For the most part, in our view, e-business does not include commercial transactions involving an
exchange of value across organizational boundaries. For example, a company’s online inventory
control mechanisms are a component of e-business, but such internal processes do not directly
generate revenue for the firm from outside businesses or consumers, as e-commerce, by
definition, does. It is true, however, that a firm’s e-business infrastructure provides support for
online e-commerce exchanges; the same infrastructure and skill sets are involved in both ebusiness and e-commerce. E-commerce and e-business systems blur together at the business firm
boundary, at the point where internal business systems link up with suppliers or customers, for
instance. E-business applications turn into e-commerce precisely when an exchange of value
occurs (see Mesenbourg, U.S. Department of Commerce, August 2001 for a similar view).
BENEFITS OF E-COMMERCE
The benefits of e-commerce can be seen to affect three major stakeholders: organisations,
consumers and society.
1) Benefits of e-commerce to organisations
International marketplace. What used to be a single physical marketplace located in a
geographical area has now become a borderless marketplace including national and international
markets. By becoming e-commerce enabled, businesses now have access to people all around the
Operational cost savings. The cost of creating, processing, distributing, storing and retrieving
paper-based information has decreased.
Mass customisation. E-commerce has revolutionised the way consumers buy good and services.
In the past when Ford first started making motor cars, customers could have any colour so long
as it was black. Now customers can configure a car according to their specifications within
minutes on-line via the www.ford.com website.
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. This is particularly beneficial for companies in the high technology sector, where
stocks of components held could quickly become obsolete within months. For example,
companies like Motorola (mobile phones), and Dell (computers) gather customer orders for a
product, transmit them electronically to the manufacturing plant where they are manufactured
according to the customer’s specifications (like colour and features) and then sent to the
customer within a few days.
Lower telecommunications cost. The Internet is much cheaper than value added networks
(VANs) which were based on leasing telephone lines for the sole use of the organisation and its
authorised partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialling.