Issues in E-commerce

PRESENTED BY:

CHERRY ANNE G. ALBONIA, CPA

MBA
What is e-commerce?

• commercial transactions conducted electronically on the Internet.

• E-commerce -- electronic commerce or EC -- is the buying and selling of
goods and services, or the transmitting of funds or data, over an
electronic network, primarily the internet. These business transactions
occur either as business-to-business, business-to-consumer, consumer-to-
consumer or consumer-to-business.
History of e-commerce
• The beginnings of e-commerce can be traced to the 1960s, when businesses started
using Electronic Data Interchange (EDI) to share business documents with other
companies. In 1979, the American National Standards Institute developed ASC X12
as a universal standard for businesses to share documents through electronic
networks.
• After the number of individual users sharing electronic documents with each other
grew in the 1980s, the rise of eBay and Amazon in the 1990s revolutionized the e-
commerce industry. Consumers can now purchase endless amounts of items online,
from e-tailers, from typical brick-and-mortar stores with e-commerce capabilities, and
from one another.
Types of e-commerce
• Business-to-business (B2B) e-commerce refers to the electronic exchange of
products, services or information between businesses rather than between businesses
and consumers. Examples include online directories and product and supply exchange
websites that allow businesses to search for products, services and information and to
initiate transactions through e-procurement interfaces.
• Business-to-consumer (B2C) is the retail part of e-commerce on
the internet. It is when businesses sell products, services or
information directly to consumers. The term was popular during
the dot-com boom of the late 1990s, when online retailers and
sellers of goods were a novelty.
• Today, there are innumerable virtual stores and malls on the
internet selling all types of consumer goods. The most recognized
example of these sites is Amazon, which dominates the B2C
 market.
• Consumer-to-consumer (C2C) is a type of e-commerce in which
consumers trade products, services and information with each other
online. These transactions are generally conducted through a third party
that provides an online platform on which the transactions are carried
out.
• Online auctions and classified advertisements are two examples of C2C
platforms, with eBay and Craigslist being two of the most popular of
these platforms. Because eBay is a business, this form of e-commerce
could also be called C2B2C -- consumer-to-business-to-consumer.
• Consumer-to-business (C2B) is a type of e-commerce in which
consumers make their products and services available online for
companies to bid on and purchase. This is the opposite of the traditional
commerce model of B2C.
• A popular example of a C2C platform is a market that sells royalty-free
photographs, images, media and design elements, such as iStock.
Another example would be a job board.
• Business-to-administration (B2A) refers to transactions conducted
online between companies and public administration or government
bodies. Many branches of government are dependent on e-services or
products in one way or another, especially when it comes to legal
documents, registers, social security, fiscals and employment. Businesses
can supply these electronically. B2A services have grown considerably in
recent years as investments have been made in e-government capabilities.
 • Consumer-to-administration (C2A) refers to transactions conducted online
between individual consumers and public administration or government
bodies. The government rarely buys products or services from citizens, but
individuals frequently use electronic means in the following areas:
Education -- disseminating information, distance learning/online lectures,
etc.
Social Security -- distributing information, making payments, etc.
Taxes -- filing tax returns, making payments, etc.
Health -- making appointments, providing information about illnesses,
making health services payments, etc.
• Mobile e-commerce (m-commerce)
• M-commerce is a type of e-commerce on the rise that features online sales
transactions made via mobile devices, such as smartphones and tablets. M-
commerce includes mobile shopping, mobile banking and mobile payments.
• Internet Retailer reported that mobile accounted for 30% of all the U.S. e-
commerce activities in 2015. In addition, 62% of smartphone users made a
purchase online using their mobile device in the last six months of 2017,
according to OuterBox.
• Mobile chatbots also provide e-commerce opportunities to businesses, allowing
consumers to complete transactions with companies via voice or text
conversations.
Top 7 Issues in e-commerce
1. An absence of Online Identity Verification
• When a visitor visits an e-commerce website and signs up, the portal is unaware of
the customer except for the information he/she entered. The customer is genuine or
not is questionable. This creates huge revenue losses for a company when a
customer makes a Cash-On-Delivery (COD) purchase and the information entered
like phone number, the address is invalid or fake.
Solution:
•This challenge can be solved by taking proper steps to verify the customer’s
information. First of all recognize signs of suspicious activities like if any customers are
placing high priced orders or large orders, Detect fake phone numbers or e-mail
address, check zipcode whether it is matching with state/city. Besides this when a
customer signs up send textual message or e-mail to validate the genuineness of
customer. And when a customer makes a COD purchase automated call can be dialed
out to the customer and ask him/her to validate the delivery address.
2. Competitor Analysis
In this competitive world, there will be too many competitors who will be offering
same products and service as you. Unless you have the best strategy that
differentiates yourself from other competitors; it will become difficult to survive

•“You can’t look at the competition and say you’re going to do it better. You have
to look at the competition and say you’re going to do it differently.” – Steve Jobs
•Solution:
•Conduct proper and deep research of your competitors. Put your efforts in making
strategy which enables you to shine brighter than your competitors. Use social media
platforms, blogs, for promoting your products. Invest in promotional offers this will
help to get more web presence and customers.
3. Maintaining customer’s loyalty
• No matter how attractive or fancy your website looks, if you would not be able to
build the customer trust and loyalty, the business has to struggle another day!
• It’s the work of lots of efforts for companies to make a new a customer and
maintain the same customer for a long time. One of the reasons why ecommerce
companies face the struggle while building trust and loyalty with the customer is
because a seller and a buyer don’t know each other nor they can see each other
while making a transaction, unlike street-shopping. It takes few transactions, time
and plenty of efforts by the company to build the customer trust and loyalty.
•Solution: 
“Customer service is what you and your organization provide. Customer loyalty
is the result of the service.” – Shep Hyken
• To earn the customer loyalty, you must provide is excellent customer service. You
must make sure from ordering online to shipping, the customer is satisfied with
your service. There are plenty of online retailers that might be the selling the
same product like yours, so you must identify your competitive advantage and
nurture your customers accordingly
The few simple ways to increase the trust with visitors are as
follow:
 Display your address, phone number and pictures of staff, customer testimonials, and
credibility badges on your website.
 Add live chat option to the website.
 Create the blogs. Often blogs help the ecommerce to build trust.
 Make customer service as a priority before profit. Always remember, it’s always easy
to maintain an existing customer than to find a new.
 Create loyalty programs. As the points are not transferable to other companies, the
customer will definitely make next purchases from your sites.
• 4.   The headache of product return and refund
• In a survey by comScore and UPS, 63% of American consumers check
the return policy before making a purchase and 48% would shop more
with retailers that offer hassle-free returns. This clearly shows how
conscious consumers are for the return and refund policy
•Solution:
•Return and refund are also part of great customer services, therefore it will be the big mistake to
underestimate them. The best thing you can do is build a strong returns policy. Below consideration
should be kept in mind while designing returns policy:
 Never hide your policy. Be transparent.
 Use plain English that even understand by laymen. Not all your customers that will read the policy
will be highly intellectual.
 Don’t use the scary stuff in the policy like, “you must”, “you are required”, the too harsh policy may
stop customer to purchase the product.
 Outline what they can expect from you. Provide them various options for payments and shipping.
 Educate your staff about your return policy. So, that they can assist customers quickly and effectively.
 Be prepared to face the cost of your mistakes. If the product is shipped wrong, then take extra efforts
to make the customer happy.
5.   The struggle of competing on price and shipping
• Online merchants frequently compete on price. Plenty of sellers may list equal
products on their sites. The product is same but the only difference here is the price.
They are vying to sell the product to increase their market share.
• The price competition affects the small ecommerce business badly. Because the mid-
sized or large competitors often offer products for less price and free shipping on
nearly every order, while they couldn’t afford to offer the same with competitive
price.
• Online sellers like Amazon and Walmart generally have the shipping amenities
around the country. Their distributed warehouses allow large ecommerce
businesses to ship orders from the closest facility; approximately 60 percent of
orders are in the same area the customer is in. As the orders are shipped from the
nearby warehouses, the cost to send the order decreases and the order arrives in a
day or two.
• Ultimately every online shopper expects fast and frees shipping that too at lowest
price
•Solution:
•To survive in the competitive market, ecommerce companies need to distribute their
own inventory to fulfilment warehouses, become extremely resourceful shippers, or find
some unique products to minimize this problem. Because ultimately every online
shopper expects fast and free shipping that too in lowest price.
• 6.   Competing against retailers and manufacturers
• Many online stores bulk buy products wholesale from manufacturers or
distributors to sell that in retail from their online store. This is the basic
business model for online stores.
• Unfortunately, because of ecommerce’s low barrier to entry and other
reasons, many product manufacturers and retailers to start selling directly
to consumers.
• The same company that sells your products may also be your competitor.
For an example, ABC Garments, sells not just your online marketplace, but
also directly to consumers on its website. Even some of manufactures
builds distributors that makes the scenario worse.
•Solution:
•Though it is not completely possible to stop manufacturer to sell products
to customers directly, but few tactics may help to minimize the problem.
Below are the tactics that might help the online seller:
 Giving priority to buy from those manufactures that are less likely to sell
directly to customers.
 Offering the product at fewer prices or with added benefit to increase the
sales.
 Restricting the manufacturer to sell the product directly to the customer
by enforcing the policies and strict rules while making the contract. It
will be not possible for every manufacturer but you can deal with the
small manufacturers.
7. Problem of Data Security
• Security issues over the web can lead to nightmare. Fraudsters post lot of spam and they
may attack the web host server and infect all websites with viruses.  They can get access
to all your confidential data about your customer’s phone number, card details etc.

Solution:
• Manage your own servers and do not use common FTP to transfer files. FTP is prone to
theft. If any developer copies any file in an open Wi-Fi network can lose passwords and
other confidential data to the thief. By constantly updating shopping cart you can
minimize the risk of data stolen. Most content management systems store their data in the
database. Developers should take the backups at regular intervals and should retrieve the
data if stolen.
CONCLUSION:
•Surviving in the Ecommerce competition, which is no less than war, requires the
outstanding strategies. If you don't want to struggle, then give extra efforts on your every
aspect of business. You must be prepared for challenges and growth at every stage of
your business, and ultimately it will have a better chance to bloom.