In the emerging global economy, electronic commerce (e-commerce) has inchmeal become a strong catalyst for economic development as well as a necessary element of business strategy. Therefore, e-commerce is a potentially growing business for nowadays market and its development offers an undertaking way for business to meet the challenges of the ever-changing environment.
In year 2001, Vladimir Zwass, editor-in-chief of International Journal of E-Commerce, he says ‘Electronic commerce is sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks’. On the other plane, E-Commerce is the process of buying, selling, transferring, or exchanging products, services, and/or information via computer networks, mostly the Internet and intranets (Turban, King, Viehland, Lee, Liang and Turban, 2011). However, as a simple understanding on the E-commerce will be referred it likes a wide range of online business activities for products and services.
Basically, e-commerce can be classified by different dimensions which are business-to-business (B2B), business-to-consumer (B2C), intrabusiness e-commerce and etc. with reference to the nature of the transactions or the relationship among the participants (Turban et al., 2011)
Furthermore, Pikom, Chairman of the Association of the Computer and Multimedia Industry of Malaysian had commented on the current transactions of e-commerce among small and medium enterprises (SMEs) in Malaysia are expected to grow by 20 percent this year following greater awareness by the government and industry players.
2.0 Literature Review
2.1 Impact in the business world
During ancient times, barter system is a system that was adopted by the first people in the same locality to exchange their personal possessions of value for other goods or services in return before the invention of money.
Nowadays, e-commerce has become the essential method in the business world. The business transaction which is shifted to the Internet and computer network includes online credit card transactions, e-cash, e-billing, e-cheques, electronic invoices, purchase order and financial statements. Banks will need to adopt online payment systems and practices that will meet their clients’ new needs arising from a change to e-commerce.
The use of e-commerce in our country is still in the infant stage. Abu Bakar and Rohaizat (2002) said that most of the Malaysian SMEs are still left behind in terms of using internet in their business transaction. It is useful to enhance business growth and popularity of product by turning the business to online business.
According to Bernades & Verville (2005), e-commerce helps in responding to business environmental pressures, fulfilling customers’ demands and facing globalization challenge. E-commerce which is also known as ‘many-to-many’ e-marketplaces allows global buyers and sellers to trade in one trading community. They can choose the favorable price from the information available in the e-marketplaces. These advantages can thus reduce the transaction cost for SMEs due to the insensitivity of e-commerce to distance factor. It encourages the SMEs to extend the sales across the world.
Besides, SMEs has transferred paper business into online business by using e-commerce website in different language. The digital products or services can be delivered directly to customers throughout the world via Internet. It also can save costs by not paying to the intermediaries. Moreover, customer service also can be improved by more interaction with the customer.
On the other hand, e-commerce also makes big changes to the business world by giving more benefits to the customers. Customers can compare price of thousands of products provided by SMEs by visiting different sites at any time around the world. Besides, they can make payments and transactions easily by just one click which improves the cash flow of SMEs. Customer can also obtain information and electronic product easily through Internet. This improves efficiency for delivery of service which plays an important role in the business world. Customers are also fond of using the on-line tracking for checking their order status.
As a result, the changes of the face of business to e-commerce can not only increase the volume and speed of making transaction, it also improves the quality of goods or services provided and source of production with less input which results in reducing the business transaction costs.
2.2 Evolution of e-commerce to enhance business operations in the future
The evolution of e-commerce in the future play a significant role as it can enhance a company’s operation. According to Dick Brown, the chairman of EDS said that “the future of the cyber marketplace will depend, to a large degree, on safety and security.” Public perceives that the level of protection includes it personal and confidential information as well as their activities. They have high degree of concern about the safety and security problem due to their personal information easily access by other parties, confidential information falling into wrong hands, received e-mail viruses and others (Allan R. Paliotta, 2000).
Therefore, companies require enhancing the safety and security of their company’s website to protect the information of customers will not easily access by third parties. With the high level of protection, customers will reassurance to use the website. On the other hands, the complaint from customers will reduce as a result of the satisfied service provided.
Besides, companies have to aware of the innovative technology in the market. According to Rich Riley, vice president and general manager of Yahoo Small Business, the essence of internet is for communicating and collaborating. Thus, it makes Riley believes that internet has enabled innovators and entrepreneurs to reach their audiences efficiently and effectively in the past decade (Jennifer LeClaire, 2005). Companies should adopt new technologies which can fulfill the requirements of customers such as easy to understand and use, high security of personal information, easier online return options as well as the online payment process. Customers will satisfy because the company able to provide services that can fulfill their requirements.
Additionally, companies should adopt new software that can easier the sales process on the management side. For example, the system will automatically notice the management after the customer made the online payment. Hence, adopting of new technology will benefit the company to have a successful online business.
Furthermore, the company should have a content management services (Vidushi, 2011). Basically, website is a communication media that enable a company to have conversation with its customers. Consequently, the contents in the website are very crucial. If the website contain outdated or wrong information, customers may make a wrong decision regard of the merchandises that they purchase. In addition, customers lose confidence due to the merchandises fall short of their expectation. Therefore, content management services aim at ensures the contents in the website are update and correct.
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Recently, social networking site is very popular around the world. This indicates that social networking site will be an ongoing trend in the future. Therefore, company can consider developing a social networking site and application which may help the company to conduct businesses globally (Vidushi, 2011). The purpose of this application is to connect the customers of the website. Customers can chat or make friends through this application. Besides, they can exchange opinions about quality or price of the merchandises purchase in the website as well as share the information on a particular topic of their interest areas. Then, they may give some suggestions to the company to improve or enhance the operations.
In other words, company can consider using mobile commerce (M-commerce) to conduct the businesses. M-commerce enable a company conducts business activity through wireless telecommunication network. M-commerce is the extension of electronic commerce (E-commerce). There is wide speculation that m-commerce will surpass e-commerce as it is more convenient and ubiquity.
M-commerce is more portable and hence it can connect easily and quickly to Internet, Intranet, other mobile devices, and online databases through the cellular telephone and personal digital assistant (PDAs) whereas e-commerce’s users require plugging in their PC or laptop before conduct a transaction (Turban et al., 2010). Besides, m-commerce is more ubiquity which means that it is available at any time and location. M-commerce’s users can deliver information when it is needed regardless of the users’ location by using the wireless mobile device (Turban et al., 2010). These two factors may benefit the company to obtain wide range of customers and thus will help to increase the company’s value.
2.3 Examples of companies that successfully built up/overturn its decline with
the use of e-commerce
Nowadays, e-commerce is one of the most important facets of Internet. A successful e-commerce business must be globally aware, system-oriented and customer sensitive. Companies can use the direct access to consumers to collect information that will help them better develop products to meet the consumers need through customizations or create new niche products (Rohaizat Baharun and Abu Bakar A Hamid, 2005).
One of the well known e-commerce site in Malaysia is Airasia.com. It is the first low fare airline which is opening an e-business that creates a world of opportunity and establishes new relationships with potential customers. The reason of Airasia.com becomes one of the well known e-commerce is it provides the most convenient for customer by giving 24 hours a day, 7 days a week freely access the website to buy or preview the availability of tickets. In others words, the operation costs of Airasia have been reduced dramatically due to e-commerce stores can be run with less employees and eliminated marketing costs. Therefore, Airasia can save cost which assists with regard to its research and development.
The difference between Airasia and Malaysia airline is the Airasia website more user friendly and easier to let users remember the well-know slogan “Now Every One Can Fly”. In contrast, the Malaysia airline not has the slogan about the airline business. The Malaysia airline also lack of colourful and enjoyable feeling website, which it like more traditional format website. So that, the Airasia website can attracts more users or customers. Besides, more users or customers also more trust about the Airasia because this website is well-know really website, then the users will not afraid to be cheat. Thus, the customers or users will more trust Airasia compare with Malaysia airline. Even through, the Malaysia airline provides the reward to the users also cannot easily to beyond the Airasia website. It is because in the mind of the users and customers the Airasia has a strong positive image compare with other airline.
Another example of the well-known successfully attractive site is amazon.com. It is the global marketplace where businesses and individuals can buy and sell practically anything. However, some similar business requires brokers. The amazon.com using the e-market to deal the transaction, so that is not requiring any brokers. It can reduce the search cost, allowing consumers to find sellers that offer lower prices, better service, or both (Turban et al., 2010). This online company urges the use of secure electronic transactions.
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Their website also has a whole page devotes to convince its potential customers that using credit cards online with their business is safe. So that, the customer and seller has the confident to trust this website while doing their trade. After reading their security statement, if customer is still unsure about using credit card online, they encourage customers to submit their order without using credit card online and they will contact them to complete their order. These shows that Amazon is providing an attractive website to the users and enhanced trust regarding well relationship with their customers as well as secure to buy their product online. This built up a very strong relationship between customers and seller in term order to increase its sales and profit.
In addition, dell.com also promotes the use of secure electronic transactions. The Dell Company selecting the right product to sell is a critical success factor for e-tailing. Dell using e-commerce also decrease the amount of time involved in the order-taking cycle because automation can be introduced to help customers search for, select, and pay for a product, anyplace and anytime, without the intervention of a sales or technical person. Finally, product updated can be communicated to customers rapidly. The Dell Company also provide the cost and speed of product customization. Millions of consumers configure computers to their liking. The Dell Company can fulfil such requests at a reasonable cost and in a short amount of time; this is the reason for Dell can assure success (Turban et al., 2010)
As for implementing security measures, Dell utilizes industry-standard Secure Sockets Layer (SSL) technology to allow for the encryption of potentially sensitive information such as the customer’s name and address, as well as critically sensitive information like their credit card number. The Dell Store Web site is also registered with site identification authorities to enable a browser to confirm the Dell Store’s identify before any transmission is sent. Dell.com also backs each credit card order with the Secure Shopping Guarantee. This guarantee further ensures that the customer is protected every time they buy online with Dell. This shows that Dell website success is caused by providing a reliability and security to their users and potential customers.
Therefore, they also provided a self-serve site to let their users easy to use or download the software to solve their problem without assistance and are letting customers help themselves. If the problem really is very serious, the customers can send e-mail to them for requesting help and then they will come to customer house within 3 days to help customer solve the problem. This provided very efficiency service and very responsible to their customers and show their confident with their product. On the other hand, if the customers directly buy through their website, their providing an incentive and attractive price for customers to buy and to return. They provided sales promotion involve coupons, special offers and discounts. So, they can build up their goodwill and image in the mind of users and potential customers.
2.4 Examples of companies that failed their e-business and lessons learnt
In the end of year 2000, “dot-com bubble” was burst causing an unprecedented number of online-based businesses being closed down.
Empirically, Pets.com is one among many other online retailers that failed as a B2C entity. In fact, Pets.com is a fully virtual firm which founded by Grec McLemore that offered pet products, information, and resources to its customers were established in November 1998. Besides, it had the first-mover advantage being the first to enter the market and appeared to success in the beginning of 1999. However, the success never brought profit and thus Pets.com decided to close down its business in November 2000.
The reasons for the closing of Pets.com relate to an unsustainable business model and unachievable expectations. Basically, Pets.com “bet everything on the market” (Fischer, 2000). Furthermore, they had overestimated the market trend that assumed the revenues would grow rapidly and allow them to hit their rate. On the other hand, Pets.com did not bring up a good proposal in opposing its competitors which the product’s price is lower than its cost. Also, Pets.com failed to position itself in an effective manner (The failure of Pets.com, n.d.).
Figure 1: The symbol that representing Pets.com
Other than Pets.com, one of the most notable dot-com failure, Webvan, was established in 1996 by Loius Borders. It was offering same-day delivery of general grocery merchandise ordered by its customers via internet. Finally, they ceased its operations in 2001 (Ray Delgado, 2001).
The critical mistake the Webvan’s management made was to spend too much of the investors’ capital before there was even any revenue. Whereby, Webvan’s management was made a wrong presumption against reality on consumer intention to purchase groceries online thereafter. Webvan failed to accurately predict the existing demand for their services and were overly optimistic about the readiness of the consumer market to accept their new way of doing business. Another mistake the Webvan’s management made was they provided a low customer service and contributed to low consumer enthusiasm.
In Essence, poor planning, spending too much capital before producing any profit, expanding too quickly before trying to establish in a specific market, failure to provide due customer service, and failure to predict the readiness of customer market – all of these things could be found in these two failed dot-com companies (Jeff Ropelato, n.d.).
Hence, based on the experiences and lessons from Pets.com and Webvan.com, the management team must to have a comprehensive research and planning on their market, readiness of customer market, financial perspective, and future market trend. The basic economic principle stands in the E-Business world as “you have to make a profit eventually in order to succeed”. Thus, think seriously on its investment before getting any profit. Meanwhile, a good customer service is a critical success factor for any online retailer that to ensure their customer loyalty.
Emergence of e-commerce is creating fundamental changes to the way that business is conducted (Mohd Amirul Akhbar Mohd Zulkifli, 2001). The uptake of e-commerce is influenced by its potential with respect to create business value and by awareness of its participants of the potential benefits.
According to the past studies, there are some potential benefits which can be classified into tangible and intangible benefits. As such, tangible benefits are included business efficiency, transformation of traditional market chain into international marketplace, retained and expanded customer base (mass customisation), increased automation of process, operational cost savings and etc. Likewise, intangible benefits are involved consumer loyalty, competitive advantage, convenient shopping, enhancing well-being, education of customers and etc.
In contrary, they are also concluded some drawbacks brought by e-commerce such as lack of sufficient system security, reliability, standards and communication protocols, issues with compatibility of older and ‘newer’ technology, increased competition from national and international competitors, rapidly evolving and changing technology, pressure of innovation and developments on business models and etc.
Generally, SMEs are constrained in their adoption of e-commerce by lack of financial resources and technological education. Therefore, they are facing some barriers like lesser competitive advantages, ineffective and inefficient transformation of traditional market, web site issues, poor security, people and organisational issues and etc. that made SMEs facing challenges of e-commerce.
In order to overcome the barriers stated, we suggest that SMEs can being flexible to continually innovate and integrate their e-commerce into existing business activities by implementing training course on technology education or outsourcing to others expertise. Besides, they can also having selection on their product or service that are well-suited to e-commerce and being able to manage the growth or changes of those products or services with the purpose of providing well customer service and up to date information. Moreover, SMEs is encouraged to maintain a great integration of e-commerce infrastructure and organisational structure in order to fully utilize e-commerce without any barrier.
Lastly, according to Edim (2000), even though SMEs might have a difficulty to develop a sophisticated web due to lack of expertise and fund, but they still need e-commerce to prosper and for on-going survival. Consequently, we hope that our suggestion can strengthen their e-commerce and eventually achieved their organizational goals effectively and efficiently.
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