E-commerce also has positive effects on companies. First, it enables all companies to improve their competitive level by coming closer with the consumer (www.servicemachine.org, 2003, p. 3). E-commerce enables the smallest companies to attain a worldwide attendance and to sell their goods and services at a global basis, as there is no limit to computer networks. For instance, milehighcomics.com is a small store that has created a website selling comics around the world. To illustrate this point there are various businesses that employ e-commerce technology. This in addition to the offer of pre-and post-sales support including product information and guidance on goods’ use raises the level of quality of service for the benefit of the consumer (www.servicemachine.org, 2003, p. 3).
At the same time, e-commerce has a positive contribution on companies, especially on the ones that have online economic transactions with customers through the Internet. Companies enhance e-commerce for its potential to develop their businesses worldwide and due to its direct effect upon customer needs and wants (www.servicemachine.org, 2003, p. 2). The latter brings further changes to the definition of new markets. To illustrate this point, global online consumers can purchase goods from a single site that may be located on Greece. On the other hand, organisations that close their eyes to technological changes will suffer the consequences of market changes (www.servicemachine.org, 2003, p. 2). Through e-commerce, companies try to aim to a greater target market group. As companies have global presence due to Internet, their products do not address specific countries. Boundaries fall and the target market goes global. Goods and services now address to consumers from different countries and different age groups. The target market for a specific group is not restricted upon the borders of a country. This has a positive economic impact on the marketing and the financial returns of the business.
Furthermore, companies that have electronically economic transactions manage to have higher profits (www.servicemachine.org, 2003, p. 4). This is due to the following reasons. Every company or every person can open an online store. The cost for such an investment is lower than opening a physical business selling products or services. Usually the costs include the ownership of a computer and access to electronic community centres. On the contrary, physical shops require daily operational costs and the creation of a sufficient distribution network (, p. 1).
Additionally, e-commerce is said to diminish various supply chains. As products are delivered straight to the customer without the intervention of intermediate groups, such as retailers, transaction costs are limited to the minimum. For instance, while CD’s at traditional retail stores, such as Virgin Megastores, cost approximately 20 euros at certain websites cost around 10 euros (, 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 (, 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. It also can be instrumental in helping developing economies participate in the multilateral trading system. Benefits accruing to developing economies from the rapid growth of E-Commerce will help them to meet more effectively their vital development goals, such as poverty reduction, health and education (Policy Information, p.1). Bartelsman and Doms argued that the search for cheaper products by consumers will result in the broadening of markets (Suijker, Frank, p. 44). In return, competition between e-commerce companies will increase. The profit margin for each company will decrease to a considerable level. Furthermore, economies of scale resulting from the creation of new markets can benefit organisations. Muecke Tom during his speech to the National Small Business Forum at Canberra underlined the significance of e-commerce as the major element for the growth of the Australian national economy (p. 2). More specifically, he emphasised that e-commerce may improve the Australian productivity and social welfare
While e-commerce continues to grow, there are several open issues for the opponents of e-commerce, such as lack of legislation regarding the safety, security and government help and support (, p. 1). Governments try to follow technological developments, when implementing laws for e-commerce. However, since legislative issues do not apply, the trust between consumers and businesses and with governments will continue to subsist, while Internet will continue to support the free flow of data. (Kiong Lim Chee, p. 1).
Concerns over security, safety and reliability are extremely significant for consumers (, p. 1). Most consumers are concerned about providing financial information through a volatile means, that has proven unsafe in the past, and namely the Internet. Sani Rozana (2002) underlined the need for the design of governmental legislation regarding e-commerce (p. 1) in order to overcome this consumer concern. More specifically, economic transactions are not always considered as secured especially when fulfilment in terms of delivering and shipping the product are more difficult than the actual stores (www.businesstown.com, p. 1). To illustrate this point, one may wonder about not just the extent and the legal status of the binding contract between companies making online transactions, but also about the nature of payment and the taxes that may apply to the good or service. (www.servicemachine.org, p. 6). Zhu J James (p.1) is worried about the challenges emerging from e-commerce, especially about the lack of an appropriate legal framework.
The customisation e-commerce promises is not real according to Wharton and Forrester research as there exist difficulties in realizing it (Merrill Lynch Report, p.1). At first, customisation is difficult due to numerous manufacturing processes. Second, sometimes consumer’s needs in relation to tailored goods are hard to identify by companies. Further, Fader Peter states customisation is difficult to be applied by companies while this is not always welcomed by consumers (Merrill Lynch Report, p.1).
Several conferences have taken place in order to face the above matters. On April 8th, 1999, the American Bar Association's Information Security Committee met at the Crystal City where a panel including companies, government as well as consumers examined issues regarding secure electronic commerce (Information Security Committee, p.1) At the same time, Kiong Chee Lim (p.1) stated that nowadays most online companies provide warranties on their websites as for potential customers to feel safe. Accordingly, the World Wide Web Consortium uses technology in favour of privacy protection. More specifically, the Platform for Privacy Preferences Project is one of the industry standards for the above issue. The latter enables consumers to read privacy policies on the websites visited.
The UK Department of Communications in 1999 by releasing a relevant discussion paper concerning e-commerce began the policy-making process. The lack of security in addition to the anarchy of the Internet forced politicians to establish regulations for the protection of consumers. (Haffajee, Ferial, p. 1). Additionally, an e-commerce Working Group was established in order to co-ordinate regulation. The policies formed do not discriminate between online and offline commerce (Fourtheenth Report, p. 2). In parallel, New Zealand’s Government moved to the creation of a web-site where everyone be informed about government the e-commerce policy as well as the Electronic Transactions Act (New Zealand Government E-commerce Information, p.1). Lynch Karen Witham reported that the American state governments have applied tax regulations on online transactions (p.1). For USA The National Conference of Commissioners on Inter-State laws has tried to develop a minimum set of laws for e-commerce but commerce is traditionally a matter of State law and the States are beginning to break ranks. However, the Chinese government has implemented numerous regulation and legal frameworks regarding the content of web-sites. At the same time, there is a further need for the establishment of laws that will recognise online transactions (Zhu J, James, p. 4) as to secure the authenticity of the electronic transactions. Garrod Anthony said that due to the development of the Internet, there is a necessity for not the review of the existing law for commerce but also the introduction of new legislation on behalf of government for e-commerce (p. 1) in order to protect consumers from fraud online companies, theft and loss of security of their personal data. A model law regarding e-commerce was introduced in 1996 by the United Nations Commission’s International Trade Law that had to do with the formation of contracts during online transactions. Cancert reports that most countries have developed laws protecting privacy and e-commerce legislation (Security Conference Hall, p. 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).
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