E-Commerce in Business

E-Commerce in Business Free Essay

E-commerce, also known as electronic commerce, refers to different types of electronic transactions that take place between businesses and their respective stakeholders, and it involves the exchange of goods, services, and information, as well as the processing of financial transactions (Chaffey, 2016). The process became possible through the widespread use of the internet among all types of stakeholders, as nowadays, almost every single person has significant access to the worldwide web through mobile phones, computers, and other technological devices. E-commerce has made it easier for businesses to streamline processes, thus offering convenience and ease of access. The technology has several business models that include business to business, business to consumer, business to government, business to administration, consumer to consumer, government to business, and administration to business. The models are determined by the respective parties that interact through e-commerce as well as the extent to which a company incorporates its core processes while performing the transactions.

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Evolution of E-commerce in Business

Advances in e-commerce over the years have been made possible by a similar development in technology and development. E-commerce first emerged in the 1990s (Alnaser, Alrawashedh, & Saeed, 2018). Another early version of e-commerce was the electronic data interchange that made it possible for routine documents to be transferred electronically. Such processes result in more e-commerce versions that focused on offering goods and services to consumers, such as CompuServe which provides online retail products to people, was followed by the emergence of Amazon and eBay, sites that offer consumers a wide range of products to choose from, as well as the emergence of PayPal in later years, which allowed to make money transfers online.

With high-speed internet, e-commerce has evolved into a massive tool of sale, and businesses all over the world that are grappling with the effects of sticking to traditional systems transform further into the e-commerce space. E-commerce goes beyond geographical borders to the point where it does not matter anymore where a company is located since as long as it has provided an online platform to offer products to the consumers, individuals in most parts of the world can access these products and transfer funds electronically through available options. E-commerce has changed the entire chain of business processes through the use of information and communication technologies. Now, customers not only get information about products, but they can also order online, choose their preferred shipping method, and wait for their items to be delivered right to their doorstep.

The major elements that the businesses focus on are how to make the e-commerce platform more seamless and convenient for the buyers. Amazon, for instance, has emerged as a global leader in e-commerce by leading in innovations, and currently, the business makes use of drones to deliver products to consumers.

Adoption of E-commerce by Businesses

The adoption of e-commerce by businesses significantly improves their online presence in international markets as well as reduces costs that were previously realized through the use of intermediaries in the buying and selling processes. Various factors have been identified to explain why some businesses adopt e-commerce, whereas others do not. The factors have been categorized into technological, economic, and organizational ones.

Technological Factors

Technological factors include the cost of infrastructure, perceived benefit, and compatibility. Firstly, the cost to set up infrastructure can be quite high, especially for small and some medium-sized businesses; hence, most businesses that are seen to adopt e-commerce and innovate in that space are big companies that have extensive financial and even human resources. Secondly, in terms of the perceived benefit, the extent to which a business realizes and accepts the potential advantages of e-commerce is a determining factor. If during analysis, the executives are unable to understand the potential benefits that might be realized through the adoption of e-commerce, then they would not allocate resources that would facilitate the adoption of this technology. Finally, compatibility refers to the extent to which the business systems, culture, values, and practices are in tune with e-commerce. If e-commerce is not in line with the culture and values of a business and does not seem to meet the need of the organization, then it would not be adopted.

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Economic Factors

Such factors refer to external influences that determine whether a business adopts e-commerce or not. The factors include pressure from business consumers, external support, and pressure from competitors (Rahayu & Day, 2015). The pressure from consumers is highly determined by their changing needs. The emergence of e-commerce has seen consumers prefer a company that offers convenience, streamlined processes, and saves their time; if an entity does not satisfy these needs, it should either adapt or lose its consumers. Pressure from competitors mostly refers to competitors within the same industry. If a good number of competitors adopt e-commerce, then a company would adopt it just to gain a competitive edge in the industry. Lastly, external support refers to the extent to which the parties, such as the government, support e-commerce adoption. If the current legislation or government policies do not seem favorable, then a business would not adopt e-commerce.

Organizational Factors

It refers to the factors that can be perceived to be internal and include management perception, size of the business, and readiness to adopt. Managers are vital elements that determine adoption since they authorize the distribution of resources to areas in the business they deem significant. If a manager does not perceive e-commerce to be beneficial, then the business would not adopt it. If a business is small in size, the probability of adoption is lower compared to a business whose size is large. Small businesses can be constrained in terms of resources in both financial and human terms. To be ready to adopt e-commerce, an organization should have the resources and technical skills required to handle e-commerce technology and be able to innovate in that space. If a company lacks this, then it would not be ready to adopt e-commerce.

Advantages of E-commerce for Businesses

E-commerce offers several advantages to the businesses that adopt it. Firstly, one major advantage is the improved communication channels. A business can offer more and better data about its products and services to its consumers as well as have improved customer service in terms of technical support and after-sales services. Secondly, a company can reach a wider consumer base not defined by geographical boundaries, hence improving visibility in the global market, which is enabled by a search engine. A third advantage is that a business is also able to reduce costs, especially operational costs, as there is no need for a physical presence; hence, the decreased numbers of personnel as well as other transaction costs common in traditional businesses are also relatively low. A reduction in costs is followed by a relative increase in sales due to some of the aforementioned factors such as a wider consumer base. A final advantage is the ability to improve a business’ distribution channels which can further be enhanced by broadening the supplier avenues through e-marketplaces.

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Challenges of E-commerce in Business

For the most part, the emergence and continued growth of e-commerce have offered great benefits for both businesses and consumers. However, there exist some challenges (Elnaga & Shammari, 2016). The most common challenge is security, as consumers are often required to input their personal information while making online transactions, and this puts them at risk of losing their data. Apart from that, at times, the transactions fail due to system errors or other issues. It leads to a significant loss of revenue during the downtime, which might discourage the consumers from making repeat purchases in a shop, especially if business systems are known to fail often. Furthermore, a major challenge is the ability to transform a shopping customer into a buying one. More often than not, consumers like to go through products but only a few of them make an actual purchase. It is, therefore, important for a business to not only attract customers to their e-commerce platform but to also ensure that they purchase their products as well as services. Finally, online sales are often characterized by high product returns. Upon delivery, some people tend to change their minds about their products and end up returning them. It mainly hurts the small enterprises that have very limited stock and ends up making refunds.


All in all, e-commerce has made it possible for businesses to transform their processes as well as the consumer experience through innovations in technology. However, several barriers hinder adoption of the e-commerce by companies, especially those that are relatively small in size; hence, the advantages are not experienced across the board. It includes technological factors, environmental factors, as well as organizational factors. Businesses that have adopted e-commerce should also be cognizant of the challenges it poses to them as well as to the consumers to enable people to make necessary changes, and herein, there are new opportunities for the platform.

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