THE LIMITATIONS OF E-COMMERCE
These will be dealt according to the three major stakeholders –
- Consumers and
Limitations of e-commerce to organizations
- Lack of sufficient system security, reliability, standards and communication protocols. There are numerous reports of websites and databases being hacked into, and security holes in software. For example, Microsoft has over the years issued many security notices and ‘patches’ for their software.
- Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch up’ and not be left behind.
- Under pressure to innovate and develop business models to exploit the new opportunities which sometimes leads to strategies detrimental to the organisation. The ease with which business models can be copied and emulated over the Internet increase that pressure and curtail longer-term competitive advantage.
- Facing increased competition from both national and international competitors often leads to price wars and subsequent unsustainable losses for the organisation.
- Problems with compatibility of older and ‘newer’ technology. There are problems where older business systems cannot communicate with web based and Internet infrastructures, leading to some organisations running almost two independent systems where data cannot be shared. This often leads to having to invest in new systems or an infrastructure, which bridges the different systems. In both cases this is both financially costly as well as disruptive to the efficient running of organisations.
Limitations of e-commerce to consumers
- Computing equipment is needed for individuals to participate in the new ‘digital’ economy, which means an initial capital cost to customers.
- A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web.
- Cost of access to the Internet, whether dial-up or broadband tariffs.
- Cost of computing equipment. Not just the initial cost of buying equipment but making sure that the technology is updated regularly to be compatible with the changing requirement of the Internet, websites and applications.
- Lack of security and privacy of personal data. There is no real control of data that is collected over the Web or Internet. Data protection laws are not universal and so websites hosted in different countries may or may not have laws which protect privacy of personal data.
- Physical contact and relationships are replaced by electronic processes. Customers are unable to touch and feel goods being sold on-line or gauge voices and reactions of human beings.
- A lack of trust because they are interacting with faceless computers. There is no guarantee for product quality. Our orders might be damage in the post or things may look different online to what you actually receive for example, slightly different colors and feel of clothes or the freshness of vegetables and fruits.
Limitations of e-commerce to society
- Breakdown in human interaction. As people become more used to interacting electronically there could be an erosion of personal and social skills which might eventually be detrimental to the world we live in where people are more comfortable interacting with a screen than face to face.
- Social division. There is a potential danger that there will be an increase in the social divide between technical haves and have-nots – so people who do not have technical skills become unable to secure better-paid jobs and could form an underclass with potentially dangerous implications for social stability.
- Reliance on telecommunications infrastructure, power and IT skills, which in developing countries nullifies the benefits when power, advanced telecommunications infrastructures and IT skills are unavailable or scarce or underdeveloped.
- Wasted resources. As new technology dates quickly how do you dispose of all the old computers, keyboards, monitors, speakers and other hardware or software?
- Facilitates Just-In-Time manufacturing. This could potentially cripple an economy in times of crisis as stocks are kept to a minimum and delivery patterns are based on pre-set levels of stock which last for days rather than weeks.