Evolution of E-Commerce
Vast Evolving Era
Technology advancement has enabled small businesses to grow and compete favourably in the market with big firms. The rapidly evolving technology, especially in the field of communication has enabled sellers and buyers to transact faster and not necessarily from the same geographical location. E-commerce is the process of transacting business by selling and buying goods and services or transmitting funds over the internet. E-commerce mainly entails mobile commerce, electronic funds transfer, and online business transactions. Today, the use of technology in business transactions is a major determinant of a business’ success. This article focusses on the evolution of e-commerce technology, increase in usage, benefits and disadvantages, how it can negatively affect a business, its effects to the economy, and finally e-commerce fraud and protection.
Over the past decade, technology has greatly evolved both in technological hardware and the internet. This evolution has had a direct impact on e-commerce, where many businesses are transacting part or all transactions through the internet. E-commerce has evolved to large online marketplaces where a buyer can buy almost everything he/she needs at the comfort of his/her home, provided there is internet connectivity. Sellers are able to sell their goods to a wider market through internet sites. Companies like Amazon have grown to giant online retailers who are able to sell their products across the world[1]. Online shopping has been made easier to use and faster to transact through the improved smartphones and computers. Customers are now able to install shopping apps on their smartphones. They can compare different items from different sellers faster and more conveniently. Advertising has also been made easier by social media platforms. Nowadays, companies can post their adverts through Google ads and Facebook posts. In the near future, one may predict that more than seventy percent of the business transactions will be done on the internet since the number of businesses adopting the use of technology is growing rapidly. For a business to remain competitive in the market, it has to move with the emerging trends in technology and communication.
The evolution of e-commerce technology has been advantageous to businesses, and in particular small businesses. First, businesses enjoy a wider market since e-commerce is not geographically limited. A seller is able to transact business with any customer from anywhere in the world. Also, goods and services can easily be delivered to the customer as a result of improved transport systems. Customers find it easy to search for goods and services they require from the internet. Since the customer does not have to travel, s/he saves on transport costs, which makes the purchase cheaper and affordable. Second, e-commerce has greatly reduced the business expenditures because a business does not require a warehouse or a physical stall. A seller can transact business from home or any other place, thus saving on rent. Also, the seller does not need to employ many people because the process is simplified and can be handled by a few people, therefore saving on salaries and wages. In addition, the business saves on advertisement and publicity costs since most of the adverts are done through social media platforms and the internet which is fairly cheaper and more effective. Most importantly, e-commerce helps reduce the costs incurred on middlemen to distribute goods and services. These middlemen also make the prices of the products to go higher. Since the seller has a direct link to the consumers, the business is able to maintain a good reputation in the market. The savings can be used to expand the business or to increase the variety of goods and services. Finally, e-commerce has enabled business transactions to be done at any time of the day or night, 24/7. Unlike in the past where many businesses only operated during the day, businesses which has e-commerce technology are able to serve their customers at any time since the transactions can be carried out from any place.
The disadvantages associated with e-commerce technology include the inability of the consumer to verify the quality of products before buying, which increases the chances of complaints or goods being returned. Some customers may avoid a business that uses e-commerce for fear of buying substandard products. Also, little or no direct contact between the consumer and the seller may make it hard to maintain customer loyalty. E-commerce technology may have some negative effects on a business. First, the business is likely to suffer from price wars where its products are competing with other firms with competitive offers. For example, large-scale retailers sell their products at a lower price than a small-scale retailer. The small-scale retailer may not have as much sale as expected given that customers have the liberty to compare the prices from different firms, which cause losses to a small firm. Also, the business loses its privacy in terms of their price structures and customer relation. Competing firms are able to verify the prices offered by a business and thus may decide to lower their prices to be more competitive, leading to an unethical competition. Competing firms may also copy each other’s after sale services and this reduced competition. Moreover, a business is at risk of failure in case of a mechanical failure for instance malfunctioning of the computers used to serve the customers.
E-commerce may affect the economy in several ways. First, it increases the GDP of a country as a result of increased business activities[2]. Many people are able to transact faster and in a wider market thus increasing the income earned in a country. Also, goods and services are easily made available to many people thus enhancing a good flow of cash in the economy. On the contrary, e-commerce is likely to cause unemployment as businesses will require few employees and this and result in increased dependency ratio on the working population[3].
When businesses are transacted over the internet, chances of fraud increase. It becomes difficult to identify the genuineness of the advertised goods on social media. In some cases, the customers end up being conned by people who pretend to run online businesses. Also, since the customers give their personal details over the internet, the system can be hacked by pranksters who can use those details to conduct criminal activities. However, efforts have been made to make sure that online transactions are safe. First, policies have been enacted that require the seller to encrypt all personal information given by the clients immediately after concluding the transactions. Also, customers and sellers are encouraged to use secure e-commerce platforms which are fraud-free and preferably a common online platform. Customers should avoid sites they are not sure about since they may end up being conned.
In summary, e-commerce has improved the business environment by enabling faster contact and transaction between the buyers and the sellers across the world. Also, small businesses have benefitted from the little expenditures incurred in running online businesses. In the future, more than seventy percent of the businesses will be transacted online.
Bibliography
T, Thanasankit. E-Commerce and Cultural Values. (London: IDEA GROUP PUBLISHING, 2003), 10, 22,119.
[1] T, Thanasankit, E-commerce and cultural values (London: IDEA GROUP PUBLISHING, 2003), 10.
[2] Ibid,22
[3] Ibid,119
