Seven Unique Features of E-Commerce Technology
Seven Unique Features of E-Commerce Technology are:
- Global Reach
- Universal Standards
- Information Density
In traditional commerce, a market place is a physical place you visit in order to transact. For instance, television and radio typically motivate the consumer to go someplace to make a purchase. E-Commerce, in contrast, is characterized by its ubiquity: it is obtainable just about everywhere, at each and every one time. It liberates the market from being restricted to a physical space and makes it feasible to shop from your desktop, at home, at work, or even from your car, using mobile commerce.
The result is called a market space which is a marketplace extended beyond conventional, customary & traditional boundaries and removed from a temporal and geographic location. From a consumer point of view, ubiquity reduces transaction costs which are the costs of participating in a market. To transact, it is no longer necessary that you spend time and capital traveling to a market. At a broader level, the ubiquity of E-Commerce lowers the cognitive energy required to transact in a market space. Cognitive energy refers to the mental effort required to complete a task. Humans generally seek to reduce cognitive energy outlays. While given a choice, humans will choose the path requiring the least effort the most convenient path.
2. Global Reach
E-Commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and cost-efficient and effectively than is true in conventional, customary & traditional commerce. As a result, the potential market size for E-Commerce merchants is roughly equal to the size of the world’s online population (over 1 billion in 2005, and grow rapidly, according to the Computer Industry Almanac). The total number of users or consumers an E-Commerce business can obtain is a measure of its reach.
In contrast, most traditional commerce is local or regional-it involves local merchants or national merchants with local outlets. Television and radio stations, and newspapers, for instance, are primarily local and regional institutions with limited but powerful national networks that can attract national addressees. In contrast to E-Commerce technology, these older commerce technologies do not easily cross national boundaries to global addressees.
3. Universal Standards
One strikingly unusual feature of E-Commerce technologies is that the technical standards of the Internet, and therefore the technical standards for conducting E-Commerce, are universal standards-they are shared by each and every one nation around the world. In contrast, most conventional, technologies differ from one nation to the next. For instance, television and radio standards differ around the world, as does cell telephone technology.
The universal technical standards of the Internet and E-Commerce greatly lower market entry costs-the cost merchants must pay just to bring their goods to market. At the same time, for consumers, universal standards reduce search costs-the effort required one-world market space, where prices and product descriptions can be inexpensively displayed for each and every one to see, price discovery becomes simpler, faster, and more accurate.
One of the major Seven Unique Features of E-Commerce is Information richness refers to the complexity and content of a message. Conventional, customary & traditional markets, national sales forces, and small retail stores have great richness; they are able to make obtainable and provide personal, face-to-face service using aural and visual cues while making a sale. The richness of conventional, customary & traditional markets makes them a powerful selling or commercial environment. Prior to the development of the Web, there was a trade-off between richness and reach: the larger the addressees reached the less rich the message.
Unlike any of the commercial technologies of the twentieth century, with the feasible exception of the telephone, E-Commerce technologies allow for interactivity, meaning they enable two-way communication between merchant and consumer. Television, for instance, cannot ask viewers any questions or enter into conversations with them, and it cannot request that consumer information be entered into a form. In contrast, each and every one of these activities is feasible on an E-Commerce Website. Interactivity allow online merchant to engage a consumer in ways similar to a face-to-face know-how, but on a much more massive, global scale.
6. Information Density as One of the major Seven Unique Features of E-Commerce
The Internet and the Web vastly amplify and raise information density-the total amount and quality of information obtainable to each and every one market participants, consumers, and merchants alike. E-Commerce technologies reduce information collection, storage, processing, and communication costs. At the same time, these technologies amplify and raise greatly the currency, accuracy, and timeliness of information-making information more useful and important than ever. As a result, information becomes more plentiful, less expensive, and of higher quality.
A number of business consequences result from grow up in information density. In E-Commerce markets, prices and costs become more transparent. Price transparency refers to the ease with which consumers can discover and locate out the variety of prices in a market; cost transparency refers to the ability of consumers to discover the actual costs merchants pay for goods. But there are advantages for merchants as well. Online merchants can discover much more about consumers; this allows merchants to segment the market into groups willing to pay different prices and permits them to engage in price discrimination which is like selling the same goods, or nearly the same goods, to different targeted groups at different prices.
For instance, an online merchant can discover a consumer’s avid interest in expensive exotic vacations, and then pitch expensive exotic vacation plans to that consumer at a premium price, knowing this person is willing to pay extra for such a vacation. At the same time, the online merchant can pitch the same vacation plan at a lower price to more price-sensitive consumers. Merchants also have enhanced abilities to differentiate their goods & services in terms of cost, brand, and quality.
One of the major Seven Unique Features of E-Commerce is E-Commerce technologies permit personalization: merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests, and past purchases. The technology also permits customization which is like changing the delivered product or service based on a user’s preferences or prior behavior. Given the interactive nature of E-Commerce technology, much information about the consumer can be gathered in the marketplace at the moment of purchase. With the amplify and raise in information density, a great deal of information about the consumer’s past purchases and behavior can be stored and used by online merchants.
The result is a level of personalization and customization unthinkable with existing commerce technologies. For instance, you may be able to shape what you see on television by selecting a channel; but you cannot change the contents of the channel you have chosen. In contrast, the online version of the Wall Street Journal allows you to select the type of news stories you want to see first; and provides you the prospect to be alerted while certain incidents happen.
Now, let’s return to the question that motivated this section: Why study E-Commerce? The answer is simply those E-Commerce technologies and the digital markets that result a promise to bring about some fundamental; unprecedented shifts in commerce. One of these shifts, for instance, appears to be a large reduction in information asymmetry among each. And every one market participants (consumers and merchants). In the past, merchants and manufacturers were able to prevent consumers from learning about their costs; price discrimination strategies, and profits from sales. This becomes more hard and difficult with E-Commerce, and the marketplace potentially becomes highly price competitive.
Seven Unique Features of E-Commerce
In addition, the unique dimensions of E-Commerce technologies; suggest several new possibilities for marketing and selling a powerful set of interactive; personalized, and rich messages are obtainable for delivery to segmented, targeted addressees. E-Commerce technologies make it feasible for merchants to know much more about consumers. And to be able to use this information more efficient and effectively than was ever true in the past. Potentially, online merchants could use this new information to develop new information asymmetries, enhance their ability to brand goods & services, charge premium prices for high-quality service, and segment the market into an endless number of subgroups, each receiving a different price.
To complicate matters further, these same technologies make it feasible for merchants; to know more about other merchants than was ever true in the past. This presents the feasibility that merchants might collude on prices rather than compete and drive overall average prices up. This strategy works especially well while there are just a few suppliers.