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Advantages And Disadvantages Of Online Business Information Technology Essay

Paper Type: Free Essay Subject: Information Technology
Wordcount: 1990 words Published: 1st Jan 2015

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Several decades ago nobody could have imagined that development of technologies would lead to radical changes in business management. Moreover, we did not even suppose that a usual process of buying and selling which was implemented through real communication between buyer and trader would become so convenient and accessible. Till some particular moment communication was the only way of holding negotiations we got accustomed to, which now is being gradually replaced by this new possibility to do business by using the Internet technologies. From year to year “online business” method that was intended only for privileged is becoming more and more demanded and available for everyone in the cyberspace. Electronic business has a significant impact on company performance and new ways of growth and improvement are opened for its subsequent prosperity. This improvement is achieved by changing the concept of operations and establishing closer relationship with customers. The economic basis of electronic business is radically expanding the audience, increasing marketing effectiveness, accelerating the process of buying and selling of all kinds of goods and services (Shelly & Vermaat, 2009, p.737).

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We used to refer the phrase “electronic shop” (Shelly & Vermaat, 2009, p.738) to a specialized website where web visitor is able to purchase any goods directly online and acquaints preliminarily with their descriptions. Customer’s process of buying in an electronic shop differs from the traditional form of purchasing items in usual shops. This trend of modern trade continues to grow and this is the reason why most companies are now actively converting conventional business models and are focused on multi-marketing strategy. Today, investment in electronic business is a priority for many of them. However, its solution is necessary for clear understanding of the key factors which determine the success. Although electronic business definitely has valuable advantages over other types of business, it has disadvantages which should not be overlooked.

It cannot be denied that the main benefits of online business are its low start up cost and fast development in comparison with the common one. There is no need in renting a physical space as the cyberspace is infinite area to some extent and the seller can suggest a wide range of products. Therefore the clients have more extensive choice. The more things the customer has to choose the more satisfied he/she is. For the generation of online shops it does not require a lot of efforts and time to set it up. At the beginning of the business a website’s developer should register the project and promote it through various advertising companies. All these costs do not require a lot of money expenditures while in conventional business it does. Thus, any business process, in which you can use the electronic interaction between people, has the potential for reducing expenditures, which, in turn, entails lower prices for customers (Fields, 2007).

Another important advantage of online business is its capability to attract not only local customers but also a worldwide audience with minimal effort. Of course, it is possible to reach international public through other forms of advertising like traditional ones: television, radio and print media. But all together they are not as effective in reaching potential clients around the world as electronic marketing is. “Basically, any product or service that is registered on the World Wide Web has a limitless market that transcends age, culture, geography and time zone” (Campbell, 2007). No matter of wherever and whenever the clients are, it is not a problem now to get the things they want within the shortest period. At the same time, it unites people of all ages, races and occupations into one whole community of online buyers in some meaning. Having a discussion with each other on the forums, the clients from different countries exchange their knowledge about some kind of products and get both useful information and also an international experience of communication.

Online business gives traders a possibility to earn money even if they sleep as their shops work 24 hours a day, 7 days a week. The important feature of the Internet is that it has automatic operating mode of websites and therefore the probability of missing clients is minimized in this situation because they can purchase goods at any time they want and what is of high importance is that sellers save a lot of their time. Thousands of people can surf website simultaneously without making a crowd while it is rarely happens in offline business. In addition, traders can spend enough time doing the things they like and working at the time they prefer. It is very convenient for them to manage daytime in this way as they can put the work aside whenever they like and get some rest or vice versa (Smith, 2005).

A very strong side of starting online business is the fact that in the situation of business failure the businessperson does not lose his/her life savings. Usually the activity of electronic business has to be stopped because of the deficiency of profit and thereby the businessperson has to end his/her activity. The only thing the owner can lose is his/her money that were spent for the development and promotion of business. The risk of such failure can be much bigger if business was granted franchise. It means that all the efforts the seller put into activation of business, the list of his/her patrons and customers in common, a respectful position in the business sector, communication with persons of consequence, all these life benefits disappear in a moment.

Electronic business has transformed its customer service into the convenient and effective one. Auspicious conditions were created for maintenance of confidential relationships between clients and traders. The customer can contact a commercial agent in an interactive mode to get more information about the product or service. Furthermore, the clients can read recommendations and reviews of different people within website who already have opinions about items that they want to buy or already purchased and used them. If some product the customer wants to buy is not available for the current time then it is possible to send a request to inform him/her about its appearance via e-mail. What is more convenient is that payments can be implemented online and the items can be delivered to the customers without their participation (Iyer, n.d.).

Remember the situation in the shop when people have to go through different departments to find the items they need. It takes a lot of time and power and as a consequence the amenities of shopping disappear. Fortunately, online shops have a very smart option – the possibility to search products in catalogues just by entering the keywords into search form. After several seconds the integrated search engine would find all the possible offers of goods. It is a very attractive option for people who do not like to waste a lot of time on selecting the products (Shelly & Vermaat, 2009, p.745).

The last advantage I want to pay attention is a lack of necessity in hiring personnel like software engineer to run online business. The basic thing to activate online store is to create and upload it to the Internet. Even if hire a professional programmer, it would be a kind of a temporary work which does not require permanent control. “One way around this is to outsource as many of your business functions as possible” (Kaarakainen, 2010). If later the shop owner could fulfill such things like monitoring of the website, observation of clients’ requests and some other stuff by himself/herself then there is no need in outsourcing anymore, maybe except the situations like technical problems when it is almost impossible to hold down a job without specialist’s help.

Having considered the main benefits of online business it is important to pay attention to the drawbacks as they put obstacles in the way of taking the leading position of online business running.

A use of electronic communications is becoming one of the key conditions for the survival of companies in a huge competitive environment however competition is also one of the most alarming problems. “Because competition comes in all forms and shapes, your sales pitch would have to be truly attention-calling” (Campbell, 2007). One of the necessities in the competitive activity is occasional price reduction when only the most stable business could survive. The customers often become victims of a warm work of competitive organizations and sometimes can find it difficult to make the right decision in choosing the right goods for themselves. So the only possible constructive tool in clients’ attraction could be the proper marketing strategy in the cruel wars of the business rivals.

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As online shops became accessible for all the visitors so the tendency of copying ideas which were put there is of high possibility. People tend to do these things following the main motivation of gaining as much profit as possible. In view of the fact that if one’s online business is not officially registered as the trade mark then stealing the project of website construction is not taken as a copyright offence. So that means that everyone who would take the same concept of already existing website could live with no worry. It is a very grievous aspect of open business activity when all your marketing strategies are visible and clear (Kaarakainen, 2010).

Another disadvantage that also should be observed is a security threat of supposed electronic transaction which customer usually accomplishes during the purchase. People are still worrying about security of electronic commerce in spite of the wide spread of modern software that helps to protect their personal information. Through the growing number of fraudulent schemes people in most cases are afraid of giving details of their account until they are sure about the reliability of the payment system. And such behavior is fully justified as no one would like to lose his/her money (Campbell, 2007).

As all the talks of customer and trader are implemented via the Internet it is really “hard to build a good and trusting relationships” (Burton, 2008) between them because of their isolation from each other. Most of people find it almost impossible to negotiate in this way as they do not have any idea of who they are contacting with. Therefore, the seller should endeavor a lot to satisfy all the needs of the clients and try to keep positive and friendly relationships in order to attract as many new customers as possible for the further possible collaboration.

In conclusion I would like to stress that all the mentioned advantages of online business are very strong and have conclusive proofs that maintaining business with the help of modern high technologies is optimized as much as possible and continues to develop day after day. For those who have never tried it, electronic business could be perceived as not serious occupation but this system really works. Just look at the real examples of such successful online companies like Amazon or eBay as they are the parts of the list of online giants with overwhelming profit made since their creation. Unfortunately, we should admit the fact that deficiencies hamper subsequent progress of online business techniques and traders have to cope with them. In the near future it seems to be the full dominance of high technologies in the commerce sector and its improvements would be interpreted as a fertile soil for the effectiveness of people’s saving time (Shelly & Vermaat, 2009, p.751).


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