Monday, July 9, 2012

Advantages of Electronic Commerce

Firms are interested in electronic commerce because, quite simply, it can help increase
profits. All the advantages of electronic commerce for businesses can be summarized in one
statement: Electronic commerce can increase sales and decrease costs. Advertising done
well on the Web can get even a small firm’s promotional message out to potential customers
in every country in the world. A firm can use electronic commerce to reach small groups of
customers that are geographically scattered. The Web is particularly useful in creating virtual
communities that become ideal target markets for specific types of products or services.
A virtual community is a gathering of people who share a common interest, but instead of this
gathering occurring in the physical world, it takes place on the Internet
Just as electronic commerce increases sales opportunities for the seller, it increases purchasing
opportunities for the buyer. Businesses can use electronic commerce to identify
new suppliers and business partners. Negotiating price and delivery terms is easier in electronic
commerce because the Internet can help companies efficiently obtain competitive
bid information. Electronic commerce increases the speed and accuracy with which businesses
can exchange information, which reduces costs on both sides of transactions. Many
companies are reducing their costs of handling sales inquiries, providing price quotes, and
determining product availability by using electronic commerce in their sales support and
order-taking processes.
Electronic commerce provides buyers with a wider range of choices than traditional commerce
because buyers can consider many different products and services from a wider variety
of sellers. This wide variety is available for consumers to evaluate 24 hours a day, every day.
Some buyers prefer a great deal of information in deciding on a purchase; others prefer less.
Electronic commerce provides buyers with an easy way to customize the level of detail in the
information they obtain about a prospective purchase. Instead of waiting days for the mail to
bring a catalog or product specification sheet, or even minutes for a fax transmission, buyers
can have instant access to detailed information on the Web.
Some digital products, such as software, music and video files, or images, can even be delivered
through the Internet, which reduces the time buyers must wait to begin enjoying their
purchases. The ability to deliver digital products online is not just a cost-reduction opportunity.
It can increase sales, too. Intuit sells its TurboTax income tax preparation software online and
lets customers download the software immediately if they wish. Intuit sells a considerable
amount of TurboTax software late in the evening on April 14 each year.
The benefits of electronic commerce extend to the general welfare of society. Electronic
payments of tax refunds, public retirement, and welfare support cost less to issue and
arrive securely and quickly when transmitted over the Internet. Furthermore, electronic
payments can be easier to audit and monitor than payments made by check, providing protection
against fraud and theft losses. To the extent that electronic commerce enables people to telecommute, everyone benefits from the reduction in commuter-caused traffic and pollution. Electronic commerce can also make products and services available in remote areas. For example, distance education is making it possible for people to learn skills and earn degrees no matter where they live or which hours they have available for study.

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