Advantages & Disadvantages of Doing E-Commerce

Why should individuals and companies do e-commerce?

E-commerce has already reached a pervasive stage. Without us knowing it, we are doing e-commerce as we use our ATM card, mobile phone, credit card, and the likes.

For companies, e-commerce is an arsenal that will be used against you by competitors in getting access to important information, communicating effectively to customers, and seeking out a wider market.

Note that competition is no longer on a country-level but a global level. Those whom you never thought as competitors may become one someday as the Internet reduces market entry and cost barriers.

Not all who has access to the Internet and does e-commerce are guaranteed with success. What you do and who you know online counts a lot as well.

For companies, e-commerce has benefits that include:

1.            Improved customer service.

Banks with big ATM network/presence tend to get a large share of depositors as well. Banks offering Internet banking such as UnionBank, BDO, BPI, Metrobank, among others allowed them to tap a customer base that was unreachable for them before. Online banking has also evolved allowing deposits to pay their bills and transfer funds to 3rd parties online.

The Department of Foreign Affairs used their online presence to make passport application and renewal manageable by having Filipinos register online and book to get one.

 

2.            Increased revenue

A growing number of businesses today have realized that they can extend their reach online by making their products available through online portals like Lazada, Ensogo, CashCashPinoy, and generate sales. For fashion, Zalora is a hotspot for clothing and fashion brands to gain exposure.

3.            Access international markets

Sites like Alibaba also allows Filipinos to look for potential products and suppliers they want to market in the country. For businesses, it can also serve as a site to promote products for export.

For online service I Want TV, their service allowed anyone in the world to watch ABS-CBN TV programs and subscribe to it.

4.            Customer information and trading exchange

Classified sites like OLX and Istorya provided a venue where a buyer can also be seller. Its reputation scoring serve as means to guide anyone who would like to trade whether to trust or not.

5.            Increased customer loyalty

By listening to what customers want, airlines like Cebu Pacific and Philippine Airlines were able to maximize the use of online facilities to sell tickets way ahead of time by offering great deals. Being able to check-in early online, passengers don’t have to pass through long cues anymore.

Fastfood burger McDonalds use their online presence to give the McDo treat anytime and almost anywhere by allowing customers to order online and have it delivered to their doorsteps.

6.            Improve competitive position

Using job sites like Jobstreet, OnlineJobs.ph, WorkAbroad.ph allows applicants to know ahead on what they need to make themselves competitive in the job market. Negotiate salary and perks too by knowing what is offered in the market.

7.            Reduce procurement and operation cost

For service providers and freelancers, getting clients typically involve face-to-face client meetings and negotiations. With online services like Upwork, providers can now bid for projects online. Companies can also use the platform to seek for hard-to-find skills and manage the project deliverable done.

For advertisers looking for blogging platforms to market to, Nuffnang Philippines is a popular destination to get exposure. For bloggers, the platform is also a vehicle to generate income for one’s blog.

For logistic entities, e-commerce provided new revenue opportunities as more companies and individuals now sell products online and have them shipped through entities like LBC.

Businesses who also would like to bid for government requirements can also check PhilGEPS. This electronic procurement system platform requires government agencies requires to post their requirements.

8.            Attract long-term investment

The Internet has serve as a popular venue to market products and services that will require long term investment on the part of buyers. For real estate portals like Lamudi, Property24, Carmudi, Filipinos have the opportunity to scout for potential investments (like home or car) that suit their needs and budget.

9.            Venue for trial marketing

Instead of just advertising with no guaranteed returns, deal sites like Metrodeal give companies a channel where they can market their products and services where the customer pay to avail it at discounted rates. This way, the advertising money is spent on companies who avail of the special offer instead.

Munchpunch is a site also tapped by the restaurant sector to give freebies and perks to its site visitors. Encouraging prospective customers to try their offerings.

Individual risks online

There are also disadvantages (or problems) in Internet and e-commerce that you must be aware of.

1.            There’s a lot of unsolicited (spam) and virus-infected e-mail being sent and received.

It is wise to have three e-mail accounts: work, personal, subscriptions. The reason why you’d like to separate each one is to ensure that unproductive e-mail will not mix with important ones and vice versa. Also, don’t forget to use different alphanumeric password for each and change it on a regular basis. Use an e-mail service provider that blocks spam and virus-infected e-mails such as Yahoo Mail (http://mail.yahoo.com), 0Spam (http://www.0spam.com), and MailBlocks (http://www.mailblocks.com).

When in chat rooms, be very wary of accepting files for they maybe infected or have hidden programs intended to monitor Internet activity. Files, programs or music, sold commercially can’t be shared to others unless licensed for such purpose. Downloading copyrighted material is a crime and there are severe penalties corresponding to it.

2.            You can be misinterpreted and sued.

Be careful when sending e-mail and joining forums. Unless you’re using encryption software, assume that messages exchanged over the Internet are not secure and can be forwarded to other individuals. As a rule of thumb, whatever you won’t tell people you don’t know in a public meeting don’t say it online.

We’ve seen individuals who end up having to take back the bad things they say online about another person or entity to avoid being sued for libel.

As an additional reminder:

If you received an interesting e-mail (whose content is from a website or another resource) and would like to forward it to another person, make sure to ask the person’s permission first to avoid copyright violation.

Don’t use all capital letters when typing an e-mail message. The recipient may assume that you’re shouting.

Be careful when you reply or forward an e-mail message. Make sure it will only be sent to its intended recipient. The last thing that you want to do is make a sarcastic and derogatory remark only to be read by a lot of people who don’t need to know.

Don’t send e-mails with attachment without asking for permission first. This is of absolute importance especially to people who don’t know you.

3.            It can waste a lot of your time.

The Internet is an important resource infrastructure. Use it well and as necessary. Don’t spend hours chatting online and playing games instead of spending time with your friends and family. Use it in moderation, always. Neither should you waste your time arguing or engaging in unnecessary “word” war in discussion groups.

Aside from using up valuable Internet hours, you will create an impression about yourself that will cause you more harm.

4.            You can lose your privacy (and be stalked too)

Don’t tell things about yourself in a website or chat room that you won’t otherwise tell a stranger. (especially when talking about other people)

When joining Internet communities, only fill-up the minimum required information. Find out as well how the site use the information you provide. Do they sell or trade membership lists? For what purpose do they use it? If a site asks for personal details that you believe is not needed for the service you’re signing up to, it is better to back out rather than compromise your privacy.

5.            You can be misinformed

Not all e-mails and information found on the Internet, even if it came from friends, can be considered as 100% true and accurate. Make sure to always verify and check if it came from a reliable source. I remember receiving a text sometime ago saying that Pope John Paul II is dead. I got another one that says Bill Gates is dead via e-mail. Before sharing the news to someone else, I checked every credible news source online and no information of such deaths can be found.

This is also true for virus alerts. There were so many virus hoax alerts asking you to delete your files. Before doing anything, make sure to validate it from anti-virus sites, no matter how trustworthy your friends are.

Another example of this nature is freebie promo asking you to forward a message to 20 friends and get a cellular phone, among others. Always verify!

6.            Your credit card and personal information can be sold.

If buying from websites, make sure they are highly recommended by friends and have been written by well-recognized publications. Else, you might end up falling into a trap. What you thought was a cheap music site turned out to be a credit card fraud site.

Don’t use high limit credit cards in making regular over-the-counter purchases. It is even much more risky to purchase in traditional establishments where your credit card information and signature is directly captured.

Regularly monitor your credit card and bank statement for any unusual purchasing activity. The banks are more than willing to reverse the charges if you complain truthfully about it.

7.            The products you ordered may not arrive at all.

When you buy products online, keep logs, confirmation, and email exchange with the seller for proper documentation.

8.            You can be spoofed.

Make sure to protect your identity and make it clear to customers as to who is only authorized to contact them. No credible and reliable website would asked for user ids, password, among others using other means of communication like phone call, fax, text message, or e-mail.

9.            You can be hacked.

If your computer is unprotected, hackers can gain access to your files and damage your system; install programs without your knowledge with the intent of monitoring your keystrokes to discover your account details and password; or use your computer as a jump-off point to attack other computers.

You should install a personal firewall to protect yourself from these attacks. You can download one at ZoneLabs (http://www.zonelabs.com). However, note that a firewall can only be effective if you are also cautious in disclosing personal information.

When using Internet facilities outside of your home like at work, school, or Internet rentals, make sure that no one watches you when typing in your password and change it as often as possible. If you accessed websites in these places that requires you to type in your password, after using, make sure to clear the browser’s cache or history settings to remove traces of the websites you visited.

At all times, it is best not to allow your computer programs to remember your password. Better to go through the minor inconvenience of logging in whenever you need to gain access rather than compromise your security and privacy when you least expected it.

Parental Guidance on Internet Use by Children

The Internet can be useful and fun as well for children. However, parents or adults should properly guide them in order to maximize Internet use and make it educationally worthwhile. A good Internet guide for kids online is NetMom (http://www.netmom.com).

Organization risks online

There are also disadvantages in e-commerce that companies must be aware of.

1.            Customer dissatisfaction.

The Internet allows real time processing of transactions and communication 24 hours a day, 7 days a week. When a customer or site visitor sends you an e-mail complaint, request, or praises, you are expected to reply as soon as possible. A company that doesn’t have resources and procedures will have to reconsider its decision in putting a website online and heavily promote it.

If a business entity provides Internet and/or e-mail access to employees, it must ensure that a written Corporate Internet, E-mail, and Software Use Policy or Guidelines is in place and signed by personnel with Internet and/or e-mail access.

2.            Poor priority status. 

Different companies have reasons for putting up their online presence. A website that does not have a strategy tied in to organizational objectives will not likely be able to achieve success. Like in the real world, any product or service, no matter how good, if not promoted and made useful as well, will not be known. Resources have to be allocated fully in order to make this endeavor successful.

3.            Not e-commerce ready.

Companies must plan and prepare extensively when doing e-commerce.  The last thing you want is to offer great products and service but not have any means of delivering it making your customers frustrated. Here’s a case study example to ponder (my first e-commerce site but no longer online).

“Pinoy Online Bookstore (http://www.itcc.com.ph) was created in 1997 with the intent of selling Filipino books online to the local market. All of a sudden, Filipinos based overseas started expressing their intent to buy books.  ITCC does not have a payment system yet and can’t accommodate those orders.

ITCC preferred cash payment as it does not have inventory and credit limit with book publishers yet. All ordered books from publishers will have to be paid in cash before deliveries can be made.

Another issue that ITCC encountered is the local and international shipping charges for books were quite expensive. Provincial customers were requested to pay through bank deposit first, before ITCC can deliver. This required a lot of trust from customers and was considered of great inconvenience.

Finally, ITCC discovered that a lot of local book publishers were not computerized. They can’t give ITCC electronic copy of outline, abstracts, author profile, and book cover image. As a result, ITCC have to borrow the books, type the abstracts, scan the book cover, then upload it online.

With all of these problems, Pinoy Online Bookstore decided to shut down its site in 1998.”

E-Commerce can be very powerful. However, without proper planning, it can be a costly venture that will take time to fly.

Additional reference:

• Delivery delay hurts Philippines E-Commerce