4.8 E-commerce

Question 1

E-commerce

Answer 1

The buying and selling of goods and services on the internet.

Question 2

Features of e-commerce

Answer 2

• global reach
• 24/7 accessibility
• access to information
• consumer reviews
• impersonal interactions

Question 3

E-commerce and place (marketing mix)

Answer 3

Reduces the number of intermediaries in the supply chain, and increases opportunities to find suitable products and services.

Question 4

E-commerce and promotion (marketing mix)

Answer 4

Supports innovative promotion, e.g. purchase suggestions based on search behaviour.

Question 5

E-commerce and price (marketing mix)

Answer 5

Lower overheads reduce the prices of goods. Customers compare prices using search engines and price comparison sites.

Question 6

E-commerce and product (marketing mix)

Answer 6

Allows firms to offer a wider range of products and provide more information on specifications with greater customisation opportunities.

Question 7

Types of e-commerce

Answer 7

• business-to-business (B2B)
• business-to-customer (B2C)
• customer-to-customer (C2C)

Question 8

Business-to-business (B2B)

Answer 8

E-commerce conducted directly for business customers rather than the end user.

Question 9

Business-to-customer (B2C)

Answer 9

E-commerce business conducted directly for the end-user.

Question 10

Customer-to-customer (C2C)

Answer 10

Transactions between one consumer and another.

Question 11

Potential costs of e-commerce to firms:

Answer 11

• It is harder to develop online brand loyalty as customers can search for cheaper alternatives
• It is expensive to develop reliable, secure sites with payment facilities and links to distribution systems
• Vulnerability to cyber-attacks from competitors, spammers and hackers, and loss of commercially sensitive information
• Some products are difficult to market online as customers want to try them out before buying

Question 12

Potential benefits of e-commerce to firms:

Answer 12

• Potential access to global markets
• Increasing opportunities for small producers in niche markets.
• Cost savings and improved efficiency

Question 13

Potential costs of e-commerce to customers:

Answer 13

• Fewer quality controls on online businesses and product quality may be less than in physical retail outlets.
• Laws protecting shoppers in one country may not apply to purchases from foreign sites.
• Customer security may be compromised online, e.g. fraudulent operations.
• Cybercrime is growing, with hackers and spammers disrupting commercial activities and stealing information.

Question 14

Potential benefits of e-commerce to customers:

Answer 14

• lower overheads than physical competitors and consequently lower prices
• a larger range of products available
• search facilities to find the correct product and information more easily
• reduced transaction times
• purchase tracking
• higher service levels, e.g. links to frequently asked questions
• encrypted payment systems