Electronic Commerce Term paper

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Electronic Commerce

There are very few successful companies that do not use computers in their

everyday business activities, which also means there are few companies that do not use

e-commerce.

To emphasize the point that the effect of the Internet is so widespread in today’s

business communities, one online article stated that more than 100,000 companies have

Internet addresses, and 20000 companies have home pages on the Internet as of February

1999 (DataQuest, 1999). These numbers have more than tripled since 1995, and the trend

shows no signs of slowing. But what exactly is e-commerce? To most casual Internet

surfers, e-commerce means online shopping; workaholics pointing their web browser to

Amazon.com to order an emergency present because they forgot someone’s birthday

again (Weiss, 1999). As we will soon find out, this is far from the case. Simply put,

e-commerce is the exchange of business information between two or more organizations.

An example of this would be buying and selling products or services over the Internet.

E-commerce became very popular soon after it proved to be an efficient means to

conduct long distance transactions.

The purpose of this report is to discuss some of the advantages and disadvantages

of e-commerce, as well as examining its potential for the future of business.

Electronic commerce, or e-commerce has developed very rapidly in the last few

years and has left some people wondering what it is all about. "Most people think

e-commerce is just about buying and selling things over the Internet." (Wareham, 2000)

E-commerce is a broad term describing the electronic exchange of business data between

two or more organizations' computers. Some examples might be the electronic filing of

your income tax return, on-line services like Prodigy, and on-line billing for services or

products received. E-commerce also includes buying and selling any item over the

Internet, electronic fund transfer, smart cards, and all other methods of conducting

business over digital networks. “The primary technological goal of e-commerce is to

integrate businesses, government agencies, and contractors into a single community with

the ability to communicate with one another across any computer platform.”(Edwards,

1998)

History of E-commerce Electronic commerce was built on a foundation that was

started more than 125 years ago with Western Union's money transfer as an example of

telegraph technology. In the early 1900’s the advent of credit cards as a payment system

revolutionized the process of automated commerce functions. In the mid 1980’s the

introduction of the ATM card was the latest improvement to electronic commerce. The

Internet was conceived in 1969 when the Department of Defense began funding the

research of computer networking.

The Internet, as a means for commerce, did not become reality until the 1990’s.

Before this time, it was mainly a tool for the army, and a research device for some

American universities. Its popularity grew when it proved to become a fast and efficient

means to conduct long distance transactions, as well as an effective way to distribute

information. Economic Impact Clearly, E-commerce will change the face of business

forever. Companies that are thousands of miles away can complete business transactions

in a matter of seconds as well as exchange information. As one online article explained:

Dell Computers sells more than $14 million worth of computer equipment a day from its

web-site. By taking their customer service department to the web Federal Express began

saving $10,000 a day. The Internet provides businesses with the opportunity to sell their

products to millions of people, 24 hours a day. (Baxton, 1999) Figure #1 shows the

amount of revenues generated by the Internet, dating back to 1996 as well as estimating

possible revenues through the year 2002. With 1998, revenue equaling almost 74 billion

dollars and experts predicting that it will climb to as much as 1,234 billion dollars by the

year 2002, anyone can see that e-commerce is the wave of the future.

Figure #1- Internet generated revenues in US dollars. Source: NUA Internet

Surveys "Without a doubt, the Internet is ushering in an era of sweeping change that will

leave no business or industry untouched. In just three years, the Net has gone from a

playground for nerds into a vast communications and trading center where some 90

million people swap information or do deals around the world. Imagine: It took radio

more than 30 years to reach 60 million people, and television 15 years. Never has a

technology caught fire so fast" (Edwards, 1998).

Advantages of E-commerce ; Speed , Savings , International Distribution ,

Customer Service. The number one advantage that e-commerce possesses is speed. The

Internet and World Wide Web gives businesses opportunities to exchange messages or

complete transactions almost instantaneously. Even with the slowest connections, doing

business electronically is much faster than traditional modes. With increased speeds of

communication, the delivery time is expedited and that makes the whole transaction from

start to finish more efficient. Also, you can find practically any product available for sale

on the Internet, as one author put it ,from books and compact disks (from

www.amazon.com) to French bread .(available from www.sourdoughbread.com),

(Buskin, 1998) Even more significant is the fact that information appearing on the

Internet can be changed extremely rapidly. This gives business owners the ability to

inform customers of any changes to the service that you are offering. This also allows for

you to update marketing and promotional materials as often and as frequently as you

would like. The second advantage of the electronic commerce is the opportunity it offers

to save on costs. By using the Internet, marketing, distribution, personnel, phone, postage

and printing costs, among many others, can be reduced. You can start doing business in

cyberspace for as little as $100. Most businesses will spend more than this but compared

to the cost of opening a physical store, the savings are tremendous. These funds can then

be diverted to marketing and advertising of your product or service. Cyberspace knows

no national boundaries. That means you can do business all over the world as easily as

you can in your own neighborhood. Since the Internet connects everyone in cyberspace,

information is transmitted at the speed of sound or the speed of light, depending on your

connection. Either way, distance becomes meaningless, which makes you able to link to

anyone on the globe and anyone on the globe can link to you. The ability to provide links

makes doing business on the Internet attractive to customers in any part of the world.

Using the web to provide customer support is an excellent vehicle to help build the

reliability and effectiveness of your product or service. The ability to provide on-line

answers to problems through email or an provide an archive section of frequently asked

questions 24 hours a day, 365 days a year, builds customer confidence and retention. In

fact, a whole series of IBM E-commerce commercials were based on this one single

point. The Internet tends to be a more personal environment. People expect to get a real

person when they send mail. This can work to your advantage as a small start-up

company, or when you are a large corporation. No matter what business you are involved

in, an online-help feature is an extraordinary advantage to have.

Disadvantages of E-commerce ; Privacy and Security , Willingness to Pay ,

Technical Challenges , Organizational Commitment. A potential source of trouble is

customer concerns with privacy and security. Anything sent over the Internet is sent

through several different computers before it reaches its destination. The concern

regarding Internet security and privacy is that unscrupulous hackers can capture credit

card or checking account data as it is transferred or break into computers that hold the

same information....

You should cite this paper as follows:

MLA Style
. EssayMania.com. Retrieved on 26 May, 2012 from
    <http://essaymania.com/72505/electronic-commerce>

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