Benefits And Limitations

Benefits And Limitations

Few innovations in human history encompass as many potential benefits as EC does. The global nature of the technology, low cost, opportunity to reach hundreds of millions of people (projected within 10 years), interactive nature, variety of possibilities, and resourcefulness and rapid growth of the supporting infrastructures (especially the Web) result in many potential benefits to organizations, individuals, and society. These benefits are just starting to materialize, but they will increase significantly as EC expands.

The Benefits of EC

· The new markets could be accessed through the online and extending the service offerings to customers globally.

· Internet shrinks the globe and broaden current geographical parameters to operate globally

· Marketing and promotional campaigns can be done globally at the reduced cost.

· Retaining the customer and the customer services could be improved drastically.

· Strengthen relationships with customers and suppliers ?

· Streamline business processes and administrative functions

· No added sales staff

· A catalogue which is quickly and easily updateable. This means that when prices or stocks are changed, you don’t have to have hundreds or thousands of obsolete catalogues lying around. You don’t have to wait for the printer to deliver the catalogue before the new prices can come into effect.

· The facility to advertise daily, weekly or monthly ‘specials’ and sales, or any special discounts – and they can be changed within minutes, when and if necessary.

· You can also add a marketing message which highlights your strengths, such as the range and quality of your products or services – or anything else you want to tell your customers.

Benefits to Organizations

· Electronic commerce expands the marketplace to national and international markets. With minimal capital outlay, a company can easily and quickly locate more customers, the best suppliers, and the most suitable business partners worldwide.

· Electronic commerce decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 percent.

· Ability for creating highly specialized businesses. For example, dog toys which can be purchased only in pet shops or department and discount stores in the physical world, are sold now in a specialized

· Electronic commerce allows reduced inventories and overhead by facilitating-type supply chain management. In a pull-type system the process starts from customer orders and uses just-in-time manufacturing.

· Electronic commerce reduces the time between the outlay of capital and the receipt of products and services.

· Electronic commerce initiates business processes reengineering projects. By changing processes, productivity of salespeople, knowledge workers, and administrators can increase by 100 percent or more.

· Electronic commerce lowers telecommunications cost-the Internet is much cheaper than VANs.

· Other benefits include improved image, improved customer service, newfound business partners, simplified processes, compressed cycle and delivery time, increased productivity, eliminating paper, expediting access to information, reduced transportation costs, and increased flexibility.

Benefits to Consumers

· Electronic commerce enables customers to shop or do other transactions 24 hours a day, all year round, from almost any location.

· Electronic commerce provides customers with more choices; they can select. 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, EC allows quick delivery.

· Customers can receive relevant and detailed information in seconds, rather than days or weeks.

· Electronic commerce makes it possible to participate in virtual auctions.

· Electronic commerce allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.

· Electronic commerce facilitates competition, which results in substantial discounts.

Benefits 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 lower 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, for example, can reach patients in rural areas.

Limitations of E-Commerce

The Limitations of EC

The limitations of EC can be grouped into technical and non-technical categories.

Technical Limitations of EC

· There is a lack of system security, reliability, standards, and some communication protocols.

· Insufficient telecommunication bandwidth.

· The software development tools are still evolving and changing rapidly.

· It is difficult to integrate the Internet and EC software with some existing applications and databases.

· Vendors may need special Web servers and other infrastructures, in addition to the network servers.

· Some EC software might not fit some hardware, or may be incompatible with some operating systems or other components.

Non-technical Limitations

Of the many non-technical limitations that slow the spread of EC, the following are the major ones.

· Cost and justification: The cost of developing EC in-house can be very high, and mistakes due to lack of experience may result in delays. There are many opportunities for outsourcing, but where and how to do it is not a simple issue. Furthermore, to justify the system one must deal with some intangible benefits (such as improved customer service and the value of advertisement), which are difficult to quantify.

· Security and privacy: These issues are especially important in the B2C area, especially security issues which are perceived to be more serious than they really are when appropriate encryption is used. Privacy measures are constantly improved. Yet, the customers perceive these issues as very important, and, the EC industry has a very long and difficult task of convincing customers that online transactions and privacy are, in fact, very secure.

· Lack of trust and user resistance: Customers do not trust an unknown faceless seller (sometimes they do not trust even known ones), paperless transactions, and electronic money. So switching from physical to virtual stores may be difficult.

· Other limiting factor:. Lack of touch and feel online. Some customers like to touch items such as clothes and like to know exactly what they are buying. • Many legal issues are as yet unresolved, and government regulations and standards are not refined enough for many circumstances.

· Electronic commerce, as a discipline, is still evolving and changing rapidly. Many people are looking for a stable area before they enter into it.

· There are not enough support services. For example, copyright clearance centres for EC transactions do not exist, and high-quality evaluators, or qualified EC tax experts, are rare. • In most applications there are not yet enough sellers and buyers for profitable EC operations.

· Electronic commerce could result in a breakdown of human relationships.

· Accessibility to the Internet is still expensive and/or inconvenient for many potential customers. (With Web TV, cell telephone access, kiosks, and constant media attention, the critical mass will eventually develop.) Despite these limitations, rapid progress in EC is taking place. For example, the number of people in the United States who buy and sell stocks electronically increased from 300,000 at the beginning of 1996 to about 10 million in fall 1999. As experience accumulates and technology improves, the ratio of EC benefits to costs will increase, resulting in a greater rate of EC adoption. The potential benefits may not be convincing enough reasons to start EC activities