E-Business and E-Commerce: Models and Benefits

Introduction

Electronic business or the more common acronym e-business may be defined as the use of internet based services like websites and the extensive use of information and communication technologies to create value for your product, improve performance within your organization and reinforce relationships with your partners and suppliers. E-business is not the same as e-commerce by virtue of e-commerce involves the exchange of products and services between individuals or groups through buying and selling plus the marketing drives that go along with it; all of which is carried out over the internet. Therefore e- commerce is more focused on the use of the internet to improve your external activities while e-business is more of improving efficiency within your organization. (Turk: 26)

In today’s business world, it is very hard to make a distinction between the two since they go in tandem. Faster bandwidth speeds through fiber optic cables has enabled entire business empires like Ebay to be built virtually on the web without spending a huge chunk of their capital on office space. Building a business that relies almost totally on the internet for its profitability is not an easy undertaking. Strategy and implementation of your business plan are the fine line between a thriving e-business and a “just another business” on the web. While other business might have the time to analyze their various investment plans and business strategies, e-business executives need to be able to think on their feet and make hasty but productive decisions since the internet has proved to be a very fluid environment (Harmon: 45). The catch phrase or advertising platform of today might look like an out-of-fashion cardigan a few weeks or months later. You need to be able to respond to the consumer’s demands in terms of product display and delivery, today and well into the future. Also, research has shown that most consumers will show some loyalty to a particular product or service for years if they were satisfied from the first time they used it. This trend is very common with the middle-aged and older generations.

With the world economy becoming one global village and country boundaries becoming non-existent, it provides new challenges for e-businesses since your products are not only being viewed by a population in a particular demographic; products being advertised in a store at Paris are also visible to someone who is logged on in Melbourne, Australia. Therefore, the e-business must be prepared to offer a dependable level of service delivery that not only appeals to everyone but also takes into account the competition and market forces in different regions. How do they achieve this? (Hammer: 16)

A Successful E-Business

First of all, since you depend almost entirely on the internet, the business strategies that are prepared should also be joined to the hip with the IT strategies available in the market at that time since without the IT infrastructure, the line of communication with your customer will be broken. To improve your service delivery around the globe, you will have to set up various administrative departments around the globe also or simply get into partnerships with locally prominent companies. It is very important that these local departments are interconnected through the internet so as to improve flow of policy decisions and service reports. Maintaining and also improving communication lines with your suppliers and distributors will result in faster delivery of services and products to the consumers. Last but not least, encouraging the various government agencies to reduce the red tape like scrapping of unnecessary licenses will reduce the time taken in setting up a business and the extra revenue generated will result in higher taxes going back to the Government.

Since its inception in the mid-1990s the e-business phenomenon underwent rapid expansion and popularity creating overnight millionaires. The burble kept growing and growing until it eventually did burst in the infamous dot com burst of 2001. With the loss of value of these businesses and drop in share prices for the listed companies, in order to survive they had to make some radical changes so as to remain relevant. This has given rise to the different types of e-business models that are now focused on providing a particular service instead of the previous mistakes of being jacks of all trades.

E-Business Models

When business organizations decide to go online, they have to choose which e-business model will best serve their goals and improve product image, flow of information and increase their sources of revenues. The e-business model is the same as any other business model but the only difference is you have to conceptualize its implementation online. (Adams: 69)

E-Shopping

This is a process whereby consumers go through a list of various products online as they look to purchase what appeals to them. The products include stuff like clothes, furniture, cars and even apartments or houses. It’s not only products that are available online. Purchase of a majority of computer software is also done on-line and also other services like available life or health insurance plans. Catching the appeal of consumer from the very first time he or she looks at your product or service is very important and it is common practice for companies to display their better offers in bold letters and hide the hidden charges and disclaimers in fine print. Majority of stores in the retail business have online stores and this includes those that do not own any physical business premises.

Over the years, online shopping has become quite popular but it still caters for the middle and upper class since they have an easier access to credit or debit cards, which is the major mode of payment. Online shops have cast a wide net so as to increase the number of consumers they can attract. Initially, their major customers were young men in the upper class earning a high level of income and have a university education. This was attributed to the fact that men were more likely to make independent decisions in the purchase of products and ignore prominent trends and fashion statements. Women are slowly making a sizeable chunk of online shoppers but their decisions to purchase are pegged on the opinion of their friends and they prefer to have seen the product first or have a clear picture of it before purchasing.( Adams: 71)

A majority of people use a search engine like Google or Yahoo to find the products or services and this has created a whole new advertising market on these search engines due to the number and type of visitors using this method. This form of business model is advantageous to both the consumer and the business itself. The consumer has specific needs when going shopping and it is much easier to find the products that fit into these needs. Also the mode of payment and assured delivery saves on time and energy.Online businesses can quickly pick the shopping trends and adjust their products to fit to the consumer’s needs. The feedback from the buyers is also immediate making it easier to evaluate product or service performance.

E-Procurement

Electronic procurement involves the purchase or sale of services through the internet and other ICT systems like Electronic Data Interchange or Internet Resource Planning. How it works is qualified and registered users subscribe and log on to e-procurement websites so as to buy or sell various goods and services. This is different from online shopping in that access to these websites is restricted and tougher legislation is set by the governments to ensure strict business practices are maintained. Buyers or sellers are able to invite bids for their products and services or may simply set their actual costs. E-procurement provides specific real-time information of a customer’s needs to the seller or vendor enabling even far much better delivery of service. All of this is made possible by the use of software applications that allow for complex auctions and efficient inventory control on the part of the seller. (Harmon et al: 59)

E-Commerce

Electronic commerce involves buying and selling of goods and services over the internet and other ICT networks. The various services being offered in this e-business model are electronic funds transfer for example Western Union and MoneyGram, internet marketing, electronic data interchange by banks and inventory management systems. A large majority of e-commerce services involves purchase of items that can be considered “virtual” like paying via your credit card to gain access to certain websites, wiring of money around the world or having access to your bank account using a cell phone. With the continued expansion and improvement of the internet, most businesses and governments are banking their future on e-commerce to improve service delivery, increase revenue collections and cut costs. (Adams: 75)

References

Adams Jonathan, Srinivas Koushik, Guru Vasudeva, Galambos George, 2001, Patterns for E- Business: A Strategy for Reuse. IBM Press, pp 69-75.

Hammer, Michael, 1997, Beyond Reengineering: How the Process-Centered Organization Is Changing Our Work and Our Lives, HarperBusiness, pp 12-17.

Harmon Paul, 2001, Business Process Change, Morgan Kaufmann, pp 43-45.

Harmon Paul, Rosen Michael, Guttman Michael, 2001, Developing E-Business Systems and Architectures: A Manager’s Guide. Morgan Kaufmann, pp 56-59.

Turk, Turk Z, Scherer R, 2002, EWork and EBusiness in Architecture, Engineering and Construction, Taylor and Francis, pp 26-29.

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