Question

Accounting Information System (AIS)

Answers the followings;

1 ) Discuss fully in the business advantages of effective use of electronic commerce (in EDI, Internet and WWW environments) and provide examples to illustrate your answer.

2) Discuss Fully the challenges of direct business links to customers via the internet (including but no limited to www) and provided examples to illustrate your answer.

Answer 1

1) Advantages of electronic commerce in business -

.i] Decrease in cost: The cost incurred on advertisement and communication is lower as the business uses e-mail and online advertising channels, The cost incurred on human resources is also low as most of the business processes are automated. Middlemen are eliminated to a considerable extent as there is a direct link between the business and the consumers.

Due to effective supply chain, the cost incurred on maintaining inventories is reduced.

ii] Effective customer service: E-commerce through internet provides up-to-date information about the business and its products to customers. By answering customers’ queries quickly and arranging immediate delivery of goods, a business organization is able to win the loyalty of customers. Effective communication and quick delivery of goods lead to total customer satisfaction.

iii] Increase in revenues: Decrease in cost; increase in sales help the business to enjoy greater profits. The business being open 365 x 24 x 7, fetches revenues throughout the year.

iv] Transaction efficiency: Automation of business processes helps the business to streamline its operating processes. Efficient procurement cycles reduce delivery delays. Minimum time taken to complete transactions also results in transaction efficiency.

v] Effective information management: E-Commerce helps business to create, process, distribute, store and retrieve any information cheaply and quickly. The above benefits enable a business organization to remove any communication gap between the business and consumer, or between business and business associates or between business and its employees.

Communication is considered as the lifeblood of any business organization. Good information management enables the top level management to take quick decisions and make use of the business opportunities at the right time. E-Commerce helps at every stage for an effective information management.

vi] Global reach: Business organizations are able to send messages worldwide with the help of electronic medium, explore new markets and reach globally at lower cost. E-commerce helps to attract customers and business clients from anywhere in the world due to global reach of the internet.

2) Challenges of direct business links to customers via the internet -

i] Finding the right products to sell: Shopping cart platforms like Shopify have eliminated many barriers of entry. Anyone can launch an online store within days and start selling all sorts of products.

Amazon is taking over the eCommerce world with their massive online product catalog. Their marketplace and fulfillment services have enabled sellers from all over the world to easily reach paying customers.

Let’s not forget about Aliexpress. They’ve simplified product sourcing by giving access to Chinese manufacturers within a couple of clicks.

All of this has made it very difficult for retailers to source unique products unless you they decide to manufacture your own.

ii] Attracting the perfect customer: Online shoppers don’t shop the same way as they used to back in the day. They use Amazon to search for products (not just Google). They ask for recommendations on Social Media. They use their smartphones to read product reviews while in-store and pay for purchases using all sorts of payment methods.

Lots has changed including the way they consume content and communicate online. They get easily distracted with technology and social media.

Retailers must figure out where their audience is and how to attract them efficiently without killing their marketing budget.

iii] Generating targeted traffic: Digital marketing channels are evolving. Retailers can no longer rely one type of channel to drive traffic to their online store.

They must effectively leverage SEO, PPC, email, social, display ads, retargeting, mobile, shopping engines and affiliates to help drive qualified traffic to their online store. They must be visible where their audience is paying attention.

iv] Capturing quality leads: Online retailers are spending a significant amount of money driving traffic to their online store. With conversion rates ranging between 1% to 3%, they must put a lot of effort in generating leads in order to get the most out of their marketing efforts.

The money is in the list. Building an email subscribers list is key for long term success. Not only will help you communicate your message, but it will also allow you to prospect better using tools such as Facebook Custom Audiences.

Not all leads are created equally. Retailers must craft the right message for the right audience in order to convert them into leads with hopes of turning them into customers.

v] Nurturing the ideal prospects: Having a large email list is worthless if you’re not actively engaging with subscribers.

A small percentage of your email list will actually convert into paying customers. Nonetheless, retailers must always deliver value with their email marketing efforts.

Online retailers put a lot of focus on communicating product offering as well as promotions, but prospects need more than that. Value and entertainment goes a long way but that requires more work.

vi] Converting shoppers into paying customers: Driving quality traffic and nurturing leads is key if you want to close the sale. At a certain point, you need to convert those leads in order to pay for your marketing campaigns.

Retailers must constantly optimize their efforts in converting both email leads as well as website visitors into customers. Conversion optimization is a continuous process.

vii] Choosing the right technology & partners: Some online retailers may face growth challenges because their techonology is limiting them or they’ve hired the wrong partners/agencies to help them manage their projects.

Retailers wanting to achieve growth must be built on a good technology foundation. They must choose the right shopping cart solution, inventory management software, email software, CRM systems, analytics and so much more.

In addition, hiring the wrong partners or agencies to help you implement projects or oversee marketing campaigns may also limit your growth. Online retailers must choose carefully who to work with.