E-Commerce: The Benefits, Security Risks, and Countermeasures

Introduction: Why E-Commerce?

E-commerce is a very useful and convenient technology, but it is something that must not be taken lightly, and until its security risks are worked out and lessened, it will not be able to reach its full potential (Ghosh, 1998). The technology is a necessary asset for any business that wants to be successful in today’s high tech world. Customers expect that they will be able to purchase items online and that their personal and financial information will be secure and not given to other companies without their consent.

For customers, e-commerce can be used in new commercial ways to do such things as file and pay taxes and attend to other personal matters (Scheer, 2005). Also, e-commerce makes it convenient for customers, because it enables them to directly make payments for purchases made online. A bill can be sent electronically to a customer, who then can authorize the bank by electronic check to transfer funds from the customer’s account to the vendor’s account. The customer’s monthly electronic bank statement then lists the payments.

Technically, e-commerce is a new channel for doing common, everyday actions via the Internet. The Internet’s main feature is that it improves productivity, streamlines some operations, and achieves cost savings. Companies that want to affect measures for cost control should use e-commerce as a gateway to more customers, as well as to save on overhead. E-commerce reduces operating costs by improving coordination and communication in manufacturing, sales, and distribution. Research has shown that further cost reductions enhance competitive position, and may also ensure better operating efficiency, but can also lead to downsizing (Mazon, 2001). Using the Internet can also reduce or lower costs by eliminating paper use for certain information—for instance, issuing and filling purchase orders in electronic form, rather than the traditional paper form. Depending on the type of items the company is selling, the company can actually deliver over the Internet, eliminating the need for packaging and printed documentation (Ghosh, 1998). Product upgrades may be automatically transmitted to the customer by computer, instead of subject to the will and memory of an employee to upgrade a product. Furthermore, online electronic catalogs save time and eliminate the costs of printing and mailing. All of these examples make it apparent that e-commerce can be a very cost-effective way of doing business for both the consumer and supplier.

Another positive reason to move toward e-commerce as a business method is the competitive advantage an e-commerce business may have over physical businesses. A “digitalized” company can gain this advantage by adding special features, more options, adapting to variability in customer demand, providing more and better products and services, shortening the product life cycle, and eliminating geographic boundaries (Kuzic, 2005). To have a successful site, the company should offer automated suggestions for accessories, add-ons, or other compatible products throughout the product selection process. The company must also offer substitutions for items that are out of stock. These features are necessary, since digitalized companies do not have the advantage of a live employee to suggest these factors to customers. Furthermore, companies should offer customers the ability to pick up the item in the store that is located nearest to them. This allows for the cost of shipping and packaging to be low, compared to if the company would have to send the package to the customer. This can also serve as a mechanism to ensure that the proper product is going home with the customer.