E-Commerce

With the astonishing growth of the Internet, many companies are finding new and ways to expand upon their business opportunities. 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 20,000 companies have Web-sites 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; "for workaholics pointing their web browser to Amazon.com to order an emergency present because they forgot someone's birthday again." (Weiss, 1999) This is far from the case.

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 for hotels and resorts, as well as examining its potential for the future of business.

E-commerce has developed very rapidly in the last few years "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. Like 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)

E-commerce will change the face of business forever. Hotels that are thousands of miles away can complete business transactions and exchange information in a matter of seconds. As one online article explained: "Expedia sells more than $14 million worth of hotel and airline reservations 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)

"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)

The number one advantage that E-commerce possesses is its speed. The Internet and World Wide Web give 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 reduced and that makes the whole transaction from start to finish more efficiently. In addition, you can find practically any product available for sale on the Internet, as one author put it "from books and specialty items to French bread (Buskin, 1998). Even more significant is the fact that information appearing on the Internet can be updated continuously and rapidly. This gives business owners the ability to inform customers of any changes to the service that they are offering. This also allows them to update marketing and promotional materials as often and as frequently as possible.

The second advantage of the electronic commerce is the opportunity it offers to save on costs. As an advertising medium for hotels or resorts, promotion using a web site results in the sale of ten times the number of units of one-tenth of advertising budget. In addition, web based promotion cost roughly one quarter of direct mail expenditures. Colorful, graphical are always less expensive than four color printing and distributing printed materials. A resort company, once printed its catalogues at a cost of 2 million dollars. By putting its list of locations and amenities items on the web, such costs have been greatly reduced and sales have increased. Furthermore, the specially designed web site makes it easier for the customer to identify desired location for a desired price. (Cameron 19)

The Web can reduce the call volume and cost for providing effective customer support. For example, expedia's web site enables customers to access their reservations with a cost to the company of $ 0.10 per inquiry. When live operators handle these inquiries over toll-free telephone lines, each call costs the hotel or web based reservation site much more than $0.10. One quickly see that offloading any telephone traffic to the web site results in substantial savings. Files of frequently asked questions (FAQ's) at travelolicty reduced the company's support costs by $4 million. Lotus Development Corporation can manage six times the volume of calls with the web and the telephone staff as it could by telephone alone. There is no question is cost effective. (Cameron 19)

In addition to cost savings, Web-based E-commerce provides resorts and smaller family owned B and B's with an expedient global reach that cannot be duplicated. In no other medium can a company globally market its products and, in only one month, receive reservations from around the world. While success depends on how well the site is promoted online, new vistas open up for small and large businesses alike, without physically placing offices in other countries or using other forms of localized advertising.

Because of differences in time zones, coordinating international business negotiations can be highly inconvenient. Providing support and service 24 hours per day, seven days per week is expensive. However, Web sites are always online. Users can find the answers to their questions any day of the year and can E-mail questions if the Web site does not answer their questions. In addition, prospects that are unaware of the company's existence