E-commerce (electronic commerce) can be defined as
commercial transactions of goods and services over the internet and
other computer networks (Chaudhury & Kuilboer, 2002). It consists of
online shopping, online banking and e-learning (Tkacz & Kapczynski,
2009). E-commerce is becoming increasingly popular since the spread of
the internet. The e-commerce users are businesses, consumers and
government departments (Kessler, 2009). E-commerce is controversial but
the advantages of it greatly outweigh the disadvantages.
To begin with, e-commerce offers consumers speed and convenience.
E-shopping involves a web site that sells goods and/or services without
the direct, face to face, contact between the vendor and the customer.
This process is easy and only takes a few clicks before the
client/customer has bought themself something. Compared to the
traditional way of shopping, online shopping is far more convenient. The
traditional way of shopping involves driving the car to shopping
centers and if the desired item is not there, then driving to further
shops. After getting to the desired destination, the customer has to
“fight” for parking space, walk from store to store and aisle to aisle
looking for the items desired. After that process, there is a chance the
queue for the checkouts are long. Then there is the issue of carrying
out the merchandise. This whole shopping process can take hours
(Kessler, 2009)! Many people avoid all this hassle nowadays by shopping
online in the comfort of their own home.
According to a study (Entrepreneur, 2003) 72% of online
shoppers chose convenience over privacy. In addition, consumers can shop
without time limitation with 24 hour access at because the World Wide
Web never closes. Another advantage of e-commerce is the ability to
comparison shop. Comparison shopping is the act of comparing prices of
something in advance before shopping for the best bargain. E-commerce
allows consumers to compare prices and brands and conduct research
quicker and with less effort. It also lets everyone access the global
market to purchase goods and services. The internet has no geographical
boundaries and allows people to browse through countless stores and
compare as many products as they want (Tkacz & Kapczynski, 2009) .
E-commerce allows shoppers to obtain information about
the particular product online. The World Wide Web has reviews and
detailed information on almost anything (GlobalSchoolnet, 2011). There
are websites such as EBay that have feedback from buyers that lets other
buyers know how the product really is. These reviews and feedback are
another great advantage of e-commerce because it helps protect consumers
from undesirable scams and businesses online.
Although e-commerce is becoming more popular, many people
are still concerned with the security and privacy of it. These are a
few perceived disadvantages of e-commerce. Privacy is the number one
reason that non-online shoppers do not shop online (Bilstad &
Enright, n.d). Many people, especially the middle-age or elderly do not
trust the privacy of the Internet and are concerned with their credit
card frauds, unwanted solicitation and spam, and the use of their
personal information for other purposes (Ackerman, Cranor & Reagle,
1999). Credit card fraud is one of the most common types of fraud in
online shopping. Every time a credit card is used for an online
purchase, there is the risk of credit card fraud. However this can be
reduced by transacting on a site that is secure (Chaudhury &
Kuilboer, 2002). The other safety issue is whether a site is a
legitimate and safe site to shop. To identify a secure site, look out
for a small padlock icon in the lower right hand side of the page. Many
online vendors use SSL Technology which is ‘Secure Sockets Layer’ and
protects personal data transmissions by encrypting your private details
before they are sent over the internet (Chaudhury & Kuilboer, 2002).
Another disadvantage of e-commerce is the inability to
physically check out the items being purchased. Therefore, the consumer
has to know exactly what they are purchasing by extra research and
physically going to the store and examining it first before buying
online unless they are like most people who buy products without knowing
exactly what it includes.
Shipping costs for the product sometimes exceed the value
of the item itself and is not worth purchasing. Furthermore, many
online vendors charge customers shipping costs that far exceed the true
shipping rate. When purchasing internationally, currency exchange rates
may leave the product you’re buying way expensive than the actual real
value (Entrepreneur, 2011).
E-commerce does provide consumers with redress and
protection, especially major online vendors such as B2C sites like EBay
for unsatisfied customers. When shopping online, less time is spent in
resolving invoice and other conflict if the consumer is unhappy or
displeased with the products or services There are many forms of redress
available to consumers. EBay has many protection programs and software
to protect buyers such as PayPal Buyer Protection, Dispute Resolution
Service and the Feedback System.
This portion of the paper will discuss how e-commerce
impacts modern supply chains. It will explore and discuss elements of
integration, collaboration, synchronization and key B2B entities
described in the 2004 article, “The Strategic Importance of E-Commerce
in Modern Supply Chains”, by Gibson and Edwards, from UOP EResource.
As described in the article by Gibson and Edwards, supply
chain encompasses all activities associated with the flow of materials,
information and services from raw materials through the product or
service processing facilities and warehousing, and then to the end user.
This process includes the sourcing and procuring of raw materials for
assembly and production, to inventory management, order fulfillment,
distribution, transportation, and finally delivery (Gibson, Edwards,
2004). Supply chain management spans all movement and storage of raw
materials, work-in-process inventory, and finished goods from
point-of-origin to point-of-consumption (Handfield, 2011).
E-commerce is essential in respect to supply chains.
Strategic opportunities for internet-based technology in establishing
partnering relationships and collective decision making amongst supply
chain personnel is extremely important. Internet-based technology can
provide mutual strategic benefits to all with enhanced customer service,
reduced work in progress, faster response times and enhanced
customization (Gibson, Edwards, 2004). According to this article, there
can be little doubt that the most significant enabler of improved supply
chain management efficiency is business-to-business (B2B) e-commerce.
Of course, this is dependent on the use of the internet to integrate and
synchronize supply chain activities. Internet e-commerce can remove
gaps in communication and maintain a focused view on the service given
and received by the final customer. The unpredictability of supply and
demand and the need to stay connected with supply chain partners has
made internet tools vital for competitive organizations (Gibson,
Edwards, 2004). B2B tools facilitate integration and synchronization of
the supply chain functions. This is accomplished through “part physical
and part Internet” or by fully automating the supply chain to enable
internal and external trading partners to electronically conduct
business (Gibson, Edwards, 2004).
The internet revolution enabled organizations to perform
more B2B supply chain processes such as a faster and more accurate flow
of information to assist in better decision making, easier and faster
negotiations of contracts and trade with partners and suppliers, easier
order placement and fulfillment, better logistics and warehouse
management, and easier financial transactions between trading partners
in the supply chains (Gibson, Edwards, 2004). B2B e-commerce tools
improve upon efficiencies and assists in driving supply chain to real
time. As stated in the Gibson, Edwards (2004) article, B2B e-commerce
has two main types of impact on supply chains. One is aggregation of
suppliers and buyers and the other is the facilitation of information
exchanges in businesses and relationships. Access to information through
B2B applications affect the entire business of supply chain activities
such as products, customers, suppliers, transportation, inventory, and
processes. Key entities in B2B e-commerce are the buying and selling,
trading platforms, logistic providers, network platforms, protocols of
communication and back-end integration (Gibson, Edwards, 2004).
Two obvious areas of cost savings due to e-commerce are
the procurement of direct or indirect materials that go into the product
or service and the order to delivery. Demand can be increased due to
“build to order” rather than “buying off the shelf”. Reductions in lead
times due to e-commerce make this much more viable (Gibson, Edwards,
Collaborative commerce is used for communication, design,
planning, and basically information sharing. This can be achieved
through e-commerce platforms such as email, chat rooms and online
corporate data access systems. Efficient communication and integration
is used to synchronize manufacturers and their supply chains (Gibson,
Many questions still arise in relation to e-commerce and
the buying and selling online. Tariffs, trade barriers and customs must
be considered (Malawer, 2001). Other issues that need to be resolved are
security standards and communication protocols, vendor selection and
coordination, telecommunications and outsourcing issues (Gibson,
In conclusion, E-commerce has already spread through most
of the supply chain world. These days a business would find it extremely
hard if not impossible to survive without e-commerce. Companies that
are not interested in e-commerce can basically be forced into it because
of their need to do business with the more thriving companies that
utilize e-commerce business. E-commerce is very convenient and the
advantages clearly outweigh the traditional way of transacting and
shopping. Electronic commerce has given shopping and trading a fresh
perspective because it offers consumers greater convenience, ability for
consumers to comparison shop and find out more information on various
products with ease. E-commerce also protects users’ personal financial
information and in most cases offers redress to consumers. E-commerce
is here to stay and will continue to become more powerful and stable as
users begin to explore its full potential. The tough part for a company
may be the tools to integrate to e-commerce and not the actual use of
this integrated way of business.
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