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Advantages and Disadvantages of Online Shopping, Essay Example

Pages: 9

Words: 2448

Essay

What are the advantages and disadvantages of online shopping and how to improve electronic stores in the future?

Introduction

In the first wave of e-commerce businesses witnessed new start-ups creating diverse business models and pioneering into new markets. This created a race between the brick and mortar and the new internet .com businesses trying to dominate market presence in the new virtual economy. The wave of optimism, however, did not last long as Companies fought over market share and pondered their survival in this new market. The Second wave of e-commerce has seen an expansion in the sophistication of technology and use of communications.

The major difference between the first and second waves was the sophistication of the internet and communications technology. There has been a shift in the dynamics too as in the second wave we are moving away from transaction based business to more of customer relationship management . The advent of M-Commerce has seen this technology accelerate to the use of mobile hand held devices connecting through an array of wireless networks connected to powerful and sophisticated servers.

E-Commerce can best be defined as computer medium that facilitates online shopping and trading via the internet.  Essentially an electronic means of searching for and purchasing goods online via a computer terminal connected to the internet.

E-Commerce or online retail shopping has revolutionized the way we go about researching and purchasing or household and personal goods.  It is an irreversible trend associated with technological development in a consumer based society.  The question remains on how secure this method is and how invasive it becomes in our private life?

Literature Review

There is a large and diverse literature base that covers the merits and demerits of online and electronic shopping ( e-commerce). A good introduction is provided  in the text ‘E Commerce’ by Mamta Bhusry where all of the basics of the subject are covered including that of computer technology, security, infrastructure and an understanding of the legal requirements in e-commerce. (M.Bhusry, 2005).  There are a number of texts that review online shopping from that of the approach taken by the retailers to that of concerns for the online shopper who is new to this form of trading.  (Esterline, 2006).  The concept of globalization and online shopping has become an important feature. Sites like e-bay mean you can bid for products in different countries and have them despatched direct to your home.  (Dholakia, 2002).  As this is a technology based industry it is difficult to say how the future trends and direction of this business will develop. (Zhou, 2004).

E-Commerce Retail Shopping

Challenges for the e-business – adoption of e-commerce

There are significant challenges that a business must face in the adoption of e-business. We explore some of the Critical Success Factors (CSF’s) that are considered essential for a successful outcome. The CSF’s for the adoption of e-business initiatives span across three main areas: (1) Strategic Factors (2) Structural Factors and (3) Management Oriented Factors.  The table below illustrates the type of CSF’s that need to be managed (Dubelaar, 2005).

Strategic Factors (1)
Build of web activities avoiding business disruption The challenge of improving the business operations without wrecking the integrity of the existing business operations
Avoid duplication of business rules online Avoiding process duplication from physical to online environment; cost control.
Performance comparison with competitors in physical and online world The online system should demonstrate performance improvement statistics
Perception adjustment – e-commerce is for the benefit of the customers Get the right slant! This is to improve customer relations and not a luxury for the business

 

Structural Factors (2)
Adoption of internet without impacting core business functions The challenge of introducing the e-business and internet without making the company 100% reliant upon it
Maintenance of E-Business division from core business functionality Restricting the physical impact on the company allowing for phased adoption and growth

 

Management Oriented Factors (3)
Under commitment of resources and allocation of Executives with no e-business experience The firm must be committed to the venture ensuring adequate allocation of resources and Executive training
Lack of in house technical and web skills The right technical skillsets should be applied from the outset
Trying to get the internet to adopt too rigorous company standards Flexibility – Give the online system time to both grow and develop
Acknowledge people contributions in the change transition cycle Celebrate success! – people form the most important challenge to change

 

A study carried out by Chris Dubelarr of Bond University stated that the main issues related to that of leadership qualities, ineffective solutions design and operational impediments. (Dubelaar, 2005).  A number of research studies have been carried out on the importance of determining the CSF’s for B2C applications, one survey concluded that the most important considerations are that of  quick response times on products and services, flexibility and enhanced customer services.   (Jamil & Ahmad, 2009). Business transformation ( Change Management) is a vital component that must be supported by the Executive team and as such they need to be well informed and knowledgeable in B2C applications.  In 2007 a Norwegian Research team carried out an empirical research study looking at the CSF’s collected from a sample base of 339 Small-Medium Enterprise (SME’s) businesses in Europe. (Eikebrokk, 2007).

Advantages of online shopping

There are a number of distinct advantages in conducting online shopping. Some of these are enumerated as follows:

  1. Convenience – You can shop from the comfort of your own home and browse through a selection of different stores as opposed to going down a shopping mall.
  2. Cost – You often get better price deals shopping over the internet as the stores do not carry the overheads of a conventional shop in the mall.
  3. Variety – You often get more variety on the internet and the ability to customize your purchase to exact needs.
  4. Price Comparison – The ability to research your product over a number of stores and compare prices in order to obtain the best deal.
  5. No crowds or busy malls – Avoid the stress from crowds and busy shopping malls
  6. Sending Gifts – Quick and easy method to send gifts throughout the world e.g. Interflora
  7. Discreet Purchases – Allow purchase of discreet goods to avoid embarrassment in shopping stores e.g. condoms, sexy lingerie etc.(Anamika, 2012)

Disadvantages of online shopping

  • Some of the negative attributes to online shopping are enumerated as follows:
  • Security – Your personal details and credit card details are not always secure and this can result in potential hacking or misuse of your private information
  • Tactile – You cannot touch and feel the goods or inspect them like in the mall or store
  • Personal Service – You do not get the personal service that you find in the store
  • Delivery – Your goods have to be delivered and you may incur delivery charges and custom duties
  • Refund Policy – not always clear and causes delays in getting your cash back if you have to return goods. Can be a hassle in having to follow up troublesome vendors
  • Scams – You may be victim of scams particularly from online auction sites
  • Viruses – Some stores contain viruses and unless you have good protection on your PC you may get contaminated. This also applies to the risk of malware and cookies being transmitted to your computer.

Dell Case Study

Dell was one of the earliest entrants to E-Commerce in 1994 and its direct business over the internet provided it with marketing advantages over its close rivals like Apple, IBM and HP.

Since 1984 Dell has established itself as a brand leader of competitive based computer products, particularly in desk tops and lap top computers.  Dell had a loyal customer base because it built up a business with good supplier and customer support. They became famous as a pioneering computer company that invested in its technical capability ensuring high product quality and reliability. This being achieved whilst keeping its customer model in mind regarding flexibility and affordability of the product. (The Irish Times, 2000)

Dell perhaps lost ground to the rival of Apple who produced more creative and innovative products largely attributed to Steve Jobs (CEO) and his innovative team.  Despite this new entrant Dell seemed more prone to self-punishment when in 2007 they lost market share owing to a number of flawed products which in turn damaged its reputation of quality and reliability. Customer frustration with Dell from its user base resulted in blogs outlining the lack of support and the frustration of the customer user base.

Dell developed a strong network of suppliers and business partners in order to help building the reliable and flexible computer supplier.  An early attraction was the ability for customers to fully customise their PC by building a precise model from specifications over the internet.  The suppliers to Dell became well integrated into the order fulfilment process and supply chain. This whole value chain was controlled by Dell using a sophisticated information technology system.  At the time Dell had the largest e-commerce site in Europe managed under a project called ‘Frictionless’.  It automated most of its processes extending the scope of its sales model. This included applications like automated business processes, product configuration, order processing and technical support.  (Maguire, 2003)

Dell utilized this sophistication of technology to integrate the suppliers directly with meeting specific customer need. It essentially created a build to specification assembly line of customised PC’s providing retailers and customers with the precise configuration that they needed. Because Dell had a network of reliable suppliers they were not wholly dependent upon any one of them and this increased both its range and flexibility. (Maguire, 2003)

The importance of the supply chain was demonstrated by Dell`s understanding of what was needed to be achieved in this area.

Dell used the Direct Sales Model concept and quickly entered the retail market setting up a number of retail stores.  It had strong purchasing power and was able to build up inventories that would allow it the flexibility to build custom produced orders. This process was fully automated and as such enabled them to operate a strong supply chain without the need for extensive over stocking that ties up working capital. The high street retail outlets enabled Dell to grow and thus essentially retain a low investment profile. (Maguire, 2003)

Dell was able to deal with a variety of order concepts from simple PC configurations to that of large server and network based systems. It used the internet and call centres in order to build an extensive customer base.  This also allowed Dell to build a large knowledge base about its customers and anticipate both their current and future computing needs.  Dell spent a great deal of effort in getting to know and understand its customers. Dell used information in order to provide them with competitive advantage and build their value chain. (Dedrick, 2001)

The internet provided an easy forum for Dell to enter the international marketplace. This it did readily by setting up overseas manufacturing and distribution centres.  Dell found the following drivers that elevated them into the globalized marketplace

Drivers of Globalization

There are essentially four main drivers of the globalization concept:

Market Drivers

Cost Drivers

Government drivers

Competitive drivers

Considering each of these in turn:

Market Drivers |  Market drivers tend to be influenced by:

Basic needs of the customer

Desire for international customers

Need for global market participation

Concepts of transferable marketing

Cost Drivers | those drivers influencing cost are:

Global scale economies

Improved methods of sourcing

Differences in production methods

High operational costs

Pace of technological development

Government Drivers | those influencing government are:

Policies relating to trade and investment

Technical standards

Impact of marketing regulations

Future Trends and Improvements

The current and most recent trend is towards that of mobility via hand held devices like that of mobile phones or IPADS.  These devices provide the ability to conduct online shopping no matter where you are travelling provided that you have access to wireless internet.  Many wireless  service providers provide access by simple plug in of USB pen drives e.g. Rogers Rocket USB wireless access drive.  Future machines will have this service hard coded into the machines and linked to appropriate service suppliers.  Ultimately it may be possible to project three dimensional hologramatic images of the goods you wish to purchase, as such allowing a more intimate and realistic inspection of the goods to be  purchased.  Despite the technological aspects there remains a great deal of personal satisfaction in visiting a store.  The smell of walking into a tobacconists shop and the smell of a fine cigar.  The smell of perfume in terms of getting the scent that is right for your personality.  The ability to feel smooth silk in a shirt or dress.  In addition the social experience of walking into a store and meeting people.

Conclusions

The concept of litigation seems most prevalent in the area of IT Security.  Nearly all forms of electronic media have the potential for being involved in litigation cases.  When these instances arise one of the most important aspects will be the gathering of data or information for evidence.  Where it is believed that a criminal act has taken place the computers and network devices may be removed for evidence.  Internet Crime and particularly illegal entry into other computer systems i.e. hacking is deemed to be a Federal Offence in the USA and falls under the investigative jurisdiction of the Federal Bureau of Investigation (FBI).  Criminal computer hacking has been legally defined as any person who willingly and knowingly commits an act of cyber terrorism, credit card fraud, malicious vandalism, identity theft or other cyber-crime by hacking into a Corporate or Government system.  Such criminal acts are treated very seriously in the USA and will be subject to harsh penalties.  Such intrusions are capable of creating a tremendous amount of malicious damage. When undertaking online shopping you need to be aware of the security threats and take appropriate counter measures.

Works Cited

Anamika, S., 2012. Top 10 benefits of online shopping. [Online] Available at: http://anamikas.hubpages.com/hub/Online-shopping-sites-benefits [Accessed 30 7 2012].

Dedrick, K. L. K. a. J., 2001. Dell Computer: Using E-Commerce to Support, Irvine CA: University of California.

Dholakia, N., 2002. Global E-Commerce and Online Marketing: Watching the Evolution. Washington DC: Library of congress.

Dubelaar, C. S. A. D. V., 2005. Benefits, impediments and Critical Success Factors in B2C E-business adoption. Science Direct, 25(1), pp. 1251-1262.

Eikebrokk, T. a. O. D., 2007. An empirical investigation of competency factors affecying success in European SME’s. Information and Management, 44(4), pp. 364-383.

Esterline, K., 2006. E Business: Business Solutions to Overcome Online Shopping Concerns. Gross, Ile MI: GI Engineering.

Jamil, M. & Ahmad, N., 2009. Present status and critical success factors of e-Commerce in Bangladesh. Dhaka, Bangladesh, ICCIT 12th International Conference.

M.Bhusry, 2005. E-Commerce. London: Firewall Media.

Maguire, J., 2003. Case Study: Dell.com. [Online] Available at: http://www.ecommerce-guide.com/news/news/article.php/2013731/Case-Study-Dellcom.htm [Accessed 31 7 2012].

The Irish Times, 2000. E-Commerce within Dell. [Online] Available at: http://www.business2000.ie/pdf/pdf_7/dell_7th_ed.pdf [Accessed 30 7 2012].

Zhou, Z., 2004. E-Commerce and Information Technology in Hospitality and Tourism. In: E-Commerce and Information Technology in Hospitality and Tourism. New York: Thomson Delmar, pp. 191-192.

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