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					                                                     BTEC National Diploma
                                                              e-Commerce

                  Social Implications of e-Commerce

e-Commerce was not always available, in fact it is a very recent
development. As with all major changes e-commerce has implications for
businesses and consumers. Some of these are positive implications, some
are less favourable.

Changing the way a customer operates

E-Commerce allows a business to be more focused on their customer and
this can create better customer relationships and for the business, more
profits. An online business can easily give its customers more service,
and more personalised service, for example Amazon.Com provides
recommendations based on a customer’s previous shopping patterns. This
can make shopping more enjoyable for the customer.

Are there any downsides to recommendations? __________________
_______________________________________________________
_______________________________________________________




When shopping online the customer does not get to “handle” the goods,
therefore to save having to deal with many returns the company must
provide very detailed information on each product. Some companies are
excellent at doing this.

Task One

List Five Online Companies who you feel provide good product
descriptions.




                                   1                        Angela Gilmore
                                                      BTEC National Diploma
                                                               e-Commerce

   1.   __________________________________________________
   2.   __________________________________________________
   3.   __________________________________________________
   4.   __________________________________________________
   5.   __________________________________________________

List Five Online Companies who you feel advertise their products badly
and why.

   1.   __________________________________________________
   2.   __________________________________________________
   3.   __________________________________________________
   4.   __________________________________________________
   5.   __________________________________________________

Finally e-commerce allows people to shop in a very different way. The
online shop is available 24 hours a day, 7 days a week, 365 days a year.
Customers can quickly switch from one store to another and can search
for the cheapest product at the click of a button. The best online stores
will use marketing techniques to encourage customers to shop at their
store and not look elsewhere.

Task Two

Find the following items in three online stores. List the name of the
store and price and indicate which store you would use and why.

        Item       Friends     Calvin Klein   Nintendo DS       Leeds
                  DVD Box       Eternity          Lite          United
                  Set 1-10      Perfume                        Football
                                                                Shirt
  Store One
  Price One
  Store Two
  Price Two
 Store Three
 Price Three
  Buy From
    Why?




                                   2                         Angela Gilmore
                                                           BTEC National Diploma
                                                                    e-Commerce

Impact on business and society as a whole

e-Commerce can open up a global marketplace,
meaning that you can now buy goods from
anywhere in the world. This means even a small
local shop can have a massive global customer base.
It has also allowed new digital markets to be
created selling items such as MP3s, MPEG movies,
software and information.

Task Three

What effects has e-Commerce had on the music industry? Is this good
or bad in your opinion? _____________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________

For a business they are no longer limited to local suppliers. Businesses
can buy their products, or parts, from global suppliers and they can
source these at the click of a button. This form a global trading has
many impacts:-

        There is more accessible information about what is available – you
         can compare dozens of prices in seconds e.g. moneySupermarket.Com
        This can lead to large organisations, who can offer better services
         and discounts, swallowing up small stores e.g. there once was a Music
         and Book Shop in Downpatrick – it is no longer in business
        In the B2B sector firms can source and control their ordering across
         the globe
        Using EDI – electronic data interchange – orders can be sent
         automatically and instantly over an extranet – a private network on
         the Internet that exists between organisations
        E-Commerce means that even tiny organisations can be global
         companies
        This leads to more competition in the marketplace and usually to
         lower prices

The UK government has also taken advantage of e-commerce:-

         People can book their theory and practical driving tests online



                                        3                         Angela Gilmore
                                                        BTEC National Diploma
                                                                 e-Commerce

      The Post Office sells postage services online
      This allows busy people to access services in a quicker and easier
       manner

There are also negative effects of e-commerce:-

      Many small local companies are closing
      Many jobs in trade and government are being lost as the roles are
       begin replaced with automated processes

Economic and Social Impact due to the Speed of Change

e-Commerce has been used for only a decade and the speed and change in
this time has been profound. By 1999 it was a “boom” sector and
Internet search engines were more highly valued than large businesses.
On the 14 April 2000 the boom came to an end when US stock markets
crashed and suffered the largest losses in history – Microsoft alone lost
$1.8 billion in one day. The same thing happened in the UK and many e-
Commerce organisations disappeared overnight. This made people less
confident in the idea of e-Commerce but since then it has grown again.
Retail analysts IMRG state that between April 200 and December 2006
e-Commerce in the UK has grown by 3500% and worldwide sales are over
£250 billion.

The driving force behind the success of e-Commerce is information.
Information is readily available about:-

      Customers
      Suppliers
      Products
      Services

Search engines and price comparison sites
bring information together in one location
and this can be accessed in seconds. Prices
of items that are readily available and easy
to distribute have been lowered as a result.
Customers do not always make purchasing
decisions based on cost however and e-
commerce can still suffer from a lack of
trust. Many people, especially older people,



                                     4                         Angela Gilmore
                                                        BTEC National Diploma
                                                                 e-Commerce

have some very justifiable concerns about using e-commerce.           These
include the facts that:-

       Anyone can create a site on the Web – they need not be a
        legitimate business and may sell stolen or imperfect goods
       These individuals or businesses can easily remain anonymous
       Without an established brand consumers find it difficult to trust
        on-line businesses, especially when they have to enter personal
        information and credit card numbers

Task Four

List FIVE issues that would cause you concern when ordering from a little
known web site:-

   1.   __________________________________________________
   2.   __________________________________________________
   3.   __________________________________________________
   4.   __________________________________________________
   5.   __________________________________________________

Some businesses can now operate in a completely different way. These
include businesses that provide free web searches, social networking and
direction finding. Google is an example of a new type of business and it
not only competes with other search engines, it also competes with the
media industry, radio and television. In the UK, Google is only second to
ITV in advertising revenue.

How is Google able to provide free services and still be a multi-billion
pound organisation? ______________________________________
_______________________________________________________
_______________________________________________________

e-Commerce offers a fast response to economic and social changes.
Businesses that trade via e-commerce can react to changes more quickly
than a traditional business. For example imagine two businesses who
decide to lower their prices on a particular product.

For the traditional business this is time-consuming. They need to put new
price labels on every item in every store. It is also expensive in terms of




                                     5                         Angela Gilmore
                                                       BTEC National Diploma
                                                                e-Commerce

advertising. They must print new posters or perhaps change newspaper
adverts or mailing leaflets.

For the e-commerce business it is much less complicated. The changes to
the prices happen automatically. The business can simply change the
price in a database and the product is instantly available to customers at
the reduced rate. It is also very cheap. The company just needs to send
out an e-mail to all its registered customers.

Language Issues

e-Commerce allows businesses to trade on a global scale, even if the
businesses is a local craft shop based in Downpatrick. Again this raises
issues for the business and the consumer:-

      For a business to achieve a global impact requires local language
       Web sites - customers prefer to buy from sites in their native
       language
      60% of web content today is in English; but more than 50% of the
       current users do not read English
      If a business decides to use different languages for different
       areas they may still need multiple translations for different
       dialects for example, Spanish - Mexico and Spain
      Translating entire Web sites is expensive – about £120 per hour
       for human translators. Automated software translation (machine
       translation) is cheaper but it is also less accurate




Cultural Issues

Cultural issues are those that relate to the social characteristics and
behaviours of a particular society or region. Many cultural issues affect
successful e-commerce:-
    The choice of icons on Web pages becomes problematic on
      international Web sites:



                                    6                         Angela Gilmore
                                                       BTEC National Diploma
                                                                e-Commerce

          o In the US a shopping cart is useful, in the UK a shopping
            basket is more appropriate, Australians call shopping carts,
            shopping trolleys
          o In many places other than Brazil the thumbs up gesture
            means okay, in Brazil it is an obscene gesture

Brick and Click

Many successful e-businesses are existing business who have created a
strong web presence to compliment their existing
organisation. Tesco is a prime example of this
idea of “brick and click”. Their Internet side is a
billion pound industry with sales of £1226 million
in 2006 and profits of over £83 million. Tesco
has over 850,000 regular customers who place
over 250,000 orders per week.

Brick and Click organisations are very successful because:-

      They already have customer trust. The customers will have used
       their “brick” store and know there is a “real” business that they
       can communicate with
      It is less risky for an established business to set up a web
       presence than for a new business to start from scratch on the web.
       Established businesses will already have:-
          o a track record of success before they branch out
          o existing suppliers from whom they can source products
          o existing customers
          o existing processes and assets to build on
      Adding an Internet presence gives an organisation a chance to
       benefit from new economies of scale – this means that can increase
       their productivity without increasing their overheads (costs)

Providing an online presence does not always guarantee success as opening
a web store can take customers away from existing “brick” stores.

Task Five

Argos is a well established business who have built an online presence
while maintaining their traditional stores. In groups, log on to the Argos
website and consider the following questions:-



                                    7                         Angela Gilmore
                                                 BTEC National Diploma
                                                          e-Commerce



1. Why do you think Argos decided to move into e-Commerce?______
   __________________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
2. How would the move to e-Commerce fit in with the organisation’s
   aims?______________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
3. Has the e-Commerce site achieved its aims? _________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
4. What effects do you think the e-site has had on existing
   customers?_________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
5. What do you think the benefits of the e-site have been for
   Argos?_____________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________

6. What do you think the main problems have been?_____________
   __________________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________
7. What could they do to improve their e-site in the future?_______
   __________________________________________________
   __________________________________________________
   __________________________________________________
   __________________________________________________




                               8                        Angela Gilmore

				
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