E-Commerce

E-commerce is a relatively new technology to the world. According to the lecture on November seventeenth, e-commerce, electronic commerce, is a set of technologies, applications, and processes that link businesses and consumers to one another or each other. The main difference between traditional commerce and electronic is the simplicity of buying within the comfort of the consumer’s own home. E-commerce can sell objects that are either tangible or digital. The transaction is done completely online between the buyer and seller. The benefits of e-commerce are not one sided. It is convenient for the consumer to stay in the comfort of their household likewise it is trouble-free for the retailer to eliminate the showroom and employing salespersons. Not all online commerce is done between businesses and consumers there are three type of e-commerce discussed in the class lecture: Consumer to consumer, business to business, and business to consumer. Because of the lack of salespersons in electronic commerce the manufacturer or wholesaler now has a direct line of communication with the consumer. This process is referred to as disintermediation. In order for the retail companies to resist extinction they have combated this with reinter mediation this “gives traditional retailers a web presence” as mentioned in the lecture. Companies such as Best Buy and Wal-mart are able to sell the same items that the manufacturer would by promising better customer service or linking the web presences with their existing physical stores. This website presence is known as a portal Aggregator and it is an extra step between the retailer and the consumer. With the convenience found on both sides of the transaction what are the barriers withholding e-commerce from swallowing traditional commerce completely? A study done by Weathers, Sharma, and Wood at New York University tested the effects of seeing an item online as opposed to seeing it in person prior to purchase. “For example, the smell of flowers can be assessed prior to purchase in a bricks-and-mortar, but not an online, florist shop” (Weathers). They tested if performance uncertainty would be lowered based on if a picture was available or not, the product information was provided by an independent third-party source compared to when the information was provided by the retailer, and finally when consumers are allowed to control the presentation of information compared to when they cannot control information presentation (Weathers). The study found that pictures reduced consumer uncertainty, third party feedback reduced uncertainty for search goods not experience goods. And lastly providing shoppers control over information reduced uncertainty for search goods more than experience goods. E-commerce will not satisfy customers as much as physically seeing the goods at this point in time; however photographs, third party feedback, and information control can help online stores come closer to traditional shopping.

Weathers, Danny, Sharma, Subhash, Wood, Stacy L. (2007). Effects of online communication practices on consumer perceptions of performance uncertainty for search and experience goods. Journal of Retailing, 83, 393-401.