Modern Modes of Business: Electronic commerce and Business, Merits and Limitations of E-Commerce and E-Business

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Electronic Commerce

  • You know that commerce involves buying and selling and support services like

    • Transport

    • Insurance

    • Banking

    • Communication

  • E-Commerce refers to the process of conducting business with the help of electronic devices using the computer and interconnected telecommunication network.

  • It is also known as

    • On-line trading

    • On-line shopping

    • E-shopping

E-Commerce Takes Place between Companies

Image of the E-Commerce takes place between companies

E-Commerce Takes Place between Companies


To interactions between

  • A manufacturer and a supplier of materials and services

  • A manufacturer and a wholesaler

  • A wholesaler and a retailer


  • Business firms (manufacturer or retailers) at one end and its consumers on the other.

  • It enables a business firm to be in touch with its customers on round the clock basis.

  • It involves a wide range of marketing activities including

    • Promotion

    • Seeking orders

    • Intimating supply


  • Consumers at both ends dealing in good

  • No established market mechanism

Electronic Business

  • The terms ‘e-Commerce’ and ‘e-Business’ interchangeably.

  • The term e-Business is used in a broader sense.

  • E-Business is a wider term which includes e-commerce and other electronically conducted business functions like

    • Production

    • Accounting

    • Finance

    • Personnel

    • Administration

  • e-Business includes not only B2B, B2C, and C2C but also Intra-B Commerce

Merits of E-Commerce/E-Business

Image of the Merits and demerits of e-Commerce/e-Business

Merits and Demerits of E-Commerce/E-Business

Wider Accessibility

The help of a well-developed computerized networking system, the business units can operate at the national as well as the global level.

Improved Customers Service

  • E-Commerce enables a company to be open for business whenever a customer needs it.

  • Up-to-date information about products can be offered on the web

Shortened Transaction Time

E-Business transaction takes much less time as compared to the normal process of buying and selling

Cost Saving and Low Prices

  • There is a substantial cost saving in business transactions

  • The number of employees required is also limited

  • Helps in substantial savings in operational costs and offers products at lower prices to customers.

Enlarge Business and Profits

  • The companies are able to approach a larger number and variety of customers and gain exposure to new markets.

  • Earn more profits

Convenience to Customers

  • The customers also stand to gain by e-Commerce in various ways.

  • Large number of suppliers

  • Wider choice

  • Acquire quality products and services at competitive prices.

Limitations of E-Business/E-Commerce

Lacks personal touch

  • It lacks personal touch with customers

  • It unsuitable for items such as clothes, jewelry

Cannot actually try on the goods

  • The web can provide a good picture

  • Detailed description of the product

  • The customer cannot actually see, feel or try on the goods

Takes long time and be delayed

  • The transaction can be finalized quickly

  • Physical delivery of goods often takes long time and be delayed

  • This leads to a lot of inconvenience for the customers.

Difficult to Return of faulty goods

To return of faulty goods bought on-line may often be more problematic and a time-consuming exercise.

Shopping through Internet is not the same experience

  • Shopping through Internet is not the same experience as a shopping expedition with family or friends.

  • It is not suitable for non-routine buying

Number of risks

  • The risks relate to

  • The transaction (default in order taking, default in delivery, default in payment)

  • Data storage and transmission

  • Privacy

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