The evolution and growth of e-commerce can be attributed to a combination of technological, marketing and economic forces.
Economic forces that drives e-commerce
E-commerce enables businesses to interact with suppliers, customers and with players in the distribution channel at a lower cost.
- The cost of installing and maintaining a website is much cheaper than owning a physical store. This motivates the growth of e-commerce.
- E-commerce generates greater profits due to less human intervention, lower overhead cost, few clerical errors and more efficiency.
- The cost of advertising is cheaper and provides access to global market at low cost. This is something which encourages people engaged in business to promote their business through electronic medium.
- Reduction in communication cost and technological infrastructure expense drive business towards e-business.
- Increase in competition and the rise in consumer power, ‘globalization wave’ have forced the business organizations to penetrate into internet world.
Technological forces that drives electronic commerce
- Technological advances have made business communication faster, easier, economical and efficient. It has enabled the business to switch over from the local market to the global market.
- The growing popularity of cyber cafes has created a big role in attracting internet population towards e-commerce.
- Technological changes have given confidence to consumers to make electronic payments in settlement of financial obligations.
Market forces that drives electronic commerce
- Business organizations are able to reach international markets by using electronic medium for enhanced customer support and service.
- E-commerce enables customers to make product comparison, place orders, track orders and make payments at ease. Due to convenience, customers prefer to purchase their desired goods or services over internet in the online marketplace.
- E-commerce also allows the customers to choose and order products according to their personal and unique specifications. It paves way for mass customization.
- The growing internet population stimulates business to switch over from an additional business to e-business.
- The great variety of commodities available online and reliable payment methods are regarded as contributors to the increase of e-business.
- Consumers often prefer shopping on the internet due to convenience and the changes in consumer behavior pulls consumer towards e-commerce.