Business Application of E-Commerce: Benefits

What is the Application of E-Commerce in Business?

Electronic commerce is the purchasing of goods and services and the transfer of funds in any way using electronic communications in inter- and intercompany business activities. Its application has led to many changes in the way as business is conducted.

An e-commerce solution is a solution to conduct business using technology, through an intra-, extra- or internet solution. There are two types of e-commerce, viz Business to Consumer (B2C) e-commerce involving companies selling products or services to individuals and Business to Business (B2B) e-commerce relating companies selling their business to other business organization.

Application of E-Commerce

Undertaking a business to the internet is a sound strategy for increasing business volume, making business internationally. Going international facilitates better support for 24*7 business solutions.

A business with a strong internet presence can reduce staffing and office space overhead, which result in more competitive pricing of goods and services and also more economical form of advertising. A firm with an effective e-business strategy develops the capabilities needed to improve the flow of information and business intelligence among partners, suppliers, employees and customers.

The following industries or markets of application of E-Commerce:

  1. E-commerce application in Manufacturing
  2. E-commerce Application in Wholesale
  3. E-Commerce Application in Retail
  4. E-commerce Application in Service Sector

E-commerce application in Manufacturing

Manufacturing is the transformation of raw materials into finished goods for sale, or intermediate processes involving the production or finishing of semi-manufactures.

The production of goods and services is the result of the efforts of many organizations, a complex web of contracts and co-operation known as the supply chain or the value system. As shown below manufacturing requires various components, sub-assemblies as well as include transportation, storage, paperwork etc.

Each supply chain transaction adds cost without intrinsic value. E-commerce can be applied to the supply chain to reduce costs or improve service. In this way, e-commerce can enhance the manufacturing process by:

  • Enhancing Efficiency
  • Reducing Cost/Cycle Time
  • Providing Accuracy and Flexibility
  • Supporting Inventory Levels

E-commerce Application in Wholesale

Wholesale is the sale of goods or services in large quantities and at lower prices to someone other than consumers. Wholesale consists of the sale of goods merchandise to retailers, to individuals, commercial, institutional or other professional business users or to other wholesalers and related subordinated services.

These persons are sometimes called middle person, middle-man or distributor. Wholesaler frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in small lots, for instance pharmaceuticals; store, refrigerate, deliver and install goods, engage in sales promotion for their customers and label design.

E-Commerce Application in Retail

Retailing involves selling products and services to consumers for their personal or family use. Department stores, discount stores and specialty stores like jewelers; toys are all examples of retail stores.

Service providers, like dentists, hotels and hair salons and on-line stores, like are also retailers. Many businesses, like Home Depot, are both wholesalers and retailers because they sell to consumers and building contractors.

E-commerce Application in Service Sector

The service sector or the service industry is one of the three main industrial categories of a developed economy, the others being the secondary industry (manufacturing and primary goods production such as agriculture), and primary industry (extraction such as mining and fishing).

The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from a producer to a consumer as may happen in wholesaling and retailing, or may involve the provision of a service, such as happens in the restaurant industry.

However, the focus is on people interacting with people and serving the consumer rather than transforming physical goods.

Benefits of E-commerce

Electronic commerce is the business environment in which information for the buying, selling and transportation of goods and services moves electronically. It includes any technology that enables a company to do business electronically. Some of the major benefits of E-commerce are:

  1. Improved productivity
  2. Cost Saving
  3. Streamlined Business Processes
  4. Better Customer Service
  5. Freedom of Choice
  6. Opportunities for New Business

Improved productivity

Using electronic commerce, the time required to create transfer and process a business transaction between trading partners is significantly reduced.

Furthermore, human errors and other problems like duplications of records are largely eliminated with the reduction of data-entry and re-entry in the process this improvement in speed and accuracy plus the easier access to document and information will result in increase in productivity.

Cost Saving

Based on the experience of a wide variety of early adopters of electronic commerce, Forester research has estimated that doing business on the internet can result in cost saving of about 5 percent to 10 percent of sales. This cost savings steam from efficient communication, quicker turnaround time and closer access to markets.

Streamlined Business Processes

Cost savings are amplified when businesses go a step further and adopt their internal processes and back-end legacy systems to take advantage of e-commerce. Inventories can be shared if businesses use the internet to share such information as promotional plans, point-of- sale data and sales forecasts. Business processes can also be a made more efficient with automation.

Better Customer Service

With electronic commerce, there is better and more efficient communication with customers. In addition, customers can also enjoy the convenience of shopping at any hour, anywhere in the world.

Freedom of Choice

E-commerce offers multiple options for the consumer because the internet contains a number of different topics and locations, services and users can access throughout the world. It thus allows rationalization of the decisions taken by consumers due to its large number of sites of the flow of information in a timely and coordinated manner and accurate, allowing easy comparison between products and services.

Both in terms of price or quality or method of payment, and the time required receiving the required item or service and electronic commerce is particularly important for consumers in developing countries, where it can overcome the traditional barriers of distance and lack of information.

Opportunities for New Business

Business over the internet has a global customer reach. There are endless possibilities for business to explicit and expand their customer base. E-commerce is the use of telecommunications and data processing technology to improve the quality of transactions between business partners.

It has existed in some form since the invention of the telegraph and early automated data processing equipment, but its use has greatly increased. E-commerce improves organizational efficiencies by leveraging data processing, database storage and data communications technologies.

Existing network facilities can be utilized to achieve great savings in labor costs and the reduction of paper storage and handling facilities. It has enabled firms to be more effective in improving the quality of standard goods and services and to offer a variety of new services. The global marketplace has become larger and wider than ever because of the expansion of e-commerce activity.

FAQ’s Section

What is the role of e-commerce in service sector?

E-commerce can be implemented in service sector for gaining competitive advantages by proving strategies for differentiation and cost leadership and customer satisfaction. E-commerce will improve the speed of transactions, reduce management expenditure, increases competitiveness and helpful in the banking, insurance and financial sectors, and real estate, construction, telecom, tourism, postal and logistics services

What are the Benefits of E-commerce?

The following are the benefits of E-commerce:
1. Improved productivity
2. Cost Saving
3. Streamlined Business Processes
4. Better Customer Service
5. Freedom of Choice
6. Opportunities for New Business.

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