One of the main factors that will determine the success of business-to-consumer e-commerce will be the availability and ease and readiness of capable technology, such as computers with Internet access and interactive/digital television. Taking a look at some 1998 statistics in the UK, approximately 32% (up to 50% in certain areas) of UK households had a home computer (See Appendix 2), and it was predicted that this would rise to 44% by the year 2008. Where in fact the reality is access to computers and the internet has developed much faster then anticipated (a projected 10% increase per month), from an estimated 11.5 million internet users in 1999 to 25 million in internet for personal use (April 2001). This is important data, as the use of e-commerce is largely dependant on how many people have access to the Internet. So with such an obvious public interest in technology, and the Internet, then surely e-commerce is the way forward for many consumers.
With such an active public interest in technology and the Internet, companies such as Egg Plc, an online banking company, noticed the potential edge that could be gained from such wonders as online banking, and has flourished ever since. Egg estimates that 54% of Britons are now using interactive technologies, which is probably why they also report that a huge increase of 37.5% in online banking within the past 6 months, now standing at roughly 5.5 million online bankers. (See Appendix 3)
Looking at egg’s 5-year report from 1996 to 2000 (See Appendix 4), egg’s net interest has gone up and up and up from £1 million in 1996, up by £3.8 million when they reached 1997, and most noticeably, particularly after the 1998 period, up to £10.5 million when Prudential launched the Egg business (www.egg.com) in October 1998, which shows fantastically how well electronic commerce, along with the huge boost in home technology and internet access has effected the company. This is shown as in the next year they reached £22.4 million net interest income, and up to an incredible £80 million by 2000, showing a 761% increase since the introduction of the Internet to the company.
Also what is quite noticeable is the amount of egg customers, and how quickly they increased, not surprisingly after the 1998 launch of egg (which stood at 155,353 customers) the customers increased by 510% to 792,348 at 1999. The gap in the market was clearly discovered, and allowed a huge potential success for the company.
After looking at the Egg Plc example, I can conclude that electronic commerce can be said to affect the productivity, profits, and distribution systems of businesses. The use of electronic websites presumably expands the potential market for businesses’ goods and services and thereby increasing the sales income generated. The company is increasing the range of potential new customers and business hours, as they are introducing a potentially global customer base, and can be available for 24 hours a day.
It also offers a larger purchase per transaction, ordering from regular catalogues often becomes a tedious process unless the customer knows exactly what they need. Online presence makes it easier for a customer to find products, translating into more sales, or in the Egg Plc example, it in fact offers the customers more information, better access and unlimited freedom of banking
However, Lets not get too excited about e-commerce, as on the other hand even though e-commerce is providing a quick, easy to use business transaction, it does not allow personal contact between the business and the customer, which is a strong disadvantage, as without the personal link, it may seem like there is no customer relations, or that it makes it much harder to trust the business.
The costs of a suitable site design, which will be updated daily, with full logs of customers and stock etc, will also take up large space as well as manpower, and bandwidth, and also to get it running on popular or faster servers, will cost the business more money. Another concern is that customer have to be notified somehow of the businesses site, otherwise it wont be visited, so uses of advertising, or extra notification in the business stores will cost more money, in order to get the pubic in the know about that businesses site.
To conclude, I strongly believe the potential to reach a global audience, and the potential to leave your business open at all hours, all the time, is a fantastic advantage for any company to have, not to mention the other advantages, which clearly outweigh the disadvantages I already mentioned earlier. This tied in with the demand for new technology, and the seeming consumer hunger for better service, and more opportunity opens up an amazing amount of potential.
I wish to fall back onto two statements, which I feel sums up the beliefs of e-commerce perfectly, but still shows that e-commerce is only the beginning of what’s to come in the future, and is defiantly a possible standard to what the world might see in future businesses.
"The appetite continues to grow for new and exciting innovations that are either already on the market or on the technological horizon. Consumers have developed a liking for the value and flexibility that digital technology affords them, and are becoming increasingly confident in the possibilities of transacting online."
- Mark Nancarrow, Chief Operating Officer, Egg.
"No other aspect of e-business has garnered more attention then that of e-commerce. After all, consumers are expected to spend roughly $180 billion online in the next four years"
- Spokesperson, IBM e-business solutions.