Does e-commerce give a competitive advantage, and will it influence the future of business?

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Does e-commerce give a competitive advantage, and will it influence the future of business?

There is little doubt that electronic commerce has penetrated many people’s, and particularly businesses’, lives in one way or another during the past few years, but certain aspects of e-commerce are open to interpretation, such as;

  • What kind of businesses actually uses e-commerce?
  • What are the relative advantages and disadvantages of e-commerce?
  • Does it really give a competitive advantage?

Data collected from the US (1999) shows the e-commerce percentages of total value in the following different business areas (See Appendix 1):

Looking at this data, I could safely say 20% of the Total Value of Business Trades was e-commerce, which is a respectable amount considering how long e-commerce has been used for. This data shows Manufacturing and Merchant Wholesale Trade, (sectors where goods are sold to other businesses) had substantially higher e-commerce percentages than Retail Trade and Selected Service Industries (sectors where goods and services are sold to individual consumers as well as to other businesses).

Looking closer at the percentages, if all manufacturing and wholesale e-commerce was entirely business to business trade and all retail and service e-commerce activity was entirely business to consumer, more than 90 percent of total e-commerce would be business to business. This shows that one of the best uses of e-commerce is in fact for business-to-business trade. However, business-to-consumer e-commerce has the potential to affect the way in which people live and interact with each other and is therefore also a key aspect for statistical measurement, for example personal banking is a business-to-consumer service, and can drastically affect the way in which people live, and if the e-commerce formula works true for personal banking then surely a great competitive advantage would be available.

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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), ...

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