THE BENEFITS OF E-COMMERCE
The benefits of e-commerce can be seen to affect three major stakeholders:
- Consumers and
Benefits of e-commerce to organizations
- Electronic commerce expands the market place to national and international market with minimal capital outlay, a company can easily and quickly locate more customers, the best suppliers, and the most suitable business partners worldwide. By becoming e-commerce enabled, businesses now have access to people all around the world. In effect all e-commerce businesses have become virtual multinational corporations.
- The cost of creating, processing, distributing, storing and retrieving paper-based information has decreased. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 percent.
- E-commerce has revolutionised the way consumers buy good and services. The pull-type processing allows for products and 12Introduction services to be customised to the customer’s requirements. In the past when Ford first started making motor cars, customers could have any colour so long as it was black. Now customers can configure a car according to their specifications within minutes on-line via the www.ford.com website.
- Electronic commerce allows reduced inventories and overhead by facilitating “pull” type supply chain management. In a pull-type system the process starts from customer orders and uses just-in-time manufacturing.
- The pull-type processing enables expensive customization of products and services which provides competitive advantage to its implementers. 21
- Electronic commerce reduces the time between the outlay of capital and the receipt of products and services.
- Electronic commerce initiates business processes re-engineering projects By changing processes, productivity of salespeople, knowledge workers, and administrators can increase by 100 percent or more.
- Lower telecommunications cost. The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organisation and its authorised partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialing.
Benefits to Consumers
Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location. For example, checking balances, making payments, obtaining travel and other information. In one case a pop star set up web cameras in every room in his house, so that he could check the status of his home by logging onto the Internet when he was away from home on tour.
- Electronic commerce provides customer with more choices; they can select from many vendors and from many more products.
- Electronic commerce frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.
- In some cases, especially with digitized products, E-Commerce allows quick delivery.
- Customers can receive relevant and detailed information in seconds, rather than days or weeks.
- Electronic commerce makes it possible to participate ate in virtual auctions.
- Electronic commerce allow customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.
- E-commerce facilitates competition, which results in substantial discounts.
- An environment of competition where substantial discounts can be found or value added, as different retailers vie for customers. It also allows many individual customers to aggregate their orders together into a single order presented to wholesalers or manufacturers and obtain a more competitive price.
Benefits of e-commerce to society
- Electronic commerce enables more individuals to work at home and to do less travelling for shopping, resulting in less traffic on the roads and lower air pollution.
- Electronic commerce allows some merchandise to be sold at lowest prices, so less affluent people can buy more and increase their standard of living.
- Electronic commerce enables people in third world countries and rural areas to enjoy products and services that otherwise are not available to them.
- Electronic commerce facilitates delivery of public services, such as health care, education, and distribution of government social services at a reduced cost and/or improved quality. Health care services, e.g., can reach patients in rural areas.
- Enables people in developing countries and rural areas to enjoy and access products, services, information and other people which otherwise would not be so easily available to them.