Electronic commerce which is more commonly referred to as e-commerce is the act of transacting business through the internet and mainly consists of buying and selling of services and products through electronic systems chief among them being computers connected to the internet. It also involves the buying and selling of goods and services through computer networks. In recent times, the transactions conducted through electronic means have increased significantly and the most important avenue of these transactions is the internet catering for more than eighty percent of all electronic commerce. Most e-commerce transactions vary and range from accessing premium content of a website to the actual buying and selling of physical products. In this respect, e-commerce has also encompassed physical transportation of goods into physical addresses.
E-commerce can be categorized into two categories; one of them being the transactions between businesses and this is commonly referred to as Business-to-Business (B2B). The other category is the transactions between businesses and consumers commonly referred to as Business-to-Consumer (B2C). In B2B, the transactions can be open to all interested parties but in some cases it is limited to some qualified parties (Chaffey, 102).
Divisions of e-commerce
E-commerce can be divided into various divisions. One of the divisions is the e-tailing also referred to as virtual storefront or virtual mall. This is a mechanism in which consumers have availed an internet-based retail shopping which runs for twenty fours hours, seven days a week. It also has a global outlook and can be reached from anywhere in the world the only necessity being available internet service. It allows the consumers to interact and also offers information on products and services offered by a business. It also has to order information. This division of e-commerce has enabled businesses to access a multi-billion dollar revenue source and has recorded a significant success.
Another division is the division of market research. This is laid on the basis that since the internet is the source of a lot of information and many people use the internet as one of the most avid interactive mechanisms, many businesses took up the opportunity to gather information and data about customers and prospects. This is done through site registration and other research methods such as online questionnaires and surveys. This is also done through the act of taking orders. However, there has raised the issue of whether information got through the internet is legal in terms of the participant’s knowledge and the subjects of markets permission are honest (Sparrow, 19).
Electronic Data Interchange (EDI) is also another division of e-commerce and it involves business data exchange whereby the use of a mutually understood format for the data is used. It is more advanced than the modern internet. Electronic Data Interchange is mainly organized by parties that are well familiar with each other and have made point-to-point or one-to-one connections. However, this technology is expected to be replaced by other formats which are more standard and common such as the XML and ebXML formats that have started to be used all over the world now.
Another division is the e-mail, fax and internet telephony that businesses have adopted to increase their marketing capabilities. Consumers can now access information about products that they are interested in and likewise, businesses can now interact with the consumers and in the same effort be marketing their products and services. However, this method of advertising has elicited a lot of controversies because companies have proved to be so focused on marketing than respecting the privacy of individuals. This has brought about the issues of spam mail and junk mail with companies sending information to people who have not requested the information. However, this medium has also benefited both the consumers and businesses because many businesses which have websites have the option for interested consumers to sign-up for weekly, monthly or quarterly newsletters which are sent either through mail address, e-mail or even fax (Sparrow, 10).
Importance of e-commerce
The world has undergone a number of changes and businesses all over the world have to adapt to the new changes if they want to secure their continuity and survival. In this era of globalization, many inventions and innovations have arisen and this requires that businesses all over the world need to bring these technological advances into lines of operation to enhance their success in the various fields they are operating in. The recent years have seen to it that communication and transport technologies have adversely been improved and this has seen to it that many businesses have complied with the new technologies (King, 29).
Technological advancement in such fields as communication and transportation has made it easier for people from various locales in the world to interact and conduct business. E-commerce in this era of globalization is one of the most important tools for businesses as they can transact in various regions at amazing speed and also have the products delivered with the most convenient means. In this respect, e-commerce has availed a very reliable way of doing business all over the world and also for the people to communicate what they want and put in their specifications on various products (Hickie, 123).
E-commerce has benefited the consumers in that they do not have to travel to get their products or order their products. It is also efficient in that the consumers can access the information of the products and their producers without having to struggle a lot. A lot of time and money is saved through e-commerce because people have reduced their traveling with information being available online. In the same respect, the consumers do not have to travel to transact for the commodities they need to buy, but they can order online and also have information about offers on various products and services (Chaffey, 150).
The businesses have also benefited from e-commerce because they have cut a lot of costs that they incurred prior to the establishment of e-commerce. Some of these costs included sending information through snail mail which apart from taking a lot of time was also very costly. However, with e-commerce, businesses can keep track of consumers who are interested in their products and do not have to go on a wild goose chase with some consumers who are not interested in their products or services. This means that the businesses are saving a lot of money and resources by only focusing on potential customers rather than employing their resources in targeting a particular group of people of which only a few individuals may end up buying their products (Sparrow, 12).
FSF case study
FSF has been doing considerably well for a number of years and this is evident in the fact that it has been running without losses for ten years. However, recently it has encountered stiff competition from large retailers and this has been seen as a threat to the existence of the company. It is plain to see that the company has been relying on the traditional means of conducting business and has for some time ignored the changes that are taking place in the field of commerce. Many companies like FSF have been forced to go under due to the companies’ reluctance to adopt new changes in the field of commerce (Schneider, 128).
A significant advancement that the company has not adapted is the e-commerce concept which can be very beneficial to a company like FSF. This is because; e-commerce provides a basis on which the markets of the company can be expanded over the horizons and the company to be suppliers of furniture for customers all over the world. E-commerce will also benefit the company in that many of its customers will have a basis on which to interact with the staff of the company. This means that the customers will have a forum in which they will air their views on the company’s outlooks as well as product design and improvement. The company will also benefit from the concept of e-commerce in that it can easily have customers do a survey and this will help the company in improving in some areas which the customers will have directed (King, 39).
The company will need to invest in the new technology and hence it may put some strain on the already struggling company. However, the benefits by far outweigh the investment costs because from the day the company will adapt its new global outlook, the customers will be flocking in from all over the world. This means that it will also be easier for the company to interact with all its clients and suppliers from all over the world. This is very apt for FSF as it has started dealing with other companies from other regions like its chief supplier in Sweden and its customers in the Far East. The company will also benefit by avoiding unnecessary running costs, which are mainly accrued from marketing. The company can set up a newsletter sign-up website in which interested customers and suppliers can log in and get all the information. Apart from that, the company can keep all signed-up customers and suppliers of the company’s update which would include even new products and changes in prices as well. This would benefit the company so much because it would have to focus on a number of clients and suppliers who it is assured of doing business with rather than blindly marketing its products to other people who might as well be wasting the company’s resources since they are not likely to buy the products any time soon (Hickie, 123).
The company can also adopt a number of e-commerce options that are likely to benefit the company. One of the most essential things to have is a company website which acts as one of the most selling elements in today’s commerce field. Many companies that have recorded a significant success over the past few years all have a website and hence many people find all the information about a company on the website. A website can be enhanced to fit and competently serve any company operating in any field. One of the most important aspects of a website is that it should be as interactive as possible and this means that the customers and suppliers will contact the company through the website rather than through telephone calls and snail mails. It should also have such features that allow orders to be processed and payments to be made online rather than the cumbersome traditional way of conducting business (Schneider, 102).
In as far as competition is concerned; adapting an e-commerce outlook for FSF can be very beneficial because it can always and promptly alert its customers of new offers and prices. It is also very convenient for the company to keep customers and suppliers updated for new offers from the company. This can be achieved by the company posting this information on the company’s website or also keeping the clients and suppliers informed through the newsletters. It is also less costly because the information does not have to be transmitted to all people through various media because the company will only post the information on the website where many people can access it. Alternatively the company can only send the information to subscribed clients and suppliers through newsletters (King, 47).
It is also a convenient way of keeping track of all company suppliers and clients. This is because the companies will only need to keep track of the people they contact through electronic means and hence is a convenient way of keep track of all associates. It is also beneficial if the company can create a forum in which clients can have a platform for interacting and this would help a lot in bringing the company to some of the best clients’ attention and clinching bigger deals than it has already (Napier, 120).
Principles of e-commerce
E-commerce will help the company to start being involved in the international market. With the onset of globalization, companies have started to focus on the international market and this has proved to be very beneficial to the companies. This is because the companies have access to a very large and competitive market and this means that the company will also have to improve on its services and products (Chaffey, 192).
The company will also have to deal with some legal issues when it starts to be involved in international markets. This is because; international markets entail doing business in many countries of the world and this means dealing with many legal issues ranging from taxation to government regulations. The company must adapt to its new status by being competent in dealing with other countries that may have different legal settings than the home country. This means that FSF will need to have significant structural adjustments internally so that departments can handle various issues that will come into the scene when the company goes global (Napier, 101).
When the company opts to go the e-commerce way, one of the paramount things it has to consider is the website. The website will be its main selling point and hence a lot of effort has to be put into place to ensure that the website produced is a world-class website. This means that the website needs creativity and it has to offer some very state-of-the-art features and be very enticing and attractive to the visitors of the site. The marketing of the website is also a very important thing and this can be done by linking your website to other frequently visited sites. The use of the search engine is also a very important marketing strategy for the website. It is important to note that the more traffic a website has the more business the company will have (Schneider, 302).
Advantages of e-commerce to FSF
The company will not be limited to operating during office hours but will be able to operate any time of the day. This means that the company will be able to operate twenty-four hours a day, seven days a month and three hundred and sixty-five days a year. This is very in tune with the current trend of globalization because clients from various regions in the world would need some other time rather than the local office hours of the company’s locality. This is because with different time zones, many clients and suppliers cannot be able to find the right time to contact the company. This would mean that the company would only be able to serve the clients within its locality and also deal with suppliers from its locality. This means that the company would lose a lot of sales because it cannot make substantial profits from just dealing with contacts from its locality. This is the reason why most successful corporations have embarked on using the e-commerce option (Hickie, 123).
The company can also expand its marketing horizon to a global level rather than sticking to its local market. This means that the company will increase its sales volume because many people will be able to know about the business. This means that the business can do business with any other business all over the world and even come to contact with other potential customers. The only necessity is the provision of internet service and if this is available, then the company can do business in virtually all parts of the world. In the case of FSF it can access worldwide markets not restricted to any region and all it has to do is offer the products and a means of transportation which would mean that the company stands to reap a lot of benefit from an e-commerce venture (Napier, 111).
The company also gets to get a large market space in terms of its operations. This is because the internet which is the most widely used medium in e-commerce has a very large market force behind it and in modern times when internet sales are elevating to very high scales, it is important for any company to try and take up the opportunity. It also means that the company has a lot of market potential all over the world and this means that the company will do very well if it takes e-commerce marketing very seriously. The internet nowadays holds the biggest market worldwide for virtually any commodity and this is supposed to increase with increased internet usage (King, 49).
Disadvantages of e-commerce to FSF
The products that FSF deals in may prove to be limited to a venture into e-commerce because of the implications of physical transportations of its products. This is because FSF dealing with furniture may find it difficult to transport its products to the clients either in time or in a cost-effective way. This means that the cost of transportation may make the prices of the products escalate to higher rates. Unlike other products like music and movies where customers can only download them directly from the internet, furniture may prove to be a bit tricky to be transported. However, the company can make use of some of the transportation technological advancements to ensure that the goods get to the customers in good time (Hickie, 123).
E-commerce may also prove to be trying because of the uncertainties between the buyers and the company. In case the company seeks payments first before delivering the goods, then the buyer may be uncertain if the products will get to him in time or at all. This may limit the success of e-commerce because many customers would not want to be involved in such a deal in which they are not sure if the products will be delivered at all and to their satisfaction. Another problem is that when the company opts to send goods first without receiving payments, the company is also uncertain if the customer will stick to the promise of paying. This may bring about a lot of legal tussles which the company will lose a lot of time and resources. This also brings a lot of issues when there are some goods that need to be returned. It is very costly to transport goods to and fro and though some companies promise to cater for the expenses, many customers are not certain whether they will be helped out (Chaffey, 202).
The number and range of transactions are also other inhibiting factors. Many online transactions are conducted using credit cards and hence very small transactions or very large transactions are left out in the online transactions. This means that the company will have to limit its transactions to those that are manageable using credit cards. There are also rising cases of fraud and hence the company must be very cautious on online transactions. Many companies have lost substantial amounts of goods and cash through online transactions and this has brought about many companies shying away from e-commerce (Napier, 120).
- The company should invest in an e-commerce venture so that the company can counter its competition and also enlarge its market base. The internet is one of the best places to market your products and services and hence the most important marketing avenue any company would like to be in. In any case, the internet is the most avid interaction avenue for many individuals and hence the increased possibility that a company’s product will be seen through the internet.
- The company should however be careful so as not to jeopardize its current customers or potential customers by delayed deliveries which can be very disheartening to any customer. The company should first of all come to a decision on which method of transportation it will use for deliveries, a system that will not fail the customers or delay the deliveries.
- The company should also look into international legal issues that may arise when it starts dealing in international market. This is because many countries have different regulations. The company should come up with a new department to look into legal issues that accrue to international trade.
- The company should also come up with very effective anti-fraud mechanisms because there is a lot of risks involved in online trading. The mechanisms should be able to detect fraud before it has fully accepted to enter into a transaction.
E-commerce is a great way of rejuvenating a falling company because it widens its marketing horizons and hence ensures that if well-adapted, the company will increase its sales volume. However, there are many issues to be looked into one of them being the international marketing regulations and individual government regulations of the countries the company is willing to do business in. There are also fraud cases that increase nowadays and any company must come up with effective mechanisms to counter fraud before it happens.
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