach allows the organization to broadcast advertising and promotional materials on its products [1]. Examples for this approach are advertisement on television, radio, newspaper or magazine. This approach has also been widely adopted by traditional business.

The web (many to one or many to many)

The internet is neither a mass media nor a personal contact device [1]. It stands on the middle of the fine line where mass media is allocated at the first side and personal contact at the other side. The web provides more interactivity than mass media does to its audience but less than personal contact could offer. For example, an internet user can type in his keywords on a search engine tool (e.g. Google) and click on the products that catch his attention. The web is the approach that is adopted by e-business.

So, what impacts that the web can bring to-business as its business communication model? The communication model adopted by e-business will surely raise new barriers that need to be brought to attention.

The low level of trust

Unlike traditional business who can gain trust from its prospective customers through a straight, personal contact, the web eliminates the customers’ privileges to experience such personal contact with both the products and organization they want to buy the products from. In traditional business, customers come to a store and have personal interaction with the organization through its sales person and then, possibly, have personal contact with the product. These types of experience somehow develop trust towards the organization and are very important for certain types of product.

The need of good electronic marketing strategies

It is undeniably that internet provides the facilities for business to ‘broadcast’ their advertisement. However, it doesn’t have such power to force its audience to view or click on the ads [2]. An audience has the opportunity to create a list of product by using search engine tool (e.g. Google) and click on the product that catches his attention. Therefore, some traditional marketing strategies are not applicable in e-business. New marketing strategies such as how to increase the rank of a company on search engines are more likely to gain attention in running an e-business.

E-Business is changing the relationship between merchant and customer, whether it is business to business or business to consumer Business, or the government isomers of these.

Relationship building is paramount. Savvy Internet users know that if they cannot get good service, which also means an easily navigable web site, they can move on — and quickly. The Internet is providing customers with growing power and purchasing control. Shopping agents will find the lowest price; scams or poor service will quickly be identified and passed on.

In addition there is still a strong ethic of ‘free stuff’ on the web. Consumers in particular are looking for free information and services. Providing these aspects is a crucial part of relationship building which will form the basis of electronic Business into the future.

With the potential speed and efficiency of electronic communications and transactions, the nature of inventory is changing. A virtual shop on the web may carry no stock at all, relying on suppliers to fulfil orders; a small, on-site inventory can be replenished with just-in-time manufacturing

E-business improves the benefit and efficiency of traditional business, comparing with traditional business, E-business has the following advantages:

E-business improves the benefit and efficiency of traditional business, especially international trade. Compared to traditional models,

8. E-business has six main advantages compared to that of traditional business:

(1) Reduces business cost. Firstly, e-business can improve the marketing efficiency and decrease promotional costs by network marketing enterprises. According to statistics, advertising on the internet can increase sales volume by 10 times, while the cost is only 10% of traditional advertisements; Secondly, E-business can reduce stock cost, because it can find more suppliers with the most favourable prices in the global market by internet enterprises, and sharing information with suppliers can also reduce problems caused by long communication chains. Some studies indicate that using EDI usually can save stock cost for enterprises by 5%-10%.

(2) Decreases stock, Decreases Waste. Enterprises should maintain a certain stock of products and materials to deal with fluctuant market requirements. The essential reason for stocking up is lack of information, a lack of information E-business based suppliers and manufacturers don’t have. They can send information of market requirements to enterprises to make decision and produce by internet, and enterprises’ requirement information can be transferred to suppliers to supply on time, leading to zero-inventory management.

(3) Shorter production cycles. To create a saleable product is often the cooperation of many enterprises. The product’s design, produce and sales may be managed by many different related enterprises. Using E-business can change the stage-cooperation method caused by lack of information into coordinated work methods, improving business to

business (B2B) relations.

(4) Increases business opportunities. Traditional trade is limited by time and space, but E-business is a global 24 hour operation. Business on the internet can expand in the market that the traditional marketing and advertisement promotion can not reach.

(5) Reduces material dependence. Traditional enterprises must have a certain number of materials to develop business, but the E-business in internet can built virtual enterprise, such as shop and bank on network, they don’t need many practical basic instruments, and the enterprises can transfer the saved cost to customers, this is the reason that Amazon, a book shop on network can supply customers discount that the traditional book shops can not supply.

(6) Cuts out the middle man. E-business redefines the traditional currency mode and reduces middle links in B2B relations and international trade. E-commerce allows the possibility of direct transaction between manufacturers and buyers, across borders, thereby changing the economy of the entire world.

9. Conclusion

Today, ecommerce is the latest mantra in increasing your sales. This is because instead of selling your goods and services through a local store, you can sell online and gain a greater customer base. Apart from providing shipping services, you will need an online ecommerce merchant account to accept credit card payments to make your venture a success.

These days, even a restaurant is running under ecommerce system. Ecommerce solution provider performs many jobs for the Restaurant, such as, they put online restaurant menu, online restaurant ordering systems and bed and breakfast booking system. There are many ways to get your products and services online, from a simple brochure site to a high-end database driven site.

In this way, we see that ecommerce has changed the people to do the business in a different way. Every thing in this world has been being globalize and of course business is no exception. Global ecommerce business has been new trends in ecommerce business and plays a pivotal role in global economy. Also the role of ecommerce business solution providers cannot be ignored because you cannot imagine successful and fruitful ecommerce business without their assistance.

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