The UK figures released by the Office of National Statistics in February 2009 showed that internet retail sales, as a percentage of total retail sales, rose by 13.2% (average weekly value of £167 million). These figures closely match figures released by the which showed that the e-business retail market rose by 17% in July compared to July 2008, this increase has been driven by the clothing, accessories and electrical goods online retail sales.
Banking Industry
The introduction of E-business (ICT) in the European banking system has had a significant impact on banks operating system and their operations within physical branches. The most important form of e-business used by banks is the online banking which has help cut down cost. E-business has enabled banks to redefine their boundaries and also gained competitive advantage through it. Internet banking is nowadays supported by advanced ICT solutions which enable most everyday banking services to be conducted online (). Studies also shows productivity growth rose in the EU from year 2000 onwards, while average working hours per employee has decreased subsequently, this study tells use e-business investment is largely substituting labour particularly in retail banking.
Travel and tourism Industry
In the last few years travel pattern has changed in the EU. The travel sector in the EU is so large that even a small share of it produces a major online market; it is also one of the fastest growing sectors in e-business. Taking the internet for example, it has had a very high impact on the air travel industry. It can provide a direct connection between airlines and customers without the need to use travel agents or Computer Reservation Systems (CRS), thereby leading to cost savings in the distribution of air tickets (Law and Leug, 2000) the internet has become very extensive in the travel industries and its impact has been particularly significant on the distribution channel for air travels and the use of the Internet for searching and purchasing airline tickets has become common in travel markets. The introduction of e-business to the airline industry has enabled most travellers to bypass travel agents altogether, with most agreeing that the most current air market will shift from traditional travel agents to internet based agents like . A recent study shows that firms that have reinforced their e-business strategy in the airline industry have had an increase in sales volume for airlines’ website. The internet has contributed strongly to the growth of most budget airlines taking easy jet as an example. Easy jet has never used the travel agent network; they rely on the internet because all their flights are booked online by customers. (
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Impact of E-Business on the economy
The primary route in which e-business will have an impact in the economy is on its productivity and inflation, Businesses and consumers that use E-business benefit from a reduction in cost in the sense that the time and effort required to search for goods and services and to complete transactions (Wen, 2004). This reduction in cost will bring forth higher productivity. Continued expansion of e-business may lead to downward pressure on inflation through greater competition, cost savings, and changes in price-setting behaviour of sellers (Lucking-Reiley, David, and Daniel Spulber. 2001. "Business-to-Business Electronic Commerce," Journal of Economic Perspectives, Winter) Over the past decades e-business has helped and provided various methods in which buyers and sellers can transact in the decades to come, exploiting the full potential of developments could have profound impacts in individual sectors of the economy as well as for macroeconomic performance and economic policies. At the aggregate level, productivity and economic growth could rise, at least for some time, as a result of more efficient management of supply and distribution, lower transaction costs, low barriers to entry and improved access to information. An increase in productivity will result to an increase in a nation’s GDP. In the business-to-business context, higher efficiency can be gained from B2B e-commerce and B2B exchanges via lower procurement cost and better supply chain management. Many companies claim that putting their supply chains online has led, or will lead, to major cost savings. According to Goldman Sachs (2000) study these gains range from between 2 and 40 percent of total input cost depending on the industry which may subsequently reduce the price in the overall economy.
The development of e-commerce is likely to have both direct and indirect impacts on labour markets as well as composition of employment. The rapid growth in e-business, in particular e-commerce, should boost the demands for jobs in e-business. Although the direct employment consequences of e-commerce may not be large it is likely to drive widespread changes in labour market shifting the composition of workers required to produce and deliver a service. For example, a retail sale via the Internet probably does not require the same density of sales staff, but may actually more people with IT skills to develop program and software. Certain jobs, especially those involved transfer of information from one party to another such as travel agent, insurance and stockbrokers may become less common. Therefore it is imperative that workers update their skills in order to survive in this environment. In addition, although the current economic climate has meant that job opportunities are limited, there is still a shortage of IT professionals in certain areas of the sector, and this situation is likely to continue in the foreseeable future.
Critical issues and challenges faced by e-business on the economy
The increasing use of the Internet and the accompanying emergence of a Web-based economy have lead to changes in business conditions and practices. Some observers have predicted that these changes will transform the nature of business (Ulrich, 2000).Various aspect of e-business has continually affected the trends in the economy. As stated above, the introduction of e-business has had an adverse effect on employment, business operations have become more automated, and people have lost their jobs because they have been replaced by ‘technology’. For example the introduction for e-commerce websites and automated online payment system in the past decade has resulted in less staffs (human resources) needed to process and accept orders since computers can do repetitive tasks quicker and much more efficient than humans. The rapid growth and development of e-business and the internet also raises a series of other issues, including online security and privacy. Consumers are often advised against giving their credit-card numbers freely over the Internet, and this remains one of the most-cited reasons for not buying products online. Security must be a top priority of e-business due to the increase number of fraud carried out over the internet.
The future trend of E-business on the economy
If buyers and sellers continue to increase their use of e-business, the overall economy will likely to be affected in two ways. Firstly cost saving can be achieved by firms using e-business which will lead to higher productivity. Secondly while B2B has changed how firms collaborate in buying and selling inputs from and to each other, e-commerce also affects how business competes against each other (Lucking-Reiley & Spulber, 2001). As e-business continues to expand, it’s likely to increase productivity in firms, mostly in the B2B sector. Businesses use information technology to reduce costs of transactions, advertising, search, inventory holdings and transportation. These cost savings are achieved mostly through a reduction in the amount of labour required to complete business tasks. The continued expansion of e-business can also have a diverse impact on prices and inflation. Despite the limited history/research on e-commerce study has shown that the pricing strategy used by e-firms differ from that of non-e-firm. The implementation of advanced information technology to achieve cost saving by e-firms has led to lower prices for many goods and changes in the frequency of price adjustment. These changes may contribute to lower inflation in the short run and the faster adjustment of prices in response to changing economic conditions. (What impact will E-business have on the U.S. economy by Willis, Jonathan L)
Conclusion
E-business has emerged as a new way to transact in the marketplace. Initially introduced as a means for businesses to efficiently place orders over private EDI networks, the introduction of the Internet has recently spread the benefits of transacting electronically to consumers as well. While currently representing only a small share of total transactions, e-commerce has grown rapidly in recent years
For the economy as a whole, e-business will have a positive impact on the economy over the next few decades. B2B and B2C transaction will continue to expand into existing and future industries.
References
-Aiyagari, S. R., Braun. R. A., & Eckstein, Z. (1998). Transaction services, inflation, and welfare. Journal of Political Economy, 106(6), 1274-1301.
-Autor, D. (2001). Wiring the labor market. The Journal of Economic Perspectives, 15(1), 25-40.
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, September 2006, Pages 253-260
-Journal of E-Business, Volume II, No 2, December 2002
-Lucking-Reiley, D., & Spulber, D. F. (2001). Business-to-business electronic com-merce. The Journal of Economic Perspectives, 15(1), 55-68
-The microeconomic impacts of e-business on the economy (May 20, 2009)
-The macroeconomic impact of e-business on the economy ( May 19, 2009)
-What Impact Will E-Commerce Have on the U.S. Economy?
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