The Importance of E-commerce in Today’s Business World

Introduction

E-commerce is a subset of e-business and is essentially a platform for businesses to communicate and offer their products and services directly to the consumers through online transactions. Using an online platform, people can buy, sell, order and pay through various modes of payment without the need of face to face interaction. The transactions can be Business to Business (B2B), Business to Customer (B2C) and Customer to Customer (C2C).

In comparison, e-business refers to all business related activities that are carried out through or with the help of internet. E-business comprises of not just buying or selling of goods but all communication within the business as well as with customers, providing services to customers, financial transactions, online technical support and electronic transfer of information. E-business makes use of website, Enterprise Resource Planning (ERP) systems as well as Customer Relationship Management systems in bringing together different departments of the business and ensuring uninterrupted communication which can be used to optimize all processes such as manufacturing, operations and marketing. E-business can be Business to Business (B2B) and Business to Consumer (B2C). The main element of e-business is e-commerce which provides the ability to conduct online transactions. Amazon, eBay, and Alibaba are some examples of e-commerce businesses that are currently flourishing. Using Alibaba as a case study, this report highlights the importance of e-business and e-commerce in today’s business world.

Personal Opinion on E-commerce and E-business

There is an exponential increase in the number of people who prefer to shop online in the last few years and the number increases with each passing week. We spend most of our time browsing the internet either for study, business, work, learning, marketing or entertainment and it is very hard to imagine what we would do if there was no internet. Businesses are aware of this fact and this is the reason most business are turning to online model in contrast to the traditional brick and mortar shops to attract more customers.

There are many reasons why I strongly believe e-commerce has played an effective role in improving our daily lives and will continue to do so. Firstly, electronic commerce offers a broad range of opportunities. For people living in small cities or villages, there is lack of choice due to the limited number of shops and number of available products and services most of which are produced locally (Chaffey, 2015). The conventional model is also limited by the capacity of the merchants to stock goods and hence they continuously need to churn out fresh products to meet demand. E-commerce on the other hand is free from such limitations hence expands traditional commerce’s boundaries. With e-commerce, you can simultaneously browse several websites and compare products in real time, making the shopping experience faster and more convenient as compared to visiting different shops (Awais & Samin, 2012). Deciding on the product to purchase is also easier as you can add product to cart and make payment as per your own convenience. The average total time to make a purchase is less than 30 minutes in e-commerce where it traditionally took whole day. That is the main reason why I believe that e-commerce trumps traditional commerce providing quicker access to a variety of goods.

E-commerce also leads to reduction in prices compared to traditional business for the customers as compared to the traditional methods, selling goods and services online is cheaper for businesses due to less overhead costs. In offline commerce costs including shop rent, recurring expenses, security cost, management cost, transportation cost, inventory cost, salaries among others make it difficult for businesses to sell goods at reduced prices (Sila, 2013). That is the reason why I believe e-commerce is becoming popular as it effectively minimizes fixed and variable costs, making it possible to offer and obtain goods and services at low prices.

Also, I observe that e-commerce provides instant notifications to customers regarding best deals and offers. Traditionally, customers were unaware of what latest products were available at their local businesses until they visit the place and often by the time they came to know, the products would be outdated or out of stock. Also local retailers were unaware of the products available in the international market. Although there has been a difference in consumer habits, profile, mindset and purchasing pattern of individuals that belonged to the metros and smaller cities (Solaymani, Sohaili & Yazdinejad, 2012), generally information dissemination was slow. However, owing to the e-commerce and communication technology’s rapid growth, everyone including people that are located in the far-flung regions obtain notifications as well as messages from the sellers regarding latest discount offers instantly. In the current digital age, consumers are able to find the most suitable deals within seconds via automated notifications on their mobile phones. As a result, e-commerce has been effective in connecting consumers to businesses, removed disparity and removed the gap that existed among people living in the villages and those in the metros (Chen & Holsapple, 2013). By so doing, e-commerce has leveled the playing field for all businesses, opening up markets for all businesses globally. That is the reason why I believe e-commerce is and will continue to be a game changer.

Roles of E-business and E-commerce in Today’s World of Business

E-business is a term that encompasses e-sales, e-learning, e-commerce, e-banking, along with online communication. It plays a major role in the manner in which organizations conduct business, thus shaping the global economy. The roles that e-business plays in today’s business include the following.

Reducing business costs

The main advantage that businesses have with e-business is the reduced costs. Digitization virtually disposes of the need of having a physical presence in the form of a physical store or workplace. Except if they want to, businesses do not have to lease a space to work or pay for utilities. What's more marketing costs for an e-commerce business is less expensive in contrast to conventional marketing (Gupta, 2014). Thus, e-business provides startups and other small businesses with an opportunity to reach a larger market and to compete against big and already established organizations without incurring huge costs. Technologies like Artificial Intelligence and Machine Learning have assisted such firms to reduce operational costs, thus increasing productivity.

Greater marketing efficiency

Approximately 93% of online shoppers use search engine like Google to look for products. Through Search Engine Optimization (SEO), organizations are able to reach a larger customer base and increase customer engagement by putting into practice the best e-business practices (Ray, 2012). Email marketing and retargeting are examples of modern technologies that facilitate customer acquisition, hence offering companies the opportunity to target their ideal buyers reducing advertisement cost. Through e-business, businesses can spend their marketing budget wisely rather than on banners that are likely to be blocked or ignored by the customers.

Centralized information

The most recent e-business capacities enable associations to store huge amounts of information on the cloud keeping it secure as well as easily available. For example, cloud facilitating offers a means of putting away client data, financial records, audio and video recordings, contracts and different kinds of information eliminating the need for a physical office as all the information is always accessible at click of a mouse from anywhere in the world.

More stock control

Through e-business and latest advancements in IT, organizations can mechanize logistic processes, process orders, update stock and issue notifications. E-business permits businesses to offer more transparency to executives along with greater control (Namvar and Khalilzadeh, 2013). Automated stock management tools help businesses save their time and reduce human error that results in lower operational expenses and upgraded proficiency as they can concentrate on their core processes without stressing over trivial things.

Increased income

Latest e-business tools and systems are built for increasing revenue for a business. Such processes and methodologies bring down the expenses as well as improve efficiency within an organization (Wynn, Turner and Lau, 2013). CRM, ERP, data driven advertising and other automated functions add to the growth of an organization as greater efficiency means more productivity and more revenue as more work is accomplished in lesser time (Zhu, et al., 2015). Also, the office can effectively share significant information instantly helping them achieve the best outcomes bringing the stakeholders closer in the process.

Case Study: Alibaba

Alibaba Group is an example of a business that works through an e-business framework and it has got branches all over the world. The association's essential goal is to build a worldwide online business system with the aim of providing service to a wide client base setting up a strong business organization (Du, et al., 2013). Alibaba offers a convenient platform for vendors to connect with customers and offer their goods worldwide based on a solid Information Technology foundation. Alibaba makes use of Big Data Services connected to microfinance system (Fan, et al., 2018) enabling the organization to oversee and manage the business' statistics in real time.

The organization's unique methodology is spreading its business globally by connecting small and medium-sized organizations with a global market by varying costs depending upon the interest level in a specific location. Through its e-business model, Alibaba can boost the local businesses which greatly improve the organization's power over the local market (Leong, et al., 2016). With the help of the latest technological advancements along with its fruitful promotion technique, the organization is growing its e-business around the globe. In this manner, Alibaba fundamentally focuses at building up its e-commerce business without getting into the hassles of owning and managing its own manufacturing and warehousing units (Clark, 2018). With the click of a mouse, clients can place orders for products they need and have them delivered to their doorsteps. The organization's e-commerce strategy has encouraged the development of other independent local companies that have banded together with Alibaba to connect with their market.

Conclusion

E-business is the future of commerce and every business in order to sustain and be competitive in these times needs to incorporate some aspects of e-business if not completely transformation. Processes like information transfer, financial transactions, CRMs and others help in easier management along with delivering better and quick service which greatly impacts the business. As listed above, there are number of ways in which e-business play positive role in growth of businesses as evident in the case study of Alibaba.

References

1. Awais, M., & Samin, T. (2012). Advanced SWOT Analysis of E-commerce. International Journal of Computer Science Issues (IJCSI), 9(2), 569.
2. Chaffey, D. (2015). Digital business and e-commerce management. London: Pearson Education Limited.
3. Chen, L., & Holsapple, C. W. (2013). E-business adoption research: State of the art. Journal of Electronic Commerce Research, 14(3), 261.
4. Clark, D. (2018). Alibaba: the house that Jack Ma built. HarperCollins Publishers.
5. Du, J., Lu, J., Wu, D., Li, H., & Li, J. (2013). User acceptance of software as a service: Evidence from customers of China's leading e-commerce company, Alibaba. Journal of Systems and Software, 86(8), 2034-2044.
6. Fan, J., Tang, L., Zhu, W., & Zou, B. (2018). The alibaba effect: Spatial consumption inequality and the welfare gains from e-commerce. Journal of International Economics, 114, 203-220.
7. Gupta, A. (2014). E-Commerce: Role of E-Commerce in today’s business. International Journal of Computing and Corporate Research, 4(1), 1-8.
8. Leong, C. M. L., Pan, S. L., Newell, S., & Cui, L. (2016). The Emergence of Self-Organizing E-Commerce Ecosystems in Remote Villages of China: A Tale of Digital Empowerment for Rural Development. Mis Quarterly, 40(2), 475-484.
9. Namvar, M., & Khalilzadeh, P. (2013). Exploring the role of intellectual capital in the development of e-business models: evidence from the Iranian carpet industry. International Journal of Commerce and Management, 23(2), 97-112.
10. Ray, P. K. (2012). Integrated management from e-business perspective: Concepts, architectures and methodologies. Springer Science & Business Media.
11. Sari, A., & Onursal, O. (2013). Role of Information Security in E-Business Operations. International Journal of Information Technology and Business Management, 3(1), 90-93.
12. Sila, I. (2013). Factors affecting the adoption of B2B e-commerce technologies. Electronic commerce research, 13(2), 199-236.
13. Solaymani, S., Sohaili, K., & Yazdinejad, E. A. (2012). Adoption and use of e-commerce in SMEs. Electronic Commerce Research, 12(3), 249-263.
14. Wynn, M. G., Turner, P., & Lau, E. (2013). E-business and process change: two case studies (towards an assessment framework). Journal of Small Business and Enterprise Development, 20(4), 913-933.
15. Zhou, Q., Chen, X., & Li, S. (2018). Innovative financial approach for agricultural sustainability: A case study of Alibaba. Sustainability, 10(3), 891.
16. Zhu, Z., Zhao, J., Tang, X., & Zhang, Y. (2015). Leveraging e-business process for business value: A layered structure perspective. Information & Management, 52(6), 679-691.