The Impact of E-Commerce on Business

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Table of Contents

Executive Summary
Introduction
Outline
Problem statement
Objectives
Impacts of introducing e-commerce
Draw backs of e-commerce
Conclusion
References

Executive Summary

Advancement in technology has reshaped and revamped the way business is being done. There is a shift towards using internet as a platform for firms to carryout business. The advantages associated with this technology has left almost all business firms whether big or small in size to consider adopting it with the notion that it will help them stay competitive and relevant in the current world of business.

However, there is little knowledge these firms have with regards to both advantages and disadvantages of adopting e-commerce. This paper has identified the pros and cons of adopting e-commerce. The method used to arrive at the conclusion in this paper is through an analysis of secondary data from existing books, journals and internet sources.

It is apparent that since the inception of computers and internet, everything particularly on how business is carried out has tremendously changed. E-commerce is one of the fastest growing industries worldwide and is one of the most rapidly evolving areas of national and international trade.

Using internet to carryout business has been deemed to be the most current innovation in the world of business and offers an opportunity to businesses to carryout business through electronics. Firms have rushed to adopt e-commerce which entails making transaction online with the belief that it will help them gain competitive advantages and increase their market shares as well as revenue.

Indeed there are numerous advantages associated with this concept such as capturing new markets by allowing firms to go global, 24/7 operation this has been shown to bring with it the advantage of reliability and convenience which allows potential customers who do not have time to buy products and services regardless of time.

It is evident that e-commerce help firm cut the costs of doing business, for instance there will be less paper work which requires human resource, a flexible or telework arrangement can be put in place making working execute their tasks, duties and responsibilities not necessarily in the office among other advantages.

For instance there is concern about increase in crime rates that are not easily detected, the real time production of goods and services have and will continue to create stock crisis, there is potential of loss of resources as well as underutilization of the same (people will lose jobs and rates of disposed equipment will increase), unavailability of power, ICT manpower, telecommunication facilities leaves some communities especially in third world countries at a disadvantage, social division and broken human interaction that creates and nurture trust.

Bases on these pros and cons of adopting e-commerce, it would be rational for businesses to critically examine them and develop better strategies to curb some of these drawbacks. Failure to give this concept a serious thought might be a recipe for an organization to fail.

Introduction

Since the advent of computers, mankind has experienced an unmatched surge in development of new and cutting edge technologies. Additionally the desire for organizational effectiveness as well as using it to attain competitive advantage has made the adoption of these technologies to be deemed paramount in ensuring that organizations do cut themselves an edge in this competitive business world (Sharma & Gupta, 2003).

However, there is need for each and every organization to deeply and extensively consult before embarking in rolling the entire project, this is important as it will dictate the success and sustainability of the project. One notable technology that has propelled a number of organizations to greater height is internet-e-commerce (Coulter & Vogel, 2004).

By definition, e-commerce has been thought of as a employing “electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals” (Bonnett, 2000).

The whole idea centers on buying or transaction via the internet. Generally speaking, e-commerce include; the business will effectively monitor it records, it will be competitive because potential users will be able to place their orders on-line as well as track the progress of the orders they placed, time is saved, it is reliable and convenient, the concept will offer the business an opportunity to reach wider markets, e-commerce will not only be used for transactions but also advertise a firm’s product among others (Karyn & Filson, 2001).

Outline

The paper has an introduction where the topic to be covered is succinctly brought to readers attention. Definitions of important terms are also presented. The problem statement is also clearly written down together with the objectives of the entire work. The next section is the main body tackling the impact of e-commerce to businesses. The paper begins with the positive contribution of the technology. After this, the negative effects are succinctly covered. The last section of the paper is the conclusion which entails a brief summary of the work done.

Problem statement

E-commerce is one of the fastest growing industries worldwide and is one of the most rapidly evolving areas of national and international trade. Using internet to carryout business has been deemed to be the most current innovation in the world of business and offers an opportunity to businesses to carryout business through electronics. E-commerce technologies have provided opportunities for business growth but have also presented the business world with many challenges (Nissanoff, 2006). It is worth mentioning that,

[E-commerce enables organizational change and helps organizations to conduct business with improved efficiencies and productivity. E-commerce is credited with empowering employees and knowledge workers, by giving them easy access to virtually unlimited information. E-commerce technologies have helped nations to accelerate their economic growth and to provide more opportunities for the businesses to grow.

Meanwhile, it has also created many challenges and adverse effects, such as concerns over privacy, consumer protection, and security of credit card purchases, displacement of workers (especially low-status ones), and is charged with having a negative impact on quality of work life.] (Sharma & Gupta, 2003, p. 655)

Objectives

The objective of this task is to critically evaluate the positive and negative impact for a business which adopts e-commerce in doing business. As noted previously, there is need to have this information in the public domain so that organizations are not misled that adopting e-commerce is a bed of roses.

This will be very important since it will help them make informed decision as well as prepare them in developing better strategies that can help them overcome the negative impacts of such technology. Similarly the paper will give recommendations to businesses that desire to adopt e-commerce.

Impacts of introducing e-commerce

Benefits of e-commerce

It is worth noting from the onset that just like any other business and for that matter a normal concept, there are both benefits and draw backs associated with introduction of e-commerce to any business organization. Therefore, the impact to the whole organization, consumers, current market and legal issues can be very dramatic (Kotler, 2009).

Nissanoff, 2006 believed that E-commerce if introduced in an organization might help a firm to segment its market better by utilizing the demographic characteristics such as age, gender, price, interest, tastes and preferences of its potential customers, information that is usually easily collected online.

This will help the firm to keep track of the required goods and the services, quantity, quality and the time of delivery. This in turn will shape how the business strategizes on production. It is worth noting that what this brings in elimination of the poor timing in production and possibly cutting down on wasting of resources and time.

Additionally, according to Kotler, 2009 e-commerce will cut down the cost of doing market survey. For the simple reason of adopting the innovation, paper work will be tremendously reduced. The later has no doubt been cumbersome, consuming a lot of time that can be utilized by the firm to doing other things that will upgrade their operation. With e-commerce, a business will be able to get various group segments directly especially via internet. This has come with low investment level but in turn high return.

It is also a fact that most customers’ critic some business concerning the products and services it offers. For this reason, the sensitization process that will be generated by online advertisement will make these customers to buy confidently in transacting with any business.

E-commerce has the potential of making a firm cut itself an edge and stay competitive even during economic hard times, as it can learn and promote its image to different market segment depending with their needs, thus promoting market expansion and consequently, high sales volume. It is evident that e-commerce will help an organization to reach to a wider market not initially thought of (Kalakota & Whinston, 1997).

Additionally, information gathered online concerning the desires of customers will aid the firm to be in contact with demand and supply curve hence always striving to stay competitive. This will be attained by novelty to have room for the needs and aspirations of customers from the ground. As a result of trying to meet these demands and needs, there will be room for the firm to develop new products to cope up with ever tightening competition in the business environment.

The ultimate outcome of this is highly satisfied who will be loyal to the firm which translates to doing business with them for a longer period. On the same note, there are higher chances of improved relationship between the firm adopting e-commerce and its customers. This will be brought about due to the multiple roles played by e-commerce (advertising and publicizing) (Bonnett, 2000).

The reason for this is that customers will be provided with all necessary information regarding products and services available, information on progress on orders placed as well as deliveries. Such a relationship will definitely result in a better relationship between the two that might lead to more market segmentation as well as customers’ satisfaction hence a potential to develop into a global market.

On the same note there are organization such as Amazon.com among other that have adopted this technology in ensuring that delivery of placed order is quick hence reaching customers on time. This in itself is a competitive advantage. In most cases the products are delivered in at the customers’ door steps.

On the same note, e-commerce carries with it the advantage of doing business around the clock, 24/7. With this come the concepts of convenience and reliability. It is worth noting that doing business around the clock will attract more potential customers especially those who do not have time to physically come to the offices to place an order.

The implications of this is that more revenue will be generated and at the same time widening customer base. Additionally, the business can benefit by using the whole idea as an alternative source of income. Similarly, a firm that adopts e-commerce can be provided with an easy and very flexible opportunity to maneuver pricing issues.

Mass customization and network production can be made possible by adopting e-commerce. After capturing a global market, a firm can parcel out some production processes to other firms that offer goods and services similar to it. The advantage that will be realized as a result of this is reduced cost, increased strategic target marketing as well as facilitated sell add-on goods and services when need arise.

Another positive force brought forth by introduction of e-commerce may be the link it creates among customers, employees of the business, competitors, suppliers and distributors. The association will be effective if there is a clear supply chain management which will in the end boost sales.

It has been shown that in traditional environment of doing business, it was difficult and cumbersome for a new entrant or a small firm to conquer other geographical locations. However, when a firm adopts e-commerce, this gives it a perfect opportunity to compete globally since there are no geographic boundaries. The only thing a firm needs to do is to develop a well thought and managed website where its products and services can be accessed. This will help even small firms to gain competitive advantage and increase their market shares.

Draw backs of e-commerce

Legal implications

On the other hand, there is need for the business especially if it operates in the United States to carefully evaluate the associated legislations such as the copyright legislation, computer misuse act 1990, trading standards, delta protection act of 1998, freedom of information act of 2002 as well as e-commerce regulation.

This does not mean that other businesses in other geographic locations are exempted. There is also need to adhere to international laws and regulations concerning usage of e-commerce (Miller, 2002). A clear understanding of this legal provision is key in ensuring that any emerging legal issues for instance differing prices advertisement can be handle with clear precedent.

It is worth noting that failure to follow a number of government provisions might land businesses which have adopted e-commerce into serious legal battles (Chaudhury & Jean-Pierre, 2002).

Ethical issues

As suggested by Coulter & Vogel, 2004 with the introduction of e-commerce, managers and line supervisors will be faced with very serious ethical issues that need to be addressed in time. One notable issue is what a firm will do with those employees for instance who work on business paperwork’s now that most of the things have been automated.

Additionally, another issue linked to this is addressing the issue of resistance as well as employees who are difficult to be retrained so that they fit into the system. This is costly and laying them off can imply legal battle on the basis of the contract signed between employees and their employer (Kalakota & Whinston, 1997).

Similarly, issue of confidentiality in using e-commerce will be highly compromised. The is a higher chance again of the business to utilize information technology to closely monitor all activities of its customers as well as workers which amount to invasion of human privacy. It is also a fact that surfing the internet is an interesting as well as time consuming, there is a possibility of an employee to surf during work time which can jeopardize the efforts of adopting the innovation (Mellahi & Johnson, 2000).

To control this, there will be need to limit the kind of information accessible through the internet. This in turn might negative impact the moral of the workers. In recent past, there are cases reported where hackers get into businesses data bases and obtain full details of customers (Chaudhury & Jean-Pierre, 2002).

They later use these details to steal money from unsuspecting customers. This they do by sending customers mails which are fictions for instance one might be told that he or she has won a price and needs to send some cash to a certain bank account. Similarly, with advancement in technology, there are those who after acquiring the full details of customers, hack their bank accounts and transfer money to unknown accounts (Eisingerich & Kretschmer, 2008).

Trust and human contact

Although adopting e-commerce sounds heavenly send solution to doing business in the 21^st century, Lefebvre et al 2001 note that there are very serious issue regarding customer trust and lack of human contact while carrying out transaction might be a blow to the desires of any firm which seek to have a direct contact with its customers.

It is human nature to interact while doing business; this usually fosters the concept of building customer trust. Although the current generation is capable of living up to this kind of idea, the older population is yet to embrace this kind of technology and they still prefer the human contact (Wyckoff & Colecchia, 2000).

It has been argued that online communication can never be a substitute to face-face interaction. Additionally in situations where there are serious complains, there is no perfect opportunity like face to face interaction. Here the complaining party can gain full understanding of the issue at hand which cannot be attained through online communication particularly when the other party is agitated (Laudon & Traver, 2010).

It is worth mentioning that there are a group of people who will resist doing business through this kind of platform and will prefer doing business the traditional way. The major reason why people resist using internet to transact is due to lack of adequate knowledge on how the system works as well as reluctant to buy a product that cannot be physically examined.

As a result, this will call for the firm adopting this kind of technology to set aside funds that will be used to educate potential and willing consumers so that they become confident in using e-commerce. The problem with this is that the firm might incur extra cost and still the group refuses to change.

Technical problems and emerging innovation

Having in mind that changes are always part of human life, advent of new technology will always present a challenge to the business. There are chances that after adopting the innovation, a new one is developed rendering the one adopted to be obsolete leading to a financial draw back especially if the entire project has not repaid the money invested in it (Seethamraju, 2006).

Technical hiccups can also hit the innovation and this might include failure of the web site, problems with the surrounding environment, failure in power systems, failures in hardware and software as well as virus attacks (Bonnett, 2000). When the later happen, it is risky for the business since it can loss all its viable data in case it has not backed it up.

Compatibility problem

Since it is everybody’s anticipation that there will be development of further technological innovation, the business might face problems with compatibility of its old and the emerging innovation. What this will imply is that there will be instances where sharing of information is hindered which will call for installation of entirely new system which will have huge financial implication to the business (Eisingerich & Kretschmer, 2008).

Impact of e-commerce to the entire society

Among the societal implications of adopting e-commerce in doing business are; it has fostered creation of a flexible working environment. This has in turned led to improved quality of life making people to work from their homes. The advantages of this working scenario not only include convenience but also offer a conducive environment to take part in activities that aid in generating revenue.

Similarly, working from home help reduces traffic congestions as well as cutting down air pollution (Bonnett, 2000). Additionally this helps the firm cut down on operation costs in terms of space, power, and food to employees among others

Consequently, people are interconnected which makes sharing of information to be very easy and quick thus making the entire society to make informed choices before engaging in business transactions. Additionally, there is an economic as well as social impact as a result of the rate at which changes occur.

On the same note, e-commerce has facilitated quick delivery of public services for instance plumbing services, banking services and more importantly health care services. It is also thanks to e-commerce that it has been possible to fill tax return forms on line and submit them on time (Seethamraju, 2006).

On the other hand, there are drawbacks that the society has experience as a result of adopting e-commerce. According to Kalakota & Whinston, 1997 these include increase crime rates that are not easily detected, the real time production of goods and services have and will continue to create stock crisis, there is potential of loss of resources as well as underutilization of the same (people will lose jobs and rates of disposed equipment will increase), unavailability of power, ICT manpower, telecommunication facilities leaves some communities especially in third world countries at a disadvantage, social division and broken human interaction that creates and nurture trust.

Conclusion

It is apparent that since the inception of computers and internet, everything particularly on how business is carried out has tremendously changed. Using internet to carryout business has been deemed to be the most current innovation in the world of business and offers an opportunity to businesses to carryout business through electronics.

Firms have rushed to adopt e-commerce the belief that it will help them gain competitive advantages and increase their market shares as well as revenue. Indeed there are numerous advantages associated with this concept such as capturing new markets by allowing firms to go global, 24/7 operation, cutting costs among others.

However, it is established that there are a host of drawbacks associated with e-commerce such as increase in criminal activities, ethical issues such as firing employees as a result of automating some tasks, technical issues, compatibility problems as well as legal implications. Thus businesses need to critically examine the concept of e-commerce and develop better strategies to curb some of its drawbacks. Failure to give this concept a serious thought might be a recipe for an organization to fail.

References

Bonnett, K. (2000). An IBM Guide to Doing Business on the Internet. New York: McGraw-Hill.

Chaudhury, A. & Jean-Pierre, K. (2002). E-Business and E-Commerce Infrastructure. New York: McGraw-Hill.

Coulter, J. & Vogel, T. (2004). Pets.com, Inc.: Assessing financial performance and risks in the e-commerce industry. Accounting Education, 2(1), 567-582.

Eisingerich, A. & Kretschmer, T. (2008). In E-Commerce, More is More. Harvard Business Review 86, 20–21.

Kalakota, R. & Whinston, A. (1997). Electronic Commerce: A Manager’s Guide. London: Addison Wesley Longman, Inc.

Karyn, W. & Filson, D. 2001. The Impact of E-Commerce Strategies on Firm Value: Lessons from Amazon.com. Web.

Kotler, P. (2009). Marketing Management. Pearson: Prentice-Hall.

Laudon, K. & Traver, C. (2010). E-Commerce 2011. Prentice Hall.

Lefebvre, L., Pierre-Majorique, L., Cassivi, L., Lapointe, R & Pierre, H. (2001). OECD Electronic Commerce Business Impact Project. Web.

Mellahi, K. & Johnson, M. (2000). Does it pay to be a first mover in e-commerce: The case of Amazon.com. Management Decisions, 38(7), 445-452.

Miller, R. (2002). The Legal and E-Commerce Environment Today. London: Thomson Learning.

Nissanoff, D. (2006). Future Shop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want. New York: The Penguin Press.

Seethamraju, R. (2006). Impact of E-Commerce on Business Process Redesign and Integration. International Journal of Electronic Business, 4(5), 380-400.

Sharma, S. & Gupta, J. (2003). Adverse effects of e-commerce. The electronic and social impact of e-commerce. Web.

Wyckoff, A. & Colecchia, A. (2000).The Economic and Social Impact of Electronic Commerce: Preliminary Findings and Research Agenda. London: Org. for Economic Cooperation & Development.

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