BTEC L3 90 Credit Diploma in IT
Unit 8 – Impact of E-commerce
Throughout this assignment I will be discussing the impact of introducing an e-commerce
system to an organisation, I will also be explaining the potential risks of having an e-
commerce system in place.
I will then review the regulations governing e-commerce and to finish there will be a case
study which I will need to complete, my case study will be based on ‘Tesco’, it will be
evaluating the use of an e-commerce business in a ‘brick and click’ organisation.
P2 Explain the impact of introducing an e-commerce system to an organisation
Benefits
There are a lot of benefits attached to having an e-commerce website. In the first section of
this assignment I will be discussing them.
Global Market place
E-commerce has enabled a global marketplace to develop, people are now able to sit in the
comfort of their home and order anything online, from anywhere in the world. Traditional
local stores have decreased dramatically since the birth of e-commerce, they have to target
only their local community for sales and if they wish to expand to new areas they’ll have to
build new, expensive stores.
24/7 Trading
Trading online not only means a global market place, it also means you are open to business
all days of the week and at any times, no labour costs (apart for start-up and occasional
maintenance). Also because the websites are automated, transactions can be done without
hassle.
Relatively low start-up and running costs
Compared to the traditional stores the start-up and running costs are next to none. With the
traditional stores you would have to pay for: the location, the stock, labour, electricity,
water and utility costs, whereas with the e-commerce businesses there are far fewer costs.
Although you can run the business online just with a single person it is advised to create a
small team for you to work with. If your e-commerce site begins to grow a reputation and
becomes successful you may want to consider growing your team however not to the extent
of what traditional stores have.
Competitive edge
One major benefit of having a store online instead of a traditional one is that you will have
the competitive edge. Picture two companies having the exact same results, the reason why
the e-commerce site will only go up from here is the fact that they have a global market
whereas the traditional stores will still only have their locals looking to buy.
Matthew Lloyd-Jones 1|Page
, BTEC L3 90 Credit Diploma in IT
Unit 8 – Impact of E-commerce
Search facilities
In the traditional stores you could spend hours trying to find a single item, whereas on most
e-commerce websites there are search facilities enabled. This makes the hours of searching
cut down into a click of the button.
Pricing opportunities (differences and fluid pricing)
Online you can also create discounts on certain items encouraging the customers to buy the
products. What really sets the two businesses apart is the fact that the online stores do not
have to worry about the running costs as much and therefore can be more lenient with their
sales. Online stores can also take full advantage of the fluid pricing. This is a lot more
difficult for the traditional stores, to put fluid pricing simply, it is for example when you have
high demand on a certain product, because of this you would increase the price. It’s just the
same for when the demand is low meaning that the price will drop.
Gathering customer information
Gathering information about your customers is very important in the business world. It
means you can keep track of what products are trending and you can also give the customer
a personalised shopping experience, for example amazon when you make a purchase,
advises you to other books that are similar to that of what you bought. In the traditional
shop it can be harder to gather personal information however there have been certain
things introduced to help cut down on the unknown, such as loyalty cards.
Alternative income sources
Once an e-commerce has been created and is working effectively there are other sources of
income. An example being ‘pay-per-click-advertising’, this is where adverts are placed on
your website. Each time a user clicks on the advert you’ll gain money.
P3 explain the potential risks to an organisation of committing to an e-commerce system
(This will be explained throughout the entirety of the assignment)
DRAWBACKS
Although there are what seems to be endless opportunity in making your business online
there are also a number of downsides which will need to be seen to.
Customer trust
The most popular issue with online businesses is that customers don’t trust them.
Lack of human contact
The fact that there is no human contact (impersonal) can put off a lot of a lot of customers,
the traditional shoppers would rather going to local stores and buying products a little over
priced but face-to-face.
Matthew Lloyd-Jones 2|Page
Unit 8 – Impact of E-commerce
Throughout this assignment I will be discussing the impact of introducing an e-commerce
system to an organisation, I will also be explaining the potential risks of having an e-
commerce system in place.
I will then review the regulations governing e-commerce and to finish there will be a case
study which I will need to complete, my case study will be based on ‘Tesco’, it will be
evaluating the use of an e-commerce business in a ‘brick and click’ organisation.
P2 Explain the impact of introducing an e-commerce system to an organisation
Benefits
There are a lot of benefits attached to having an e-commerce website. In the first section of
this assignment I will be discussing them.
Global Market place
E-commerce has enabled a global marketplace to develop, people are now able to sit in the
comfort of their home and order anything online, from anywhere in the world. Traditional
local stores have decreased dramatically since the birth of e-commerce, they have to target
only their local community for sales and if they wish to expand to new areas they’ll have to
build new, expensive stores.
24/7 Trading
Trading online not only means a global market place, it also means you are open to business
all days of the week and at any times, no labour costs (apart for start-up and occasional
maintenance). Also because the websites are automated, transactions can be done without
hassle.
Relatively low start-up and running costs
Compared to the traditional stores the start-up and running costs are next to none. With the
traditional stores you would have to pay for: the location, the stock, labour, electricity,
water and utility costs, whereas with the e-commerce businesses there are far fewer costs.
Although you can run the business online just with a single person it is advised to create a
small team for you to work with. If your e-commerce site begins to grow a reputation and
becomes successful you may want to consider growing your team however not to the extent
of what traditional stores have.
Competitive edge
One major benefit of having a store online instead of a traditional one is that you will have
the competitive edge. Picture two companies having the exact same results, the reason why
the e-commerce site will only go up from here is the fact that they have a global market
whereas the traditional stores will still only have their locals looking to buy.
Matthew Lloyd-Jones 1|Page
, BTEC L3 90 Credit Diploma in IT
Unit 8 – Impact of E-commerce
Search facilities
In the traditional stores you could spend hours trying to find a single item, whereas on most
e-commerce websites there are search facilities enabled. This makes the hours of searching
cut down into a click of the button.
Pricing opportunities (differences and fluid pricing)
Online you can also create discounts on certain items encouraging the customers to buy the
products. What really sets the two businesses apart is the fact that the online stores do not
have to worry about the running costs as much and therefore can be more lenient with their
sales. Online stores can also take full advantage of the fluid pricing. This is a lot more
difficult for the traditional stores, to put fluid pricing simply, it is for example when you have
high demand on a certain product, because of this you would increase the price. It’s just the
same for when the demand is low meaning that the price will drop.
Gathering customer information
Gathering information about your customers is very important in the business world. It
means you can keep track of what products are trending and you can also give the customer
a personalised shopping experience, for example amazon when you make a purchase,
advises you to other books that are similar to that of what you bought. In the traditional
shop it can be harder to gather personal information however there have been certain
things introduced to help cut down on the unknown, such as loyalty cards.
Alternative income sources
Once an e-commerce has been created and is working effectively there are other sources of
income. An example being ‘pay-per-click-advertising’, this is where adverts are placed on
your website. Each time a user clicks on the advert you’ll gain money.
P3 explain the potential risks to an organisation of committing to an e-commerce system
(This will be explained throughout the entirety of the assignment)
DRAWBACKS
Although there are what seems to be endless opportunity in making your business online
there are also a number of downsides which will need to be seen to.
Customer trust
The most popular issue with online businesses is that customers don’t trust them.
Lack of human contact
The fact that there is no human contact (impersonal) can put off a lot of a lot of customers,
the traditional shoppers would rather going to local stores and buying products a little over
priced but face-to-face.
Matthew Lloyd-Jones 2|Page
