eCommerce Overview eCommerce Overview
The Internet’s global reach is a costeffective means for marketing products and services overseas. Companies that establish a corporate website publicizing their products and services are able to create an electronic mechanism for safe and secure electronic transactions; they can also track orders, provide customer service interface, and list their products’ technical specifications. Small and medium-sized companies can broaden their market presence internationally by adopting e-commerce or electronic business practices that are user friendly for non-English-speaking users.
What is ecommerce?
It is buying and selling online through the Internet. The transaction is completed through an electronic network featuring computer systems—the vendor’s, a web host’s, and the buyer’s—all of which are linked to the Internet.
Use of E-Commerce for International Business and Trade
Using the Internet to transact business in the global marketplace offers significant advantages to the small or medium-sized company seeking new outlets for its products and services. More than a billion people throughout the world have access to the Internet. This presence offers a tremendous potential customer base for the entrepreneur. At the same time, business-to-business (B2B) e-commerce has also surged. Corporations in Africa, Asia, Europe, and Latin America are increasingly migrating many of their marketing programs online to seek new business in regions and countries previously thought to be beyond their resources. They also seek new supply sources and services to meet their internal needs and partners to share manufacturing and marketing responsibilities. Some companies, such as GE, have migrated all their sourcing and bidding processes to the Internet.
For certain industries, products, and services, going online reduces variable costs associated with international marketing. Handling tasks such as order processing, payment, after-sales service, marketing (direct e-mail), and advertising online may lower the international market development costs that an enterprise would have incurred by using conventional “brick-and-mortar” market penetration strategies. Be aware of one important caveat: Although English is spoken in many countries, it is still important to consider using the languages prevalent in the countries targeted in your company’s e-business strategy. Your website should be designed to reach the widest audience in the languages of that audience.
In the context of the Internet, electronic commerce needs to be viewed beyond the traditional commercial arena. E-commerce affects marketing, production, and consumption. Information gathered from customers through Internet stores can be used to customize products, to forecast demand, and to prepare business strategies. Consumers not only pay online for products and services but also search for information about products, negotiate with vendors, and reveal their preferences through their purchasing patterns.
E-commerce offers much promise to U.S. companies interested in using the Internet as another vehicle for exporting. However, you should be familiar with the steps necessary to make your company’s website e-export capable. Many U.S. companies have a website that fulfills one or more marketing functions tailored to their business specialties.
A transactional website may be an electronic storefront for a brick-and mortar retailer or a catalog business, or it may be a showroom for a manufacturer wishing to sell directly to the public. Transactional websites conduct full “end-to-end” transactions through the website, allowing customers to search for, order, and pay for products online, and to contact the company for aftersales service. The most sophisticated websites create efficiencies by integrating the transaction process with back-office systems such as accounting, inventory, service, and sales.
An informational website generates sales by promoting corporate awareness rather than facilitating online transactions. It functions much like a brochure that provides information about the product or service and gives contact information needed to proceed with a purchase.
Because such a website is often static and does not require the software systems necessary for online transactions, design and maintenance are less expensive than for a transactional website. An informational website is ideal for companies that market products and services that cannot be provided online or goods that cannot be sold online. A modified version of this kind of site permits the buyer to shop online for the best price from competing vendors providing the identical product—for example, authorized car manufacturers. Information on options available for a particular model allows the buyer to visualize the configuration and obtain an estimated price for the vehicle.
These sites are market-makers because they bring buyers and sellers together to facilitate transactions. Participation in a brokerage often provides an efficient way of finding a customer without the expense of building a proprietary transactional website. Types of brokerages include auctions, virtual malls, and matching services. There is a profusion of marketplaces including eBay, Amazon, and China-based Alibaba. As these platforms establish fulfillment centers around the world in their quest to be closer to customers and to deliver orders faster, some of them make bulk purchases from suppliers and arrange all logistics themselves.