Advantages Of Internet Business: Research Paper

Type of paper: Research Paper

Topic: Business, Internet, Customers, Products, Sociology, Company, Media, People

Pages: 9

Words: 2475

Published: 2021/01/04

Internet Business

In today’s’ world, people more often than not, rely on the internet for information about products and services. Business through the internet became a reality in 1991, when the internet was opened up for commercial purposes. It took time to develop security protocols, which were essential for ensuring that transactions over the internet could happen in a secure fashion, and customers would feel safe making online payments, without the fear of some fraudulent activity. In 2000, a large number of U.S and European companies posted their company’s details over the World Wide web. Initially, the term E Commerce indicated commercial transactions over the internet like EFTs (Electronic Funds Transfer ) for electronic money transactions and EDIs (Electronic Data Exchange) for transfer of business information. Then with the advent of websites coming up and offering products and services, the meaning of E Commerce changed . People associated E Commerce as the facility of selecting and purchasing products over the internet and making electronic payments securely. With the collapse of the Dot Com boom in 2000, a number of burgeoning E commerce websites closed down. This was a rude awakening for E commerce, though on the positive side, actual physical stores identified the manifold advantages of E commerce and started putting in such electronic transaction facilities on their websites. Amazon and EBay were the first two E commerce companies who entered this business in a big way and made E commerce or E business what it is today. It still has a long way to go and the possibilities of E commerce seem endless and unlimited.

Freedom from time schedules – E commerce has made possible what would seem unthinkable a decade back. For the business house, E commerce takes away the tedium of keeping a business open during the waking hours and keeping it closed during the sleep hours. This is a store that never closes. It has opened a world of freedom to shop any time for the customer and freedom for the retailer not having to bother with timings, since the web store is open 24 hours.
Cost Effective - This saves cost for the business in terms of lower manpower required and time for the consumer because transactions take place with a click and goods purchased are delivered quickly. Having a web store requires very little investment compared to opening a physical store. There are no space constraints as to number of products one may display. The operating expenses (OPEX) are minimal, since manpower costs and overheads costs are low. Capital expenses (CAPEX) depends on the product range and can be variable. The entire operations of internet business is automated and no one needs to mind the store. It is cost effective from the perspectives of the business as well as that of the customer. It also saves expensive travel to promote the business.
Reach - Internet business has a global audience. A person from Asia can buy a product from the U.S in a matter of minutes and the purchased product is delivered to the Asian customer in a matter of days. There are no boundaries by which this business is limited. The reach of this type of online business is immense, covering billions of people. Select audiences can be targeted with specific products. Regular communication with customers, and updating new initiatives on the web site adds value to the company and builds trust with the customers. Online promotions help the company reach a larger audience. The best part for the consumer is that he/she can compare the rates of identical or similar products with other online stores and take a decision without having to leave home.
Networking - Business owners and employees can now connect to customers over the internet, and customers can simple query the store for any additional information they require which is not provided on the website. This mode of business also open the doors to a global community of business people and entrepreneurs. This networking gives everyone an opportunity to learn from others in similar businesses. The formations of internet forums have taken this concept of networking further, with an entrepreneur from India exchanging ideas on sales promotion drives with someone in the U.S engaged in the same type of business.
Flexibility - Online shopping for most customers offers the flexibility of being impersonal. They don’t have to indulge in small talk with a sales person. There is no limit to the amount of browsing different products one can do. And customers have the choice of making enquiries on things they would never have dreamt of asking a sales person. Multi branding plays a major part here. It is very convenient for the customer to go into a multi branding site like Amazon and browse similar products of different manufacturers. One does not need to dress up to go online shopping it doesn’t make any difference to the store whether you are eating or speaking on the phone whilst browsing and making purchases online.
Sales – Having a website that offers customers a choice of shopping online always improves the bottom line for the company in terms of profitability. It is far easier and less expensive to launch an online product compared to a physical one. Also the “Go To Market” is far quicker for an online product. The internet is a great leveler, and a relatively small company can compete with the giants of the business. It is estimated that 40% of internet users worldwide have bought products online..This indicates that the scope of expanding this customer base is huge. In the U.S, E commerce retails sales were at 229 billion USD in 2012 and grew to 260 billion USD in 2013. Given below are the global revenue figures of for the last four years:
Initially computers were mostly used for online shopping, now the mobile revolution has taken over and most customers use some smart phone or tablet to complete their internet purchases. PayPal, the global payment portal showed a total payments received through mobiles amounted to 46 Billion U.S. dollars in 2014. Smart online retailers are increasing their prominence in the internet space by employing successful search engine ranking features. The use of the correct keywords in the title tag increase the chances of that page being found early. The more inbound links a site has, the higher it will rank in the search engine pool. Websites also have a tracking feature which can help a business track an existing customer as well as a potential one. The potential customer can thus be contacted for promoting business.
Convenience – One of the biggest benefits of internet business is the facility of viewing and paying bills online. It can be mobile phone bills, utility services bills, and data connection bills. Tax deposits, insurance premiums and income tax filing are other benefits. Earlier people had to stand in queues to make these payments and deposits. Now they simply pick up their mobile phones and complete the transactions online. With enhanced online payment security, like encryptions at the payment gateways, more and more people are getting comfortable using their debit and credit cards for internet payments and transactions. Another big feature in terms of convenience is the mobile banking features. It is convenient for both the bank and its customers. The customers complete their transactions through mobile banking or net banking and the bank has to employ lesser number of employees to cater to physically present customers. Share trading also had become online quite some time back and papers shares are a thing of the past. For a family run internet business, there is the possibility of tax saving in case losses are incurred, as the family members can be shown as employees.

The Disadvantages of Internet Business:

The ease of doing business over the internet is alluring but online retailers should be aware of the drawbacks also. Firstly, for internet businesses the law of the country, from where the customers are accessing the company’s website is applicable. Since internet business is a global business, privacy laws are applicable from the country of origin and overseas, copyright laws applicable worldwide and tax laws applicable for the country of operations. If the products include things not to be sold to people below a certain age, pertinent legal permissions have to be obtained before starting the business. Foreign exchange laws have to be stringently followed.
People still sometimes feel the need to physically see and touch a product before purchasing it. A product like a high end smart phone or a tablet, the customer may want a demonstration before deciding, even when the entire product details are provided on the internet. Similarly for television or music systems, customers may require to check all the functions of the product to decide whether they will be comfortable using it. The same holds good for articles of personal attire like shoes, clothes and other accessories. Another factor is that people are sometimes cautious about purchasing online, in spite of all the encryptions and security features built in. Since there is no physical interaction for internet business, trademarks and logos may be copied by other business and products passed off as manufactured by the original company. Since it is a business with global dimensions, it is very expensive and tedious to get the product copyrighted or patented across the world. The employees of such companies have to be extremely careful. A social media posting or an erroneous e mail can be construed to be the company’s standing by the purchaser and can lead to legal action against the company.
Internet businesses sometimes fall prey to lack of credibility. A lot of customers associate a physical store with solidity and reliability. It builds a feeling of trust within the customer. The salesmanship present in a face to face communication is lacking in internet businesses. Internet businesses only have the features of the product to impress the customers. No explanation can be provided over why some brands are better than others.
Though online businesses provide all the features of customer service over the internet, the face to face explanations are hard to replace through electronic means. In case of a problem with the product, the customer service representative can actually try and sort out the issue, while clearly experiencing the problem. Over the internet, it is that much more difficult, since the customer may not be able to correctly identify or understand the problem, with the result being that the problem is not sorted out, leaving behind a dissatisfied, angry customer, who can spread negative word of mouth publicity for the company. In 2000, during the dot com collapse, many companies were victims of unsavory negative publicity.

The Role of Social Media in E Business and Marketing:

Social media provides an opportunity for an E business to I crease its customer base. Social media includes online methods for communication through Facebook, Twitter, internet forums, blog posts, Youtube and podcast and messaging services like Whatap. Most customers use some form of social media and that opens the doors to E business companies to making an online presence. This gives the company an identity in scattered demographic regions, where traditional advertisement would be very expensive and results difficult to gauge. LinkedIn has helped recruiters bypass the cost of expensive advertisements by searching in this site and finding suitable people looking for jobs. Public relation managers of E business companies are increasingly turning to the social media to enhance the image of their companies and also to inform their customers of new initiatives, CSR (Corporate Social Responsibility) activities. Some companies have introduced the concept of small online contests to increase their following. Positive customer feedback can be shared on the social media to let the other customers know of the good things one is doing. A company’s special promotions can also be propagated through the social media. The social media has decreased the cost of communication for the E businesses. Long distance calls to and from customers can be reduced by offering online messaging facility. Companies who employ people at remote locations or people who work from home, the social media replicates to some degree the bonhomie of the office. Social media helps in lead generation for fresh customers.
Social networking is more of a habit in a persons’ personal as well as business life. When a customer wants to purchase a certain product, he/she seeks recommendations from the social network he/she is attached to. A lot of E businesses have been quick to recognize that peer groups influence a persons’ decision on purchasing a product. Advertisements on the social media evoke a good response, because there are a discussions taking place regarding the product. A good way that some E businesses use the social media is to create a brand awareness. People, sometimes do not know they would like to own a particular product until they see the products’ uses and details. Awareness through social media helps cross these obstacles. Due to the viral nature of social media, brands that post regular updates supported by relevant content increase their base of followers and reap more benefit than those that don’t. Reluctance to purchase on the part of the customer is natural if it based solely on advertisements. The feedback from other followers and word of mouth erodes that reluctance and trust is built up. Social media sites also help increase customer stickiness and loyalty.
Social media is also a good tool for providing insights to the products, both from the perspective of the company as also from the existing customers. When E businesses participate in social media, they should have a clear strategy and an estimation of the probable outcomes. Traffic from social media sites to their E business sites should be monitored. The number of leads generated from such traffic and actual conversion of such leads to sales. The repeat sales from existing customers attached to these sites should also be monitored to determine the efficacy of these social media tools in relation to increase in volumes of business.


E business today is an increasingly growing concept, and more and more companies are starting web sites to promote their businesses. The results from the big ones in this business like Amazon, Ebay, Alibaba are amazing and eye openers for others thinking of starting e businesses. A lot of customers attach more importance and credibility to a company owning a web site, even if they are not into E business. A lot of things still need to be streamlined to make it the preferred way to do business. More cutting edge technology needs to be developed to make it a error free and secure way of transacting. The Gen X( 15 to 30 years age bracket) is comfortable with it, but the baby Bloomer (those born in the 60s) need to be convinced, because they are the biggest spenders. It has to be remembered that though social media is a good platform to engage in to expand business, people visit social sites to interact and not do so with the express purpose of online shopping. The indications and trends point to this form of business growing exponentially in the near foreseeable future.


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