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E-commerce
Introduction
In the early of the 20th century 90s, internet commercialization directly promoted rapid development and growth of electronic commerce (Yan, 2008). Revolution that e-commerce has brought is comprehensive and far-reaching. While development and application of it is the process of continuous, change and evolve. Different from traditional business, e-commerce builds on the network and has been impacted by the environment of network. Not only the network brings competitive to it, but also some limit to it.
From the birth to now, tremendous growth of e-commerce has rested on clipping growth of computing technology. Computing technology has played a pivotal role on progress of e-commerce. Thereby, some issues of e-commerce could be solved with technology advancing. Similarly, appearance of e-commerce has brought improvement to supply chain. E-commerce linked the independent processes, which improved efficiency of operation of supply chain.
Main Body
E-commerce has advanced with the introduction of computers in doing business. It involves use of technologies such as computers and network communication in doing business. Defining e-commerce simply is that managing business in the Internet and Web (Shelly, Aileen, 2008). According to their same position and different angle of the e-commerce and different extent of participation, governments, academics, business people gave many different definitions.
It is however important to understand that e-commerce is not the same as doing business electronically. The approach of e- commerce tends to vary across nations and countries. The applicable of the concept is also different across these countries. Nevertheless, with all these variations, it is important to understand that the concept is still same because it relies on internet communication and electronic equipment.
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As the technology space increased, many other functions or services are now being provided through the internet. Shopping is one of the most widely service that takes place through electronic and network communication technologies. Nowadays, other services such as logistics, financing, among many other ancillary services take place through electronic technologies.
Other areas where e-commerce applies is in electrical trading market, supply chain management, network marketing, electronics currency exchange, online transaction processing, automated data collection systems, inventory management and electronic data interchange (EDI). This functionality has enabled various businesses across the globe to engage in businesses without any physical border obstructions. Information technologies such as email, databases, extranet, internet, mobile phones, and electronic catalogs have been very important if facilitating e-commerce.
It is also very important to understand that e-commerce is classified into two; narrow and broad. Narrow e-commerce involves uses of internet in performing business activities, while on the other hand, broad e-commerce involves adoption of electronic tolls such as computers, and even use of Smartphone to conduct business. Regardless of these divisions, it is important to note that in both, internet is critical for their functionality. Otherwise, it cannot be called for e-commerce; the second it is just a kind of business activities which is finished in the Internet.
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Environment always has effect the organization and the stakeholders of the organization. From microanalysis, internet could offer information to organization. According to Holden et al. (2009), the network is a collection of electronic documents—the inventor calls it a supposed space of information. Every user of network is a part of network; he had unrestricted access to network. At the same time, the network must influence him.
The network could play its role and influence in changing. It is an advantage of network to be updated and change constantly. From macro analysis, network would not impact the profitability of organization in a short term, but it would affect the development of organization in long term. The macro environment including political and legal environment, economy environment, humanities and social environment, levels of education and science and technology, natural environment and population.
Because of the characteristics of network, for twenty-first-century entrepreneurs, online business is the representative of moneymaking opportunities. In their analysis, Holden et al. (2009) recommend that online business could bring much strategic advantage to traditional business, such as low cost. For example,online business need not physical store to start as the traditional business. During operating, organization could communicate with consumers on the network, which would cut the cost of communicating cost in traditional methods.
On the other hand, marketing efficiency of online business is higher than traditional business’s. Compared with traditional methods of marketing, marketing on network has far more wide audience.Also, online business has higher transaction efficiency than traditional business. Network could make commercial messages in trade to become standard, this makes it easier to process messages, and to transmit the same in short span of time across the globe. Network could expand sales of organization with unlimited space and time.
At last, online business has price advantage. Operation of online business reduced intermediate links of sales and changed the structure of the market. So that the price of products must be lower than the price of products of traditional business. E-commerce breaks through the limitations of time and space. Extended trading hours will give more opportunities for traditional enterprises to increase sales to some extent to be listed companies. E-commerce as well impact on business customers.
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E-commerce allows interactions between customers and the sellers. This enhances the relationships between these parties hence it helps in improving the quality of customer services. Customers feel a sense of care and concern if they keep intact with their sellers. Through these platforms, buyers or customers have an opportunity to enquire, ask questions, ask for clarification an even give their feedback. This wholesome situation impacts positively on this relationship. Furthermore, customers have the discretion to purchase products during any time of their convenience.
Companies nowadays provide personalized services to their customers, in accordance to their needs. They achieve this through tracking customers’ tastes and preferences and storing this information in their databases. This information is also important in helping the companies make decisions pertaining the kind of goods they need to stock and the best strategies they employ to meet the needs of the clients.
Customer and business relations improve with adoption of e-commerce. It allows real-time interactive conversations through the internet giving an opportunity to customers to contribute their views. Companies through these evaluations become aware of the market dynamics that allows them to position their products well. Through this interaction as well, it helps to improve their services, level of customer satisfaction creating positive relations that add value to the company as well as to customers.
However, online business is an immature business model with some characteristics which have negative impact to this model to be developed. Network has limitation that consumers cannot see and touch the products, which is great different from traditional shopping habit. Consumer attitudes of customers in developing areas cannot accept virtual transactions. Currently, the revenue of online business in developing countries is less than developed countries (Hoffman, 2000).
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Doing business through the internet also known as virtual transactions requires use of credit money. Customers need to have knowledge and capacity to use this form of money transactions to do business over the internet. The development of e-commerce is much advanced in the western world compared to other countries in Asia and Africa. One of the reasons for this mismatch is the wide acceptance and use of credit money as well as better market environments. The concept of credit money has as well continued to gain approval across the globe with increasing advancement and penetration for technology.
These developments will see the entire world change the way they shop. It is however, important to understand that credit money has also had some security challenges that have seen people hack into other accounts. It is therefore essential that this is looked into to ensure that all users of credit cards are secure and that can have confident in their credit cards. This is a important reason of limitation of e-commerce’s development. On the hand of law, the legal constraints in e-commerce have not yet been standardized. It requires managers to make some changes for them to adhere to the new rules and methods.
These rules are subject to changes because of the continued changes in development of technologies. Therefore, to keep abreast with the changes of this standardization, it is important to keep in mind various management concepts such as technology management, business, and service management aspects. Therefore, achieving a more satisfactory level specification in these areas simultaneously needs a long-term plan.
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Anderson (2004) considered that low demand and low sales volume of products stands a chance of gaining a competitive edge when the distribution is done through online. The level of competition in the market is likely to be mitigated with the virtual world, as this will ensure wider reach in the market place. Long tail theory, is one of the recent theories that have emerged in this modern world connected with internet networks.
Internet has contributed to increase supply and reach of goods. Stores have the capability and the opportunity to offer or sell their products through different channels. The space has been widened with the introduction of e-commerce. This trend has affected the cost of production, which has gone down. These changes have as well affected the prices of these commodities because of the low production costs. Nowadays, there are products that every person can afford.
It has also become easy to determine and reach to niche markets with developments in technology. Businesses have the capacity to provide products or services that target a particular market segment. This has as well helped in provision of high quality services and products that meet the needs of particular category of audience or customers (Kotler & Kevin, 2012). Customers have a variety of choices to make and have many options or channels to choose to shop. These changes have changed the way businesses operate and the shopping trends of customers.
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Compared with the traditional business, e-commerce is more competitive, and inclined to personalized service. Sampson describe that traditional tradesman feel pressure in the competition with online business (Sampson, 2008). In order to survive, intense competition makes ecommerce sites (companies) must be concentrated mostly on the promotion of their sites and products, to seize the market. Variety revenue model which traditional business do not have was formed gradually in the process of the enterprises to adopt various methods to promote their sites and products. Such as the revenue model is to gain membership fees from registered members.
B2B is the real domination of revenue model of e-commerce (Yuan, 2008). Alibaba is currently the world’s most successful B2B e-commerce company with this revenue model. The advantage of this revenue model is that when the organization has fixed member companies in walks of life, they must update and manage members of these companies supply and demand information simply and assist them to carry out the transaction. Organization charges membership fee from those members every year to gain tremendous benefits.
However, the drawbacks of this revenue model are that organization must do a lot of work at the beginning to attract members, and establish a fair, safe image in members’ heart. It would not be only profitable, but also need to continue to invest a lot of money at the beginning, which requires a strong capital supporting. Some companies use the revenue model is that sale their own products or services. Success of this model relies on producing the competitive products or services mainly, and using innovative marketing methods and business model.
The advantage of this model is that consumers will follow the brand and companies can occupy an important position in the market to gain huge profits after they created their own brand image. The cost of marketing would be reduced after the brand image. But the disadvantage is it is difficult in the early promotion. Especially, the companies are in the competition with other similar companies, which required stamina, endurance and lots of capital investment.
In other hand, Amazon is the successful enterprise which uses the revenue model selling others products. Its profit comes from the different price between cost and selling. The advantage of this model is it allow the website operation become simply. It only concentrates on solving the promotion of website and logistics without paying attention to the goods. The disadvantage is companies cannot control the price, quality, after-sale service.
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E-commerce is a business model which use computer networks for business activities, also is a direct product of rapid development of internet technology and WWW. The computer network is the computer technology and communication technology combining discipline is an important infrastructure development in the 21st century information age. Since 1969, the advent of ARPA network, computer network technology has been rapid development (Leiner et al., 2010).
It not only changed the way people live, learn, work and even ways of thinking, and science and technology, politics, economy and society as a whole have had a significant impact. With the development of computer network technology, growth in the economy in 21st century has received contributing from e-commerce. It has become an important indicator to measure the strength, technological level, and social information of the country. In a word, appearance of e-commerce is based on maturity of computing technology and internet. On same note, e-commerce continues to advance and develop unremittingly with development of computing technology and internet.
According to Zhu (2004) empirical analysis, e-commerce capability and Information technology relate. Computer technology has provided the platform of the development of e-commerce transactions. This means that it is impossible to have an e-commerce without computer technology. Therefore, any advancement in e-commerce cannot happen without this computer technology as the basis. Any advancement in computer technology will help improve e-commerce as well. For instance, if the computer security is guaranteed, then e-commerce is as well going to thrive and remain beneficial to the users.
The rapid development of e-commerce to promote the development of computer technology. Problems encountered in the development process of e-commerce are the power of computer technology development, and profit obtained in e-commerce activities to the development of the computer to provide a source of funding. More and more organizations communicate and exchange information between organization members such as customers, suppliers, partners and other third parties (Wilkinson, 2005).
Thereby, organizations must protect their information safety through improving computing technology.Computer technology is a prerequisite for the safe operation of e-commerce. During transaction, how to ensure the secure transmission of transaction information and other data become one of the main factors and the impact of e-commerce development and growth.
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Achieving the cooperation and sharing of information in the environment of e-commerce could make e-commerce reply the demand of market to improve the operation efficiency of supply chain (Enarsson, 2009). E-commerce and supply chain management are in fact from one manufacturer to the end user’s value-added process. E-commerce operates as a virtual supply chain that functions courtesy of the available computer network technology. Therefore, value is gained through its supply chain management concept.
This chain allows or make supply chain operations to maximize and minimize costs, the process from procurement to delivery are efficient operation. E-commerce linked independent business processes on the supply chain to become adhesive of supply chain.The impact of e-commerce on supply chain are impact on supply chain structure. Traditional supply chain is complicated and its value does not match that of the e-commerce.
The traditional chain has various levels or hierarchies that make the process of making decisions tedious. It also contributes to duplication and complexities in the operations. Other disadvantages of this traditional multi level chain are that it contributed to increased costs, it is also slow, and has no agility compared to e-commerce supply chain.
After the emergence of electronic commerce, the development of a product by the manufacturer, the raw material supplier, retailer, etc., many businesses constitute the supply chain network (supply chain network structure). Secondly, the impact is on supply chain operations. Technology advancement especially with e-commerce and network technology, businesses have managed to connect with their customers easily compared to traditional mode of operations. In the traditional mode, only few key product and serve need to rely on single or few suppliers.
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E-commerce has enabled companies to have the discretion of choosing specific products from different suppliers that provide better selling terms. This has impacted positively on the competitive of this suppliers contributing to increased quality and efficiency. It has also helped to achieve synchronizing of both electrical supply chains with other kinds of supply chain impacting on operations. Clearly, e-commerce compared to traditional commerce has a great advantage.
In traditional commerce, business experience stiff competition at the market level and it is very difficult to plan and to forecast their demands (Misre & Khan, 2010). Enterprises could utilize the system of supply chain management e-commerce built to connect the manufacturers, suppliers, vendors, customers together to enable them get most useful marketing information on the appropriate time. Thus reduces the circulation greatly, reduces costs, and helps to improve management levels, levels of efficiency and effectiveness.
Conclusion
The history of e-commerce is less than 30 years, which is enough to prove that it is a new business model with a rapid development. According to Al-Qirim & Nabeel, as a phenomenon, e-commerce’sstatus has been prominent in SME (Al-Qirim&Nabeel, 2006). During its growth, there are some problems to be solved. Though the negative effect that network brings is unescapable, organizations could choose appropriate model to exert e-commerce’s advantages.
Developments in technology have contributed to developments of e-commerce implying that e-commerce can only function when the computer technology is available. On contrary, e-commerce has positive effect to supply chain. Those effects made the competitive of supply chain management prominent. In a word, e-commerce caused some shock on traditional business, but enterprises could gain more profit through using the model that online sales and offline sales simultaneously.
References
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