Advantages of E-commerce


Wal-Mart.com is one of the 10 most popular shopping Web sites, Stores magazine reports.
Wal-Mart.com is one of the 10 most popular shopping Web sites, Stores magazine reports.
Scott Olson/Getty Images

Ohmigosh. . .You jump out of bed. It's 3 a.m., and you forgot that your mom's birthday is only three days away. You head over to the computer and start surfing. You scroll through your favorite site. You see a purse, a vase and then you find it -- the perfect pair of earrings. You mother's guaranteed to love them.

You place them in your shopping cart, enter your credit card and shipping information. You click send. In less than an hour, you're all done. And, you didn't have to get dressed or leave the house.

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E-commerce, the buying or selling of goods and services over the Internet, is changing the way that we shop. On an increasing basis, consumers turn to the Internet to purchase and research items like dishwashers, cars, stocks, travel and even clothing. According to a September 2007 Pew Internet & American Life Project survey, 49 percent of Americans have bought a product online and 60 percent rely on the Internet to conduct product-related research.

E-commerce's advantages aren't just for consumers; retailers also find there are advantages to selling online. Customers can shop in their own time, and an online store doesn't require live salespeople.

What exactly are e-commerce's advantages for consumers? And, what are those advantages for retailers? Read on to find out.

Consumer Advantages of E-commerce

With online shopping, consumers can pre-order hot items avoiding standing in lines.
With online shopping, consumers can pre-order hot items avoiding standing in lines.
Joe Raedle/Getty Images

When CompuServe created its Electronic Mall in the 1980s, few consumers had even dreamed of an online shopping environment. Now for many, it's become a way of life. Buying goods and services online saves time, offers greater selection, allows for independent research and often saves the consumer money.

It's hard to beat the Internet for convenience. A full 50 percent of adult Americans have broadband Internet access at home [source: Pew Internet & American Life Project]. This type of always-on, high-speed connection makes it simple to research and quickly buy goods and services. According to a 2008 survey by the Pew Internet & American Life Project, 78 percent of Internet users either agree or strongly agree that online shopping is "convenient," and 68 percent say that it "saves them time" [source: Pew Internet & American Life Project].

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Let's look at airline tickets, for example. How did people buy airlines tickets before the Internet? If you knew the airline that flew to your desired destination, then you could call them, find out the schedule and prices, write it all down, and call them back when you were ready to purchase. If you didn't know which airline was the right one, then you'd have to call a travel agent, or go down to the travel agent's office and talk about different packages, rates and schedules.

Now, with the Internet, you can visit Web sites like Travelocity or Expedia. At those sites, you can compare rates and travel dates from multiple airlines. You can assemble hotel and rental car packages, reserve a tee time at the local golf course and pay for everything at the same time with your credit card. An impressive 64 percent of adult Internet users have bought or made a travel reservation online [source: Pew Internet & American Life Project].

The Internet is open 24/7. You can shop for shoes at midnight, rent a movie at breakfast and shop for travel deals when you really should be working. With e-commerce, normal time constraints are no longer an issue. You don't have to race from work to run six errands before the stores close. You can get your chores done while you're still at work and do the rest after putting the kids in bed.

And no store, no matter how huge, can match the Internet for variety and selection. Instead of being confined to stores in your immediate geographical area, you can shop from stores and Web sites located one state over or halfway around the world. You can buy from big national chains or small home businesses. With e-commerce, the consumer is in the driver's seat. If you put in the time, you can find the best deals on the widest variety of products and services in the world.

According to the Pew survey, 81 percent of Internet users have used the Web to research a product they're considering buying. In fact, 20 percent of Internet users say they research purchases on a daily basis [source: Pew Internet & American Life Project]. Once again, this gives consumers power that they never had before. In the past, you simply went to the store, looked at what they had, talked to a salesperson and bought what seemed like the best choice. Now you can read endless reviews by amateurs and professionals, compare prices from hundreds of vendors and even watch videos and interactive demos about the products you're considering.

Now let's look at some of the top advantages of e-commerce for doing business.

Vendor Advantages of E-commerce

Offering online shopping lets vendors save cost on employees.
Offering online shopping lets vendors save cost on employees.
Justin Sullivan/Getty Images

E-commerce levels the playing field for retail businesses. Even if you're a small, home-based company, you can establish a global reach with a simple Web site. Anyone, anywhere with an Internet connection can read about your product, and even better, buy it! You don't have to set up physical locations in different cities. You just need to invest in a good Web site design and the right online advertising to catch the attention of potential online clients.

Once again, online shopping puts consumers in the driver's seat. In some ways, that's good for the vendor as well. The vendor's job is to put all the information on the Web site in a clear, compelling way. But then he or she can sit back and let the consumer do the rest of the work. The vendor doesn't have to hire and train salespeople to pitch the product or service. The Web site does it for the company. A well-designed, well-written Web site can do double (or triple) duty as a marketing and advertising tool, a salesperson and a cashier, all wrapped up in one.

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Plus the Internet never closes. This means that your Web site is working for you 24/7. People can read your marketing materials, test drive your products and buy them outside of normal business hours.

This is all part of a larger concept called "customer outsourcing" [source: The Knowledge Exchange]. With an e-commerce Web site, anything that the customer does for himself -- like searching for airline flights, entering his billing information and signing up for an e-mail confirmation -- is work that paid customer service representatives don't have to do. That work, essentially, has been "outsourced" to the customer, saving the company money on employees and salaries.

With certain products and services, the Internet is not only the salesperson and the cashier, but the delivery guy as well. Think about digital downloads. You can go to iTunes or Amazon and download music, movies, TV shows and music videos. Those products are delivered to you within minutes. The company can save on shipping costs and related fees by delivering products directly to the consumer in electronic form.

We hope this has been an interesting look at the advantages of e-commerce. For more information on e-commerce, online business and related topics, check out the links on the next page.

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