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What is E-commerce? Advantages or Disadvantages of E-commerce

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E-commerce or Electronic commerce is the process of buying and selling of products and services over the electronic system such as the internet and other computer networks. It also includes the entire online process of developing marketing, selling, delivering, servicing, and paying for products and services.


According to E: Turban and others, “E-commerce is the process of buying and selling (or exchanging) of products, services, and information via computer network Including the internet.

” According to M. Greenstein and T. M. Feinman, E-commerce denotes the use of electronic transmission media (telecommunication) to engage In the exchange of products and services requiring transportation either physically or digitally, from location to location.”

In nutshell, E-commerce Is the process of buying and selling goods and services on the internet, especially through the world wide web.


A wide range of activities are included in E-commerce, namely the following

  1. Establishment of business-to-business relationships.
  2. Electronic distribution of products and services
  3. Exchange of Information.
  4. Electronic payment (using electronic fund transfer, credit cards, electronic cheques, electronic cash, etc.
  5. Pre and post-sales support.
  6. Customer Relationship Management (CRM).
  7. Joining together many companies which pool their competencies so that they can offer products or services that would be beyond the capacity of any individual company.

Now people, having a personal computer and having access to the internet, can buy and sell goods through electronic media. They can do business online. There is no need to visit shops or malls, called, brick and mortar. All, a customer has to do is to go to the website of the seller, view the goods on sale and their price (see its photo too), and place an order for it. The seller also has not to keep his store open till late at night to attract customers, he can display his goods on his website and get orders. Internet technology is shifting the firm’s relationship with its customers from “face to face” to “screen to screen” interaction.

E-commerce is now used everywhere in our life, E-commerce activities include credit/debit card transactions, travel reservations, and fund transfers. electronic banking and insurance, fundraising, online trading in shares and commodities, and whatnot.

The potential for E-commerce in India is enormous, this is because of the rapid growth of the number of internet users. E-commerce in India is expected to touch US dollars 35 billion by the year 2019.

Role of the internet in E-commerce. E-commerce is entirely based on the internet. The seller displays his merchandise or services on his website on the internet and the buyer places an order for them through the internet.


One can find the use of E-commerce everywhere, may it be financial services (like banking), travel (booking of air or railway tickets or retail sales, it is because of the advantages of E-commerce, which are :

1. Economy.

To run an E-commerce business one does not need a shop or establishment in a busy marketplace; there is no need to employ salesmen to attend to customers, E-commerce is all done on computers, all that is needed is a well-designed website.

2. Global reach

A website, over which goods and services are displayed by sellers, can be seen by prospective customers through the Internet on their computers in any part of the world, at any time that is at all 24 hours of the day and seven days a week.

3. Cheaper method of reaching customers

It is a relatively cheaper method of reaching customers over the internet than opening a shop.

4. Lower per transaction cost

Doing business on the internet is quite more cost-effective than when a customer personally goes to the counter of the seller. For example, when a customer goes to the counter of an airline to book a ticket the Transaction cost may come to over RS 400 rupees, but if the same transaction is done through the internet (c-ticket) the cost may be just RS 50.

5. Easy interaction with the outside world

In the commercial world of today, every enterprise is part of the connected economy. A business enterprise has to interact with business partners like distributors, retailers, end customers, government agencies, etc. The internet provides an effective and less expensive method to reach these parties. Tools like supply chain management and customer relationship management can be deployed over the internet resulting in more efficiency in all respects.

6. Reduction in intermediaries

Through the internet, manufacturers can directly reach final consumers thus eliminating, the need and profit margins of intermediaries like distributors, wholesalers, and retailers. The consumers, thereby, get the goods or services at cheaper rates,

7. Provides more choice to customers

E-commerce helps customers in purchasing goods of their choice at competitive prices. Web-based customer service provides a wider choice of goods, the customer can compare prices and quality of the goods over the Internet, sitting at home He has not to travel to markets for shopping, he can place an order for goods sitting at home. The goods are delivered to his doorsteps, he has not to carry bags full of purchases. The customer cannot be influenced by salesmen attending to him In a shop. If the customer is not satisfied with the purchased goods, he is given the right to return them and get back the price.

8. Knowledge of consumer behaviuor

Firms dealing with customers over the internet can observe and track individual consumer behaviuor through a ‘website he has visited (seen). It is easy to study what the consumer preferences are, his shopping ist, time he spends on a particular website, how much he spends, his repeated purchases behaviour. Thorough knowledge of consumer behaviour, manufacturers can develop new products, and make offers that attract customers.

9. Increased Profits

With E-commerce, companies can reach more and different kinds of customers and gain exposure to new markets, Because internet provides all the three aspects L.e., publicity, sales, and distribution channel. E-commerce companies can, therefore, influence their customers in accepting new products and services.


Following are the limitations of E-commerce:-

1. Some businesses are not suitable for E-commerce

Some businesses never lend themselves to electronic commerce, Perishable goods like fruits and vegetables or high-cost items (such as jewelry or antiques are not saleable by the internet.

2. Difficult to estimate investment required and profitability of the business

In E-business it is difficult to estimate the cost and benefits because technologies are changing rapidly.

3. Difficult to find competent staff

Many firms have faced difficulty in finding the competent staff to handle E-business.

4. Security fear of customers

Customers are afraid of doing online business. they do not want to give their credit card number via the internet. For millions of cyber-customers, the fear of credit card misuse is real.

While doing business on the internet there is always a security risk, there is the possibility of the organizations data or their customers data being intercepted by hackers.

5. High start-up costs

Starting E-commerce business involves high costs. Large amounts of money are required to get a connection to the Internet. Costs have also to be incurred in acquiring sophisticated computers, moderns, routers, etc. Expenses have to be incurred on setting up the system, all this makes starting E-commerce business a costly affair.

6. Training and maintenance

Organisations require trained and qualified staff to initiate, update and maintain the Internet facilities and web pages. Some of these problems can, however, be solved by outsourcing some of these functions and services.

7. Lack of Contact with customers

In E-commerce, the seller and the buyer meet only through the internet with the result that the customer does not feel that he has received personal attention. Maintenance of personal cordial relations is necessary for all businesses including E-commerce.

8. Some businesses may never lend themselves to E-commerce

Many items like perishable food, high-cost items líke jewelry, and antiques cannot be inspected personally by prospective customers when buying through the internet. Customers may not like to place orders for certain items unless they physically see, touch, or feel them.

9. Problems when doing international business

Doing E-commerce internationally poses a number of problems regarding currency conversion, tariffs, import and export restrictions, and different business customs and laws. These problems make international E-commerce difficult.

10. Exposure of business secrecy

Availability of product details, price list, and other information about one’s business through its website exposes its business secrets to competitors.

11. Legal hassles

Many legal problems arise in the case of E-commerce because laws about it are not clear. There are no clear-cut rules about copyright clearance centers for E-commerce transactions etc.

12. Problem of meeting the orders

There are complaints about delays in sending the ordered goods, sending wrong goods, and websites crashing under pressure, especially in heavy shopping seasons like Pooja, Christmas, and Diwali. Many times, websites break down or slow down due to heavy load.

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