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E-commerce is the process of conducting business online through such transactions as sales and information exchange. There are a number of applications of e-commerce, including online retailing and electronic markets, and online auctions. E-commerce offers many benefits to businesses, including the widening of its marketplace and the reduction of operating costs. E-commerce is often combined with other channels as part of a business' marketing and sales efforts. As with any marketing and sales efforts, careful consideration needs to be given regarding how to best present the business on its website. There are a number of considerations to be taken into account in order to develop a website that will help the organization to maximize the effectiveness of its e-commerce efforts.
Keywords Channel; Customer Relationship Management; Domain Name; E-Business; E-Commerce; Hyperlinks; Information System; Information Technology; Risk; Search Engine; Strategic Planning; Strategy; Supply Chain
Business Information Systems: E-Commerce
Arguably, the primary goal of information technology and systems is the ability to transmit large amounts of data and information between organizations and individuals quickly and accurately. In addition, information systems often provide the means to automate previously labor-intensive tasks and to add convenience. For example, in many cases, information technology can significantly reduce the time, effort, and expense involved in developing written documents. Similarly, one no longer has to physically go to a store and search aisles for products to purchase. With the advent of information technology, customers frequently have the opportunity to do these tasks electronically by shopping online using e-commerce retailers.
E-commerce is the process of conducting of business online through such transactions as sales and information exchange. Although the term e-commerce is sometimes used interchangeably with e-business, it is actually one of the functions of e-business. In addition to shopping functions, e-business is the process of buying and selling goods or services electronically rather than through conventional means, along with the support activities and transactions necessary to do these tasks.
Approaches to E-Commerce
Nearly all businesses have established an online presence. One of the most common applications of e-commerce is online retailing and electronic storefronts. In this scenario, the organization's home page is the electronic equivalent of a brick-and-mortar storefront, and the various web pages being the electronic equivalent of the aisles of a traditional store. Typically, e-commerce websites allow customers to browse “the aisle” by having links to various categories of products or to search for specific items by various characteristics such as key words, title, product name, item number, or model number so that they can go directly to a specific product using a search engine.
E-commerce is not only the electronic equivalent of a physical retail store or mall, however. Another popular approach to e-commerce is through online auctions. This approach to e-commerce allows customers to determine the price of products rather than paying a fixed, predetermined amount. There are three online approaches to auctions. In the forward auction, shoppers bid on an item and the seller takes the highest offer. In the reverse auction, bidders list their product or service needs and the maximum they are willing to pay for the product or service. Sellers then bid against each other in an attempt to offer the product or service at the lowest price. The third approach to online auctions is the Dutch auction. In this approach, an item is offered online at a high opening price. At a predetermined interval, if no one has purchased the item, the price is lowered. This continues until someone is willing to purchase the item at the price offered.
Benefits of E-Commerce
E-commerce offers many benefits to businesses. First, e-commerce enables a business to extend its geographic reach to customers around the globe. For example, through e-commerce, customers no longer have to physically go to a brick-and-mortar store to purchase software. Not only can most software be sold over the Internet, but in many cases it can be downloaded directly from the Internet, thereby eliminating the costs not only of delivery but of packaging and storing the product as well. However, even when a product needs to be physically delivered via a transportation carrier, e-commerce can facilitate selling to a larger market. E-commerce also can increase the speed at which transactions can take place. Transaction times are reduced because customers no longer have to wait in line to be served but can complete their own transactions over a secure network simultaneously with other shoppers. Although the transaction speed is irrelevant if the customer still has to wait for delivery of those items that are not available locally, e-commerce can save time because the customer does not physically have to go from store to store to locate an item. Similarly, e-commerce can also increase productivity. Customers can lessen the time needed to find similar products and compare features and prices by doing their research online. This ability means that the customer can make a better informed decision but also make such decisions in a timelier manner, thereby helping the business's cash flow and saving the customer time.
Incorporating E-Commerce into Business Strategy
As all too many small business owners learned the hard way after the dot-com bubble burst in 2001, e-commerce is not a passive tool that magically brings in business and profits. Those businesses that were able to survive were those that had used the Internet as only one of many marketing channels and were able to fall back on other channels to market and sell their products and services. One of the lessons learned from the bursting of the dot-com bubble is that e-commerce works best when it is only an extension of one's business, not the sole channel. The use of e-commerce is not an all-or-nothing proposition. Businesses can — and in many cases must — have both traditional capabilities as well as e-commerce capabilities.
There are a number of different ways that businesses can incorporate e-commerce into their strategy. On one end of the spectrum is a primarily offline strategy with a primary channel that is offline and online marketing efforts playing only a supporting role. In this approach, the business may publish a website that provides customers with information about store hours and locations, describes the range of products that are sold, or offers customer-service options. For example, grocery stores may allow customers to go online to read the weekly sales flyer, send comments to the store or corporate manager, or find directions to various store locations. However, to do e-commerce, the business must also allow customers to purchase items online. To do this, the offline-focused strategy is often used when a sophisticated distribution...