ELECTRONIC COMMERCE (BEM 302)

LECTURE NOTES
MAKUDZA F
LESSON 1: INTRODUCTION

After studying this lesson, you will be able to:

❖ Understand the concept of E-Commerce
❖ Know the Characteristics of E-Commerce
❖ Explain the functions of E-Commerce
❖ Define the scope of E-Commerce
❖ Recognize the benefits and limitations of e-commerce
❖ Identify E-Commerce opportunities and challenges

CONTENTS
1.1 Introduction
1.2 Meaning of E-Commerce
1.3 Definitions of E-Commerce
1.4 Features of E-Commerce
1.5 Functions of E-Commerce
1.6 Scope of E-Commerce
1.7 Benefits and limitations of E-Commerce
1.8 Internet and Zimbabwe
1.9 Opportunities and challenges
1.10 Future scope and growth
1.11 Summary
1.12 Key Terms
1.13 Self Evaluation Questions

1.1 Introduction
WE are living in e-century. The Internet and information and
communicationstechnologies (ICT) are central to economic growth and
productivity. Internet-based technologies and networks can increase
productivity, decrease costs and open new market opportunities.
Now-a-days, using the Internet and email to conduct business is
not uncommon. However, lack of technical and management skills in
Information and Communications Technology is a barrier. There are
a wide variety of resources available to help you to improve

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your e-commerce skills. Simply, decide what skills you need and identify the appropriate resources
to help you to build those skills.
The skills that may be required range from basic abilities, like word processing and Internet
navigation, to more complex capabilities such as designing and building websites and database
management.

1.2 E-Commerce: Meaning

E-Commerce or Electronics Commerce is a methodology of modern business which
addresses the need of business organizations, vendors and customers to reduce cost and improve
the quality of goods and services while increasing the speed of delivery. E-commerce refers to
paperless exchange of business information using following ways.
• Electronic Data Exchange (EDI)
• Electronic Mail (e-mail)
• Electronic Bulletin Boards
• Electronic Fund Transfer (EFT)
• Other Network-based technologies

The concept of e-commerce is all about using the internet to do business better and faster.

E-commerce is the process of buying and selling over the Internet, or conducting any
transaction involving the transfer of ownership or rights to use goods or services through a
computer-mediated network without using any paper document.
o Electronic commerce or e-commerce refers to a wide range of online business
activities for products and services. It also pertains to “any form of business
transaction in which the parties interact electronically rather than by physical
exchanges or direct physical contact.”
o Business transacted through the use of computers, telephones, fax machines,
barcode readers, credit cards, automated teller machines (ATM) or other
electronic appliances without

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 • the exchange of paper-based documents. It includes procurement, order entry, transaction
processing, payment authentication, inventory control, and customer support.
o E-commerce is subdivided into three categories: business to business or B2B
(Cisco), business to consumer or B2C (OK, TM PicNPay), and consumer to
consumer or C2C (eBay) also called electronic commerce.
o E-commerce the phrase is used to describe business that is conducted over the
Internet using any of the applications that rely on the Internet, such as e-mail,
instant messaging, shopping carts, Web services, UDDI, FTP, and EDI, among
others.
o A type of business model, or segment of a larger business model, that enables a
firm or individual to conduct business over an electronic network, typically the
internet. Electronic commerce operates in all four of the major market segments:
business to business, business to consumer, consumer to consumer and consumer
to business.
o Ecommerce has allowed firms to establish a market presence, or to enhance an
existing market position, by providing a cheaper and more efficient distribution
chain for their productsor services.

1.2.1 Examples of E-Commerce

• An individual purchases a book on the Internet.

• A government employee reserves a hotel room over the Internet.
• A business calls a toll free number and orders a computer using the seller's interactive
telephone system.
• A business buys office supplies on-line or through an electronic auction.
• Retailer orders merchandise using an EDI network or a supplier's extranet.
• A manufacturing plant orders electronic components from another plant within the
company using the company's intranet.
• An individual withdraws funds from an automatic teller machine (ATM).
• Accepting credit cards for commercial online sales
• Driving information through a company via its intranet
• Driving manufacturing and distribution through a value chain with partners on an
extranet

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• Selling to consumers on a pay-per-download basis, through a Web site, etc

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1.3 E-Commerce Definitions
The definition of e-commerce includes business activities that are business-to-business
(B2B), business-to-consumer (B2C), extended enterprise computing (also known as "newly
emerging value chains"), d-commerce, and m-commerce.
Ecommerce is simply a part e-business, more specifically, the trading aspect of e- business.
Although there are many definitions and explanations of e-commerce, the following definition
provides a clear distinction. There are many definitions and understanding about E- Commerce.
They are as follows:
1. According to the editor-in-chief of International Journal of Electronic Commerce,
Vladimir Zwass, ‘Electronic commerce is sharing business information, maintaining
business relationships and conducting business transactions by means of
telecommunications networks’.
2. Electronic Commerce is where business transactions take place via telecommunications
networks, especially the Internet – E. Turban, J. Lee, D. King and H.M. Chung,
3. Electronic commerce is about doing business electronically – P. Timmers
4. Electronic commerce or e-commerce refers to a wide range of online business activities for
products and services – Anita Rosen
5. It pertains to “any form of business transaction in which the parties interact electronically
rather than by physical exchanges or direct physical contact.” – MK, Euro Info
Correspondence Centre (Belgrade, Serbia),
6. E-commerce is usually associated with buying and selling over the Internet, or conducting
any transaction involving the transfer of ownership or rights to use goods or services through
a computer-mediated network. – Thomas L. Mesenbourg
7. A more complete definition is: E-commerce is the use of electronic communications and
digital information processing technology in business transactions to create, transform,
and redefine relationships for value creation between or among organizations, and between
organizations and individuals. – Emmanuel Lallana, Rudy Quimbo, Zorayda Ruth Andam,
ePrimer
From your reading it should be apparent to you that electronic commerce is more
than online shopping.

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1.4 E-Commerce – Features
Electronic commerce, or e-Commerce, refers to the purchasing and selling of goods or
services via electronic means, such as the Internet or mobile phone applications. It may also refer
to the process of creating, marketing, servicing and paying for services and goods. Businesses,
governments and the public can participate in e-Commerce transactions. The following discussion
will elicit the unique features of e-commerce. The unique features of e-commerce technology
include:
1.4.1 Ubiquity:
e-Commerce is ubiquitous, It is available just about everywhere and at all times by using
internet and Wi-Fi hotspot such as airport, coffee cafe and hill station places. Consumers can
connect it to the Internet at any time, including at their homes, their offices, on their video game
systems with an Internet connection and mobile phone devices. E-Commerce is ubiquitous
technology which is available everywhere Moreover, individuals who have cell phones with data
capabilities can access the Internet without a Wi-Fi connection.
1.4.2 Global reach:
The potential market size is roughly equal to the size of the online population of the world.
E-Commerce Technology seamlessly stretches across traditional cultural and national
boundaries and enables worldwide access to the client. E-Commerce website has abilityto translate
the multilingual websites as well as allow the access to visitors all over the world, purchase products
and make business interactions.
1.4.3 Universal standards:
The technical standards of the Internet are shared by all of the nations in the world. The
whole online tradition are growing and expanding their features in the world. To development
any kind of business need Internet and communication application which make the business
relationship more lovingly and attractive for secure business and successful business.
1.4.4 Richness:
Users can access and utilize text messages and visual and audio components to send and
receive information. An individual may see information richness on a company’s blog if a post
contains a video related to a product and hyperlinks that allow him to look at or purchase the product
and send information about the post via text message or email.

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1.4.5 Interactivity:
E-commerce technologies allow two-way communication between the merchant and the
consumer. As a result, e-Commerce technologies can adjust to each individual’s experience. For
example, while shopping online, an individual is able to view different angles of some items, add
products into a virtual shopping cart, checkout by inputting his payment information and then
submit the order.
1.4.6 Personalization:
Technologies within e-Commerce allow for the personalization and customization of
marketing messages that groups or individuals receive. An example of personalization includes
product recommendations based on a user's search history on a Web site that allows individuals
to create an account.
1.4.7 Information density:
The use of e-Commerce reduces the cost to store, process and communicate information, At
the same time, accuracy and timeliness increase; thus, making information accurate, inexpensive
and plentiful. For example, the online shopping process allows a company to receive personal,
shipping, billing and payment information from a customer all at once and sends the customer's
information to the appropriate departments in a matter of seconds.
1.4.8 Social technology:
E-Commerce technology has tie up the social media networking application to provide the
best source of content sharing technology and e-Marketing systems. You can share your content or
data easily in just one click.
1.4.9 User-Generated Content:
Social networks use e-Commerce technologies to allow members, the general public, to
share content with the worldwide community. Consumers with accounts can share personal and
commercial information to promote a product or service. When a company has a professional social
networking account, a member of the same social network has the option of associating himself
with the company or a product by saying he likes or recommends it. When an individual updates
his status on a social networking account, he may also mention a product or company by name,
which creates word-of-mouth advertising.

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 Differences between Traditional Commerce and E-Commerce
Point of E-commerce Traditional Commerce
Difference
Cost Effective E-commerce is cost effective. The cost Cost has to be incurred for the role of
incurred on middlemen is eliminated as middlemen to sell the company’s
there is direct link between thebusiness products. The total overhead cost is more.
and the customers. . The total overhead Running a traditional business require a
cost required to run e- business is head office with several branches to cater
comparatively less. Running an e- to the needs of customers situated in
business require only a different places.
head office. Overhead cost can be
eliminated by hosting a website.
Time A lot of valuable time for both the It takes a lot of time to complete a
consumers and business is saved. A transaction.
product can be ordered and the
transaction can be completed in few
minutes through internet.
Convenience It provides convenience to both It is not so convenient method as that of
customers and business. It provides E-commerce. Customers have to move
better connectivity for its prospective away from their home or work place to
and potential customers as the website locate and purchase a desired product.
can be accessed virtually from
anywhere, anytime through internet. It
is not necessary to move away fromtheir
work place or home to locate and
purchase a desired product.
Accessibility It is easy to expand the size of the market It may not be easy to expand the size of
from regional to international level. By the market from regional to national level.
hosting a website, a business can Business organizations have to incur a lot
penetrate into global market. It is quite of expenses to enter international market.
easy to attract customers from
global markets at a marginal cost.
Introduction of It is easy to introduce a product on the It takes a lot of time and money to
new product website and get the immediate feedback introduce a new product and analyse the
of the customers. Based onthe response, response of the customers. Initially, cost
the products can be has to be incurred to carry out pilot
redefined and modified for a successful surveys to understand the taste of the
launch. customers.
Profit It helps the organization to enjoy greater The cost incurred on the middlemen,
profits by increasing sales, cutting cost overhead, inventory and limited sales
and streamlining operating pulls down the profit in traditional
processes. commerce.
Physical It does not allow physical inspection of It is possible to physically inspect goods
Inspection goods. before the purchase.
Time Round the clock service is available. Business is open only for a limited time.

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 accessibility
Product It not suitable for perishable goods and It is suitable for perishables and ‘touch
suitability high value items such as jewellery and and feel’ items.
antiques. It is mostly suitable for
purchasing tickets, books, music and
software.
Human It requires technically qualified staff It does not have such problems
resources with an aptitude to update themselves associated with human resources.
in the ever changing world. It has
difficulty in recruiting and retaining
talented people.
Customer The interaction between the business The interaction between the business
interaction and the customer is screen-to-face. and the consumer is a face-to-face.
Process Automated processing of business There are chances of clerical errors to
transactions helps to minimize the occur as there is manual processing of
clerical errors. business transactions.
Business Business relationship is characterized Business relationship is vertical or
relationship by end-to-end. linear.
Fraud Lot of cyber frauds take place in e- Fraud in traditional commerce is
commerce transaction. Peoplegenerally comparatively less as there is personal
fear to give credit card information. interaction between the buyer and the
Lack of physical presence in markets seller.
and unclear legal issues give loopholes
for frauds to take place in e-
business transactions.
Information Little dependency on person to person
Heavy dependency on information
sharing information exchange. It provides a
exchange from person to person. No
universal platform to support business
uniform platform for information
activities across the globe. sharing as it depends heavily on
personal communication.
Method of Communication can be done in Communication is done in synchronous
Communication asynchronous way. Electronics system way. Manual intervention is required for
automatically handles when to pass each communication or transaction.
communication to required person or
do the transactions.
Strategy A uniform strategy can be easily It is difficult to establish and maintain
established and maintain. standard practices.

1.5 Functions of E-Commerce

The following are five functions you should be doing daily in your e-commerce business.
a) Search Engine Optimization (SEO)
• Generate unique relevant content. Google loves unique content that is related to what your site
is all about. Ensure you are using good keywords you want to focus on.

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• Keywords in optimized page titles.
• Internal linking. Link keywords in your unique content to pages related to that keyword. This
is huge!!!
b) Selecting New Products
• Sell what the customer wants to buy, not what you want to sell! This is a common mistake,
especially when merchandisers are given a great price to sell a particular product. If nobody wants
to buy that product, it doesn’t matter what price you set it at.
• Find out what customers want. What is your value proposition on products you sell? Capitalize
on your niche!
c) Merchandising New Productions
• Pictures, pictures, pictures! It is very important to have high quality images of the products.
• Hero photos: if you have a big seller, feature it on a category page with a hero image of the
product.
• Promote latest releases in your newsletters and feature them in categories or on your
homepage.
• Market to customers who have purchased related items in the past.
d) Customer Service
• Make your customers happy.
• Delivery orders on time.
• Ensure order accuracy.
• Reship promptly if a package was failed to be delivered to the customer, if it came damaged,
or if it was missing parts.
• Don’t try to save every penny on an order. You may need to take a loss to make a customer happy
in order to retain their loyalty to you, and therefore be very valuable for many orders to come.

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 e) Monitoring your KPIs / Analytics
• Monitor your analytics reports. View what items are selling and bubble them to the top of product
listings so customers can find them easier. A great tool for this, if you are on IBM WebSphere
Commerce, is our Smart Merchandiser product. With it, you can see analytic overlays on each
product in each category to help you make smart merchandising decisions.
• Tackle cart abandonment. Remarket those products to the customers if you have their email
addresses. Incentivize them to complete their checkout within X days.

1.6 Scope of E-Commerce

Today, online shopping is a reality in Zimbabwe. The market place is flooded with several
e- commerce options for shoppers to choose from. In the recent past, the growth of e-commerce
industry in Zimbabwe has been phenomenal as more shoppers have started discovering the benefits
of using this platform. There is enough scope for online businesses in the future if they understand
the Zimbabwean shopper’s psyche and cater to their needs. Listed below are the reasons that
guarantee the future prospect of E-commerce in Zimbabwe.
➢ Enhancing domain registrations
➢ Rising internet users
➢ Easy access to internet
➢ Awareness about internet even in rural areas
➢ Rising number of cyber cafes
➢ Growing need for E-commerce
a) Cash on delivery (COD)
Zimbabwean e-commerce industry has evolved over a period of time with innovations that
have changed the rules of the game globally. COD is one such example. In a country where credit
card penetration is much lower than other developing markets and where e-commerce companies
are still working hard to build trust among shoppers, introducing cash on delivery has been one
of the key factors for the success of the segment. At present, COD is the preferred payment mode
for close to 80-90% of all online transactions in the fashion and lifestyle segment. Executing COD
efficiently and painlessly for the customer is critical to the success of any e- commerce player in
the country.

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b) Delivering experiences
E-commerce needs to focus on customer experience to build trust and confidence. Customer
experience encompasses every interaction of a customer from placing an order to interacting with
customer service team, to the actual delivery experience. Providing a great delivery experience is
one of the core aspects to delighting customers. This not only mean faster deliveries but also
consistency and reliability. The more faith the customer has in your delivery service, the more likely
he is to buy again. Besides, it builds a good brand image and word-of- mouth publicity.
c) Growing the base
The Zimbabwean online user base is expected to increase by 3% in the next 2 – 3 years
and a larger percentage of people are expected to transact online by the end of 2030. This large
base will provide vast scope for e-commerce businesses to establish themselves in Zimbabwe.
d) Growing opportunities
The e-commerce industry is growing at a rapid pace and changing the dynamics of the retail
industry. In the coming years, e-commerce is expected to contribute close to 8-10% of the total
retail segment in Zimbabwe. This growth is bound to continue provided e-commerce companies
focus on innovating, building strong technology infrastructure and delivering the best customer
experience.
e) Online Travel Segment
The online travel segment has seen a growth of 5.5% from 2017-2023. This due to rise of
disposable income, surge in demand for domestic travel, COVID-19 Pandemic and the boom of the
tourism industry. Domestic travel contributed to as much as 10% of the total market, followed by,
international air tickets and hotel bookings.
f) E-Tailing
E-tailing encompasses buying consumer items like apparels, electronic devices, home and
kitchen appliances, jewellery, online. Competition is intense due to low entry barrier of this
segment. However, Amazon.com, flipkart, snapdeal.com,jabong.com, and myntra.com are some
of the major players on an international scale. This segment is expected to grow further as people
become more pressed for time. Also the choice that e-tailing sites offer to customers will drive
demand for this segment. However, there will be intense price based competition in this sector and
consolidations are in the order.
g) Online Financial Services
The financial services segment includes applying for insurance, paying online bills, and
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premiums and online transactions for financial services. The costs of these insurance policies are
lesser with premiums being 4%-6% cheaper. This is a win-win situation for both the insurance
provider and the customers. Also, the convenience provided by online portals has led to more
customers choosing the online route for bill payment.
h) Classifieds
It is in a very promising stage and has lot of scope for growth. Online advertising is lot
cheaper than conventional methods and unlike the latter, it is not constrained to a geographic
location. The growth is mainly fueled by services like online job (vacancymail.co.zw), online
wedding venue marketing, B2C classifieds and B2B classifieds. \

i) Other online Services

These include sites offering online services like buying entertainment tickets, food and
grocery.

1.7 Benefits and limitations of E-Commerce

1.7.1 Benefits of E-Commerce
• Electronic commerce can increase sales and decrease costs.

• Advertising done well on the web can get even a small firm’s promotional message out to
potential consumers in everycountry in the world. A firm can use electronic commerce to
reach narrow market segments that are geographically scattered.

• The web is particularly useful in creating virtual communities that become ideal target
markets for specific types of products or services.

• A virtual community is a gathering of people who share a common interest, but instead of
this gathering occurring in the physical world; it takes place on the internet.
Some key benefits of e-commerce are summarized below:
❖ By becoming e-commerce enabled, businesses now have access to people all around the
world. In effect all e-commerce businesses have become virtual multinational corporations.

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❖ The cost of creating, processing, distributing, storing and retrieving paper-based
information has decreased.
❖ The pull-type processing allows for products and services to be customized to the
customer’s requirements.
❖ Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain
management – this is based on collecting the customer order and then delivering through
JIT (just-in-time) manufacturing.
❖ The Internet is much cheaper than value added networks (VANs) which were based on
leasing telephone lines for the sole use of the organization and its authorized partners. It
is also cheaper to send a fax or e-mail via the Internet than direct dialing.
❖ Software and music/video products can be downloaded or e-mailed directly to customers
via the Internet in digital or electronic format.
❖ Businesses can be contacted by or contact customers or suppliers at any time.
❖ 24/7 access: Enables customers to shop or conduct other transactions 24 hours a day, all
year round from almost any location.
❖ Customers not only have a whole range of products that they can choose from and
customize, but also an international selection of suppliers.
❖ Customers can ‘shop’ around the world and conduct comparisons either directly by visiting
different sites, or by visiting a single site where prices are aggregated from a number of
providers and compared (for example www.moneyextra.co.uk for financial products and
services).
❖ This can range from the immediate delivery of digitized or electronic goods such as software
or audio-visual files by downloading via the Internet, to the on-line tracking of the progress
of packages being delivered by mail or courier.
❖ An environment of competition where substantial discounts can be found or value added, as
different retailers view for customers. It also allows many individual customers to aggregate
their orders together into a single order presented to wholesalers or manufacturers and obtain
a more competitive price.
❖ Enables more flexible working practices, which enhances the quality of life for a whole host
of people in society, enabling them to work from home. Not only is this more convenient
and provides happier and less stressful working environments, it also

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 potentially reduces environmental pollution as fewer people have to travel to work
regularly.
❖ Enables people in developing countries and rural areas to enjoy and access products,
services, information and other people which otherwise would not be so easily available
to them.
❖ Facilitates delivery of public services like health services available over the Internet (on-
line consultation with doctors or nurses), filing taxes over the Internet through the Inland
Revenue website.
❖ A business can reduce the costs of handling sales inquiries, providing price quotes, and
determining product availability by using electronic commerce in its sales support and
order-taking processes.
❖ Electronic commerce provides buyers with a wider range of choices than traditional
commerce.
❖ Electronic commerce provides buyers with an easy way to customize the level of detail in
the information they obtain about a prospective purchase.
❖ Electronic payments of tax refunds, public retirement, and welfare support cost less to issue
and arrive securely and quickly when transmitted over the internet.
❖ Electronic payments can be easier to audit and monitor than payments made by cheque,
providing protection against fraud and theft losses.
❖ Electronic commerce can also make products and services available in remote areas.
1.7.2 Limitations of E-Commerce
Most of the disadvantages of e-commerce stem from the newness and rapidly developing
pace of the underlying technologies. Some of the key disadvantages of are given below:
➢ Return-on-investment is difficult to calculate.
➢ Many firms have had trouble recruiting and retaining employees with the technological,
design, and business process skills needed to create an effective electronic commerce
presence.
➢ Difficulty of integrating existing databases and transaction-processing software designed
for traditional commerce into the software that enables electronic commerce.
➢ Many businesses face cultural and legal obstacles to conducting electronic commerce
➢ Lack of sufficient system security, reliability, standards and communication protocols.

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➢ Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch
up’ and not be left behind.
➢ Under pressure to innovate and develop business models to exploit the new opportunities
which sometimes leads to strategies detrimental to the organization. The ease with which
business models can be copied and emulated over the Internet increases that pressure and
curtails longer-term competitive advantage.
➢ Facing increased competition from both national and international competitors often leads
to price wars and subsequent unsustainable losses for the organization.
➢ Problems with compatibility of older and ‘newer’ technology. There are problems where
older business systems cannot communicate with web-based and Internet infrastructures,
leading to some organizations running almost two independent systems where data cannot
be shared. This often leads to having to invest in new systems or an infrastructure, which
bridges the different systems. In both cases this is both financially costly as well as
disruptive to the efficient running of organisations.
➢ Computing equipment is needed for individuals to participate in the new ‘digital’ economy,
which means an initial capital cost to customers.
➢ A basic technical knowledge is required of both computing equipment and navigation of the
Internet and the World Wide Web.
➢ Cost of access to the Internet, whether dial-up or broadband tariffs.
➢ Cost of computing equipment. Not just the initial cost of buying equipment but making sure
that the technology is updated regularly to be compatible with the changing requirement of
the Internet, websites and applications.
➢ Lack of security and privacy of personal data. There is no real control of data that is collected
over the Web or Internet. Data protection laws are not universal and so websites hosted in
different countries may or may not have laws which protect privacy of personal data.
➢ Physical contact and relationships are replaced by electronic processes. Customers are
unable to touch and feel goods being sold on-line or gauge voices and reactions of human
beings.
➢ A lack of trust because they are interacting with faceless computers.

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 ➢ As people become more used to interacting electronically there could be an erosion of
personal and social skills which might eventually be detrimental to the world we live in
where people are more comfortable interacting with a screen than face to face.
➢ There is a potential danger that there will be an increase in the social divide between
technical haves and have-nots – so people who do not have technical skills becomeunable
to secure better-paid jobs and could form an underclass with potentially dangerous
implications for social stability.
➢ Reliance on telecommunications infrastructure, power and IT skills, which in developing
countries nullifies the benefits when power, advanced telecommunications infrastructures
and IT skills are unavailable or scarce or underdeveloped.
➢ As new technology states how do you dispose of all the old computers, keyboards,monitors,
speakers and other hardware or software?
➢ Facilitates Just-In-Time manufacturing. This could potentially cripple an economy in times
of crisis as stocks are kept to a minimum and delivery patterns are based on pre-set levels
of stock which last for days rather than weeks.

1.8 E-commerce opportunities and challenges for industries

E-Commerce has changed and is still changing the way business is conducted around the
world.

1.8.1Opportunities:

There is a rising awareness among the businesses in Zimbabwe about the opportunities
offered by e-commerce. E-commerce provides a new place for connecting with consumers and
conducting transactions. Virtual stores operate round the clock.

a) Global Trade:

E-business is one of the major factors in the globalization of business. Other factors include
decreases in trade barriers, globalization of capital markets.

b) Virtual Businesses:

Business firms now have the ability to become virtual E-Business. Virtual business uses
electronic means to transact business as opposed to the traditional means of face to face transaction.

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c) Lower search costs:

The Internet brings low search costs and high price lucidity. E-business has proved to be
highly cost effective for business concerns as it cuts down the cost of marketing, processing,
inventory management, customer care, etc.

d) Round the clock:

Customers can do transactions for the product or enquiry about any product/services
provided by a company anytime, anywhere from any location.

e) Greater Economic Efficiency:

Greater economic efficiency (lower cost) and more rapid exchange (high speed, accelerated,
or real-time interaction) are achieved with the help of electronic business.

1.9 Future Scope and Growth

The growth of e commerce will be on two accounts: One is due to the changes in the macro-
economic parameters like disposable income, internet penetration, inflow of investments, and the
other due to segment specific factors.

a) Macro-economic factors

i) Personal Disposable Income will continue to rise

According to the International Monetary Fund (IMF), personal disposable income will rise;
it signals that the purchasing power of the people and their standard of living has increased. As a
result, demand for goods and services are expected to rise. With more disposable income,the
benefits of time saving offered by e-commerce will lead to growth in the sector.

ii) Number of active Internet users in Zimbabwe is poised to rise

Internet penetration has increased in Zimbabwe. There has been an increase in internet user
base and such trend is expected to continue. This will lead to more advertisement on the digital
media. As advertisements increase, the trial rate and the repeat rate for online retailing is likely to
increase. This will trigger growth in both the travel and non-travel segment due to more customer
acquisition.

iii) Demand for debit and credit cards will see a rise

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 The demand for debit and credit cards has also seen a steady rise over the last few years.
Most of the banks now provide online banking and debit card facility with every new account. With
the financial inclusion drive, the number of bank accounts (and hence the number of debit cards)
will definitely see a rise. This coupled with rising disposable income will invariably lead to more
online transactions.

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b) Segment Specific factors

In the online travel segment, growth of the tourism industry

and demand of domestic travel will have positive externalities on
the e-commerce industry. With travel websites providing
additional features like hotel booking and package tours, the
convenience factor offered by these websites will lead to growth.
Additionally, internet gives users a choice where they can evaluate
an offer, compare the prices and decide on the one that suit their
demand. In the online retail space, absence of showrooms and high
cost of transportation prevents those in tier 2 cities to access
global brands thus increasing demand for online shopping.

1.10 Summary

There is no one commonly agreed definition of E-

Commerce. E-commerce has an impact on three major
stakeholders, namely society, organizations and customers. There
are a number of advantages, which include cost savings, increased
efficiency, customization and globalmarketplaces. There are also
limitations arising from E-Commerce which apply to each of the
stakeholders. These include information overload, reliability and
security issues, cost of access, social divisions and difficulties in
policing the Internet.
In order to aid general understanding of E-Commerce a
number of frameworks have been introduced to explore it from
different perspectives. These frameworks help identify the
elements of E-Commerce and how businesses can better
understand E-Commerce and its practical applicability.

1.11 Key Terms

1. E-Commerce: Electronic Commerce is where business
transactions take place via telecommunications networks,
especially the Internet
2. E-Business: E-business is the transformation of key
business processes through the use of Internet
technologies.
3. Internet: It is a worldwide system of computer network through which the users at any

4. E-tailing: E-tailing encompasses buying consumer items

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 like apparels, electronic devices, home and kitchen
appliances, jewellery, online. Amazon.com, flipkart,
snapdeal.com,jabong.com, and myntra.com are some of
the major players..

1.12 Self-Evaluation Questions

1. Define e-commerce
2. What are the elements of E-Commerce?
3. What is Internet?
4. What is EDI?
5. What is E-Tailing?
6. Sketch out the historical development of E-Commerce.
7. State the impact of E-Commerce on business world.
8. What are the advantages of E-Commerce?
9. Bring out the disadvantages of E-Commerce.
10. Discuss the opportunities and challenges of E-Comme

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