E-commerce: Features, Advantages And Business Models
The history of commerce can be best described as the history of civilisation. It is understood that man’s wants are few and simple but they are limited to his physical existence such as food clothing and shelter. Man constantly advances in his scale of intelligence and therefore his wants tend to increase and his demands increases in pursuit to conveniences in life. It is understood that civilized man gets little satisfaction and therefore commerce is a means by which man’s wants are satisfied(Day, 1922)
Therefore commerce can be best described as the buying, selling and distribution of goods or services in an organised system. Figure 1 below shows how commerce can be classified together in order to satisfy customer wants and needs
The importance of commerce
Commerce is there to make sure that everyone lives a comfortable life and all nation attaining high standards of living. All these achievements can be realised when goods are produced at a cheaper cost and also when there is smooth flow of goods from source to consumer.
Electronic commerce which might be also referred to as e-business refers to the transaction of goods and services through electronic communication. Ecommerce has and is a major player in transforming how business is being conducted. As man is evolving so is his technology and so is his commerce(Tian and Stewart, 2006).We are living in a global world connected through the internet and hence the introduction of e-commerce so as to satisfy man’s wants. Electronic commerce is widely considered the purchase of buying and selling of goods over the internet, but any internet transaction can be termed as e-commerce(Niranjanamurthy et al., 2013)
E-Commerce is a modern way method of doing business addressing the consumers’ needs at a reduced cost and improved quality and speeds up delivery period. E- Commerce is an internet change of information using the following ways
• Electronic Data Exchange ( EDI)
This is the electronic interchange of business information through a standardised format or process that allows a company to send information to another company with the use of electronic technology or paperless. When business entities conduct transactions electronically, they are called trading partners. Picture1 below illustrates how EDI functions from business partners
• Electronic Mail ( e-mail)
E-mail can be described as the exchange of computer stored massages by telecommunication .E- mail messages may be encoded in American standard code for information change (ASCII) or non-text files such as pictures send through binary systems. E- mail constitutes the largest volume of traffic over the internet. It can also be used or exchanged between online service provider users and in networks other than internet. Picture 2 below illustrates some types of email service providers
• Electronic Bulletin boards
This is a computer driven mass medium that are also known as message boards, a bulletin board is an online communication system where one can share and or discuss information .Electronic bulletin boards are public and anyone who visits the page or board can access the information. When there is a large collection of bulletin board it is then termed the newsgroup. According to (Rafaeli, 1984) a bulletin board or public access electronic board is a medium that serves middle sized audiences. Picture 3 below illustrates connectivity of the electronic bulletin board
• Electronic Fund Transfer (EFT)
Electronic fund transfers are electronic transfer of money form one bank to another via computer based systems and without direct intervention of banking staff. Electronic fund transfer can be described as money in ecommerce(Panurach, 1996)Picture 4 below illustrates electronic fund transfer
Features of ecommerce
- Non cash payments :there is the use of credit cards, debit cards, smart cards electronic fund transfers , mobile banking such as Eco cash , one wallet and tele cash
- Online advertising
- 24 /7 service availability
- Inventory management: through the use of ERP systems
- Communication improvement
Comparison of E- commerce versus Traditional commerce
- Depends heavily on information from person to person or face to face interaction
- Transactions are done in synchronous ways through manual intervention
- There is difficulty in maintaining standard practices
- Depends on human skills
- Information is shared electronically, limiting human interaction
- Communications are done in asynchronous ways, the system is automated
- With automation, a uniform strategy can be easily maintained
- Depends on websites
Advantages of E-Commerce
E Commerce is considered to have substantial competitive advantages for the consumer who enjoys a broader choice of products and services at low costs(Lefebvre and Lefebvre, 2002). E-Commerce advantages can be classified into three categories mainly advantages to organizations, to consumers and to the society at large.
Advantages to organizations
- With e-commerce, organisations can expand their market from national or reginal to global or international market with minimum capital investment.
- With e commerce in place , there is the realisation of increased customer base, improved or best suppliers, and business partners across the globe
- E commerce helps the organisation to minimize costs and hence maximize profits through a digitalised system
- It improves customer service and brand image
- It enables a faster and swift business process
- E commerce reduces paper work and manpower hence increases profit margins
- E commerce increases productivity since it supports the pull type supply management system
Advantages to Customers
- E-Commerce provides a 24/7 customer supply base since customers can place orders any time
- There is the aspect of more options an quicker delivery choice depending on chosen option that best suits the customer
- Customers can review products and also see what other consumers are purchasing before he decides to buy
- There is the provision of virtual shopping for consumers
- E commerce is a facility that increases competition amongst supplies and hence they tend to produce quality and cheap products for the consumer
Advantages to Society
- There is less traffic or congestion on the road system as consumers do it on line
- Costs of the products are reduced and hence society at large can be able to transact and have a better living
- Remote areas can now access modern technology and modern goods without too much hustles
- E commerce helps in communication and the government to deliver service to the community at a low cost and thereby increases social services
Disadvantages of E-Commerce
Any system has its own pros and cons and according to (MacGregor and Vrazalic, 2005) e-commerce disadvantages are said to be often dissipated through strategic structures rather than through self-centred units. The disadvantages of e-commerce can be further classified into two, thus technical and non- technical
- Lack of cyber security system and reliability that will result in poor e commerce
- The global community cannot cope up with the advancement in technology and hence software changes, prompting the consumer to change also which might be costly
- In third world countries there is the issue of poor networking bands
- In Zimbabwe the system is currently being affected by load shedding and delays will be felt
- In order to initiate certain transactions, the vender setting the e commerce structure must be in a position to use certain software which can also be costly to him
- Integration of existing databases and system application might be difficult on certain websites
- Software and hardware compatibility issues might affect the system as in the case of android and windows phones some applications might not be compatible
- The system might be prone to hacking .virus attack and many more
- Initial costs of implementing the system might be high
- E- commerce integration needs Information technology based skills and if they are limited expert skill tends to be expensive
- Uses might offer resistance, they might not have trust in the websites and hence it is difficult to convince traditional users to adopt change
- Internet access is expensive to some parts of the globe
- Cyber bullying
E-Commerce business models
Electronic commerce is the umbrella term for all online marketplaces that links the consumer and the supplier. The internet is the major player of transaction. There are many business transactions that are engaged through e commerce and one has to know what nature of business model is being adopted.(Timmers, 1998) illustrates the business models as follows
- Business to business (B2B)
- Business to consumer (B2C)
- Consumer to consumer (C2C)
- Consumer to Business (C2B)
- Business to Government (B2G)
- Government to Business (G2B)
- Consumers to Government ( C2G)
Business to business (B2B)
This is an online transaction whereby a business sells its products to and intermediate buyer who then sells the product to the final consumer .For example a manufacturer sells to the wholesaler or retailer who then sells to the final consumer .The main examples of this type of model are service providers. Picture 6(a) and 6(b) illustrates the transaction model of B2B the main link is from the main factory and goods or services are shipped to various business outlets .The outlets will then transact with consumers
The wholesaler places an order online through the website and there is the order transformation process of purchase, once the order has been purchased and approved the business organisation or supplier will then supply the wholesaler the purchased good and the wholesaler then sells to the customer
Business to Consumer (B2C)
This is a traditional retail method where the business sells to the consumer and the transaction is conducted on line and there is no physical store all products will be online. The website sells products directly to the customer; the consumer can choose the product and order for themselves. The business will dispatch the products to the consumer. Picture 7(a) and 7(b) illustrates the transaction model of B2C.
The customer orders directly online through the website and the transformation process is initiated and the supplies are directed to the customer for example the famous B-FORWARD Japan and Zimbabwean consumers by passing car sales.
Consumer to Consumer (C2C)
This is a business model that helps the consumers to sell their assets or goods through the website. The website might not charge the consumer for its services .Another consumer may opt to buy upon seeing the advert on the website. This was created through the consumer confidence in online sales, some sells online for a commission fee. Picture 8(a) and 8(b) illustrates the transaction model of C2C.
Consumer 1 sells a product online by placing an advert on various platforms and consumer 2 sees the advert online and payment will be done directly to consumer 1 and consumer 2 receives the product but this will be conducted online.
Consumer to Business (C2B)
This type of online business is when the consumer sells the goods or services to business. This is equivalent to the sole trader ship business. Examples of this kind of business are the freelance engineers or designers who transact online. Picture 9 illustrates the transaction model of C2B.
Business to Government (B2G)
This type of an online business refers to the business relationship between companies and government institutes. It can offer online services
Customer to Government (C2G)
This type of an online business refers to the business relationship between individuals and government such as paying taxes and tuition fees
- DAY, C. 1922. A history of commerce, Longmans, Green, and Company.
- LEFEBVRE, L. A. & LEFEBVRE, E. 2002. E-commerce and virtual enterprises: issues and challenges for transition economies. Technovation, 22, 313-323.
- MACGREGOR, R. C. & VRAZALIC, L. 2005. The effects of strategic alliance membership on the disadvantages of electronic commerce adoption: a comparative study of Swedish and Australian regional small businesses. Journal of Global Information Management (JGIM), 13, 1-19.
- NIRANJANAMURTHY, M., KAVYASHREE, N., JAGANNATH, S. & CHAHAR, D. 2013. Analysis of e-commerce and m-commerce: advantages, limitations and security issues. International Journal of Advanced Research in Computer and Communication Engineering, 2, 2360-2370.
- PANURACH, P. 1996. Money in electronic commerce: Digital cash, electronic fund transfer, and ecash. Communications of the ACM, 39, 45-51.
- RAFAELI, S. 1984. The electronic bulletin board: A computer-driven mass medium. Social Science Micro Review, 2, 123-136.
- TIAN, Y. & STEWART, C. 2006. History of e-commerce. Encyclopedia of e-commerce, e-government, and mobile commerce. IGI Global.
- TIMMERS, P. 1998. Business models for electronic markets. Electronic markets, 8, 3-8.