Question

Regarding the E-COMMERCE industry identify opportunities and threats with operating in this industry. Provide reasoning for each one you identify.

Answer 1

Opportunities that are responsible for rapid growth of e commerce throughout the globe, attracting more customers from conventional methods

(a) Higher customer reach, thanks to the penetration of internet among the consumer population.

(b) Advancement in the online payment facilties enabling to pay through a number of methods.

(c) Higher cost benefits to consumers due to elimination of channels from company to consumers.

(d) Customer convenience in form of easy purchase and return policies offered by the companies.

(e) Advancement in supply chain and logistic capabilities of the organisations leading to better customer service, cost effectiveness and customer reach.

(f) Easy payment and credit options offered by banks and financial establishments.

(g) Rising purchasing power of the consumers, particularly in developing economies, thanks to rapid economic growth.

(f) Rising operating costs of conventional stores reducing their cost effectivesness.

Threats

(a) Cyber crimes that include identity theft, data theft, spoofing, phishing which discourage the customers from transacting online.

(b) Companies work on razor thin margins to remain competitive. It requires huge initial investment, efficient processes and large volume to do sustainable business. Threats of failure are higher if you don't have strong back up.

(c) Taxes imposed by the governments to save the conventional sellers, may make the e commerce infeasible in some areas.

(d) It is challenging to put stringent quality control over a large number of sellers / associates onboard, lack of which may bring the company a bad name and affect its growth.

(e) Losses due to fake customers ( In pay on delivery methods), stolen and robbed goods and excessive returns.