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Chapter 5

E-Commerce

E
-commerce has revolutionized the way in which people and organizations
buy and sell products. Trading on a local and global basis for a diverse range of
products and services is possible at the touch of a button.
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E-commerce has no geographical or cultural boundaries as it can be utilized through
the Internet, intranet, extranet or a combination of these systems. Products can be
shipped over continents and payment can be instantaneous without the need for
local currencies or foreign exchange rates.

This chapter will investigate the benefits and drawbacks for society of e-commerce
and the technologies involved. In addition, a range of security issues will be explored
from both a user and a business perspective.

This chapter will also provide information to cover a range of learning outcomes:

● Know the effects on society of e-commerce.


● Understand the technologies involved in e-commerce.
● Understand the security issues in e-commerce and the laws and guidelines that
regulate it.

107
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108 BTEC National for IT Practitioners: Business Units

Know the effects on society of e-commerce


The impact of newer technologies on products and services may be
seen as positive for an organization because of the ability to sell online,
reduce costs and increase efficiency; however, the consumer may
perceive these changes differently.
CHAPTER 5

The growth of e-commerce has contributed to different ways of buying,


selling and trading for an organization (Table 5.1).

Table 5.1 Impact of e-commerce growth


Impact on the business Impact on the consumer
More streamlined and efficient service: items can be Loss of personal one-to-one service, possibly no one to
marketed through a website, transactions can be made speak to, all transactions are carried out electronically
using e-commerce and electronic payment systems
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More variety in products and services. An organization Greater flexibility, e.g. wider payment options, ability to
can advertise more items online in a virtual shopping shop around for the best deals and compare prices
environment
Using a website to promote goods and services means that Convenience: consumers will not have to leave home
an organization does not have to have a physical high street to purchase items; all transactions can be carried out
presence, thus saving costs online

The demands of e-commerce have grown into a requirement for


organizations to provide electronic and online provisions for payments,
ordering and transaction services. Those that fail to deliver often suffer
in terms of a shift in customer loyalty to more dynamic organizations
offering these facilities.

Social implication
E-commerce has impacted on a range of social areas and interests.
Customer perspectives have changed with the growth of online
shopping, banking and entertainment options. Customer attitudes have
been influenced by the way in which e-commerce provides value-added
services that are easy to use with vast savings on high-street provisions
and minimal delivery inconveniences. Even issues over security do
not seem so major when balanced against the many benefits that
e-commerce has to offer.
In terms of the impact on business and society, e-commerce has opened
up new doorways and opportunities that never existed under the
traditional commerce framework.
Businesses are now able to offer a more holistic package to consumers that
integrates elements of marketing, using a website presence as the vehicle
for promoting products and services, sales and distribution. Almost any
business can now set up a website, and advertise and sell products and
services to the public, and depending on the size and complexity of the
provision the setup costs could be reasonably small. The increase in online
businesses has opened up a much wider portal for society in terms of more
competitive pricing, more choice and greater flexibility.

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E-Commerce 109

E-commerce has impacted on customers, business and society in a


number of positive ways. Opportunities have opened up in terms of
product and service choice, reduced prices and value for money. In
addition, smaller businesses have new opportunities to trade, without
the need for costly overheads and premises or a high-street presence to
remain competitive.
The growth rate of e-commerce has had a major impact socially: the

CHAPTER 5
‘bricks and clicks’ approach of integrating high-street presence with an
online provision has proven to be very successful for a large number of
retailers and service providers. One of the downsides of e-commerce,
however, is that because of the competitive arena, some businesses
that do have a high-street presence have suffered because they cannot
compete with online pricing, choice and services.

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Activity 5.1
1. Carry out research to compare and contrast the online presence of the
following:
● Amazon

● Tesco

● Boots

● Toys ‘R’ Us.

Try to find at least two products that are offered by three of the
organizations and check to see how competitive they are in terms of
pricing and delivery options.
2. If you were going to buy one of these products, which organization would
you choose and why?

Benefits
E-commerce has provided many opportunities for both consumers and
organizations, including:
● the generation of a global marketplace with no geographical
boundaries
● a 24/7 marketplace
● relatively low startup and running costs
● Providing a competitive edge by having an online provision
● the ability to search for countless options across the globe from the
comfort of your own environment
● access to more competitive pricing, special offers, discounts and
promotions
● the ability for organizations to track and capture customer data that
can then be used for target marketing approaches
● for many, e-commerce provides an additional source of income,
especially with the demand in online auction sites and the promotion
of e-markets and e-traders.
With the support of an excellent infrastructure, the Internet and
e-commerce have grown into an interactive shopping, entertainment,

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