Amazon allows customers to listen to a sample of each track on the CD before they decide to buy
Businesses have fewer overheads and these savings should be passed on to the customer.
Drawbacks of Online Commerce:
- Some people actually enjoy going out shopping
- Security concerns (credit card fraud, bogus companies etc.)
- Waiting for goods to arrive (or the wrong goods arriving)
- Technological Underclass (the poorest people in society have the least access to the new technology)
- Who do you complain to if you don't get good service?
- Customers can't touch, feel or taste goods before they buy them
- Postage and packing has to be added to the cost of goods that you buy
Business to Business
One of the major growth areas on the Internet is trading between businesses, i.e. the distribution of manufacturing goods. International carriers can make huge savings by taking orders over the Internet, and customers can not only make savings but also get online information about exactly where their goods are, and when they are delivered.
End of Chapter Exercise
1. A large clothing retailer has decided to set up an on-line store.
a) 2 advantages of online selling:
1) There is a huge saving on overheads: no costly warehouse space, rent, heating or employee facilities.
2) It is a valuable market research tool- a list of customers’ names and addresses, purchases, likes, dislikes and suggestions can be built up to build customer profiles and databases.
b) 1 advantage to the customer of using the online store rather than the high street.
1) Customers can visit the shop without having to leave home, at any hour of the day.
(Hear snatches of a song before buying it.
Shop without the aggravation of being jostled by crowds,
Having to listen to music that is not to their taste.)
c) 1 disadvantage to the customer of using the on-line store rather than a high street shop.
Worries about the security of giving credit card numbers over the Internet; it is possible that hackers could retrieve thousands of credit card numbers and use them anonymously, thus creating dilemmas for the customer.
d) 2 Ways in which retailers could make use of the Internet to publicise its new service
1) They could request website owners to place incoming links to their website via hyperlinks.
2) There are various advertising opportunities and the ability to place attractive advertisement animations on websites- in order to grasp their attention and sell the product.
2) The use of Automated Teller Machines (ATMs), provided by banks and building societies, has become a common way for people to obtain cash.
a)i) One Advantage to bank:
1) No need to hire staff for distributing cash and assigning more important jobs to them, thus saving cash.
2) Two Advantages to the customer:
No need to queue in long lines.
Withdrawing money for customers is much quicker and efficient.
b) Advantages of Tracking credit card purchases to companies:
It is possible to see whether strange and inconsistent transactions have been made and for instance, a card has been stolen.
