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Advantages of E-business

Some advantages of an e-business are given as under:

Personalized service

Product, place, price and promotion are generally recognized as the 4 P’s of marketing in relation to traditional offline businesses. However, personalization is the 5th ‘P’ added to the other 4 P’s when we talk about an e-business. In fact, the nature of internet technology is such that the information about the online customers including their buying behavior can be recorded in the databases. This information can be utilized by the e-commerce site to study the needs of a particular customer. Based upon that the site can do customization and provide a personalized service to the customer.

High-quality customer service

Customers can provide their feedback or register their complaints quite conveniently in case of online business as compared to offline business, and in light of that an e-business can improve its customer services.

No inventory cost

An e-business can have minimum overhead cost. You do not need to have any special physical place to start your business or hire any staff to operate the business as required in offline business. One can start an ebusiness as an intermediary or a middle man. In that case one does not require any warehouses for holding the inventory. An e-business can receive orders and get them fulfilled by procuring the ordered goods form open market without bearing the inventory cost.

Worldwide reach of your business

An online business has global reach. In a way people living anywhere in the world are potential customers of an e-business. Moreover, the e-commerce site is open 24 hours a day, so shopping can be done from there at any time.

Electronic catalogues

Electronic catalogues are used in case of an online shop. They have many advantages over paper catalogues. Therefore, online shopping can be done more quickly and in a more convenient environment.

Bulk transactions

One can do bulk transactions during one visit to an e-shop, since there is no limitation of collecting, packaging or carrying goods in contrast to shopping from a traditional offline shop.

Improved supply chain management

Typical members of a supply chain management are suppliers, manufacturers and end customers. If suppliers of raw material have online presence, the manufacturers can place emergency orders to them, which can be electronically/quickly processed on the supplier side. Thus, just in time delivery of raw material is possible without requiring the manufacturer to arrange for the accommodation to hold the inventory. Ultimately, the goods can be quickly delivered to the end customers due to the improved supply chain management.


Disadvantages of E-business

Some disadvantages of an e-business are given as under:

Less security

The biggest obstacle in the growth of e-commerce is the issue of security. Internet is not a secured medium of communication. There are tools or options available to hackers whereby they can not only monitor but also control any data communicated over the internet. Particularly, people are not comfortable while providing their financial information (credit card no. etc.) online due to the fact that this information can be hacked and misused.

Less privacy

The nature of internet technology is such that private information of the online customers can be easily collected and recorded on the server side. The buying pattern of a customer can be known to an e-shop with the help of certain sophisticated tools. You know that cookies can be used to track customers online. On one hand these technologies are useful for doing customization but on the other, they can be said to have caused the breach of informational privacy rights of a person.

No physical proximity with items purchased

In certain cases the customers cannot decide about buying a thing before they can physically examine it. For example, a customer would ideally want to touch and feel the texture of a piece of cloth before buying. Similarly, a customer would actually want to smell a perfume before purchasing it. In the above or any similar case, people cannot expect to physically examine/test the thing while buying it online. Rather, they would prefer to buy such things from physical shops. An e-business has a limitation in this regard.

Online catalogues vs. Paper catalogues Paper catalogs Advantages

Easy to create a catalog without high technology Reader is able to look at the catalog without computer system More portable than electronic catalog


Difficult to update changes in the product information Only limited number of products can be displayed

Online or electronic catalogs Advantages

Easy to update product information Able to integrate with the purchasing process Good search and comparison capabilities Able to provide timely, up-to-date product information Can provide broad range of product information Possibility of adding voice and motion pictures Cost savings Easy to customize



Difficult to develop catalogues Large fixed cost if used for small no. of products Need for customer skill to deal with computers and browsers

E-Business Models

Following are some popular online businesses that one currently finds on the web:

Storefront Model

It represents basic form of e-commerce where buyers and sellers interact directly. Merchants need to organize online catalog of products, take orders through their websites, accept payments in a secure environment and send items to the customers. They can also store and manage customer data in databases. A storefront model uses the shopping cart technology which allows customers to accumulate items they want to buy during shopping. This is quite popular in B2C transactions.

Auction Model

In this model there are auction sites to which the users can log-on and assume the role of a bidder or seller. As a seller, one has to specify the minimum price to sell one’s item (called reserve price), the description of the item and the deadline to close the auction. At the end of the auction, the seller and the bidder are notified by the auction site and the payment mechanism and delivery mode is worked out. Auction sites charge commission on sales.

Online Banking

There is an online bank providing banking services to the customers through internet including services of electronic funds transfer.

Online Trading and Lending

Online trading is buying and selling of stocks/shares of listed companies using internet. Many brokerage houses have established an online presence. Online lending is providing loan through an internet transaction.

Online Recruiting

Employers can recruit and job searchers can search for jobs effectively through online recruiting web sites.

Online News Services

Many newspapers/magazines have online presence, providing 24-hour updates. Online publishing is attractive because printing and distribution costs are not involved in it.

Online Travel Services

One can make travel arrangements online without going to travel agent. It is convenient and less costly. There are online businesses which help customers find discount fares for airline tickets, hotel rooms and rental cars or assist in case of lost luggage.

Online Entertainment

Internet technology can quickly provide information with high quality multimedia. Therefore, such ebusinesses have emerged which sell music albums, movie tickets, video films etc. The content can be easily downloaded by the customer in this case.


Online Automotive Sites and Energy Online

Certain web sites allow users to search and purchase new and used cars and their spare parts. Also, there are sites where buyers and sellers can buy, sell and distribute energy (oil, electricity etc.) on the web.

Selling Intellectual Property Online

Some e-businesses deal in the sale of intellectual property rights of companies such as patents, trade marks, trade names etc.

Online Art Dealers

Artwork can be bought from the web at a discount, e.g pictures, paintings, posters etc.

E- Learning

Universities and various training institutes are offering high-quality distance education over the web. Online Notes and other reading material can be easily downloaded to one’s computer. Virtual University is an example of this type of business model.

Online Service Providers

These e-businesses help improve policies, procedures, customer service and general operations of other businesses. They can provide consultancy/professional services, for example, web site development services, online legal consultancy services etc.

Online Shopping Malls

Online shopping malls are those web sites which present customers with a wide selection of products and services at a single place. Thus, Instead of making several separate purchases, customers can use the mall’s shopping cart technology to purchase items from many stores in a single transaction.

Portal Model

Portals are the web sites which provide chance to the visitors to find almost everything in one place. Horizontal portals provide information about a very broad range of topics. Search engine is the example of a horizontal portal. Vertical portals provide information pertaining to a single area of interest. Community Portals such as those related to medical or legal profession are the examples of a vertical portal. Online shopping is a popular addition to the some portals such as ‘yahoo.com’. Portals allow users to browse independently owned storefronts unlike online shopping malls.

Brick-and-Mortar vs. Click-and-Mortar businesses

These two terms refer to the offline and the online businesses, respectively. Where a company is doing its business both online and offline, there is often the problem of lack of proper integration between the two different channels of business.

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