Essay: Economics of e-commerce

By | April 27, 2011

Sample Essay

E-Commerce:

E-commerce is a term which is used for businesses that are conducted with the help of electronic technology with the likes of internet, email, telephone, networks etc. in this era of globalization e-commerce has become an important component of business strategy and allowing organizations to achieve competitive edge over their rivals (Vulkan, 2003).

To make it more specific we can it could be said that e-commerce is the process of buying and selling over a digital medium. In other words e-commerce is the electronically based activities of commercial transaction between the organization and that individual.

The primary reasons why e-commerce has proven out to be so successful is because of its integration with communication technology which has enhanced the business to business and business customer relationship. It has also proved out to be more cost effective increasing customer participation and reducing cost (Conerly).

Apart from that there are distributional, marketing and operational benefits that could be achieved from e-commerce. Because there are no intermediaries involved in e-commerce the distribution cost is eliminated. Transaction cost is also reduced reason being the online transactions involve very little cost and hence the overall cost of the business is reduced.

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