In the past several years, the internet has done several things that have helped change our lives and the way we live our day-to-day life. It has helped us keep in contact and loved ones from near and far, it has given us the ability to get news faster so we always know what is new in the world, it has even given us the ability to know what the weather is in the present and in the future. And in the past 10 plus years, it has even changed the way we shop and make purchases, or the commerce. The internet gave people the opportunity to buy things without having to leave their home, and no matter how far away from them it may have been. It also gave companies the opportunity to expand their business by making transactions with people all over the world. From the start, it was a huge success and people and companies were loving the idea of buying and selling through the internet. The process of making transactions electronically through the internet was later called e-commerce. In this paper, I’m going to be talking about e-commerce, and the advantages and disadvantages it has from the consumer’s and the owner’s perspective. Today, I’m going to be doing a compare and contrast of the advantages and disadvantages of e-commerce, and how it stacks up against a physical store.
“E-commerce, in short is the buying and selling of goods, or any transaction for that matter, electronically, mostly over the internet. These transactions can be business to business, business to consumer, or even consumer to business” (TechTarget).
Almost, if not all businesses that run through e-commerce, are very similar. Any consumer can make a purchase on whatever product he or she may be looking for from the comfort of their house, even their bed. There are several steps involved that goes into a transaction made electronically. The first step that goes into an e-commerce transaction is that the consumer chooses one or more products to purchase off the merchant’s website. Secondly, through the checkout process, the consumer checks their cart to make sure the products they chose are correct. During this step, the consumer also selects their preferred shipping and delivery methods. Once this is done, the consumer submits the order. In the third step, the customer is sent to a payment gateway that prompts the consumer to enter their credit card information or any other sort of payment method. Once the information is entered, the gateway encrypts the data and sends it to the acquirer. The transaction must be verified after that through networks such as Visa Net or the Mastercard system. The bank then responds with the approval or denial of the transaction. If approved, the bank then sends an authorization code and the gateway displays that code to the consumer and triggers the receipt to process. Keep in mind, that all of this happens in seconds after you submit the order. Once you have received the receipt for the transaction, the product is shipped to the customer. At a set time, the gateway processes the specified batch for the day. Then, the acquirer routes the transaction through the settlement system against the card-issuing bank. Once sent to the bank, it is then routed back through the settlement system with their fee deducted. The acquirer then deposits the transaction amount into the merchant’s bank account. And then lastly, the consumer’s cardholder bills the consumer for the transaction amount who then pays the bill (MerchantProtocol). The process of an e-commerce transaction is much more complex than an individual may think. It seems as if there is no better way to shop than on the internet. People today have this laziness about them that make making purchases online that much easier to never leave the comfort of their bed. And although it seems as if e-commerce is the best way to shop, like everything, it still as its disadvantages. I’m going to take some time to talk about its advantages, as well as its disadvantages.
There are many advantages that come with e-commerce. The first of many is the faster buying/selling procedure, as well as the ease of finding a product you’re looking for. Secondly, there’s the ability to buy products 24/7 due to there not being a physical store to close, which also benefits the business having the potential 24/7 income. Another advantage is from a business standpoint is that there is a greater reach for customers. There are theoretically no geographic limitations. There are also lower operation costs and better quality of services. There’s no need for physical company set-ups, and it’s easy to start and manage a business. Another advantage is that customers can easily select products from different providers without moving around physically (eSalesTrack). There are more advantages the go along with e-commerce, but these that I’ve talked about are a few of the most important advantages. Now I’m going to be talking about the disadvantages.
For starters, what could be the biggest disadvantage to e-commerce is if the website crashes. When the website crashes from the businesses standpoint, there is no income coming in because no one can shop on the website if the website is crashed. To ensure this doesn’t happen, businesses need to make sure that they’re hosting their website on the right platform. Another disadvantage is that the consumer can’t try on the product they’re wanting to purchase. The benefit of having a physical store is that a customer is given the privilege of trying whatever it is they’re wanting to buy at the store, and that is where many customers fall in love with that product. So, a customer not being able to try something on can lead them to not even purchasing the product in fear of not actually loving it, or they may buy the product all to find out it doesn’t look good on them, or it doesn’t fit right, or whatever the case may be. They’ll end up wanting to send it back, demanding a refund. This disadvantage will slowly begin to fade though with new technology coming out that allows you to try on the product through taking a photo on your phone, called Augmented Reality. The third disadvantage of e-commerce is the fact that there is so much competition. A way around this for a business just starting out is to try and target a different audience than your competitors. A new business will have to find new and unique ways to reach out to potential customers. Another disadvantage to having an e-commerce business is that customers can become impatient. A perk of having a physical store is that there is always someone there to take any questions and have answers for the customer right away. The disadvantage there with an e-commerce business is that a customer may ask a question and expect an answer shortly afterwards, but if there’s no one online to answer that question for them, they may just become impatient and go shop elsewhere. A way to avoid this could be to just make sure you’re periodically checking to see if there’s any customers that have any questions. Another way to avoid this is to hire customer service representatives that get paid to sit there and answer any questions customers may have, which ensures a quick response time and a happy customer. The next disadvantage with having an e-commerce business is that you’ll have to ship your products. An advantage with having a physical store is that customers can take the product home immediately after the purchase. This is one of the only reasons that customers may sometimes prefer going to the store to buy the product they’re wanting versus ordering it online (Oberlo). One of the last of the disadvantages is that it is still a new thing in world of retail. Although it is growing in the world, the market share still belongs to physical retail. I believe that the e-commerce side of retail will continue to grow in the long run, but there are still going to be people that don’t enjoy paying the shipping and handling fee, and people that just would rather go to the physical store themselves and pick out what product they’re looking for (Oberlo).
According to ShopKeep, one of the biggest disadvantages of e-commerce from a business perspective is that potential customers could still be worried about giving their private information out on something that can easily be hacked into and stolen. This is a big deal in the United States. Identity theft is one of the fastest growing crimes in which a criminal obtains key pieces of personal information such as name, social insurance number, credit card number or other identifying information to carry out fraudulent activities, according to iCommerceCentral. This causes a lot of trust issues within the people of the U.S. There are many victims of identity theft and I believe that the number of victims are only going to continue to grow, unless someone makes a huge change in the security of the e-commerce world. What could be one of the worst things about identity theft is that according to websitemarketingplan.com, fewer than 1 in 700 identity crimes lead to a conviction. Also, recent estimates go as high as $56 Billion in identity theft losses. A national publication reported that 60 percent of consumers are unwilling to shop online due to identity theft concerns (Websitemarketingplan). This is hurting the e-commerce businesses greatly, and there’s virtually no way to stop it other than trying to put together a better security, but these hackers may learn how to hack through that new security after a certain period of time. The fight against e-commerce hacking and identity theft will be a back and forth war where hopefully the businesses will eventually come out on top when a security system is made that is impossible to be hacked into. For instance, I was actually caught in a scam that was made through a purchase very recently. I was told that to buy this certain product, all I would have to do is pay the shipping and handling. The product seeming like a great purchase for only $10, I figured I had to give it a shot. So, I paid for the product and received it about a week later, and it was exactly what I thought I had paid for, but when I looked at my bank statement, I saw two separate transactions from this company I had purchased this product from. One of the transactions recorded was the $10 like I had been told, and the other was a $70 charge. Confused, I tried to figure out if I had accidentally purchased this product in a high quantity. It was then I realized that the purchase I thought I made was way too good to be true. While the business told me the purchase was only going to be $10, they tried to charge me an extra $70, which was probably the actual price of the product I had purchased. As you can see, there are many advantages and disadvantages that come with running an e-commerce business and with shopping online. The advantages outweigh the disadvantages in my opinion, and it is only a matter of time where there will be hardly any disadvantages that come along with e-commerce.
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