how e-commerce confronts challenges -...

1Running head: E-COMMERCE CHALLENGES

How E-Commerce Confronts Challenges

Zhiwei Zhang

ESL 4230 Argumentative Paper

Madonna University

March 18, 2015

How E-commerce Confronts Challenges

2E-COMMERCE CHALLENGES

E-commerce (electronic commerce), started to appear in the 1960s, is developing in a rapid speed in

various areas as a methodologies of trading in products or services using technologies (Veni, K. 2007).

The emergence of e-commerce brought about more advantages compared to traditional trading.

Although some people provides that with a rapid development, it encounters challenges mainly from the

four aspects: economy, technology, society, and laws, which made difficulties for e-commerce;

nevertheless, e-commerce are prepared for those challenges.

Before taking about the challenges of e-commerce it is important to identity how e-commerce started.

E-commerce, different from traditional commerce, is the purchase and sale of goods or services via

electronic channels, of which the most important medium is the Internet. This new kind of commerce

started to emerge in the 1960s, when it was introduced by an electronic data interchange, and it grew

rapidly in the 1990s and early 2000s with the increased availability of Internet access (Arline, 2015). E-

commerce will keep growing and online consumers will increase their spending 62% by 2016 (U.S. e-

commerce sales, 2012). Just as Table 1 shows U.S. e-commerce sales has incensed really fast those year

and it will keep growing in the future. As a revolution in business practices, Watson, Berthon, Pitt,&

Zinkhan mentioned (2008) “e-commerce is taking advantages of Internet technologies to improve

organizational performance, including increasing profitability, gaining market shares, improving

customer service, and delivering products faster and so on” ( p. 8). By making use of this commerce,

organizations are enjoying higher profits brought by electronic technologies, in a way to expand their

business as well as their fame.

Table I


Development of e-commerce in the U.S. (U.S. e-commerce sales, 2012)

Obviously, e-commerce is has advantages that cannot be reached by traditional commerce. As Kaur

(2011) mentioned “Compared to traditional commerce, e-commerce is benefiting from the following

factors: being able to conduct business 24*7, reduce cost to buyers, reduce cost to the suppliers, create

new markets, crate easy market entry, increase in variety of goods, information sharing with the

customers, and global reach.” (p.335-336) For example, most traditional commerce provides services to

customers only on weekdays, which sets up limits to people who also work on these day; e-commerce

settled this problem by providing flexible services 24 hours a day, 7 days a week, which is convenient

for customers and brings about more job opportunities (Andam, 2003). Selling and purchasing on line

behind a computer cuts the cost of business in a real store where the fee of rental and electricity has to


be paid. Therefore, e-commerce benefits organizations, customers, as well as the whole society with

lower cost, more convenience and better job opportunities.

Challenges in face of E-commerce

E-commerce is developing at a rapid speed in many areas, leading a result toward electronic trade.

E-commerce, however, at the same time, is facing challenges that have never been experienced by

traditional commerce. The issues caused by e-commerce can be divided into the following four aspects:

economic, technical, social and legal. But in some way there are still

Economic Challenges

Some people consider that e-commerce confronts a huge economic challenges. There is no doubt

that a well running organization with e-commerce may cut in-store costs, including rental, decoration

and electricity. According Bingi, Mir, and Joseph “the cost of developing an e-commerce project is

typically rather high.” (p.26-34) If the organization lacks of experience, it would waste time as well as

money on the procedure of development (Bingi, Mir & Joseph 2000). This is understandable for some

organizations are in hurry to transfer their products or services to online system, which may lead them

into disadvantages that they have to pay the bill of transferring from traditional commerce to commerce

with online system, which may become a big economic issue for most of the organizations. If the

balance of budget cannot be well justified, economic challenges may occur and destroy organizations.

Economic factors from customers’ aspects should also be taken into consideration. Some customers,

especially in developing countries, are not exposed to electronic environments, some of whom cannot

afford electronics and some of whom have no access to the Internet at all. With limited access to e-


commerce, customers have to choose traditional commerce instead of e-commerce, which is another

challenge within the economy.

Nonetheless, in order to avoid unnecessary mistakes or problems on the way to seek development in

e-commerce, leaders of organizations are responsible to build the new system effectively. Every

beginning is the hardest part in the whole procedure, but people think learning from the past or from

other organizations would help. From others’ experiences, organizations can try to avoid mistakes or

problems and make the best effort to follow the most direct way, so that they would not have to spend

extra time or money.

Organizations that would like to expand customers from all aspects, like from developing countries,

should consider cheaper ways to access their commerce (Bingi, Mir & Joseph 2000). For example, for

people who cannot afford personal computers, cell phone may become the main entrance to the

commerce. Hence, organizations should take cell phones into consideration for it is more affordable than

computers and the Internet.

Technical Challenges

Some people believe that Internet security and reliability is another big issue for commerce or trade

relying on the Internet for the stability of the web which can guarantee smooth online work. Using the

Internet is not without risk, since there will always be threats and vulnerabilities and there is no absolute

security when it comes to the Internet. When encountering risks on the Internet, both customers and

organizations may suffer from damages and loss (Bingi, Mir & Joseph 2000). For example, due to

security problems, a customer may find his credit card and personal information compromised;


payments from a customer may redirect to another site. These problems caused by Internet security

issues may lead to lose of customers and reputation of the organization. There seems to be no choice to

completely prevent security and reliability issues happening. Therefore, Internet security and reliability

is a big challenge organizations and customers should pay attention to.

Another technical challenges is employers in an organization may not be equipped with enough

technical skills, which means that the transfer from traditional commerce to e-commerce may not be

completed (Bingi, Mir & Joseph 2000). Some employers are adapted to traditional commerce, having a

preference toward face-to-face communication with customers or toward in-store service. These

employers have commercial skills such as good communication and selling strategies, but they are not

able to make use of them on the Internet, which is a big challenge for the development of e-commerce.

However, though the grown of internet security, this challenge will get solve. Internet security and

reliability should be administrated and managed by professionals, for they have more knowledge and

experience in handling them. Internet security cannot be guaranteed 100%, but with enough attention

and efforts, e-commerce should be protected as much as possible.

Learning is always a good way to adapt to new technologies, and it is the same with e-commerce.

The emergence of e-commerce surely leads to technical problems for previous organizations that have

never experienced electronic business. However, it does not mean they have no idea about how to follow

the trend. For employers who have no interest in learning new technology at all, they can keep working

in their original area, since not all the work has to be on electronics. New opportunities of developing e-

commerce can be given to newer generations who are more willing to use technology.


Social Challenges

There are still some people think social challenges are mainly from customers’ attitudes toward e-

commerce. Compared to traditional commerce, dating from thousands of years ago, e-commerce has a

pretty short history. Due to its short history, some customers are not able to really trust it. Security and

privacy are big issues customers are concerned with whether that be private information, like home

addresses, phone numbers, or credit card information. Being let out for any reason. At the same time,

security problems happen all the time, which makes it clear why some customers cannot trust it.

Nevertheless, to successfully confront social challenges, the most important thing is to enhance

electronic security. With fewer criminals, customers may feel protected in the process of online business,

and therefore build a sense of trust. If customers still worry about security, they can try some tips, like

change website passwords, check payment environments, and remove search history often. With

customers’ support, e-commerce can have a better chance to develop.

Legal Challenges

Some people expect that electronic criminals are emerging together with the appearance and

development of e-commerce. Illegal websites make fools of customers and therefore be ahead, causing

serious electronic problems in the area of business. Every coin has two sides. In other words, some

people make use of electronics to provide services; some find them an effective method to make illegal

income. At the same time, people cannot deny that laws about e-commerce are not perfect. The legal

system has to be renewed from time to time to better secure the safety of electronic business. On the way

of getting a better legal system, e-commerce has to face challenges.


It is obvious that, to build a healthy commerce environment, the support from the legal system is also

an important factor. Laws about e-commerce should be renewed together with the development of e-

commerce to protect it. People, either from organizations’ side or from customers’ side, should always

give recommendations on how to regulate laws to better protect the safety of electronic businesses

(Arline, 2015).

In concluding, the emergence of e-commerce not only brought about convenience both for

customers and for organizations, but also benefits the whole society. The challenges e-commerce is

confronting will be contemporary problems, and they will be settled down with the development of e-

commerce and the regulation of the whole commerce environment. Both customers and organization

owners should give support toward e-commerce so that electronic business could provide better services.

Resources

Andam, Z.(2003). E-commerce and E-business. New York, NY: UNDP Asia-Pacific Development

Information Programme. Retrieved from


http://www.kau.edu.sa/Files/830/Files/61164_Ecommerce%20and%20E%20Business.pdf

Arline, K. (2015, February 24). What is e-Commerce? Business News Daily. Retrieved from

http://www.businessnewsdaily.com/4872-what-is-e-commerce.html

Bingi, P., Mir, A. and Khamalah, J. (2000). The challenges facing global e-commerce: A

multidimensional perspective. Information Systems Management, 17(4), pp.22-30.

Development of e-commerce in the U.S. (2012, December 14). US e-commerce sales: 2011-2016.

Kineticgrowth. Retrieved from

http://www.kineticgrowth.com/us-ecommerce-sales-2011-2016/

Kaur, G. (2011). Traditional commerce vs. e-commerce, International Research Journal of

Management Sciences & Technology , 2(3)

Watson, R. Berthon, P. Pitt, L. F. P. & Zinkhan G. M. (2008). Electronic commerce: The strategic

perspective. Fort Worth, TX: Dryden Press.

Veni, N. K. (2015). Introduction to E-Commerce, E-Business & E-Banking. Indian MBA. Retrieved

from http://www.indianmba.com/Faculty_Column/FC545/fc545.html

http://www.indianmba.com/Faculty_Column/FC545/fc545.html

http://www.businessnewsdaily.com/4872-what-is-e-commerce.html

http://www.kau.edu.sa/Files/830/Files/61164_Ecommerce%20and%20E%20Business.pdf

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