May-2015

IN THE NEWS THERE IS ONLY TALK OF DOWNTREND OF
HIGH STREET SELLING AND AN UPTREND IN SELLING
ONLINE... BUSINESSES THAT ADOPT E-COMMERCE IS
INCREASING THEIR REVENUES
agencies and business organizations.
Government-to-Government (G2G): Governmentto-government
transactions within countries linking local
governments together and also international governments,
especially within the European Union, which is
in the early stages of developing co-ordinate strategies to
link up different national systems.
Reasons for growth of E-commerce:
The invention of faster internet connectivity and powerful
online tools has resulted in a new commerce arena
‘E-commerce’. E-commerce offered many advantages
to companies and customers’ business activities that are
adopting e-commerce is growing. In the news there is
only talk of the downtrend of high street selling and an
uptrend in selling online. As more and more people are
shopping online, businesses that adopt e-commerce is increasing
their revenues. The following are the reasons for
growth of e-commerce.
i. Faster buying/selling procedure, as well as easy to find
products.
ii. Buying/selling 24x7.
iii. More reach to customers, there are no theoretical geographic
limitations.
iv. Low operational costs and better quality of services.
v. No need of physical company set-ups.
vi. Easy to start and manage a business.
vii. Customers can easily select products from different
providers without moving around physically.
Benefits of E-commerce
E-commerce has opened up new doors for business and
commerce in the true sense of the phrase in order to
provide the following benefits:
i. Cost reduction - due to increasing competition between
suppliers who compete in an electronically open
market place the costs to buyer have reduced.
ii. Reduction of time for business transactions - there is
a reduction in time to complete a business transaction,
particularly from delivery to payment.
iii. New market - there is much possibility of creation
of new market through the ability to easily and cheaply
reach to potential customers.
iv. Reduction of errors and overhead costs- it reduces errors,
time and overhead costs in information processing
by eliminating requirements for re-entering data.
v. Entry to new markets - there is an easier entry to new
markets, especially geographically remote markets. It is
most suitable for companies those are interested to enhance
their size and location.
vi. Inventory control - there is reduced inventories and reduction
of risk of absolute inventories as the demand for
goods are electronically linked though just in time (JIT)
inventory and integrated manufacturing techniques.
vii. Expansion of customer range - it helps the companies
to reach more customers all over the world.
viii. Delivery, design and manufacturing costs - reduction
in delivery cost, especially of goods that can be electronically
delivered and also a reduction in design and manufacturing
cost.
ix. Global programs - companies are able to undertake
major global program in which fast and interactive services
to the customers round the clock may be implemented.
x. Value added services - it helps to create value for the
third party intermediaries who can earn transaction
commissions and fees for value added services.
xi. Safe & secure - Customers can trust the process of
going online and purchasing only when transactions are
fast, convenient and secure. A high degree of integrity is
possible only when the online electronic payment provider
is reputable and trustworthy. In India, all payment
transaction providers are required to comply with the
security requirements laid out by the Reserve Bank of
India making the system more robust and reliable.
Barriers in Progress of E-commerce
The progress of e-commerce has certain barriers to
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MAY 2015 the MANAGEMENT ACCOUNTANT 73