Ecommerce

Introduction

In this report I will be explaining to you the benefits and negatives of ecommerce. I will also be talking about electronic payments and the risk of on-line fraud and what it could mean for your business. To finish off this report I will be giving my recommendation, but by then I think you will have already made your mind up whether you want expand your business into the area of ecommerce or not.

In the benefits of ecommerce section I will be explaining to you the potential benefits that the world of on-line shopping have to offer to you. Then I will explain to you the many benefits of electronic payments on-line and what that could mean for your business. Then in the later section I will tell you about the negatives of ecommerce like having lots of negative exposure on you on-line business and what that could mean for your business and about on-line fraud and what to do to be protected against the thousands of fraudsters on the internet.

The Benefits of Ecommerce

There are many benefits to setting up a business on-line or extending it to be also on-line. There are also many ways that the payments and purchases can be made on-line, some better and safer than others. I will now give you a brief explanation of the benefits that can be had through the introducing your business to the internet.

These days there are businesses of all different sizes, in all different sectors that are using the internet in many different ways. Many big companies like for example Sainsbury's and Tesco's are reporting benefits from the use of the internet. These benefits are cost saving, reductions in inventory, improved customer service, the gaining of new customers and increased sales, and lastly and probably most importantly improving efficiency and productivity.

Ecommerce allows people to carry out their business without the barriers of time or distance because a person can go on the internet 24 hours a day and purchase anything they wish very quickly and simply by the click of the mouse. The cost of the sales for an order from the website will be lower than through shops, as there is no human interaction during the on-line purchase. From the customers perspective ecommerce offers a lot of advantages such as better customer decisions and less time is spent in resolving invoice and order problems.

The strategic benefits of making your business ecommerce active is that it helps reduce labour costs, reduce delivery time and reduce the cost encountered by such things as overtime, telephone calls, mail preparation and data entry. The operational benefits of setting up ecommerce for your business would be reducing both the time and personnel needed to carry out the business processes. All these advantages enable a business to harness the power of ecommerce and convert their business to ebusiness

The Benefits of Electronic Payments

Electronic payments can be beneficial to your business by extending your customer base, boosting cash flow, reducing costs, enhancing customer service and improving your competitive advantage.

Electronic payments give you choice of a wide range of payment options like for example PayPal which is regarded as one of the internets leading payment options.

They may allow purchases that would otherwise be delayed, through credit and they also remove the need for invoices, cheques, cash and BACs. Small discounts can be given to encourage on-line purchases which in turn improve the perception of value.

Electronic payments give you the competitive edge- if you don't offer the full range of payment options but your competitors do, what does it say about your business?

Electronic payments can also greatly increase the profitability of a business because credit cards enable instant purchasing without delay which in turn improves cash flow. You can open additional payment channels through the phone, mail order and internet. This will help increase the amount of customers which will mean a gain in revenue.

The negatives of Ecommerce

Exposure is the acquiring banks estimate of the total risk you are exposed to at any one time, for example the number of sales open to refunds over a given period. The bond is an amount of money, overdraft facility or insurance to cover any exposure. Your exposure levels will also affect the charge bands offered to your business for example monthly charges and transaction charges. Acquiring banks calculate the exposure whether the Merchant service provided is on-line or off-line. The exposure level is calculated by examining the following elements of risk; Charge-backs, the risk of refunds on your merchant account; Forecast turnover figures, higher turnover can generate higher exposure; Average transaction size, if you sell very high value items for example like diamonds or cars this will influence the risk analysis of your business; Time from payment to order fulfilment, the longer it takes to dispatch goods to a customer, the greater the risk of an order cancellation. Finally safeguards you have in place - security checks like verifying address details or phoning customers who place large or repeated orders will reduce the perceived risk.

The element of exposure will be an important factors you to consider when deciding which payment method to employ. The acquiring bank may require a bond to be lodged

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