E-Commerce

Question 1

Section B: To what extent is it possible for e-commerce companies to gain consumer trust? (30 marks)

Answer 1

l

Question 2

Section A: What are the barriers to the adoption of e-commerce for consumers? How can companies counter these? (8 marks)

Answer 2

Barriers to adoption:

• Lack of trust in online payment systems/ fear of fraud
  Can be counteracted by using secure servers and reputable payment systems such as paypal
• Resistance to new technology
  Can be counteracted by user-friendly interface
• May like to ‘feel/try’ goods before buying
  Can be counteracted by returns policy allowing customers to easily return items for free e.g. ASOS
  Innovative ways to allow consumers to try before buy e.g. vision express
• My be concerned about data usage/protection
  Can be counteracted by ensuring data will not be used for any other purpose .

Question 3

what is e-commerce?

Answer 3

the process of buying, selling, or exchanging products, services, and information over computer networks

Question 4

what are the unique features of e-commerce?

Answer 4

ubiquity
global reach
interactivity
personalisation/customisation 
social technology

Question 5

What is the pure and partial EC distinction?

Answer 5

If at least one of these elements is digitised, it is EC:

• ordering system
• processing
• shipment

brick and mortar = (old economy) organisations, purely physical

virtual (pure play) organisations, solely online e.g. ASOS

click-and-mortar (click-and-brick) organisations e.g. Asda

Question 6

Why did most communities in the early days of e- commerce fail? What factors enable some online social networks to prosper today?

Answer 6

not enough users
culturally closed off

now: wide adoption
people more open to sharing
has become part of culture

Question 7

what is the digital economy?

Answer 7

= an economy that is based on digital technologies including digital communication networks, computers, software and other related technologies.

Question 8

what is a digital enterprise?

Answer 8

= a new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives

• reach and engage customers
• boost employee productivity
• improve operational efficiency

e.g. thetrainline, amazon

Question 9

benefits of EC to Organisations

Answer 9

efficient business transactions
global reach
business anytime anywhere
share information and knowledge
efficiency, productivity and performance 
\+ lower inventories 
\+ lower cost of distributing digitised products
\+ competitive advantage

Question 10

benefits of EC to consumers

Answer 10

\+ Inventory - huge choice
\+ Ubiquity - convenience
\+ customisation 
\+ cheaper
\+price comparisons

Question 11

Benefits of EC to society

Answer 11

+ telecommuting - facilitates working at home

+ standard of living - people in rural areas have better access to goods

Question 12

Limitations of EC (technological)

Answer 12

lack of universal standards for security, quality
integration issues
special web servers needed

Question 13

Limitations of EC (non technological)

Answer 13

security and privacy concerns
people may not trust online transactions
regulation
customers like to feel products before buying
large numbers of buyers needed to be profitable

Question 14

Barriers to EC

Answer 14

1. resistance to new technology
2. implementation difficulties
3. security concerns
4. lack of technology skills
5. lack of potential customers
6. cost

Question 15

Ethical issues

Answer 15

standards of right and wrong
monitoring
invasion of privacy
data collection and usage.

Question 16

Why did early e-commerce firms fail?

Answer 16

No. of visitors, CRM and poor planning/market research
survey found that 62% of dotcoms lacked financial skills and 50% had no marketing experience

One of the biggest mistakes early dot com businesses made was that they were more interested in attracting visitors to their website but not necessarily winning customers over.

Early e-commerce thought the most important factor was to have as many visitors as possible gather to their website and this would eventually translate into profits for their business. This was not necessarily the case and businesses failed.

Early dot com businesses also failed to take the time to properly research the situation before starting their businesses.

e.g boo.com: A fashion retailer which spent $135 million of venture capital in just 18 months,[5] and was later placed into receivership and liquidated.