2. Benefits of E-commerce
Global Marketplace
If a company is part of the global market, it means that is part
of the global online shopping market. This means that a person
in England could, for example, buy something from a company
in Australia.
Some companies are not part of the global marketplace, then it
means that it can only trade or sell to customers in its own
country, reducing the amount of potential customers the
company has.
P2
3. Benefits of E-commerce
24/7 Trading
In a normal, offline business, there are closing hours and
holidays for the employees so they can rest. This reduces the
amount of time they are open, therefore this reduces the
amount of customers to the company.
Whereas an online business that has a website with E-
commerce capabilities, can stay online and open for business
24 hours 7 days a week. This greatly increases the amount of
customers and therefore the amount of revenue.
P2
4. Benefits of E-commerce
Low Start -up & Running Costs
To start up a regular business, you need a substantial amount of money
and confidence to start up a business, it costs a lot to rent a premises and
hire employees. Also there is a lot of risk involved in starting up a physical
premises because unless you have good advertising technique’s, people
may not know about the business and slowly the business will become
bankrupt
Although an online business, has low start up costs because all that is
needed is a computer, and a website, it will costs extra to advertise. Plus
the amount of risk involved is less because it is cheaper so therefore there
is less to loose.
P2
5. Benefits of E-commerce
Search Facilities
A website may have a search function, this means that there is
a bar that a customer can type into, that allows them to search
for things on that website.
By adding this simple function to a website it greatly increases
the accessibility and user ability of website, this increases the
speed of which the website can make a sale, this in turn
increases the amount of sales I can do in an hour which
increases the amount of revenue the business can make.
P2
6. Benefits of E-commerce
Fluid Pricing
Fluid pricing is the fall and drop of prices of goods depending on demand.
For example, if a site is selling tickets to a concert and the demand is high, the price
will go up.
But if a company is selling tickets to an art show and the demand is low, then the
price will be lower.
This is another way a company can maximise the amount of money they make, the
more demand for something, the more money a company make.
P2
7. Weaknesses of E-commerce
& how to address this
Consumer Trust
Customer trust is basically what reputation a company has with its customers. This
can be increased or decreased by the quality of service or the goods supplied by a
business, or by how customers are treated e.g. Customer services.
In an online business rather than a physical store, this is harder to gain because
there is no direct face-to-face contact between customer and seller.
Because it is harder to gain customer trust a company may have less business in
its early days until it gains a decent reputation.
P2
8. Weaknesses of E-commerce
& how to address this
Lack of Human Contact
As stated before in the consumer trust area, an online business will have a
lack of human contact that you would get in a physical shop, so a customer
has to input their credit card details and part with their money without
knowing anything about what they are buying and who they are buying it
from.
This means that an online company that isn’t well known, perhaps a new or
small business, will have to work hard to gain the trust of their customers.
P2
9. Weaknesses of E-commerce
& how to address this
Product Description Problems
When a customer wants to buy something form an online website, they will
generally not know a great deal about the product they wish to buy. So they
have to rely on the information that is provided by the company. This could
be potentially problematic if the company fails to provide an apt description
of the product, if they do, they will almost certainly loose a sale to another
company that may have the same product but a better description.
P2
10. Weaknesses of E-commerce
& how to address this
Security issues
To complete a transaction in an online business, the customer must input
their credit card details in order to pay, this raises a large amount of
security issue’s.
Firstly a customer has to enter their details without knowing who is
receiving them and must trust them to only take the money for what is being
ordered
Also they must input their home address which could be a security risk for
the customer .
P2
11. The Technology
Browsers
Web Authoring Software
Web Authoring Software is software that writes HTML code automatically
The advantages of this are that, if a small company wanted to start selling
products online, but didn’t want to spend great amounts of money hiring
an employee who can write HTML code. They could buy Web Authoring
Software instead, which would cost less money and would possibly save
time by writing the code automatically.
P1
12. The Technology
Database systems
IP addresses
An IP address or Internet Protocol address, is a numerical label assigned to
any device that joins a computer network which grants that device access
so long it is connected.
An IP address can be automatically by the network by assigning a different
address to every device depending on when they connect. Or by being
statically assigned to a device by an administrator, this means that the IP
for this device will not change unless the administrator does so manually.
P1
13. The Technology
Domain Names
Multiple Domain Registration
Many large companies have more than one domain name. the reason for
having multiple domain names is simple, so that if an internet user is trying
to get to a companies website and perhaps types in the domain incorrectly,
or doesn’t know the full address, they will be directed to the correct site
because the company owns all of the incorrect domains.
Mostly it is only large companies that do this because it is expensive to
purchase multiple domain names
P1
14. The Technology
Ports & Protocols
Browser & Platform Compatibility
A large company wants its website to be compatible with as many web
browsers and as many platforms as possible to maximise the amount of
people that view the website and therefore awareness and possibly sales.
A company will usually make a website compatible on all major web
browsers and also on mobile devices such as iPads, iPods, smart phones
and tablet PC’s
P1
15. Promotion
Paying to be prominent in search engine results
Paying to be prominent in a search engine means a company can pay a search
engine, for example Google, to put their business link at the top of the search results
list when key words are searched for in the search bar. Often these links will appear
in a different colour box so they stand out.
This is were the
sponsored links are,
meaning these links
have been paid for
so they are at the
top of the page
M1
16. Promotion
Newsgroups & Forums
Another way for a business to advertise online is to set up newsgroups and forums
about their products. This is a good idea because it gets information and reviews
about a products out onto the internet, and also because the company can monitor
what is being said and can, if they wish, delete all negative comments.
This is an
example of a
public forum
concerning the
Samsung
Galaxy Note 2.
M1
17. Promotion
Banners & Pop-ups
Banners and pop-ups are a poor way of advertising online because banners are
expensive to set up because you must buy space on another companies website to
put the banner in, and even then, you must rely on the success of the other business
to get your business advertised.
Similarly pop-ups are also expensive to set up but also, most people will
automatically close pop-ups because of the amount of them that contain viruses.
This is where
Amazon have
chosen to put
advertising banner’s,
some from other
companies
M1
18. Promotion
Spam
Spam, is when a company pay another company to repeatedly send emails to every
email address they have access to try and advertise, this is a poor way of
advertising. The way this is poor is that the service is paid for in a pay-by-click
format, meaning for every time someone clicks the link in the email, they pay a small
percentage to the service provider.
Also it is poor because most people have filters on their email inboxes, so spam mail
will be automatically sent to the junk folder and deleted.
M1
19. Promotion
Ensuring An Effective User Interface
A large company wants to ensure it has an effective user interface on their
website. The reason for this is so that any visiting user will have a smooth
and flawless use of the site.
If the website has imperfections, for example;
• Brocken Hyperlinks
• Unclear fonts
• Difficult navigation
Then the customer is less likely to buy any products or services and are
even less likely to make a repeat purchase, which would overtime loose
the company money and customers
M1
20. Promotion
Establishing Customer loyalty in a virtual environment
Ensuring customer loyalty is important to a company as it will ensure repeat
purchases from existing customers. Ways a company can gain customer
loyalty is by;
• Identifying them by name when they log in
• E-mailing them directly with offers relating to their specific previous
purchases
• Offering a point system so customers can work towards a reward
All of these will gain customer loyalty which is crucial to the operation of an
E-commerce bases website where there is no human contact when buying
products or services.
M1
21. Promotion
Site Names
Memorable site names are essential to an e-commerce website, because
the harder the name is to remember or type, the more likely a customer is
to end up on a rivals website or give up and not make a purchase.
By coupling a memorable site name and previously discussed multiple
domain names, a website will maximise the amount of users that can
navigate to its website
An example of a memorable website name is Amazon.co.uk, it is easy to
remember and easy to type in because it is not to complex.
Good site names do have weaknesses, for example, they are expensive to
purchase.
M1
22. Promotion
Direct Marketing
Direct marketing is when a company targets specific audiences,
sometimes the customers a company has targeted can choose to
subscribe to an online or tangible newsletter they will receive once every
week/month that will contain offers or items specific to them.
If customers subscribe to the newsletter then it shows they have an
interest in the business and are likely to make a purchase
A weakness of direct marketing is that it is a concentrated market and
the company has less potential customers
M1
23. Security
Hacking
Hacking Prevention
An e-commerce based website must be protected against hacking.
This is essential because the website and the company will be dealing
with customers personal details including address, contact details and
bank/account details. Any leakage of this information would violate the
data protection law that all e-commerce sites must abide by.
P3, M2
24. Security
Viruses
Virus Prevention
An e-commerce website must be safe and free from viruses. If a
companies website became infected with viruses, most of its customers
wont even visit the website anymore out of fear of their computers
becoming infected also.
So companies need anti virus software for their website to ensure it
doesn’t become infected.
P3, M2
25. Security
ID Theft
ID Theft Protection
A website that requires a customer to input personal information such as
contact information and bank account details, must therefore have
sufficient protection against that information being leaked or stolen.
If this were to happen the company could be sued and customer loyalty
and reputation would go down substantially.
P3, M2
26. Security
Strong Passwords
When the company is asking the customer for their payments and/or login
details, it should prompt them so set-up the purchase or an account with
a strong password.
A strong password will help ensure the customers account cannot be
accessed by any unauthorised person, and so that the customer can trust
the company more because by prompting them to make a strong
password, it shows the company cares for customers details, which will
improve consumer trust.
P3
27. Evaluate Existing E-commerce
Business Summary
Discuss: What business sells, Why they would have moved into e-commerce, Structure of website, Layout of
products, Website security, Ease of use, Delivery options
D1
28. Evaluate Existing E-commerce
Strengths
Weaknesses
Strengths- think about the benefits for this company when moving into e-commerce. Strengths of current site.
Weaknesses- think about problems that may have had to overcome. Weaknesses of current site.
D1
