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Original e commerce

Introduction to E-Commerce

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Original e commerce

  1. 1. 253SAM- Ecommerce Adit Bakkesh Shamanur Module Leader Name: Mrs Brenda Hollyoak 3/1/2015
  2. 2. 2 Executive Summary The purpose of this particular report is discussion about the importance of the Ecommerce and the use of ecommerce in our daily lives. This report also showcases the challenges and drawbacks of the Ecommerce. It is also about converting brick and mortar business into successful venture through Ecommerce. Therefore it also offers viable opportunity to any organization to improve its operations and widen its customer base. Ecommerce consists of platforms that enable the interaction of buyers and sellers. It is also a platform for every individual to make profits through Ecommerce by selling his products and making his/her services available to the people. A business can choose to operate online entirely or partially. Coventry City Books exists as a brick and mortal retail store hence consists of a physical business premise where the customers make over the counter purchases and borrowing of the books.
  3. 3. 3 Contents: 1.0 Introduction ....................................................................................................4 2.0 Main Report.....................................................................................................5 2.1 Business-To-Business (B2B) ............................................................5 2.2 Business-To-Customer (B2C) ...........................................................6 2.3 Opportunities of Ecommerce Strategy…………………………….8 2.4 Challenges of Ecommerce Strategy………………………………9 2.5 How Consumer Preferences can be satisfied using the World Wide Web? 11 3.0 Recommendations………………………………………………………………...13 4.0 Conclusion..………………………………………………………………………...13 5.0 Reference List……………………………………………………………………...14
  4. 4. 4 1.0 Introduction: Ecommerce involves the running of business with the help of computer networks like the Internet. It facilitates the buying and selling of commodities as well as services across the Internet. Modern ecommerce mainly utilizes the World Wide Web in conducting business though it may also incorporate some technologies such as the email. Ecommerce offers various services; online shopping enabling the direct retail sales to customers, online marketplaces for the customer-to-customer or business-to-customer transactions, business-to-business interactions, collection of demographic data, electronic data interchange, and marketing platform through email and fax. Ecommerce enhances the market presence and position of a business. This enables the business attain its revenue targets and realize profit maximization. The growth of a business may also result from adoption of ecommerce in the running of an enterprise. This system may pose challenges in meeting the customer’s expectations as well as ensuring customer satisfaction. A customer may face challenges in physically visiting the store hence preventing their access to the facilities. The bookstore must therefore consider incorporating the Internet and other ecommerce facilities in undertaking its operations. This begins with understanding ecommerce, its available facilities, and choosing the most appropriate for the business. Various kinds of ecommerce transactions exist with the major ones being business-to-business and business to customer.
  5. 5. 5 2.0 Main Report: 2.1 Business-To-Business (B2B) This involves the transactions between two or more businesses. Such transactions may include supplier- manufacturer transactions as well as manufacturer- wholesaler transactions. These transactions cover approximately 80% of the overall ecommerce transactions. A standard supply chain involves numerous B2B transactions and just one B2C transaction through sale of the finished product. It involves the relationship among various businesses in the operation of their businesses. B2B market consists of two basic components; the e-frastructure and the e-markets. E-frastructure covers the architectural framework consisting of logistics i.e. warehousing, transportation, and distribution, service providers, outsourcing functions such as web-hosting, customer care services and security solutions, auction management software, content management software and web-based enablers. (Investopedia n.d.) E-markets consist of platforms that enable the interaction of buyers and sellers. B2B incorporates applications that assist in inventory, supply, distribution, channel, and payment management. Various websites facilitate B2B transactions such as company websites, product supply and procurement exchanges, specialized portals, brokering sites and information sites. Company websites target the audience of other companies as well as the employees of the company. They disseminate information concerning a company’s operations to attract potential clients. Product supply and procurement exchanges assist a company in the placement of orders for supplies, request proposals, as well as bidding to make purchases at desirable prices. Specialized portals provide information, discussion platforms, and product listings among other features. Brokering sites act as intermediaries between a company and
  6. 6. 6 potential clients for services and commodities. Information sites offer information to a company and its employees. It offers specialized search engines to facilitate this. For the business to succeed on the online platform, it needs to maintain proper relationships with other businesses that facilitate its operations. A breakdown in the B2B transactions negatively affects B2C transactions and result in business failure. A retailer needs to maintain a healthy relationship with the wholesaler who supplies commodities in bulk and at a lower cost. A poor relationship will amount to shortages for the retailer and tainting of the corporate image. (Investopedia n.d.) 2.2 Business-To-Customer (B2C) This form of transaction involves a business and its customers for the exchange of physical goods, services, information goods among others. This became the earliest form of ecommerce since it inspired the other forms of businesses. Its establishment began in the 1990s with the sole purpose of enhancing online retailing. It mainly emerged to assist e-tailing for the online direct sales to customers on platforms like Amazon.com, E-trade, among others. It holds the second position in the e-market after the B2B transactions. The most common examples of this form of transaction involve the purchase of consumer products, information goods, and financial management services. (DigitSmith n.d.) B2C transactions have various categories; direct sellers, online intermediaries, advertising based models, community based models, and fee based models. The subdivision of direct sellers falls into two categories; manufacturers and e-tailers. The manufacturers use the Internet as a platform to sell their finished products directly to customers. This aims at eliminating intermediaries thus minimizing distribution costs. Direct sales assure the manufacturer of establishing a loyal clientele since the
  7. 7. 7 products reach the customers at low prices. E-tailers on the other hand make direct sales to customers from their warehouses. This enlarges their customer base and enhances the delivery channels. The online intermediaries take the brokerage role between customers and the business. They facilitate the transactions by assisting the customers in making the purchases. They help in assembling of attractive packages for consumers to fasten the shopping process and minimize the costs incurred. Facilitation of financial transactions also falls under their docket. The advertising- based models utilize specialized sites as well as high-traffic sites to advertise for various commodities. Placing of adverts on these sites ensures that information reaches a large number of potential consumers. Advertising businesses therefore earn income from the amount of traffic the direct to the respective adverts. Companies may utilize these services to attract a niche market since people with certain characteristics visit certain sites. Community- based model seek to disseminate product information to various communities on the web such as chat groups. Fee-based models obtain income depending on the value of content they post on the Internet. (InvestorWords n.d.) Customers form part of the most important stakeholders in any form of business. Since a business requires customers to survive and grow, it must capitalize on the opportunity to widen its market base. Ecommerce offers a perfect platform for direct interactions with customers and elimination of the barriers posed by intermediaries. B2C therefore becomes the most basic form of Ecommerce transactions since every business requires selling of its products to consumers to raise revenue income and make profits.
  8. 8. 8 2.3 Opportunities: Elimination of Geographic Limitations Ecommerce enables a business to operate on the global platform. This eliminates the geographic barrier placed by a brick and mortar business that can only market its commodities to customers near its physical location. Ecommerce facilitates transactions at any point in the global market. (Triua 2014) Obtaining New Customers The success of e-tailing largely depends on traffic from search engines. Potential customers may find the ecommerce websites through following certain links. This enables them to learn about a company and its products for the first time. The information may further trigger them to make purchases of the products offered. Costs Reduction Conducting business on the online platform helps the business save on various costs. A brick and mortar business requires a large initial investment to cater for the establishment of physical premises. This entails the cost of building the offices, warehouses as well as the production plant. A business operating entirely on the Internet platform does not require a physical office hence saving on establishment costs. Ecommerce also saves the business marketing costs since the Internet offers a cheaper advertising platform. It eliminates costs incurred in hiring sales persons to undertake door-to-door sales promotions. The cost reduction enhances the pricing system by offering discounts to customers. Time Saving Running an online business saves on time since the Internet enables the stakeholders visit the business premises at the click of the mouse. The customers do
  9. 9. 9 not need to make physical visits to the premises to make enquiries or to purchase products since they can do it from any location. Communication Enhancement The Internet facilitates communication between the business and its stakeholders. Proper communication can ensure online delivery of products and services to customers and timely delivery of raw materials for production purposes. It also eliminates misunderstandings that may delay operations. The business can also utilize the communication channels to communicate with its employees and offer guidelines. Information The online platform offers valuable information to stakeholders of the business at the click of a button. An investor may require information on the financial performance of the business to make decisions regarding financing. A customer may also obtain information concerning the available products and their respective prices from the Internet. The business provides information on their offers, new commodities and other facilities. (ESalesTrack n.d.) 2.4 Challenges: Lack of Personal Touch Ecommerce eliminates the need for personal interaction between the service provider and the customer. This may cost the business customer loyalty due to the lack of customer satisfaction. Personal touch complements the customer service and ensures customer satisfaction. (Triua 2014)
  10. 10. 10 Virtual Existence A business whose existence appears only online may face extinction in cases where its websites becomes dysfunctional. This may cause drastic loss of customers that the business may not recover. Online existence may deter customers from having faith in the business since it may collapse and cease to exist any minute. Low Security Level The rising trend of cyber crimes has lowered the confidence of customers and businesses on online transactions. Online transactions have posed a great risk in the financial transaction hence negatively affecting ecommerce. Some customers as well as businesses have become sceptical about electronic payments due to the risk of giving their financial information to malicious people.
  11. 11. 11 2.5 How Consumer Preferences can be satisfied using the World Wide Web? With the operation of a brick and mortar business, the customers must make physical visits to the bookstore to borrow books, make enquiries, and make purchases. The bookstore maintains records that facilitate the buying process and the customers obtain evidence of purchase or borrowing of books. The use of the Internet in running the business will enable the customers make book purchases at lower costs. They can therefore increase the number of their orders, which consequently raises the revenue of the business. Initially, the customers had to consider the travelling costs, which cease to become an issue with the introduction of online transactions. The customers redirect the amount spent on travelling into buying more units of the commodity. Elimination of the queuing system improves the corporate image and attracts more customers who perceive the bookstore’s operations as efficient. The minimal effort offered by electronic transactions encourages repeated purchases. Ecommerce offers the consumers a wide variety of commodities to choose from hence the consumer obtains maximum satisfaction from the commodities purchased. The World Wide Web offers search engines that facilitate obtaining information concerning a business’ operations, prices, brand names, available services and general information on a company’s products. The extensive information offered attracts more customers who learn about the commodities offered by the company. The effective communication ensures customer loyalty since it enables personalized customer attention. The World Wide Web offers the bookstore information on the highly demanded books and the emerging trends of bookselling. This offers the bookstore competitive advantage and ensures it stays ahead of its competitors. The elements of ecommerce also facilitate the translation of physical books into eBooks
  12. 12. 12 that facilitate the transacting process. EBooks facilitate book storage and management of the inventory. Tracing of books becomes easier hence, customers receive quick services and can access books at their own convenience.
  13. 13. 13 Recommendations and Conclusions The adoption of ecommerce by a brick and mortar business therefore offers it a viable opportunity to improve its operations and widen its customer base. Ecommerce helps the achievement of the major goals of every business entity, which involve revenue, and profit maximization. The benefits obtained and gained from ecommerce overshadow its downside making it a crucial facility for a business to consider. Elements of ecommerce help in enhancing internal relations among the employees, which translate in the production of quality goods and services to end-users. Ecommerce enhances transaction between a business and its stakeholders such as the customers, other businesses, and the government, among others. Business-to-business transactions dominate the ecommerce platform due to interactions with raw material suppliers, manufactures, and wholesalers. Business-to-customer transactions dominated the original ecommerce market at the initial introduction of the World Wide Web. The World Wide Web continues to facilitate the transactions on the online market hence improving the global economic environment.
  14. 14. 14 Reference List 1. Investopedia (n.d) Business-To-Business [online] available from http://www.investopedia.com/terms/b/btob.asp (n.d.) 2. Investopedia (n.d) Business-To-Business [online] available from http://www.investopedia.com/terms/b/btob.asp (n.d.) 3. DigitSmith (n.d) Ecommerce Definition [online] available from http://www.digitsmith.com/ecommerce-definition.html (n.d.) 4. InvestorWords (n.d) B2C [online] available from http://www.investorwords.com/5410/B2C.html (n.d.) 5. Triua (2014) Advantages of E-Commerce [online] available from http://www.triua.com/100/5-advantages-and-disadvantages-of-e- commerce.html (25 December 2014) 6. ESalesTrack (n.d) Advantages of Ecommerce [online] available from http://www.esalestrack.com/blog/2008/09/advantages-and-disadvantages- of.html (n.d.) 7. Triua (2014) Disadvantages of E-Commerce [online] available from http://www.triua.com/100/5-advantages-and-disadvantages-of-e- commerce.html (25 December 2014)

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