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What is E-Commerce ?

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Electronic commerce (e-commerce, or EC)
describes the buying, selling, and exchanging
of products, services, and information via
computer networks, primarily the Internet.
The term E-Commerce also covers
purchasing mechanisms via Internet for B2B.
(Business to Business).

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A client who purchases on the Internet is
called a cyberconsumer. E-Commerce is not
only limited to online sales, but also covers:

 Preparation of estimates online.


 Consulting of users.
 Provision of an electronic catalog.
 Access plan to point of sales.

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 Real-time management of product
availability (stock)
 Online payment
 Delivery tracking
 After-sales service

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In certain cases, electronic commerce makes
it possible to highly customize products, in
particular when the electronic commerce site
is linked with the production system of the
enterprise (e.g. business cards, customized
items such as T-shirts, cups, caps, etc.)

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Most electronic commerce sites are online
stores which have at least the following
elements at the front-office level:

 An online electronic catalog listing all


products for sale, their price and sometimes
their availability (product in stock or number
of days before delivery)

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 A search engine which makes it possible to
easily locate a product via search criteria
(brand, price range, key word, etc.)
 A virtual caddy system (sometimes called
virtual cart): This is the heart of the e-
commerce system. The virtual caddy makes it
possible to trace the purchases of the client
along the way and modify the quantities for
each reference.
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 Secure online payment (accounting) is often
ensured by a trusted third party (a bank) via a
secure transaction.
 An order tracking system, which allows
tracking of order processing and sometimes
provides information on pickup of the
package by the shipper.

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A back office system allows the online dealer
to organize its offerings online, modify prices,
add or remove product references as well as
manage and handle client orders.

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Back office operations include processes used
by employees that help keep the business
running. Accounting, finance, inventory,
order fulfillment, distribution, and shipping
are examples of back office systems. Back
office systems can be manual or automated.

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Front office systems are focused on
customers and refer to activities such as
sales, marketing and customer service.
Effective integration of back office systems
with e-commerce improves coordination with
the front office systems resulting in better
customer service and reduced duplication of
effort by staff.

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THE DIFFERENCE BETWEEN E-COMMERCE
AND E-BUSINESS

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Some argue that e-commerce encompasses
the entire world of electronically based
organizational activities that support a firm’s
market exchanges—including a firm’s entire
information system’s infrastructure.

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Others argue, on the other hand, that e-
business encompasses the entire world of
internal and external electronically based
activities, including e-commerce.

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THE DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS

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E-commerce primarily involves transactions
that cross firm boundaries. E-business
primarily involves the application of digital
technologies to business processes within the
firm.

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we will use the term e-business to refer
primarily to the digital enablement of
transactions and processes within a firm,
involving information systems under the
control of the firm.

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For the most part, e-business does not include
commercial transactions involving an
exchange of value across organizational
boundaries. For example, a company’s online
inventory control mechanisms are a
component of e-business, but such internal
processes do not directly generate revenue
for the firm from outside businesses or
consumers, as e-commerce, by definition,
does.
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It is true, however, that a firm’s e-business
infrastructure provides support for online e-
commerce exchanges; the same
infrastructure and skill sets are involved in
both e-business and e-commerce.
Ecommerce and e-business systems blur
together at the business firm boundary, at
the point where internal business systems
link up with suppliers or customers.
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For instance, E-business applications turn into
e-commerce precisely when an exchange of
value occurs.

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Prior to the development of e-commerce, the
process of marketing and selling goods was a
mass-marketing and sales force-driven
process. Consumers were viewed as passive
targets of advertising “campaigns” and
branding blitzes intended to influence their
long-term product perceptions and
immediate purchasing behavior.

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Selling was conducted in well-insulated
“channels.” Consumers were considered to be
trapped by geographical and social
boundaries, unable to search widely for the
best price and quality. Information about
prices, costs, and fees could be hidden from
the consumer, creating profitable
“information asymmetries” for the selling
firm.
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Information asymmetry refers to any
disparity in relevant market information
among parties in a transaction. It was so
expensive to change national or regional
prices in traditional retailing (what are called
menu costs) that “one national price” was the
norm, and dynamic pricing to the
marketplace— changing prices in real time—
was unheard of.
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E-commerce has challenged much of this
traditional business thinking. Table 1.2 lists
seven unique features of e-commerce
technology that both challenge traditional
business thinking and explain why we have so
much interest in e-commerce.

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Ubiquity
In traditional commerce, a marketplace is a
physical place you visit in order to transact.
For example, television and radio typically
motivate the consumer to go someplace to
make a purchase. E-commerce, in contrast, is
characterized by its ubiquity: it is available
just about everywhere, at all times.

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It liberates the market from being restricted
to a physical space and makes it possible to
shop from your desktop, at home, at work, or
even from your car, using mobile commerce.
The result is called a market space— a
marketplace extended beyond traditional
boundaries and removed from a temporal
and geographic location.

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From a consumer point of view, ubiquity
reduces transaction costs—the costs of
participating in a market. To transact, it is no
longer necessary that you spend time and
money traveling to a market. At a broader
level, the ubiquity of e-commerce lowers the
cognitive energy required to transact in a
market space.

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Cognitive energy refers to the mental effort
required to complete a task. Humans
generally seek to reduce cognitive energy
outlays. When given a choice, humans will
choose the path requiring the least effort—
the most convenient path.

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Global Reach
E-commerce technology permits commercial
transactions to cross cultural and national
boundaries far more conveniently and cost-
effectively than is true in traditional
commerce. As a result, the potential market
size for e-commerce merchants is roughly
equal to the size of the world’s online
population.
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In contrast, most traditional commerce is
local or regional—it involves local merchants
or national merchants with local outlets.
Television and radio stations, and
newspapers, for instance, are primarily local
and regional institutions with limited but
powerful national networks that can attract a
national audience.

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In contrast to e-commerce technology, these
older commerce technologies do not easily
cross national boundaries to a global
audience.

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Universal Standards
One strikingly unusual feature of e-
commerce technologies is that the technical
standards of the Internet, and therefore the
technical standards for conducting e-
commerce, are universal standards—they are
shared by all nations around the world.

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In contrast, most traditional commerce
technologies differ from one nation to the
next. For instance, television and radio
standards differ around the world, as does
cell telephone technology. The universal
technical standards of the Internet and e-
commerce greatly lower market entry costs—
the cost merchants must pay just to bring
their goods to market.
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Richness
Information richness refers to the complexity
and content of a message. Traditional
markets, national sales forces, and small
retail stores have great richness: they are able
to provide personal, face-to-face service
using aural and visual cues when making a
sale.

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The richness of traditional markets makes
them a powerful selling or commercial
environment. Prior to the development of the
Web, there was a trade-off between richness
and reach: the larger the audience reached,
the less rich the message.

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Interactivity
Unlike any of the commercial technologies of
the twentieth century, with the possible
exception of the telephone, e-commerce
technologies allow for interactivity, meaning
they enable two-way communication
between merchant and consumer.

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Television, for instance, cannot ask viewers
any questions or enter into conversations
with them, and it cannot request that
customer information be entered into a form.
In contrast, all of these activities are possible
on an e-commerce Web site. Interactivity
allows an online merchant to engage a
consumer in ways similar to a face-to-face
experience, but on a much more massive,
global scale.
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THE CHANGING TRADE-OFF BETWEEN RICHNESS AND REACH

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E-commerce technologies have changed the
traditional tradeoff between richness and
reach. The Internet and the Web can deliver,
to an audience of millions, “rich” marketing
messages with text, video, and audio, in a
way not possible with traditional commerce
technologies such as radio, television, or
magazines.

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Information Density
The Internet and the Web vastly increase
information density—the total amount and
quality of information available to all market
participants, consumers, and merchants
alike. E-commerce technologies reduce
information collection, storage , processing,
and communication costs.

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At the same time, these technologies
increase greatly the currency, accuracy, and
timeliness of information—making
information more useful and important than
ever. As a result, information becomes more
plentiful, less expensive, and of higher
quality.

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A number of business consequences result
from the growth in information density. In e-
commerce markets, prices and costs become
more transparent. Price transparency refers to
the ease with which consumers can find out
the variety of prices in a market; cost
transparency refers to the ability of
consumers to discover the actual costs
merchants pay for products.
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Online merchants can discover much more
about consumers; this allows merchants to
segment the market into groups willing to
pay different prices and permits them to
engage in price discrimination—selling the
same goods, or nearly the same goods, to
different targeted groups at different prices.

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For instance, an online merchant can discover
a consumer’s avid interest in expensive exotic
vacations, and then pitch expensive exotic
vacation plans to that consumer at a
premium price, knowing this person is willing
to pay extra for such a vacation.

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At the same time, the online merchant can
pitch the same vacation plan at a lower price
to more price-sensitive consumers.
Merchants also have enhanced abilities to
differentiate their products in terms of cost,
brand, and quality.

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Personalization/Customization
E-commerce technologies permit
personalization: merchants can target their
marketing messages to specific individuals by
adjusting the message to a person’s name,
interests, and past purchases. The technology
also permits customization— changing the
delivered product or service based on a user’s
preferences or prior behavior.
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Given the interactive nature of e-commerce
technology, much information about the
consumer can be gathered in the
marketplace at the moment of purchase.
With the increase in information density, a
great deal of information about the
consumer’s past purchases and behavior can
be stored and used by online merchants.

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Major Types Of E-Commerce

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Business-to-Consumer (B2C) E-commerce
The most commonly discussed type of e-
commerce is Business-to-Consumer (B2C) e-
commerce, in which online businesses
attempt to reach individual consumers.

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Business-to-Business (B2B) E-commerce
Business-to-Business (B2B) e-commerce, in
which businesses focus on selling to other
businesses is the largest form of e-
commerce. There are two primary business
models used within the B2B arena;

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Net marketplaces, which include e-
distributors, e-procurement companies,
exchanges and industry consortia, and
private industrial networks, which include
single firm networks and industry-wide
networks.

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Consumer-to-Consumer (C2C) E-commerce
Consumer-to-Consumer (C2C) e-commerce
provides a way for consumers to sell to each
other, with the help of an online market
maker such as the auction site eBay.

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In C2C e-commerce, the consumer prepares
the product for market, places the product
for auction or sale, and relies on the market
maker to provide catalog, search engine, and
transaction-clearing capabilities so that
products can be easily displayed, discovered,
and paid for.

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Peer-to-Peer (P2P) E-commerce
Peer-to-peer technology enables Internet
users to share files and computer resources
directly without having to go through a
central Web server. In peer-to-peer’s purest
form, no intermediary is required, although in
fact, most P2P networks make use of
intermediary “super servers” to speed
operations.
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There have been very few successful
commercial applications of P2P e-commerce
with the notable exception of illegal
downloading of copyrighted music.
Napster.com, which was established to aid
Internet users in finding and sharing online
music files, it was the most well-known
example of peer-to-peer e-commerce until it
was put out of business in 2001 by a series of
negative court decisions.
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Mobile Commerce (M-commerce)
Mobile commerce, or m-commerce, refers to
the use of wireless digital devices to enable
transactions on the Web. M-commerce
involves the use of wireless networks to
connect cell phones, handheld devices such
Blackberries,Iphones, and personal
computers to the Web.

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Once connected , mobile consumers can
conduct transactions, including stock trades,
in-store price comparisons, banking, travel
reservations, and more.

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Top Ten E-Commerce Companies

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(10) Asos
It sells cutting-edge ‘fast fashion’ and offers a
wide variety of fashion-related content,
making ASOS.com the hub of a thriving
fashion community. It sells over 80,000
branded and own-brand products through
localized mobile and web experiences,
delivering from fulfillment centers in the UK,
US, Europe and China to almost every
country in the world.
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ASOS websites attracted 98 million visits
during December 2014 (December 2013:
87million) and as at 31 December 2014 had
9.1 million active customers1 (31 December
2013: 7.9 million), of which 3.7 million were
located in the UK and 5.4 million were located
in international territories (31 December
2013: 3.1 million in the UK and 4.8 million
internationally).
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(9) Groupon
Groupon is a worldwide pioneer of
neighborhood business and the spot you
begin when you need to purchase pretty
much anything, at whatever time, anyplace.

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By utilizing the organization's worldwide
connections and scale, Groupon offers
customers an incomprehensible commercial
center of fantastic arrangements everywhere
throughout the world. Customers find the
best a city brings to the table on the web or
on versatile with Groupon Local, appreciate
excursions with Groupon Getaways, and
locate a curated choice of gadgets.
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(8) Rakuten
Rakuten was established in 1997. It is a
Japanese electronic commerce and Internet
company based in Tokyo, Japan. Its B2B2C e-
commerce platform Rakuten Ichiba is the
largest e-commerce site in Japan and among
the world’s largest by sales.

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(7) Tesco
Tesco was founded in 1919 as a group of
market stalls in London. Now it operates in 12
countries around the world and serves tens of
millions of customers every week. It has
employees over 530,000.The first brand of
the company was Tesco Tea and it was
launched in 1924. First Tesco store was
opened in 1929.
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Tesco is grocery market leader in UK. Tesco is
diversified in Retailing, Financial Services,
Telecom and internet services. Tesco had a
market capitalization of £18.1 billion as of 22
April 2015.

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(6) Otto group
Otto Group has 123 noteworthy organizations
and more than 53,800 workers in more than
20 nations. It is a worldwide operating retail
trust and contractor From an online toy shop,
via a mobile payment provider, to an open-
commerce platform.

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(5) Alibaba
Alibaba Group Holding Limited is a Chinese e-
business organization that gives purchaser
to-customer, business-to-shopper and
business-to-business deals administrations
by means of web gateways. It additionally
gives electronic installment benefits; a
shopping web search tool and information
driven distributed computing services.
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The Group's sites represented more than 60%
of the packages conveyed in China by March
2013, and 80% of the country's online deals
by September 2014. Alipay, an online
installment escrow administration,
represents generally a large portion of all
online installment exchanges inside of China.

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(4) Walmart
Wal-Mart Stores is an American multinational
retail company that works a chain of
markdown retail chains, warehouse stores
and internet retailing business.

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Walmart helps individuals around the globe
save money and live better - whenever and
anyplace - in retail locations, online and
through their cell phones. Every week, more
than 245 million clients and individuals visit
about 11,000 stores under 65 pennants in 28
nations and e-business sites in 11 nations.
With monetary year 2015 net offers of $482.2
billion, Walmart utilizes 2.2 million partners
around the world.
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(3) Ebay
Ebay Inc is an American multinational
organization and e-commerce organization,
giving customer to shopper & business to
purchaser deals by means of Internet.

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It is a multi-billion dollar company with
operations in more than thirty nations.The
organization oversees eBay.com, an online
closeout and shopping site in which
individuals and organizations purchase and
offer a wide assortment of merchandise and
administrations around the world.

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(2) JD.com
JD.com or Jingdong Mall in the past 360Buy is
a Chinese electronic business organization
headquartered in Beijing. It is one of the
biggest B2C online retailers in China by
exchange volume.

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It began as an online magneto-optical store,
however soon enhanced, offering hardware,
cell telephones, PCs, and so on. Jingdong
Mall changed the area name to 360buy.com
in June 2007 and to JD.com in 2013

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(1) Amazon
Amazon.com, Inc. is an American electronic
business organization with central station in
Seattle, Washington. It is the biggest Internet-
based retailer in the United States. Amazon.com
began with online book store, however soon
broadened, offering DVDs, Blu-beams, CDs,
feature downloads/gushing, MP3
downloads/streaming, software, computer
games, gadgets, clothing, furniture, sustenance,
and toys.

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Here clients can discover and find anything
they may need to purchase on the web, and
attempts to offer its clients the least
conceivable costs. Site has various
personalization components and
administrations including a single tick
purchasing, broad client and editorial item
reviews, gifts registries, lists of things to get,
eatery and motion picture postings, travel,
and photograph processing.
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Amazons revenue for year end of 2014 was
88.988 billion us dollars.

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E-Commerce Advantages

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Convenience. Every product is at the tip of
your fingers on the internet, literally. Type in
the product you are looking for into your
favorite search engine and every option will
appear in a well organized list in a matter of
seconds.

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Time saving. With e-commerce there is no
driving in circles while looking and digging in
hopes of finding what you need. Stores online
offer their full line as well as use warehouses
instead of store fronts—products are easy to
locate and can be delivered to your door in
just days.

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Options, options, options! Without driving
from store to store the consumer can easily
compare and contrast products. See who
offers the best pricing and have more options
to choose from. While a physical store has
limited space, the same store on the internet
will have full stock.

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Easy to compare. Side by side comparisons
are readily available and easy to do. When
products are placed online, they come with
all the specifics, and they want you to
compare them with others, know they have
the best options and come back for more!

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Easy to find reviews. Because the
competition is high, companies online want
you to look at other consumer reviews. Good
and bad reviews are on every site, not only
can you see if the product is liked, you can
also see the reasons behind the thumbs up or
down.

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Coupons and deals. With every online
business wanting you, more and more
coupons and deals can’t be avoided, which
are totally great for customers. With major
sites that act as department store, you may
find items up to 80% off! Take advantage of
the competition and find the best price
available.

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E-Commerce Advantages for Businesses

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Increasing customer base. The customer
base is every business’s main concern, online
or off. When online, a business doesn’t have
to worry about getting the best property in
town, people from around the world have
access to their products and can come back
at anytime.

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Rise in sales. By not managing a storefront,
any business will have more sales online with
a higher profit margin. They can redistribute
money to make the consumer shopping
experience faster and more efficient. While
being available to international markets,
more products will sell.

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24/7, 365 days. If it’s snowing and the roads
are closed, or it’s too hot and humid to even
step outside in the summer, or a holiday that
every store in town closes, your online
business is open for consumers 24/7 every
day of the year. The doors never close and
profits will keep rising.

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Expand business reach. A great tool on the
internet is…translation! A business online
does not have to make a site for every
language. With the right marketing, every
consumer around the globe can find the
business site, products and information
without leaving home.

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Recurring payments made easy. With a little
research, every business can set up recurring
payments. Find the provider that best suits
your needs and billing will be done in a
consistent manner; payments will be received
in the same way.

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Instant transactions. With e-commerce
there is no more waiting for the check to
clear, or a 30-day wait for certain other types
of payment. Transactions are cleared
immediately or at most two to three days for
the money to clear through the banking
system.

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E-Commerce Disadvantages for Customers

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Privacy and security. Before making instant
transactions online, be sure to check the sites
certificates of security. While it may be easy
and convenient to shop, no one wants their
personal information to be stolen. While
many sites are reputable, always do your
research for those with less than sufficient
security.

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Quality. While e-commerce makes
everything easily accessible, a consumer
cannot actually touch products until they are
delivered to the door. It is important to view
the return policy before buying. Always make
sure returning goods is an option.

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Hidden costs. When making purchases, the
consumer is aware of the product cost,
shipping, handling and possible taxes. Be
advised: there may be hidden fees that won’t
show up on your purchasing bill but will show
up on your form of payment. Extra handling
fees may occur, especially with international
purchases.

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Delay in receiving goods. Although delivery
of products is often quicker than expected, be
prepared for delays. A snow storm in one
place may throw off the shipping system
across the board. There is also a chance that
your product may be lost or delivered to the
wrong address.

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Need access to internet. Internet access is
not free, and if you are using free wifi, there is
the chance of information theft over an
unsecure site. If you are wearing of your
public library, or cannot afford the internet or
computer at home, it may be best to shop
locally.

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Lack of personal interaction. While the rules
and regulations of each e-commerce business
is laid out for you to read, there is a lot to
read and it may be confusing when it comes
to the legalities. With large or important
orders, there is no one you can talk to face to
face when you have questions and concerns.

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E-Commerce Disadvantages for Businesses

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Security issues. While businesses make great
efforts to keep themselves and the consumer
safe, there are people out there that will
break every firewall possible to get the
information they want. We have all seen
recently how the biggest and most renown
business can be hacked online.

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Credit card issues. Many credit card
businesses will take the side of the consumer
when there is dispute about billing—they
want to keep their clients, too. This can lead
to a loss for e-commerce business when
goods have already been delivered and the
payment is refunded back to the consumer.

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Extra expense and expertise for e-
commerce infrastructure. To be sure an
online business is running correctly, money
will have to be invested. As an owner, you
need to know transactions are being handled
properly and products are represented in the
most truthful way. To make sure you get what
you need, you will have to hire a professional
to tie up any loose ends.
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Needs for expanded reverse logistics. The
infrastructure of an online business must be
on point. This will be another cost to the
business because money will need to be
invested to ensure proper handling of all
aspects of buying and selling, especially with
disgruntled consumers that want more than a
refund.

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Sufficient internet service. Although it
seems that everyone is now on the internet
all the time, there are still areas in which
network bandwidth can cause issues. Before
setting up an e-commerce business, be sure
your area can handle the telecommunication
bandwidth you will need to run effectively.

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Constant upkeep. When a business has
started as e-commerce, they must be ready
to make changes to stay compatible. While
technology grows, the systems that support
your business must be kept up to date or
replaced if needed. There may be additional
overhead in order to keep data bases and
applications running

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