Small & Medium Enterprises and E-Commerce Websites

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Table of Contents

Introduction
Ease, usefulness and potential value of the website
Comparing the three websites
Trade between countries will eventually take place through websites like Alibaba
Fraud
Alternatives
Conclusion
Works Cited

Introduction

Websites, such as Alibaba.com, create a great opportunity for SMEs to expand their sales and production. Alibaba.com and Trade-india.com have similar features on selecting products and suppliers. The usefulness of the information to a buyer is that it offers a wide range of companies and products that an individual can select. The websites lower the cost of marketing, labor, and retailing.

The three sites offer a simple path of registering a seller. A single click is enough to put the seller on a page where he can begin the registration process. Fraud can come from the ordering procedures that require customers to make payment before goods are delivered.

Fraud can be reduced by using a third party to hold money on behalf of customers. The third party can release the money once all the terms of trade have been met by the supplier. In the short run, the problem caused by lack of infrastructure can be solved by convenience stores.

Ease, usefulness and potential value of the website

The product I would like to purchase is genuine leather. I type genuine leather on the advanced search field and look if there are categories that match my search. I click on search, since there are no direct matches. Most of the categories are about finished goods.

I want genuine leather material that I can use in the fashion industry to make items such as jackets, wallets, belts, and shoes. I choose suppliers and the gold standard criteria. The list of companies that qualify is large. The selection shifts to lower prices, and suppliers with a wide range of colors. There are about 38 companies per page, and there are 90 pages. Most companies are located in Asia.

There is a large of number of suppliers, which may increase the difficulty in choosing one supplier. The two companies that I select are Jinjiang King Lion Garment Trading Co., in China Mainland, and E.F.A International (SMC-Private) Ltd., in Pakistan.

I select Jinjiang King Lion Garment Trading Co. because of its low prices. The material costs US$ 2.5 US$ 4.5 per square meter of genuine leather (Alibaba fig. 1).

The material can be used for making handbags and shoes. The delivery time is also a factor in the selection. Jinjiang King Lion Garment Trading Company delivers a package between 10 and 15 days. It offers a wide variety of colors, which makes it easier for a fashion designer (Alibaba fig. 1).

E.F.A International is selected because it offers a wide range of genuine leather with a light weight that can be used for apparel. It offers a wide variety of colors. It is chosen for sheep, goat and pig leather. The price is higher than the price offered by companies operating in China.

The price ranges from US$ 1.99 to US$ 2.75 per square foot (Alibaba fig. 2). The goods are delivered in a period of 30 days. Selecting a product and a company, based on price and ratings given to the supplier, is an easy process.

The usefulness of the information to a buyer is that it offers a wide range of companies and products to select. One can choose a company based on the years that it has retained membership. Some of the companies have been verified by Alibaba.com.

Potential value comes from the information obtained without physically visiting stores to make selections. The potential value is also created when the supplier makes arrangements using existing logistics companies that are more efficient through specialization.

Benefits and costs of using sites such as Alibaba

Benefits

Costs

1. The Web offers manufacturers and traders a larger market for their products. A larger market offers an opportunity to spread fixed costs over a larger number of products.
2. Payments can be made quickly using electronic means.
3. SMEs can use fewer resources to reach the global market, which was once only accessible to big corporations (Manzoor 22).
4. Suppliers can hire logistics firms with more efficient operations. Suppliers can share logistics infrastructure.
5. The Internet is accessible from any country.
6. The system of payment used is more convenient. Most of the firms that supply may use online money transfers.
7. Competitive pricing is beneficial to customers.
8. There is a wide variety of products to select.
9. There is reduced cost of doing business. Marketing, workforce and warehousing costs are reduced.

1. A large market comes with a large number of suppliers. Countries with high variable costs are likely to lose in the pricing competition.
2. The ease of making payment opens opportunity for fraudsters.
3. Customers may prefer well-known brands, which becomes a limitation for SMEs.
4. There are costs associated with building infrastructure for logistics (Gupta and Bijlani 1).
5. There are costs associated with purchasing electronic devices that can access the Internet. It limits the number of people that can access the Internet in emerging markets.
6. Most emerging economies do not have a developed system of making payment electronically. Suppliers still rely on cash collection on delivery (COD) method of payment. Some customers also distrust electronic methods of money transfer.
7. Competitive pricing and price sensitive customers, especially in emerging markets, makes suppliers to generate low profit margins (Gupta and Bijlani 5).
8. There is a wide range of products whose quality standards cannot be guaranteed.
9. Trade in different jurisdictions makes it difficult to enforce contracts. Laws may be unclear or conflicting in different countries (Manzoor 24). Refunds may not be easy to make.

An SME, such as SpinCent, has an opportunity to grow at a higher rate by satisfying needs of customers in a larger market. SpinCent manufactures laboratory and industrial centrifugal devices that experience a slower growth rate. Slower economic growth rate has its effects on the domestic market.

SMEs will need to be verified and gain membership of the website to increase its ratings. Customers are likely to base their selection on the ratings given to an SME by the firm that manages the website. SMEs are likely to use less on advertisement to market their products. They have the advantage of choosing a popular website.

Comparing the three websites

Alibaba.com and Trade-india.com have similar features on selecting products and suppliers. Only their location on the home page differs. Both have categories to speed up the search for a product. Both websites offer chargeable marketing services. Both of them show the length of time that a firm has engaged in online business, in years.

One of the main differences is that Trade-india.com serves products manufactured in India. It features catalogues from different manufacturers. A search on Trade-india.com results in products (Trade-india par. 1). A search on Alibaba.com offers a possibility of selecting either products or companies.

The main difference in Europages.com is the language selection option that enriches the websites content. A search on Europages.com results in a list of companies. It will take more time for a buyer to select a product on Europages.com than on Alibaba.com (Europages par. 1). The images on Alibaba.com and Trade-india.com are better than the ones found on Europages.com.

When trying to find the same genuine leather material, as in Alibaba.com, Europages.com and Trade-india.com do not provide the same simplicity of choice as Alibaba.com.

The three sites offer a simple path of registering for a seller. One click is enough to put the seller on a page where he can begin the registration process.

Trade between countries will eventually take place through websites like Alibaba

Trade will eventually take place through websites once the barriers that limit trade have been removed. One of the barriers is logistical infrastructure. As emerging markets develop more sophisticated logistical infrastructure, the cost of delivery will be lower increasing demand for online purchases.

Governments in emerging markets are investing in infrastructure that supports logistics, such as roads and local addresses. Most emerging markets lack location addresses that can be easily identified by suppliers without confirmation through a phone call (Gupta and Bijlani 3).

Another barrier is the method of payment. Unlike developed countries, most emerging markets rely on physical cash for transactions. Most people have no access to electronic methods of making payment. Some people also distrust them because they are prone to fraud. As the online money transfer services, such as Paypal and credit cards, become more frequently used, websites will become a major shopping channel in most countries.

Fraud

Online payments create a situation where personal information may be captured by hackers. Individuals may lose money. Fraud can also come from the ordering procedures that require customers to make payment before goods are delivered.

In some cases, payment may be made, but goods may never be delivered. Alibaba.com has a system for making complaints, but fraudsters may register using different names. It may require tracking of IP addresses and verification of companies to reduce fraud.

Alternatives

Fraud can be reduced by using a third party to hold money on behalf of all customers and ensure that supplier meets all the terms of trade. Gupta and Bijlani (4) discuss about Alipay that Alibaba uses as a means of payment. If the customer returns the goods, the supplier may be entitled to deduct the cost of shipping from the refund. Refunds will also become easier if a third party acts as an arbitrator in managing payment.

The problem caused by lack of infrastructure to support logistics can be solved by convenience stores. Firms such as Alibaba can hold goods, in warehouses located in central locations, until they are picked by customers. They can charge the supplier or the customer.

Conclusion

The websites offer SMEs an opportunity to grow at a higher rate by satisfying needs of customers in a larger market. Trade will eventually take place through websites once the barriers that limit trade have been removed. SMEs will need to be verified and gain membership of the websites to increase their ratings. Alibaba.com and trade-india.com have similar features on selecting products and suppliers.

The main difference in Europages.com is the language selection option that enriches the websites content. Alipay acts as a third party to reduce the level of fraud. The problem caused by lack of infrastructure to support logistics can be solved by convenience stores.

Works Cited

Alibaba. n.d. Leather Journal, Brand Leather Factory, Genuine Leather with Pu Purse. n.d. Web.

Europages. n.d. Find, select, contact companies. n.d. Web.

Gupta, Sunil, and Tanya Bijlani. n.d. E-commerce in Asia: Challenges and Opportunities. n.d. Web.

Manzoor, Amir. E-commerce: An Introduction. Saarbrucken: Lambert Academic Publishing, 2010. Print.

Trade-india. n.d. Indias Largest B2B Marketplace. n.d. Web.

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