Electronic Commerce : Advantages and Limitations

Being able to trade goods over the Internet has brought advantages for customers and businesses. For the customer the use of e-commerce means that :

1.  Customers can buy goods and services without having to leave their homes at whatever time they want. This makes shopping easier for people who are very busy or who find it difficult to travel to a shop.
2.  Customers can research their purchases on the word wide web. Product descriptions, photographs and reviews may be available. A customer can compare prices offered by many different companies to obtain the best possible price. Some web sites will carry out comparisons like this automatically.
3.  Because the customer can choose to purchase items from a wider range of companies, these companies are forced to keep their prices low so that they remain competitive.
4.  Customers can purchase a wider variety of goods more easily. They can access web sites selling specialist products such as bee keeping equipment which would not normally be readily available in a shop.

E-commerce also brings benefits to businesses because :

1.  A web site can be accessed from any computer that is connected to the Internet, anywhere in the world. This means that a small company based in one country can sell goods to customers in other countries without having to set up offices abroad or to pay for expensive advertising. The number of potential customers that a company can reach will increase considerable if its starts to trade on the Internet.
2.  The cost of selling goods electronically can be lower than selling by traditional methods. E-commerce companies do not need expensive town centre shops to trade from. They can be based in out-of-town warehouses which are cheaper to build and rent. Fewer employees are required as most of the process of the customer finding out about a product and making a purchase is highly automated.
3.  An e-commerce web site can operate for 24 hours a day every day of the year with minimal human inviolvement.

However e-commerce does not suit every customer, business of type of purchase. For example :

1.  Some people do not like using computers or do not have the skills required to do so and so will never purchase goods by e-commerce. Others enjoy taking a trip to the shops and treat shopping as a leisure activity. They prefer to visit real shops than to buy goods on the Internet.
2.  Some people are concerned about the security of e-commerce transactions. Customers feel they are more likely to be conned when they do not know exactly who they are dealing with. There are also concerns about the security of credit card details entered as part of an e-commerce transaction.
3.  Some goods such as clothing are highly personal. People like to see them for real and try them on before they decide to buy them.
4.  To purchase some items or services you have to visit a real building. For example you have to go to a hairdressers to get your haircut. These services can not be sold directly on the Internet.

GCSE ICT Companion 04 - (C) P Meakin 2004