Place: E-Commerce & M-Commerce (AQA GCSE Business)

Revision Note

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E-commerce

  • E-commerce is the trade of goods and services over the internet

    • Businesses can trade through their own websites

    • Alternatively, platforms such as Amazon, Ebay and Etsy offer the chance for small businesses to sell their products online

  • The rise of e-commerce means customers increasingly pay online using credit/debit cards 

    • Consequently, contactless payment systems (such as Apple Pay and Paypal) are growing in popularity

  • E-commerce can make life more convenient for customers and is a source of competitive advantage

    • It also provides the potential for small businesses to reach large audiences

  • However, setting up an e-store can be costly and some consumers may be concerned about security risks of purchasing online

Evaluation of E-tailing for Businesses & Consumers

 

Advantages

Disadvantages

Businesses

  • Websites offer a direct and cheap promotional method 

  • Businesses can easily make online purchases of supplies and materials from other businesses

  • An easy-to-use and well-thought-out website can encourage customers to buy more

    • E.g. Automation suggests complimentary products often purchased at the same time

  • Dynamic pricing techniques can easily be implemented so profit can be maximised during periods of high demand

  • Competition comes from many businesses around the world, allowing customers to easily switch brands

  • Large warehouses and efficient stock control systems are needed to fulfil online orders 

  • E-commerce is not suitable for businesses selling personal services such as beauty services or home improvements

  • The lack of face-to-face contact with consumers means businesses miss out on instant and useful market research feedback

Consumers

  • Competition drives prices down and allows customers to easily 'shop around' and compare prices

  • Electronic payment using credit and debit cards is relatively easy

    • E.g. Using 'one-click' platforms such as Apple Pay 

  • E-commerce is convenient as it allows customers to shop from anywhere in the world 

    • E.g. when travelling, 24 hours, on many different devices

  • Customers can buy from worldwide retailers so have increased choice

    • E.g. Chinese e-commerce businesses Shein and Temu are increasingly popular in the UK

  • Poor connections or technical difficulties can sometimes deter or stop customers from using the website to make purchases

  • Customers in low-income countries may not be able to access the products due to poor infrastructure, limiting potential market size

  • Many consumers are concerned about identity theft or fraudulent use of credit cards if they buy goods online

  • Products cannot be handled or tried out before purchase, which means customers frequently return them because they are unsuitable

M-commerce

  • M-commerce refers to transactions conducted on a mobile phone

  • Most businesses have developed optimised applications that allow customers to browse and purchase their products on mobile phones

    • E.g. Next's mobile app is a simplified version of its popular website that allows customers with an account to view products, check availability, place and check the progress of orders

  • Text messaging and instant messaging, often via the app itself, can be used to communicate special offers, links to websites and product surveys to customers

    • E.g. Logistics company Evri sends customers text messages containing delivery updates and links to review recent delivery experiences

Examiner Tip

A common misconception is that setting up online selling operations involves a business selling via its own website.

Small businesses - and even many larger firms - do not have to go to the expense of setting up and operating their own e-commerce or m-commerce platforms. They can sell products via third party sites such as Etsy or Amazon, allowing them to access large markets.

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