Benefits of eCommerce

The processes involved with conducting business on the Internet and opening an eCommerce
shop to sell from have several benefits to both merchants and the customers who buy from
them. The biggest benefits of conducting business Online include a cheaper upfront cost to
the merchant, it's easier to set up and open the store and it's faster to get an Online business
up, running and making sales.

Helps Create New Relationship Opportunities:

Expanding or opening an eBusiness can create a world of opportunity and helps to establish
new relationships with potential customers, potential business associates and new product
manufacturers. Just by being in an easy to find location that is accessible to users all over the
world, you will be available for others to find and approach you about new opportunities.
Customers who don't know you exist will know about you, product suppliers will request you
add their items and other businesses will approach you about partnership opportunities. Many
of these opportunities would not present themselves without an Online presence or site for
them to discover you on their own.

Open for Business 24x7:

An eCommerce site basically gives you the ability to have unlimited store hours, giving your
customers 24 hours a day, 7 days a week access to shop and buy items from you. Some
merchants choose to limit their hours to 5 days a week, but orders can still be made over the
weekend and customers can still make contact 24/7 via email, phone or fax. In addition, the
costs associated with having your store open 24/7 are much less than maintaining a physical
storefront or phone operator with 247 operation capability. You can literally take orders and
let customers shop while you sleep, take vacations or from remote locations.

Increases Brand or Product Awareness:

Having an Online business means that you can literally reach out to millions of consumers
looking for what you sell anywhere in the world. By reaching out to new markets and
displaying your site prominently in front of them, you will be able to help increase your
company/domain brand name and also increase awareness about your product line. By giving
users 24/7 access in an easy to find location, you will help to create more word of mouth buzz
for your eBusiness, in turn helping to promote your brand name and products. Users who
haven't heard of you will discover you exist and help spread the word about you.

Helps Establish Customer Loyalty:

An eCommerce storefront will help create an easier means for your customers to purchase the
items you sell and offers a unique way to display and describe your products in a informative,
visual and interactive way. The customers you have will become more loyal shoppers each
time they visit, making eCommerce great for improved customer satisfaction and visitor
loyalty. Now that you offer your products for sale Online, consumers will be able to shop
from your catalog more easily, get updates on new items or product discounts and can shop
or buy anytime they wish.

Potential to Increase Overall Business Sales:

An eCommerce store that is an extension of a physical storefront is a great way to boost

overall business sales and potentially increase company profits across the board. Companies
who already do business from a physical location are typically unaware of how much more
they could be making if only they were to expand into their Online marketplaces. Selling
Online opens up many opportunities for businesses both new and old. It's a great way to
increase sales, especially if you already have a physical store.

Potential to Increase Company Profits:

As mentioned above, opening an Online extension of your store or moving your business
solely Online are great ways to boost sales and potentially profits. Remember, just because
SALES increase it does not necessarily mean that company PROFITS will increase also.
Online businesses do have a greater chance of increasing sales and profits by opening up an
eCommerce store to sell the items they offer. Sales and profits are the lifeblood of any
company, so it makes sense to increase them where ever possible and whenever possible
throughout the existence of your company. More sales, more profits, bigger budgets, etc.
Potential to Decrease Some Costs:

In addition to potentially increasing sales and profits, eBusiness owners can also typically
reduce the costs of running their business by moving it or expanding it into the Online world.
eCommerce stores can run with less employees including sales staff, customer service reps,
order fulfillment staff and others. eBusinesses also do not need a physical location in order to
stay operational, which can reduce costs related to building leases, phone bills, utility costs
and other costs associated with running a brick-and-mortar storefront.

Expands Geographical or Customer Reach:

As mentioned, owning an eCommerce business typically means no limits as to who and

where you can sell your products. Some countries outside the United States have additional
regulations, licensing requirements or currency differences, but generally you will not be
limited on the customers you can reach out to. Physical storefronts are limited to the city in
which they are located, Online businesses aren't limited unless you put geographical limits in
place. At the very least, you should consider targeting U.S. buyers, but also consider, Canada,
UK, Australia and others. Sell to anyone, anywhere, anytime!

Allows for Smaller Market or Niche Targeting:

Although your customer reach may expand beyond your local area, you may only wish to
target smaller consumer markets and buyer niches for your eCommerce products. Owning an
Online store gives the merchant much control over who they target and reach out to notify
about the items for sale in their store. Currently, you can target women, men, a generation of
users, a particular race and many more smaller niche markets. This is typically done by
placing keywords that those niche markets use on a regular basis when shopping for the items
you offer.

Allows for Easier Delivery of Information:

An Online store and Web brochure are great ways to deliver and display information about
your company and the products you sell. With an Online presence your customers will have
direct access to product information, company information, specials, promotions, real time
data and much more information that they can easily find just by visiting your site day or
night. Not only does it benefit your customers, but it's also generally easier for merchants to
update their site rather than break down an in store display and put up another for the next
event. It saves both your customers and you precious time and can help you to plan more
updates or better sales as it will be much easier for you to update and take down.1

Benefits of E-commerce to Society

Nowadays, people do business through the Internet. New businesses are sprouting everyday
in the Web, while established and existing enterprises are making it their priority to move
their operations over to the online world.

Trading online has a lot of benefits both large and small benefits can enjoy. For one, the
Internet allows them to tap into a large market due to its broad reach. It is now easy for
enterprises irregardless of size to go global through the Internet. Numerous small ventures
have found success using the Internet, and more are following in their footsteps.

Another advantage of e-commerce is that it gives equal chances for success to all businesses.
Size does not matter at all in the Web for business. As long as you have the right marketing
scheme made up, you can make it in the tough and competitive world of online selling. In
short, you now have the means to stand up even to the older and larger enterprises as long as
you market your business right to your target audiences.

With all these benefits, it is not surprising at all that entrepreneurs are choosing the Internet
as a venue for their companies. The global capabilities that the Internet affords their
enterprises are simply too good to resist for both big and small corporations. With equal
footing between the established companies and the newly born businesses, these business
owners are finding it ideal for their goals to move their operations over to the Web.

1
http://www.ecommerceeducation.com/benefits-of-ecommerce.asp last visited on 17th nov. 2010 at 7.45 pm.
Although primarily an economic phenomenon, electronic commerce is part of a broader
process of social change, characterised by the globalisation of markets, the shift towards an
economy based on knowledge and information, and the growing prominence of all forms of
technology in everyday life. These major societal transformations are now under way and
will probably continue far into the foreseeable future. As both a product and manifestation of
such transformations, electronic commerce is being shaped by, and increasingly will help to
shape, modern society as a whole especially in the areas of education, health and government
services.
Societal factors will merit attention from a public policy standpoint, both to establish the
social conditions that allow electronic commerce to reach its full economic potential and to
ensure that its benefits are realised by society as a whole. Two such elements are first, access
and its determinants (e.g. income) and constraints (e.g. time) and, second, confidence and
trust.
Access to the physical network will affect the adoption of e-commerce, particularly among
consumers and SMEs located outside the urban centres of the developed world. One
consistent finding across many countries is that there is a strong positive correlation between
the use of information technology (PC ownership, access to the Internet) and household
income: for every $10 000 increase in household income, the percentage of homes owning a
computer increases by seven points (Figure 2). Governments might well look at ways to
promote the development and availability of information technologies and access to advanced
networks, either by means of conventional telecommunications policy measures or through
other appropriate policy instruments.
Internet penetration rates show a similar pattern. As a consequence, households with higher
incomes have more opportunity to benefit from electronic commerce than those with lower
incomes. While this phenomenon is common to the introduction of most new technologies
(e.g. electricity, telephone, TV), it may warrant the attention of policy makers since e-
commerce could provide access to a market with special properties, such as lower prices, that
could particularly benefit the disadvantaged. This fuels concerns about greater inequality due
to information “haves” and “have nots”. There is reason to believe that the correlation
between income levels and Internet usage may weaken, as lower-cost and simpler alternatives
to the traditional personal computer become available, although recent work carried out in the
United States between 1994 and 1997 reveals a widening gap in PC ownership between upper
and lower income groups. Governments may wish to consider what policies, if any, might
encourage the trend towards lower prices and thus accelerate connectivity.
Visions of a global knowledge-based economy and universal electronic commerce
characterised by the “death of distance” must be tempered by the reality that half the world’s
population has never made a telephone call, much less accessed the Internet. In countries with
extremely low teledensities, universal access must be defined in some way other than access
from every home; the alternative is access at the level of community or institutions. Public
access sites located in schools, post offices, community centres, public libraries or even
franchised shops are potential alternatives to home-based access.
E-commerce and other information and communication technologies reduce the importance
of time as a factor that dictates the structure of economic and social activity. It raises the
potential for saving time as consumers shop more efficiently, but could also reduce leisure, as
the technology can provide a continuous electronic link to work. A better understanding of
the impact of e-commerce and ICTs on time use is needed because the availability of free
time is an essential factor in driving demand for e-commerce, since many e-commerce
products (e.g. entertainment) are interactive and require immediate consumption. Whereas
technological development is taking place at an astounding and accelerating speed, reaching
understanding and consensus, especially on social issues, is typically time-consuming. The
nature of the Internet forces a reconsideration of the most effective way to govern and of
whether centralised decision making can keep up with the speed and fluidity of the Internet.
This suggests the need to consider decentralised modes of decision making, such as self
regulatory mechanisms. Another option may be to consider methods of controlling speed by
“throwing sand into the wheels”. This points to the need to develop a deeper understanding of
the impact of faster and more interlinked exchanges on individuals, organisations,
governments and communities.
One of the hallmarks of electronic commerce is that, by drastically reducing transaction and
search costs, it reduces the distance between buyer and seller, enabling businesses to target
very small niches, develop individual customer profiles, and essentially provide a means of
marketing on a one-to-one basis. The ability to realise this goal will largely hinge on the
climate of confidence and trust that businesses are able to create in their relations with their
business partners and customers. Assurances about protection of privacy and personal
information play an important role in building that confidence. Both the public and private
sectors need a fuller understanding of the requirements for fostering confidence in electronic
markets, particularly among consumers.
 UNCITRAL Model on E-Commerce

United Nations Commission on International Trade Law (UNCITRAL) adopted in June 1996,
the UNCITRAL Model on E- Commerce2 (Model Law). The main objective of the Model
Law is to facilitate electronic trading by providing a set of internationally acceptable rules
which can be used by states in enacting legislation to overcome legal obstacles and
uncertainities which may exist in relation to the use of electronic means of communication in
international trade.3 The Model Law is as to meaning of the provisions of the Model Law.

The Model Law adopts the functional approach, which is based on an analysis of the
purposes and functions of the traditional paper-based requirements with a view to determing
how those purposes or functions could be fulfilled through electronic commerce techniques.4

The Model Law does not attempt to define a computer-based equivalent to any kind of paper
document. Instead it singles out basic functions of paper-based form requirements, with a
view to providing criteria which, once they are met by data messages, enables such data
messages to enjoy the same level of recognition as the corresponding paper document
performing the same function.

Although the Model Law offers national legislators to set of internationally acceptable rules
that could be used to overcome some of the main obstacles when conducting legal
transactions in cyberspace, it seems that atleast in some jurisdictions, a problem might arise
in order to overcome references to writing, signature and document in conventions and
agreements relating to international trade. It is precisely for this reason that the centre for the
Facilitation of Procedures and Practices for administration, Commerce and Transport
(CEFACT) of the United Nations Economic Commission for Europe recommended 5
UNCITRAL to ‘consider the actions necessary to ensure that references to “writing”,
“signature” and “document” in conventions and agreement relating to international trade
allow for electronic equivalents’.

2
The Model Law and the Guide are available at http://www.uncital.org.
3
‘Electronic Commerce: Legal Considerations’, UNCTAD/SDTE/BFB/1, 15 May 1998. With regard to the
objective of the Model Law, see the UNCITRAL Model Law on Electronic Commerce with Guide to
Enactment, 1996, paras 2-6; see as well Report of the working Group on Electronic Data Interchange (EDI) on
the work of its Twenty-Ninth session, New York, 27 February-10 March 1995.
4
See Guide to Enactment of the UUNCITRAL Model Law on Electronic Commerce, 1996, para 1, p. 15.
5
See survey conducted by ECE published on 22 July 1994 at www.unece.org/cefact/.
UNCITRAL Model Law, nevertheless has served as a uniform set of rules and has greatly
facilitated the growth of e-commerce in the countries that have adopted laws modelled on the
law such as India and Singapore.