Implications of e-commerce on retailing

E-Commerce of Electronic Commerce is a type of industry where the buying and selling of products or services is conducted over electronic systems such as the Internet and other computer networks. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction’s life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices social media, and telephones as well.

In 2012, B2C ecommerce sales grew 21.1% to top $1 trillion for the first time, according to new global estimates by eMarketer.

Apparently, the UK has the highest e-commerce retail penetration in the world, ahead of the US and the rest of Europe. In 2011, UK e-commerce had a retail market share of 8% and this is forecast to reach 12% by 2016.

Advantages of E-Commerce

1. Overcome Geographical Limitations
If you have a physical store, you are limited by the geographical area that you can service. With an e-commerce website, the whole world is your playground. Additionally, the advent of m-commerce, i.e., e-commerce on mobile devices, has dissolved every remaining limitation of geography.

2. Gain New Customers With Search Engine Visibility
Physical retail is driven by branding and relationships. In addition to these two drivers, online retail is also driven by traffic from search engines. It is not unusual for customers to follow a link in search engine results, and land up on an e-commerce website that they have never heard of. This additional source of traffic can be the tipping point for some e-commerce businesses.

3. Lower Costs
One of the most tangible positives of e-commerce is the lowered cost. A part of these lowered costs could be passed on to customers in the form of discounted prices. Here are some of the ways that costs can be reduced with e-commerce:

– Advertising and Marketing
Organic search engine traffic, pay-per-click, and social media traffic are some of the advertising channels that can be cost-effective.

– Personnel
The automation of checkout, billing, payments, inventory management, and other operational processes, lowers the number of employees required to run an e-commerce setup.

– No physical location required
An ecommerce merchant does not need a prominent physical location.

4. Locate the Product easily
It is no longer about pushing a shopping cart to the correct aisle, or scouting for the desired product. On an e-commerce website, customers can click through intuitive navigation or use a search box to immediately narrow down their product search. Some websites remember customer preferences and shopping lists to facilitate repeat purchase.

5. Provide Abundant Information
There are limitations to the amount of information that can be displayed in a physical store. It is difficult to equip employees to respond to customers who require information across product lines. Ecommerce websites can make additional information easily available to customers. Most of this information is provided by vendors, and does not cost anything to create or maintain.

Disadvantages of E-Commerce

1. E=commerce Delays Goods
Unless you are using a website to merely order a pizza online, e-commerce websites delivery take a lot longer to get the goods into your hands. Even with express shipping, the earliest you get goods is “tomorrow.”

But if you want to buy a pen because you need to write something right now, you cannot buy it off an e-commerce website.

An exception to this rule is in the case of digital goods, e.g. an e-book or a music file. In this case, e-commerce might actually be much faster than purchasing goods from a physical store.

2. Many Goods Cannot Be Purchased Online
Despite its many conveniences, there are goods that you cannot buy online. Most of these would be in the categories of “perishable” or “odd-sized.”

3. E-commerce Does Not Allow customers to Experience the Product Before Purchase
You cannot touch the fabric of the garment you want to buy. You cannot check how the shoe feels on your feet. You cannot “test” the perfume that you want to buy.

4. Security
When making an online purchase, you have to provide at least your credit card information and mailing address. In many cases, e-commerce websites are able to harvest other information about your online behavior and preferences. This could lead to credit card fraud, or worse, identity theft.

It is also difficult to verify authenticity and integrity of the online retailer.

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