E-commerce and the opportunities it offers a business firm

Meaning of e-commerce

E-commerce is the buying, selling and related dealings of a firm with its customers and suppliers carried out over the internet. It is narrower than e-business: e-business also covers functions conducted electronically inside the firm, such as production, inventory management, product development, accounting and human resource management, whereas e-commerce is the firm's interaction with outside parties over the net. Its main forms are B2B, where both parties are businesses, and B2C, where a business deals with its customers; consumers also trade with one another on online platforms (C2C).

Opportunities that e-commerce offers a business firm

1. Speed. Much of buying and selling is an exchange of information, which the internet moves at the click of a mouse; cycle time shrinks because business processes run side by side instead of one after another.
2. Reach beyond the home market. The internet has no boundaries: it gives the seller access to buyers across the country and the world. A block-print textile unit in Jaipur can take orders from buyers in other states and abroad through its own website.
3. A tighter supply chain. Through B2B links a manufacturer can place orders with several vendors, track the production and delivery of components and make payments over a network; a distributor can watch its stock in transit and at each location in real time and trigger replenishment when needed.
4. Low cost of entry. An online business is relatively easy to start and needs less investment than a conventional one, so small firms can operate alongside large ones.
5. Customised products at low cost. Firms can now offer products made to each buyer's needs at costs once possible only for mass-produced goods; computer links let the marketing department pass customer orders straight to production.
6. Round-the-clock contact with customers. A B2C firm can stay in touch with customers at any hour and run online surveys to learn who buys what and how satisfied they are; customers can shop whenever they wish.
7. Less paperwork. Online dealing cuts dependence on paper and the delays that come with it.
8. New ways of trading. Firms can buy through e-procurement and reverse auctions, invite bids and tenders online, promote through online catalogues and deliver digital products such as software, e-books and music directly to the user's device.

Together these give a firm an advantage over its competitors.

Conclusion

E-commerce widens a firm's market, cuts its costs and brings it closer to both suppliers and customers. Its limits, such as low personal touch and security risks, mean it suits some products better than others, but the electronic mode is now a lasting part of how business is done.