Business Advantages of Electronic Commerce

Many companies are adopting electronic commerce as part of their business strategies due to the tremendous opportunities offered by this new medium of delivery. Although, business may not make a profit immediately through electronic commerce, there are other business values to be obtained through the adoption of electronic commerce which will provide a catalyst of growth for these businesses in future. The business values which can be derived are :-

Product Promotion
Product promotion can be enhanced through a direct, information-rich and multimedia interactive content infrastructure provided by the World Wide Web. The advantages of electronic commerce is the availability of product information anytime, anywhere, provided the customer has the right infrastructure (i.e. PC, modem, online service) to access this information.

Content or product can also be customised based on customer profile or input (due to the interactive nature of the World Wide Web) to suit the preference of the customers e.g. an electronic supermarket could provide different graphical user interfaces for kids, teenagers or housewives with a look appealing to each of these segments. The advertisements appearing on these pages could also be customised to appeal to the different customers. This is in line with trends in marketing such as one-to-one marketing which try and target each consumer with a specific message, according to his needs and desires.

An example is Peapod (www.peapod.com) which sells and delivers grocery to consumers. Consumers are provided with the opportunity to customise their buying experience as well as storing their personal shopping list for future use.

In an increasing competitive world where products are increasingly harder to differentiate and an abundance of traditional media messages and customers having too little time, electronic commerce offers an opportunity for new promotion strategies, thereby enhancing the branding of products.

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Time to Market
Due to the instantaneous nature of the World Wide Web, electronic commerce allows a reduction in production time of information based products. This ability to distribute information as soon as it is produced is important to certain markets especially in the print and financial markets.

In the financial markets, banks and stockbrokers have now the ability to provide its customers with instantaneous information on their account upon request. This has streamline their operation and increased their efficiency in customer service.

In the information based industry e.g. magazines and print, customers now have accesses to up-to-date information via the World Wide Web.

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Customer Service
Through web agents built into a system or a databank, electronic commerce can enhance customer service through the provision of a highly interactive environment which allows customers to obtain additional product information, download software or software patches, answers queries through auto-responders and etc. Basically, the ability to provide on-line answers to problems, through resolution guides, archives of commonly encountered problems for 24 hours a day, 365 days a year builds customer confidence and retention. Monitoring how customers use this support information also provides insight on improvement areas in current products.

A good example of excellent customer service provided by electronic commerce would the website of Federal Express (www.fedex.com) which primarily allows a customer to track the location and status of specific overnight packages.

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Branding
The popularity of the World Wide Web has ensure that corporations established a website as part of their corporate image. This is especially so for consumer products e.g. soft-drink industry which relies heavily on branding of their products to ensure market share. Electronic commerce systems will become one of the components of a brand or corporate image, especially while targeting technology-friendly customer segments.

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Reduced Pricing
The digital transmission and reusing of information on an infrastructure such as the Internet would greatly reduced the cost of personnel, phone, postage and printing especially in the service industries where the cost of customer service usually exceeds the product costs. Checking order status, getting a user statement or a bill are examples of activities which can be delivered much more cheaply using electronic commerce. This reduction in cost may eventually be transferred to customers through reduction in prices of products and services.

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New Sales Channel
Due to its interactive nature and its direct reach to customers, electronic commerce systems represent a new sales channel for existing products. This is particularly so for two kinds of products: -

- physical products which can be advertised and/or ordered on-line, such as computer hardware or books;
- Products which can additionally be delivered over the electronic commerce medium such as information or software.

Examples of the first type are the electronic catalogs such as Virtual Vineyard which sells wine, food and gifts products. These so-called electronic catalogs provide information on products, support on-line ordering and payment, and sometimes online customer service.

Electronic commerce provides significant value to markets where information is of value add to the product being purchased e.g. in the wine industry, information on the winery, the type and quality of the wine or the food that it goes well with are of significant value to customers.

In the case of information products, the electronic commerce medium actually becomes the delivery medium. As such, information products can be delivered digitally. One example of this would be www.beyond.com which sells software online and can be downloaded and used immediately after payment or www.tunes.com which sells music which can be downloaded.

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New Business Models
Due to its unique mechanism, electronic commerce systems allow for new business models, based on the wide availability of information and its direct distribution to end-customers.

An example of this would be so-called infomediaries or information brokers which repackages information e.g. Dealernet (www.dealernet.com), a site which offers comparison between types of cars, with pictures, product specification and third-party reviews.

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New Product Capabilities
Electronic commerce processes allow for new products to be created or existing products to be customised in accordance to the customer's requirements. An example of this would be Dell Computers (www.dell.com) which allows a consumer to customise the personal computer that they wish to purchase.

Other examples of new products or services which uses the strengths of electronic commerce are Switchboard, an address lookup system that has the ability to search more than ninety million names within the US. Using Switchboard, a user can locate individuals or businesses simply by typing the name into the Web page.