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E-Commerce: The Positive Effects of this New Business Channel

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Introduction

E-Commerce: The Positive Effects of this New Business Channel Various organisations and people have given different definitions to ecommerce. OKI Technical Review (2000) has defined e-commerce as "the technology, processing, and operations, which occur when business transactions are done automatically over networks, using IT." (www.oki.com, 2000). At the same time, the World Trade Organisation (1999) defined e-commerce as "the production, distribution, marketing, sale or delivery of goods and services by electronic means" (www.asfolaw.com, 2002). E-commerce has been characterised as one of the biggest revolutions regarding the electronic business, which at the same time expresses not just the enthusiasm but also the spotlight for a fast growing market. According to a survey undertaken by the US Ministry of International Trade and Industry (1999 and 2003), the scale of the market concerning e-commerce in the USA and Japan has risen from 1998 to 2003, with the transactions between businesses and consumers reaching 650 million Yen in Japan and 22500 million Yen in the USA for 1998 while this figure increase to the amount of 31600 (Japan) and 213200 Yen (USA) for year 2003 (www.oki.com, 2003). It is evident that there has been a radical change of the buying behaviour of people, who mainly use e-commerce for travel, automobiles, buying PC's and for the provision of services in general (www.oki.com, 2003). One can, therefore, argue that e-commerce has proven to have a great impact upon the buying behaviour process of people by formulating trends in certain market areas, as in the case of travel which has risen 110% from 1998 to 2003 (www.oki.com, 2003). ...read more.

Middle

For instance, while CD's at traditional retail stores, such as Virgin Megastores, cost approximately 20 euros at certain websites cost around 10 euros (www.cdnow.com, 2003). Thus economic returns are higher as costs are low (www.servicemachine.org, 2003, p. 4). This is due to the fact that several common costs, like store rent cost, administration and employee costs are reduced significantly through e-commerce. E-commerce is also considered having a positive contribution to society's welfare as a whole. The introduction of new products in direct correlation with the growing demand for certain goods and services create new markets. The latter leads to the increase of employment and livelihood opportunities (www.info21.com, p. 2), since new market will result in additional income (Muecke, Tom, p. 2). The Philippine APEC Study Center Network (2003) predicts that during the period from 2000 to 2005, the change in the inter-industry relationships, as a consequence of e-commerce, will generate 5,900 additional jobs. At the same time there will be a rise of 29% in terms of employment for the whole national economy (Philippine APEC Study Center, p.1). Moreover, technological innovations enable companies based on developing countries to make business with low costs and high profits (www.info21.com, p. 2). Without the contribution of the Internet, this would seem impossible to do so. E-Commerce can have positive effects for all economies contributing to the mutually supportive goals of sustainable economic growth, enhancing the public welfare, and fostering social cohesion. ...read more.

Conclusion

1). In conclusion, it is evident that despite the pitfalls of e-commerce, this technological revolution has numerous positive contributions various parties. Consumers, on one hand, benefit from the easier access to products and services available on the Internet. There is a new horizon regarding the purchase of goods. At the same time the choice for goods has been expanded, as numerous businesses offer a great variety of products. On the other hand, companies benefit from the positive contribution of e-commerce as well. First, companies are now available to expand their businesses worldwide. Therefore, they aim at a larger target group as they go global. Furthermore, they have higher economic returns, in other words greater profits, since their daily operational and transaction costs are minimised. In parallel, society is positively affected by e-commerce. The introduction of new products and services not only increase the level of employment but also the income for the countries. In the near future e-commerce is expected to grow further regarding online transactions. In particular, Reibstein and Fader admit that online customisation of the products or services offered are going to be improved (Merrill Lynch Report, p. 5). Therefore, the percentage of online consumers is going to increase. On the other hand, Merrill Lynch experts say that: companies give up on the idea of customisation and use e-commerce as just another way to do direct marketing - a website as a catalog on steroids. For the next few years, I think, that's the only way companies should view it. They should focus on streamlining the shopping experience without over - customizing the actual products or services being sold (p.5). ...read more.

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