ITGS Syllabus

Monday, February 20, 2006

Topic 36

E-commerce by Harsh Sharma

What is E-commerce?

The “E” in E-commerce refers to electronic and therefore the term “E-commerce” means the buying and selling of objects electronically. It doesn’t only refer to buying and selling but also any other transactions over the internet for example electronic transfers of funds or money, online marketing and advertising etc. So a simple definition for E-commerce could be, “any transaction that uses the Internet.”

How did it develop?

It was first used in the 1970s when electronic funds transfer started to occur. And then in the 1980s, ATMs started to pop-up all over the streets and this caused an increase usage of the term “e-commerce.” And when the Internet came, it included online shopping and any payments made through credit cards. However, today it just doesn’t include online shopping and credit card payments, it also includes any kind of banking (funds transfer) or any kind of business related things taking place on the Internet.

Advantages and Disadvantages


1. Provides an easy and secure way for customers to purchase objects from their home. People don’t have to go to their nearest Wal-Mart anymore to purchase their favorite cologne. Everything is available on the Internet. You can make your purchase at any time of the day – 24/7! And as long as you have the Internet, you have access to all the products (even the products on the other side of the world).

2. There is no menu or catalog on Internet. Well there is some sort of index but unlike traditional menus, these indexes are updated hourly with new prices and new content – making it much easier for customers to select the right product!

3. There are less marketing expenses to be paid on the Internet. Cost of production is greatly reduced because there’s less labor costs and other processing (phone, fax) costs. Hence, that money can be spent on improving the quality of the product etc.

4. Everything is sold directly to the customers. There is no “salesman” anymore and that’s another reduced cost. It also builds the consumer-company relationship and solidifies it.

As stated before, e-commerce just doesn’t include the transactions of purchasing products online. It is basically any business related transaction done over the Internet. Therefore, there are other advantages that are not related to online shopping.

1. Employee can be trained on the web now. They don’t have to come to a specific place to be trained and that saves a lot of money. Employee can go on the Internet and learn from the updated material at their convenience.

2. E-mail has greatly reduced the costs of communicating between businesses and customers. Therefore, the prices of products on the Internet are cheaper than the prices in the real world because all these costs have been reduced!

3. Business partners can collaborate and work on the same project using many advanced programs available on the Internet and share their ideas without having to attend a meeting in Shanghai.

4. Instant updating is one of the main features of E-commerce. As long as you have the right device(s), instant updating of anything that has happened at the store can be done. So for example, an Apple store in Japan can update the recent purchase of a Macbook and the main Apple store in USA would receive that update in less than an hour and their accountants will be notified.

Everything has two sides. There are advantages and disadvantages for everything and E-commerce is not different. However, it can be easily deduced that there are a lot more advantages than drawbacks because of the wide-spread popularity of E-commerce.


1. Credit card transactions can be a problem for some (including my dad). Some adults think that their credit card number will be “misused” if they give it out to the Internet companies. They don’t understand how secure the system is but credit card frauds do happen and therefore these adults will never purchase anything with their credit card.

2. Some consumers consider shopping a “social event” as in they are used to shopping for hours with their friends and family and would rather keep it that way instead of spending 20 minutes on the Internet alone.

3. Some consumers want to experience and test the objects they purchase. Therefore, an object like a deluxe bed would be less sold than let’s say a computer software.

4. Time for delivery of the products can be annoying for some people especially if the shipping is done internationally! And it’s not just the time, there’s also a bit of uncertainty involved. When you do normal shopping, you walk out the store with your product in your hands but through E-commerce, the product will take time to arrive and even if the company sends it, there is not a 100% chance that it will arrive!

5. Returning goods can be a pain through E-commerce. You don't even know where your product came from then how would you ever return it?

6. Perishable goods cannot be bought over the Internet. Even though the companies are working their way around this by introducing advanced shipping methods, people still don’t trust them.

Again, E-commerce just doesn’t include online shopping and hence there are disadvantages including the other aspects of E-commerce too.

1. Hacking of an electronic system can easily be done in today’s world and therefore, any kind of electronic data is always at risk. The risk can be minimized but it will always be there.

2. Perhaps, the online interaction between businesses will not be good enough to finalize a deal because the business owner could feel like he doesn’t yet know the person because of minimal eye-contact required.

3. Computers are not perfect. With computers, anything can go wrong at any time and nobody can stop. The risk of that is being minimized everyday but it will never completely go away.

However, the advantages totally overcome the disadvantages and thus E-commerce is a very efficient way of doing business and therefore most companies today have websites and web stores!

The social issue related to this could be the fact that everything is going online and even less and less interaction between people is required. If this keeps going on, all of us will mainly be computers talking to other computers and there wouldn’t be any conferences or dinners anymore!

The ethical issue is of course the fraud and hacking involved. Credit card frauds happen all the time and that is the same as stealing.


Anonymous said...

Awesome essay. You've covered pretty much everything there is to know about e-commerce. I especially agree with how we're being dehumanized slightly with the ease of doing everything with computers and the Internet.

This issue reminds of the guy who survived for a year in his house never going out and ordering everything off the internet, including food.

Sunday, December 03, 2006 1:25:00 AM


Blogger sam_shobeiri said...

Responding to harsh's paper...

you say "There is no “salesman” anymore and that’s another reduced cost." But isnt, for example, a salesman? It's selling sony's TVs through its website, so can't it be called as a type of salesman?

January 07, 2007 7:10 PM  
Blogger XiaoxiaoLi said...

Regarding Harsh's essay, all I have to say is that it's perfect! You started off with definition, then moved on to history, advantages and disadvantages, Just really coherent and informative as a whole. Personally, I espicially feels for the following points.
1.Some consumers want to experience
2. Some wants to test the objects they purchase.

#1 is really the main reasons my dad refuses to let me use it and #2 is why I have some hesitations regarding its usage.

January 08, 2007 12:32 AM  

Post a Comment

<< Home