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The case for e-commerce
[June 24, 2011]

The case for e-commerce

(Slogan (Pakistan) Via Acquire Media NewsEdge) Salman Shah Jilani balances arguments for and against e-commerce.

If you explore the market you will find several companies and retailers selling their product over the internet. Liberty books, Gul Ahmed (Ideas) and Cambridge are some prominent examples of local businesses that have adopted technology which enables them to sell their products online. Internationally, this practice has been in place for quite some time now. Levi’s, Gap and Swatch watches have all set up online stores.

The main reason why a lot of businesses – new, old, small, big – have opted to operate their businesses online is to follow a trend which is increasingly becoming popular and consequently gaining proficiency in it. Times are changing rapidly and now the current business trends dictate e-commerce.

E-commerce involves conducting business on the internet – the application that provides a commercial setting for the electronic communication of buyers and sellers. The internet is perfectly designed to perform the entire chain of business processes from its starting point to the accomplishment of the business goal.

Brick and mortar, conventional stores have many more utility bills due each month compared to their e-commerce operations. They usually need to pay rent but when it comes to e-commerce websites, you just need to pay a small amount for web hosting. While, brick and mortar stores need to pay for their electricity and other utilities on a monthly basis, e-commerce sites have lower operation expenses.

Conventional stores demand quite a lot of manpower in the sense that they require sales, customer service, human resources, maintenance and marketing departments. To the contrary, an e-commerce business can be operated with as little as five people.

It is definitely much easier and cheaper to advertise and market a business over the internet. There are so many ways to advertise a business online. Businesses practicing e-commerce can place ads on the internet at relatively cheap rates and can be more active than when they have their ads printed in newspapers, magazines, brochures and posters.

By saving utility expenses, manpower, energy expenses and advertising costs, the e-commerce business will be able to retain more profit. Apart from these savings, e-commerce business can increase their profits and sell products or services at lower price. When they sell at relatively lower prices, more people will buy from them.

Additionally, e-commerce services collect and manage valuable customer-related information – including customers’ ordering patterns – to build a comprehensive customer database. This database sharpens marketing and promotion strategies.

An e-commerce website can influence customers to purchase and return. The availability of coupons and discounts can increase chances for a customer to use the site more frequently. Websites can provide the customers with personal attention and customers can also personalize the website to suit their own purposes.

Personalized websites allow the customer to help themselves. A self-service site helps the customer by making the site easy to use without assistance.

Although it has its benefits, e-commerce has its own share of problems which hold it back from utilizing its full potential. Not everyone uses the internet let alone consider it an integral part of their lives. There are also numerous privacy and security issues that have yet to be overcome. Users continue to complain that they face problems when they have to divulge highly personal information online like credit card numbers to carry out online transactions.

Non-standardized protocols for certain processes, insufficient telecommunications bandwidth and ever-evolving software tools are some of the technical issues that prevent e-commerce from becoming an integrated component of the contemporary organizational IT systems.

While technical limitations can be easily resolved, non-technical issues including people’s reluctance to change and lack of trust for faceless and paperless transactions is bound to arrest the popularity of e-commerce.

The feasibility of an e-commerce project can only be maintained if firms incur technology, technological development, consultancy support, design and implementation, piloting and training and running costs. But advantages of e-commerce outweigh the disadvantages associated with them. Hence it is important for companies to engage in e-commerce to attain a competitive edge.

Salman Shah is a management undergraduate student and an active blogger.

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