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What is E-Commerce? Essay Sample

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What is E-Commerce? Essay Sample

Introduction

In this assignment we shall be looking closely at how e-commerce can be defined, how it has originated and the issues related closely to it. Further, we shall take a look at how the growth of trade has increased on the internet. From here I shall be giving descriptions on how this has affected companies that undertake the buying and selling of goods over the internet.

Task 1

The word e-commerce can be broken down into the following terms. E, standing for Electronic and Commerce, the buying and selling of goods or merchandise over the internet has become an ever more prominent part of the modern day life. We are now a community of online shoppers, far from the day of walking to the nearest high street to browse the shop windows. It’s near enough every where, from radio and television advertisements, to word of mouth, it’s almost unavoidable. But, is it really worth the while? And how did it all start? Let’s take a look.

E-commerce was really a bi product of the internet. At first we were not too sure whether this now booming industry would explode at all, however we have come to see this happen. When considering e-commerce however we should not just think of the buying and selling of groceries from your “local” supermarket. It’s far more global than this, if someone was to mention e-commerce instantly now we think of E-Bay. E-Bay has a huge number of users, some 250,000,000+ and this will be a constantly growing figure. It’s the same with bank transactions, this can all be done online and this is a form of e-commerce also. But why has this become such a huge part of the modern day life, when 10 years ago it was almost unheard of? The reason for this is the demand to make our lives easier. Making the most of our time provides the efficiency needed to maximise returns in other areas. Below is a bullet point list of a few of the areas where we use e-commerce today.

* Online shopping

* Banking

* Trading of goods (E-bay)

An alternative to E-bay is a website known as QXL, although its not globally as big as e-bay it offers a direct alternative. This is why e-commerce is good, it offers users selection. Fir example, walking down the high street we wish to purchase an item and one shop doesn’t posses it. In this instance we would have to go home find an alternative shop in the directory and then take the time to go and visit it (dependent on whether we phone to see if they have the item in the first place). If we were to search E-Bay for an item, and it wasn’t listed all we would have to do is search for the same thing on a different website, this is very time effective and, in some cases cost effective.

QXL is trying to be Europe’s answer to EBAY, although, unfortunately for them E-Bay has already swept up the majority of the market. It offers all the same facilities as well as selling the same sort of products. Below is a list of the key figures of QXL as of the end of March 2007

* Sales : $71.5

* One year growth: 263.5%

* Net income: $13.5mill

* Income growth: 284.6%

It sounds like an amazing trade system to get involved with, however we must remember that this form of trading is not beneficial for all items and products, and this is why we have seen a vast growth in e-commerce for certain items as opposed to others. An example of this is payment type. Although we have become all too familiar with the credit card, it is predicted that around 26% of payment methods by 2009 will use alternative methods. But what are these alternative methods? Well these can be third party members for example. Places like E-Bay, one of the most rapidly growing businesses since the revolution of the internet have become all to concerned with internet security to ensure there business maintains repeat business. That’s why it is important to gain the trust of their users when handling “money” over the internet. E-Bay therefore had to think of a strategy to minimise the chances of fraud and so on. This was the introduction of another type of business, Pay Pal.

Pay Pal is a third party business used in the world of e-commerce to aid users in sending funds over the internet, and disregards the use of its counterpart, cheques and money orders. Conveniently, the site charges a fee, and is owned by E-Bay (although originally it was not, it was only bought by E-bay in 1999)! The revolution of the third party seems to me a way of attracting more and more people in to buying over the internet, with the proposition of more secure payment methods. It has been adopted now by more and more e-commerce sites and has now become a “standard” form of payment. It operates with over 103 markets and manages over 133 million accounts.

This is a leader in its field, but pay pal has a competitor in the form of e-check. It allows transfer of funds to be distributed to people via the internet, and they claim to be able to clear transactions much faster than written checks. This sounds very appealing but both of the systems have had some serious problems with data transmission in relation to security. It has become an ever prominent concern for these two big firms and a problem that won’t seem to go away. What’s important to bear in mind however is that the risk is still as great if not greater when shopping offline opposed to online.

Using these sites to trade money has become an ever increasing way for people to make money. E-commerce has opened the door for new, smaller businesses and has allowed the general public to start up there own business ventures. This however can lead to a few problems, the increased chance of debt. E-Bay allows users to bid in an auction like procedure, and once involved it becomes hard to withdraw. What we must remember is that sites like this are big time corporations, and however honest they appear to be it is obvious they have one goal, to make money.

From looking at the business side of e-commerce a little deeper we can begin to see a few real plus points. They shall be listed below;

* Increase Sales

* Decreases Costs

* Increases Profits

* Expands the size of the market from regional to global

Above are just a few reasons as to why the e-commerce industry has become such a big part of the modern day life. The bullet pointed list to any business would appear hugely attractive, and thus has been adopted globally. Expanding the potential audience of a particular product is going to maximize chances of profit, and when businesses started to see that this was possible from e-commerce they all jumped on the bandwagon.

To use an online shopping website we have numerous steps that need to be undertaken in order for to be carried out successfully. This can be seen below;

Online shopping is a means by which users of the internet can access a local supermarket web page and are entitles to order food for home delivery.

It’s a process that has an application form embedded into the code of the web page, the user selects the products that they require and order. From here the user will be prompted for card payment and this must be entered and sent to the store. When this has been completed the address is logged and a delivery time given.

Although we don’t always pay with card it is the most prominent way to do so. Further, it is the most simple, with the day to day transactions of cash being slowly phased out by the use of e-commerce and plastic. Each shopping centre such as Tescos and Asda and Sainsburys offer discounts on delivery when we spend a certain amount, if you spend over �50 for example then delivery may be free; anything under then there is a �10 charge. This is just an example as every company has differing price guides making it very hard to compare. Above I have shown the inputs processes and outputs required by the user and the store in order for this to be a productive method of shopping, although it does get a lot more in depth.

Task 2

The use of the internet has become far greater, seeing as the accessibility of it has increased. Nearly every person has access to the internet and thus we can see examples of this when looking at the increase on trade on the internet. Looking at figures becomes quite astonishing when we look at the actual growth in usage of the internet in the first place. The figures that I shall be presenting you with now have been taken from the internet site internet world stats and provided graphs and images portraying the increase in usage and so on. Over the page is a graph outlining the increase in usage of the internet.

World Regions

Population

( 2007 Est.)

Population

% of World

Internet Usage,

Latest Data

% Population

( Penetration )

Usage

% of World

Usage Growth

2000-2007

Africa

933,448,292

14.2 %

33,545,600

3.6 %

2.9 %

643.1 %

Asia

3,712,527,624

56.5 %

436,758,162

11.8 %

37.2 %

282.1 %

Europe

809,624,686

12.3 %

321,853,477

39.8 %

27.4%

206.2 %

Middle East

193,452,727

2.9 %

19,539,300

10.1 %

1.7 %

494.8 %

North America

334,538,018

5.1 %

232,655,287

69.5 %

19.8%

115.2 %

Latin America/Caribbean

556,606,627

8.5 %

109,961,609

19.8 %

9.4 %

508.6 %

Oceania / Australia

34,468,443

0.5 %

18,796,490

54.5 %

1.6 %

146.7 %

WORLD TOTAL

6,574,666,417

100.0 %

1,173,109,925

17.8 %

100.0 %

225.0 %

If we look closely at the end column we can see that the growth of the internet usage around the world is huge. For example, in Africa we can see in the last seven years an increase in over 643%. That’s a massive increase. In Europe there is over a 200% increase. This is obviously going to lead to a rise in internet trading, especially when we consider the way in which people try so hard today to maximise the efficiency of there spare time.

As we can see from the graph above, the increase in user demand from the last seven years is directly proportional to the increase in internet usage. This really does state the obvious, and realising this means that we can start to build an image of what the turnover increase would be like for the company. Over all we can see that the internet has provided companies like e-bay the chance to grow with massive rewards. As another example, Pay Pal would have increased greatly from the success of e-bay providing them with a knock on effect. In general terms we derive from this that the success of an internet firm normally provides another with an opportunity to flourish and so on.

Conclusion

E-commerce will continue to grow, although the rate at which it does will slow down I believe, as the demand for new things will get less as people run out of ideas. Never the less, the world of e-commerce is an amazing prospect. With anyone now able to set up their own website, the endless possibilities of items to sell means that it is a trade that can only continue to grow.

Bibliography

http://images.google.co.uk/imgres?imgurl=http://ebaystrategies.blogs.com/ebay_strategies/WindowsLiveWriter/WallSt.TurnsBullishoneBay_86EB/ebay_amzn_ecomm_thumb%255B10%255D.jpg&imgrefurl=http://ebaystrategies.blogs.com/ebay_strategies/2006/08/index.html&h=255&w=402&sz=52&hl=en&start=28&sig2=49pU_VrOU_SEkRy8nxk1FQ&um=1&tbnid=rQ20yeEUh3V8pM:&tbnh=79&tbnw=124&ei=oTL2Rp_8LqiqxAGtlZjhDA&prev=/images%3Fq%3Dgrowth%2Bof%2Bebay%26start%3D18%26ndsp%3D18%26svnum%3D10%26um%3D1%26hl%3Den%26sa%3DN

www.internetworldstats.com

www.wikipedia.com

www.about.com

www.ebay.com

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