Benefits & Drawbacks of E-Commerce and M-Commerce

Business: Cambridge International GCSE (2027 Exams), topic 3.3.24

Benefits of E-Commerce and M-Commerce

There are many benefits of e-commerce and m-commerce:

Businesses can now easily sell their products to customers all over the world without setting up a physical store there.
A business’ products can reach international markets without setting up stores or overseas subsidiaries.
Small businesses in particular rarely have the finance (money) needed to set up shops internationally. Before e-commerce, expanding was harder for small businesses.

It is cheaper to set up a business that uses e-commerce.
Firms don’t have to invest lots of money in opening stores and hiring people to work in store.
Amazon was started by Jeff Bezos. He initially sold books from his garage and the only investment that he had to make was in a website and some books, rather than leasing (renting) a store. Amazon is now worth over $700bn.

Because businesses are selling directly to the consumer, no middle men take a cut, and so the business can offer a lower price to the customer.
The business has lower average costs and usually lower prices.
This should help a business to remain competitive.

Convenience: customers can shop 24/7 without travelling to a store.
More choice: customers can compare products and prices from different businesses easily.
Potentially lower prices: businesses can pass on cost savings to customers.

There are also drawbacks of e-commerce and m-commerce for businesses:

Because e-commerce allows business to easily reach wider markets, UK businesses face more competition. Foreign businesses can compete in the UK more easily.
For example, AussieBum sells men’s underwear and sportswear directly to customers in the UK from its production plant in Sydney, Australia. Prices are cheaper for UK customers than buying from approved retailers like House of Fraser and this allows AussieBum to compete against brands like Ted Baker in the UK.
Increased competition can have a negative effect on profits.

Firms must invest in specialists who can build websites.
Large businesses who sell a large volume of products may have to invest in warehouses and fulfilment centres.

Some goods are hard to judge from a computer or mobile phone. Consumers may want to see a product in person before buying it.
For example, people may want to sit on a sofa or mattress before buying it. However, companies like Casper are now successfully selling mattresses online. They offer a money back guarantee if people do not like their mattresses.

No physical inspection: customers cannot touch or try the product before buying.
Delivery time: online purchases may take days or weeks to arrive.
Security risks: online payments can be vulnerable to fraud or hacking.

What are some benefits of e-commerce and m-commerce?
Why do businesses using e-commerce and m-commerce usually have lower prices?
What are the benefits of e-commerce and m-commerce?
What are the drawbacks of e-commerce and m-commerce?
AussieBum sells men’s underwear and sportswear directly to customers in the UK from its production plant in Sydney. Which drawback of e-commerce is this representative of?