E-Commerce

THE BENEFITS OF EC

Few innovations in human history encompass as many potential benefits as E-Commerce does. The global nature of the technology, low cost, opportunity to reach hundreds of million of people (projected within 10 years), interactive nature, variety of possibilities and resourcefulness and rapid growth of the supporting infrastructures (especially the Web) results in many potential benefits to organizations, individuals, and society. The benefits are just starting to materialize, but they will increase significantly as EC expands. It is not surprising that some maintain that the EC revolution is just ''as profound as the change that came with the industrial revolution" (Clinton and Gore 1997).

BENEFITS TO ORGANIZATIONS

 Electronic commerce expands the marketplace to national and international markets. With minimal capital outlay, a company can easily and quickly locate more customers, the best suppliers, and the most suitable business partners worldwide. For example, in 1997, Boeing Corporation reported a savings of 20 percent after a request for a proposal to manufacture a subsystem was posted on the Internet. A small vendor in Hungary answered the request and won the electronic bid. Not only was the subsystem cheaper, but it was delivered quickly.

 Electronic commerce decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 percent. Another example is benefit payments. For the U.S. federal government, the cost of issuing a paper check is 43 cents. The cost of electronic payment is 2 cents (more than 95 percent cheaper). This amounts to more than $100 million in savings per year. Therefore, the federal government expects to move totally to electronic benefit payments by 2000, transferring money to bank accounts or smart cards.

 Electronic commerce allows reduced inventories and overhead by facilitating "pull"-type supply chain management. In a pull-type system the process starts from customer orders and uses just-in-time manufacturing.

 The pull-type processing enables expensive customisation of products and services, which provides competitive advantage to its implementers.

 Electronic commerce reduces the time between the outlay of capital and the receipt of products and services.

 Electronic commerce supports business processes reengineering efforts. By changing processes, productivity of salespeople, knowledge workers, and administrators can increase by 100 percent or more.

 Electronic commerce lowers telecommunications cost-the Internet is much cheaper than VANs.

 Other benefits include improved image, improved customer service, new-found business partners, simplified processes, compressed time, increased productivity, eliminating paper, expediting access to information, reduced transportation costs, and increased flexibility.

BENEFITS TO CONSUMERS

 Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location.

 Electronic commerce provides customers with more choices; they can select from many vendors and from more products.

 Electronic commerce frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.

 In some cases, especially with digitised products, EC allows quick delivery. Customers can receive relevant and detailed information in seconds, rather than days or weeks.

 Electronic commerce makes it possible to participate in virtual auctions.

 Electronic commerce allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.

 Electronic commerce facilitates competition, which results in substantial discounts.

BENEFITS TO SOCIETY

 Electronic commerce enables more individuals to work at home and to do less travelling for shopping, resulting in less traffic on the roads and lower air pollution.

 Electronic commerce allows some merchandise to be sold at lower prices, so less affluent people can buy more and increase their standard of living.

 Electronic commerce enables people in Third World countries and rural areas to enjoy products and services that otherwise are not available to them. This includes opportunities to learn professions and earn college degrees.

 Electronic commerce facilitates delivery of public services, such as health care, education, and distribution of government social services at a reduced cost and/or improved quality. Health-care services, for example, can reach patients in rural areas.

THE LIMITATIONS OF EC

TECHNICAL LIMITATIONS OF EC

 There is a lack of system security, reliability, standards, and some communication protocols.

 There is insufficient telecommunication bandwidth.

 The software development tools are still evolving and changing rapidly.

 It is difficult to integrate the Internet and EC software with some existing applications