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Basic Understanding of E-Commerce
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The rise of the internet and electronic commerce has changed the way in which customer and company interact with each other. The electronic commerce brings together more consumer and supplier, but it eliminates any form of direct and face to face interactions. For this specific reason electronic relationship are considered a formidable challenge for many organizations.
The major of challenge revolves around the components of trust and commitment.
The advent of personal computers and with it internet has changed the way business gets conducted. This information technology age has brought its own set of challenges for relationship marketing. In the developed economies, it would be difficult to find anyone who has not gone on e-relationship with any vendor. E-commerce relationships for example may in form banking, online shopping, online search, social networks etc.
Therefore, companies are trying to find ways to take advantages of e-relationship.
There are mainly two advantages of e-relationships, vast reach to the customer and ability to serve the customer better.
The internet allows the companies to reach out to the consumers in ways never thought before. Unlike other medium before the internet, for example TV and radio it was always one communication. But the internet is an interactive medium. So whatever companies have to offer, consumers can respond instantly and make a purchase.
E-relationships have changed the competition scenario completely. Small companies are able to compete with global giants with little capital investment.
E-commerce has substantial reduced the trading barrier. The companies can avoid many traditional players in the supply chain, thereby changing business structures. For example, consumers are able to book flights directly with airlines rather than going through a travel agent.
The technology has enabled companies to gather information of consumer through a reward card or electronic purchase. This helps companies understand the consumer better and thereby offering customized products to consumers.
The biggest drawback of e-relationships is that it removes human touch from the equation. Every interaction is done by looking at the computer screen. The introduction of e-commerce may have reduced overhead cost for the company, but is has also made many consumer adverse in dealing with companies.
For example, automated call center has known to create a lot of disgruntled consumers because of time a consumer spends in reaching the human agent.
The advent of e-commerce has changed the definition of market. From physical market place it has changed in the internet market space. We have four different e-commerce markets; Business to Business, Consumer to Consumer, Consumer to Business and Business to Consumer.
Consumer to consumer market: this type of market sees people buy and selling used items. People typically respond to ads in the newspaper or local yard sale. The internet has changed this consumer to consumer market completely. It is now worth millions of dollars, site like e-bay, craigslist, Quikr etc. are helping buyer and seller reach their individual goals.
Consumer to Business market: this type of market has grown in recent times with the advent of the internet. In this type of market price is proposed by the consumer for companies to bid on. The more consumers involved in the market more likely the price to be reduced. The typical consumer to business market include car hire, airline seat etc.
Business to Business: e-commerce was designed to keep in mind business to business market. With all the connectivity between the computers, data transfer has become easy, the very early purpose of e-commerce in business to business market. However, with improved network security businesses have moved to more towards transactions like function mainly order placement, processing, online payment etc.
Business to Consumer: e-relationships have evolved not only business to business market, but have significant impact on business to consumer market as well. The organization needs to invest time and capital in developing their e-business system as to fully capture the potential of this market.
From the above e-relationship has clearly stated that online shopping is a future mode of all commercial transactions. Online shopping has brought traditional retailers in direct competition with online retailers. However, there is a clear demarcation between what can be sold online or what requires a physical shop. For example, anything which can be delivered in digital format music, movies, books, etc. are likely to succeed more through online. However things like car, jewelry etc still appeal to all the five senses and consumer prefer the traditional stores.
So following factors such as product factor (Physical check required), practical factor (Ease of purchase, delivery, etc.) and people factor determine whether a product will do well online.
The advent of the internet has dramatically changed the structure of markets and way consumer and business interact with each other. Organizations have begun to realize that the internet is empowering consumers like never before.
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