Page 48 - Electronic Commerce

Introduction to Electronic Commerce

the level of detail in the information they obtain about a prospective purchase. Instead of
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waiting days for the mail to bring a catalog or product specification sheet, buyers can have
instant access to detailed information on the Web. Allowing customers to create their own
ideal information environment saves money and provides an opportunity for increased
sales.
Most digital products, such as software, music, video, or images, can be delivered
through the Internet to reduce the time buyers must wait to begin using their purchases.
The ability to deliver digital products online is not just a cost-reduction strategy; it can
provide an opportunity for increased sales. Intuit sells its TurboTax income tax
preparation software online and lets customers download the software immediately if they
wish. Intuit sells a considerable amount of TurboTax software late in the evening on April
14 each year. (April 15 is the deadline for filing personal income tax returns in the United
States.)
The benefits of electronic commerce extend to the general welfare of society.
Electronic payments of tax refunds, public retirement, and welfare support cost less to
issue and arrive securely and quickly when transmitted over the Internet. Furthermore,
electronic payments can be easier to audit and monitor than payments made by check,
providing protection against fraud and theft losses. To the extent that electronic
commerce enables people to telecommute, everyone benefits from the reduction in
commuter-caused traffic and pollution. Electronic commerce can also make products and
services available in remote areas. For example, distance learning makes it possible for
people to learn skills and earn degrees no matter where they live or which hours they
have available for study.

Electronic Commerce: Current Barriers
Some business processes might never lend themselves to electronic commerce. For
example, perishable foods and high-cost, unique items such as custom-designed jewelry
can be very difficult to inspect adequately from a remote location, regardless of any
technologies that might be devised in the future. Four issues currently act as barriers to
electronic commerce. These issues might be addressed as online business knowledge and
technology develop. They are as follows:
• The need for a critical mass of potential buyers to be equipped with the
technology necessary to buy online and be comfortable using that technology,
• A level of predictability in costs and revenues related to the technologies
used to undertake electronic commerce,
• Sufficient tools for both hardware and software technology integration, and
• The ability to overcome cultural and legal barriers that can prevent compa-
nies from doing business online efficiently.

The Need for a Critical Mass
Some products and services require that a critical mass of potential buyers be equipped
and willing to buy through the Internet. For example, online grocers such as Peapod
initially offered their delivery services only in a few cities. As more of Peapod’s potential

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