Saturday, December 5

Advantages and Disadvantages of E-Commerce

We live in the age of globalization driven by digital connectedness and unlimited flow of data. One could even say that we are hyper-connected. There are no physical barriers left when it comes to connectivity anymore. And this even translates to our consumerism. As a concept, e-commerce has emerged as a symbol of this very globalization and a key to success in this digital age. So, let us look closely at the advantages and disadvantages of e-commerce.

WHAT DOES E-COMMERCE MEAN?

E-Commerce or electronic commerce means the process of buying or selling of goods or services electronically on the internet. It involves the transaction of goods and services, transfer of capital, and exchange of data. This is supported by a comprehensive usage of information and communication technology (ICT) and a global network infrastructure. For this purpose, ICT systems work together to share, exchange and process data across various cooperating organizations that are involved. E-commerce involves mobile commerce, electronic fund transfer, supply chain management, online marketing, and data collection systems among other things. Today, e-commerce is an integral part of a business model and it is the largest sector of the electronics industry.

TYPES OF ELECTRONIC COMMERCE MODELS

There are six main types of e-commerce models. These are business-to-business commerce (B2B), business-to-consumer commerce (B2C), consumer-to-business commerce (C2B), consumer-to-consumer commerce (C2C), business-to-administration commerce (B2A), and consumer-to-administration commerce (C2A).

Business-to-business commerce is the transaction that happens between two businesses. This results in a high-value relationship. The final consumers are not involved in the online transaction. The business-to-consumer commerce is where the business or company directly sells goods or services to the consumer through their website. For example, Amazon, IKEA, Flipkart are popular business-to-consumer models. Consumer-to-business is the opposite of B2C commerce and provides services to a business or company. Companies that start crowdfunding campaigns for their business fall under this model. Consumer-to-consumer commerce is where transactions take place between two consumers. For instance, eBay and OLX are C2C commerce models. Business-to-administration is where public administration or government entities use the internet to transact with the company for services like data collection, reports, web designing, etc. Consumer-to-administration commerce is where the government or public administration transacts with the consumers. The filing of tax returns by a person is an example.

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Advantages and Disadvantages of E-Commerce

ADVANTAGES OF E-COMMERCE

Easy Availability

The biggest advantage of e-commerce is its easy availability. One can find almost anything online with relative ease at any given time of the day. Be it any kind of goods or service, everything is available only a click away. Also, there is a great variety for each product. In other words, it is convenient, efficient, and highly functional. This helps consumers get the best of the goods and services available in the market. And it can be tailored according to the needs of an individual customer as well. With a global reach of these e-commerce websites, it has become very easy to get access to anything without the hindrance of location. Hence, the geographical barrier is non-existent with the advent of globalization.

Benefit to the Providers

E-commerce is not only beneficial to the consumers and customers but it is very profitable for the goods and service providers as well. Due to the global visibility of certain e-commerce websites, there is potential for a bigger customer market. E-commerce helps these businesses have a better relationship with their customers. For instance, it is easier for them to correspond with consumers and therefore, better customer service can be provided. Additionally, there are no intermediaries between the providers and the customers. This helps them get more margins for their profits.

According to the United Nations Conference on Trade and Development (UNCTAD), in 2017 global e-commerce sales grew by $29 trillion. It was estimated by KPMG, a premier advisory firm in India, that the e-commerce market in India was expected to touch around $80 billion by 2020. In other words, this model is thriving and does not look like it’s going anywhere.

Reasoned Decision

Another advantage for consumers and customers is that they can avail of goods and services by making a reasoned decision. With the availability of many e-commerce websites, it is easy to browse through them to find what is best suited for an individual’s choice and to get the best of the products. Also, with the help of reviews and comments of other customers, there is transparency maintained within the system. This way the consumer has more autonomy to make their choice.

Cost-Effective

E-commerce websites and online services can be very cost-effective for customers. With rising competition among rival businesses, there is pressure on the pricing of goods and services. Consumers are the ones that benefit from this with global offers, discounts and the best bargains. These consumers have the option to compare the pricing of the same product or service on different e-commerce platforms to get the best deal.

Saves Time

Electronic commerce or internet commerce helps in saving time and energy. The timings are flexible as one can use these platforms 24×7. There is quick delivery of goods as well as services without any extra hassle for the customers. Any complaints of the customers are also immediately addressed by these service providers. This helps both the customer and the company save time.

DISADVANTAGES OF E-COMMERCE

Impersonal

Customers do not get a personal or hands-on experience with e-commerce platforms. It lacks the interpersonal relationship that a traditional business could establish with the consumer. This is especially important when it comes to expensive and luxurious items as the consumer has to invest a lot of capital. Also, there is no one to guide a person while browsing through the products and services. This lack of personal touch is a big disadvantage especially for businesses like furniture stores, jewelry brands, interior designing businesses, etc.

Security Issues

E-commerce poses a lot of security issues. The whole transaction for these e-commerce websites is online, including payment. This can cause a lot of problems like credit card fraud, identity theft, stealing of accounts. Even though these websites take precautions to protect the card details, there is still concern for security breaches because of the growing number of cybercrimes. Many businesses have been prey to hackers and cyber-criminals. Customers can become skeptical and lose faith in online transactions because of this. Ultimately, this would negatively impact several businesses.

Advantages and Disadvantages of E-Commerce

Inaccessible in Remote Areas

Though e-commerce platforms are booming, they are not easily accessible everywhere. More than four billion people in remote areas, mostly in developing nations do not have access to the internet. In other words, a huge population of the world does not benefit from connectivity or the services it provides.

Dilution of Traditional Businesses

With the advent of e-commerce platforms, there has been a huge setback to traditional businesses. The rise and popularity of e-commerce websites like Amazon, eBay, Flipkart has made it harder for smaller businesses to attract customers. One of the reasons for that is they cannot match the exceptionally low pricing of these e-commerce websites. This has made it difficult for these businesses to stay afloat.

In conclusion, e-commerce platforms are an emerging trend but there must be a balance sought between moving into a completely digital future and preserving the craft of good traditional business.

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PROS AND CONS

PROS

CONS

Easy Availability

Impersonal

Benefit to the Providers

Security Issues

Reasoned Decision

Inaccessible in Remote Areas

Cost-Effective

Dilution of Traditional Businesses

Saves Time