E-commerce

Since the dot-com boom, the trend of buying and selling online has increased a lot. The use of credit card, introduction of online merchant accounts and facilities such as PayPal have allowed the buyers and sellers to engage in online transactions at a reduced cost. However, the merchants and buyers both face certain problems while transacting online. This paper will discuss the advantages and disadvantages of buying and selling online.

Advantages of Selling Online
The seller get advantage from reduced costs of hiring employees to sell the products, reduction in marketing budget, no need of a physical store for selling goods (Reynolds, 2004). An online merchant needs no physical store to display his products as they can be easily viewed on the website. The cost of hiring employee and paying salaries goes down significantly when a firm starts selling online. Other significant expenditures such as utility bills and rent are also eliminated for an online seller.

The characteristic of ubiquity of e-commerce allows the merchant to increase the target market. With the increase in target market, the sales and revenues are also increased. Geographic territories are no boundaries for selling online now, as products can be sold to anyone in any country through home deliveries and receiving payments through credits cards and online transfers. Therefore a business which sells online has a global reach and opportunities for the business expansion are higher. Sales can be made round the clock as the time of the day is not a hindrance in sales. Transactions can take place 247 as no sales person is needed to guide the customers or receive the payments from him.

Disadvantages of Selling Online
Despite higher market growth opportunities and reduction in costs, the merchant has to face certain threats and costs for selling on the website. Credit card fraud is the most probable risk in online business. Hackers and crackers are able to break in to the system of vendors through credit card frauds and purchase products without paying for them. The merchant has to bear losses from these credit card frauds according to the laws of e-commerce and the credit card company has no stake in the loss. Another great disadvantage for an online seller is increased cost of transaction and reduction in profit margin because of the high charges of the credit card companies. Online sellers have to also face tough competition as the marketplace has increased and vendors from all over the world are competing on a single ground (Lightfoot, 2003).

Advantages of Buying Online
There are many advantage of buying online. The customer does not have to make personal visits to a retail store or office for a purchase of product. Hours of time and effort can be saved by the customer by purchasing online as he will not have to search for the physical shopoutlet and not have to personally visit the shop to purchase. The product is most of the time delivered at the doorsteps of the customer. The customer has the convenience that he cannot get if he visits a store and makes purchase.

The greatest advantage for the buyer is that he is not bound by the time of the day to buy (Laudon, 2009). Products can be purchased online whenever the customer needs them. No matter in which country the customer is sitting, he can engage in online transaction with the click of a button and an internet connection. The consumer gets reduced prices online as compared to the retail stores and outlets. This is because the reduced costs at the side of merchant allow the benefit to be passed to the customers as well.

Disadvantages of Buying Online
The greatest disadvantage that the customer has to face is the theft of identity and personal information. Usually the online companies take customer information and sell it to marketing firms which pay large amounts for such information. Time lag in receiving the products has increased which is at the disadvantage of the consumers.

Another disadvantage of buying online is that the customer cannot be sure of the quality of the product as he is not able to get the touch and feel of the product. The customer is also not sure of the product as he is not able to try it out on the internet. The buyer cannot trust all the websites which are present on the internet as many of them are there just to fraud the customers (Harridge-March, 2006). It has been witnessed in the past that many websites take money from the customers and do not provide them with the products that they ordered. Theft of credit card information is also a risk associated with online purchasing.

Although the customer and online vendors face some disadvantages in selling online, but the advantages and profit margins offset those disadvantages. The biggest advantage that the customer and merchants both benefit from is the availability of the website around the clock and no requirement of a sales person to make sales.