Assignment- 2
Difference between
Traditional and E-
commerce
1. Cost effe ctiv e
E- c om m er ce is ver y cos t eff ective whenc om p ar edt ot r ad itionalco m m e r ce. I nt r a ditiona lcom m er ce,c os t ha s t obe incur r edf o r t her oleof m iddlem ent os ellt he com p any’s p r oduct . Thec os t inc ur r e donm iddlem enis elim inat ed ine- co m m er cea s t her eis adir e ct link b et wee nt he bus ine s s and t hecus t om e r. Thet ot al o ver he ad cos t r equir edt or une- bu s ines s is co m par atively le s s ,com par ed t ot r aditio nalbus ines s .
For exam ple,inr unning ane- bu s ines s ,only ah eado ffi ceis r equir ed. W h er eas int r ad itiona lm et h od,ahe adoffi c ewit hs ever a lbr an ches a r er eq uir edt o cat er t ot he need s of cu s t om er s s it u at edin differ e nt pla ces . T hecos t incur r edonla bour ,m aint enanc e,offi c er ent c anbes ubs tit ut ed by hos tingaw ebs it ein e- bus ines s m et h od.
E-commerce provides better connectivity for its prospective and potential
customers as the organization’s website can be accessed virtually from
anywhere, any time through internet. It is not necessary to move away from
their work place or home to locate and purchase a desired product.
4. Geographical accessibility
In traditional commerce, it may be easy to expand the size of the market from
regional to national level. Business organizations have to incur a lot of expenses
on investment to enter international market. In e-commerce it is easy to expand
the size of the market from regional to international level.
By hosting a website, by placing advertisements on the internet and satisfying
certain legal norms, a business can penetrate into global market. It is quite easy
to attract customers from global markets at a marginal cost.
5. Introduction of new products
In traditional commerce, it takes a lot of time and money to introduce a new product and analyze the response of the customers. Initially, cost has to be incurred to carry out pilot surveys to understand the taste of the
customers.
In e-commerce, it is easy to introduce a product on the website and get the immediate feedback of the customers. Based on the response, the products can be redefined and modified for a successful launch.
6. Profit
E-commerce helps to increase the sales of the organization. It helps the
organization to enjoy greater profits by increasing sales, cutting cost and
streamlining operating processes.
The cost incurred on the middlemen, overhead, inventory and limited sales pulls
down the profit of the organization in traditional commerce.
7. Physical inspection
E-commerce does not allow physical inspection of goods. In purchasing goods in
e-commerce, customers have to rely on electronic images whereas in traditional
commerce, it is possible to physically inspect the goods before the purchase.
8. Time accessibility
Business is open only for a limited time in traditional commerce. Round the clock (24 x 7) service is available in e-commerce.
9. Product suitability
E-commerce is not suitable for perishable goods and high valuable items such as jewellery and antiques. It is mostly suitable for purchasing tickets, books, music and software. Traditional commerce is suitable for perishables and touch and feel items. Purchasing software, music in traditional commerce may appear expensive,
12. Process
There is an automated processing of business transactions in electronic commerce. It helps to minimize the clerical errors.
There is manual processing of business transactions in traditional commerce. There are chances of clerical errors to occur as human intervention takes place.
13. Business relationship
The business relationship in traditional commerce is vertical or linear, whereas in electronic commerce the business relationship is characterized by end-to-end.
14. Fraud
Lot of cyber frauds take place in electronic commerce transactions. People generally fear to give credit card information. Lack of physical presence in markets and unclear
legal issues give loopholes for frauds to take place in e-business transactions.
Fraud in traditional commerce is comparatively less as there is personal interaction between the buyer and the seller.
