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PHP and MySQL Web Development 4th Ed-tqw-_darksiderg

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336 Chapter 14 Running an E-commerce Site<br />

If you currently provide information to a large number of people, you could possibly<br />

do the same thing more economically via a website.Whether you are providing price<br />

lists, a catalog, documented procedures, specifications, or something else, making the<br />

same information available on the <strong>Web</strong> could be cheaper than printing <strong>and</strong> delivering<br />

paper copies.This is particularly true for information that changes regularly.The Internet<br />

can save you money by facilitating communication.Whether this means that tenders can<br />

be widely distributed <strong>and</strong> rapidly replied to, or whether it means that customers can<br />

communicate directly with a wholesaler or manufacturer, eliminating middlemen, the<br />

result is the same. Prices can come down, or profits can go up.<br />

Replacing services that cost money to run with an electronic version can cut costs. A<br />

brave example was Egghead.com.The company chose to close its chain of computer<br />

stores <strong>and</strong> concentrate on its e-commerce activities. Although building a significant<br />

e-commerce site obviously costs money, a chain of 80 retail stores has much higher<br />

ongoing costs. Replacing an existing service also comes with risks. At the very least, you<br />

lose customers who do not use the Internet.<br />

Egghead.com’s new venture did not work out.The company closed its physical stores<br />

during the dot-com boom in 1998 <strong>and</strong> filed for Chapter 11 bankruptcy protection during<br />

the dot-com bust in 2001.<br />

Centralization also can cut costs. If you have numerous physical sites, you need to pay<br />

numerous rents <strong>and</strong> overheads, staff at all of them, <strong>and</strong> the costs of maintaining inventory<br />

at each. An Internet business can be in one location but be accessible all over the world.<br />

Underst<strong>and</strong>ing Risks <strong>and</strong> Threats<br />

Every business faces risks, competitors, theft, fickle public preferences, <strong>and</strong> natural disasters,<br />

among other risks.The list is endless. However, many risks that e-commerce companies<br />

face are either less of a danger, or not relevant, to other ventures.These risks include<br />

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Crackers<br />

Failure to attract sufficient business<br />

Computer hardware failure<br />

Power, communication, or network failures<br />

Reliance on shipping services<br />

Extensive competition<br />

Software errors<br />

Evolving governmental policies <strong>and</strong> taxes<br />

System-capacity limits

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