E-Commerce: Creating Value For All

The emergence of the internet and the entire e-commerce industry that has sprouted from it has changed the business environment entirely. Apart from having the ability to procure goods and services from anywhere in the world, consumers have become more empowered, they can purchase with more convenience, they are able to find better deals, and they are able to better customize their orders according to their needs.

However, customers are not the only ones to benefit. Through e-Commerce activities, the costs of firms are lower. Instead of having to build and maintain a physical establishment, e-Tailers have websites. Although developing and maintaining may be quite expensive, the costs involve are trivial when compared to building and maintaining a physical store. More than this, while bricks-and-mortar businesses have to build branches to expand its market reach, one website is already accessible to anybody, no matter where in the world they are based. Furthermore, e-Commerce facilities have relatively low variable costs. One reason for this is that while physical stores have to duplicate inventories per branch, one website would be enough to meet demand. Many other fixed costs, too, are either eliminated or reduced.

The costs involved with order placement are also reduced through e-Commerce. A purely virtual store can minimize costs through cheaper and better targeted marketing campaigns. For a firm employing the click-and-bricks model, e-Tailers are able to transfer some costs to the consumers especially when it comes to communicating information regarding goods and services. Because clicks-and-bricks e-Tailers place information on the internet, prospective customers search for or come across this information are more likely to buy when he visits the firm’s physical store. Whether or not businesses are purely virtual, sales processes become more efficient through e-Commerce.

However, because of this change in the sales process, there may be employees who would have to be laid off. Some firms turning to e-Commerce would be less dependent on certain employees. Banks turning to online fund management, for example, would have less need for tellers. In this way, some stakeholders (employees, in this case) do not benefit from the change. Needless to say, firms adapting e-Commerce activities will have much more need for employees with technical abilities. The expertise needed would be higher and, therefore, salaries would be higher. This would improve on the general welfare of the employees of the company.
Some of the costs involving customer support can also be transferred to consumers. By allowing them have access to customer service over the internet, not only are businesses able to lower the costs of after-sales service but also improve the quality of service they provide.

Through e-Commerce, there is also reduction in volume when it comes to inventory of production inputs. Because firms are able to order and receive their inputs much faster, there would be a lesser need to stock up. Through this, even the suppliers benefit because they experience a higher turnover rate with their products. An even greater benefit of e-Commerce is that firms are easily able to gather more information regarding their customers through customization preferences. This allows firms to not only address the current needs of their customers but forecast demand as well.

Distribution costs are also significantly lowered through e-Commerce most especially for digital goods. Products including software, audio files, and e-books can easily be downloaded by customers through their own computers. Through this, shipping costs are not incurred. Here, those involved in producing physical goods containing digital goods (CDs of software, for example) will not benefit. However, the stakeholders of the firm that are involved in programming and creating these digital goods will benefit greatly because of the increased capacity of the firm to distribute their goods. Furthermore, when physical products are involved, the company expands the number of stakeholders because more and more importance is placed on couriers giving businesses the need to partner with a shipping or a logistics company.

In the end, it can truly be said that the advent of e-Commerce and the changes it brings to the business environment will not only benefit the consumers but the firm and its other stakeholders as well. Although some stakeholders may find less benefit (or no benefit at all), it could be agreed that e-Commerce generally creates more value than harm.

By: boredumb
Published: 03/18/08

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on-line business

@ 6:04 pm 03/18/08 by elizabethjeanallen

With the implementation of secure sites for payment, on-line shopping has jumped drasticly. If I need something, but not today, its easier to order it than to jump in my car and head to the mall. As this trend spreads there will be changes in the marketplace. That's unavoidable, but its the entry level jobs that are disappearing. I don't see that as a bad thing.

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