E-commerce Affecting Company Profits Assignment Sample

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Introduction

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By using electronic commerce (e-commerce), companies may reach a larger audience while also increasing their income. These potential, on the other hand, are equally fraught with risk. A company’s ability to maintain revenues may be hampered as a result of rising competition. Electronic commerce will have an influence on many parts of a company, including distribution and storage, as well as the skills required by personnel. It is also evident in the case of the COVID-19 that digital and physical sales channels are complementary to one another, as discovered by EL SEDDAWY & MOHAMMED (2021). Online retail sales increased from a 16% proportion of total retail sales in 2010 to a 19% share in 2020 as a consequence of the COVID-19 mobility restrictions, according to the World Bank (UNCTAD, 2021). According to Lorca, De Andrés, & Garcia-Diez (2019), both B2B and B2C e-commerce are required for a complete e-commerce commitment to be realised. As a result, depending on the amount of dedication shown, the adoption of e-commerce may provide a variety of results. It has gotten little attention in the literary world, even though it is a scalding issue right now.

Research Question

Based on the background context on the topic of concern, there would be three questions that the study would focus on –

• Does e-commerce impact businesses of all sizes?
• Is there any difference in the ways e-commerce affects businesses of all sizes?
• How different types of businesses and their profits are affected by e-commerce?
• What opinions have been presented by the scholars and experts on this topic of concern?

Research Aim and Objectives

The problem stated in the background discussion about having a lack in the literature on the impact of e-commerce on the profitability of a business, the research aims at the evaluation of how e-commerce is affecting company profits. In this regard, the objectives that the study would try to address are –

• To identify if e-commerce impacts the businesses based on their size
• To understand the ways e-commerce affects the profitability of different types of businesses
• To review the decade long literary articles on the impact of e-commerce on business profitability

Research Justification

Customers’ convenience and safety have been improved as a result of online business transactions, which enable enterprises to continue functioning despite restrictions on contact and other restrictions. As a consequence of the expansion of e-commerce, the most basic of economic transactions, the buying and sale of goods, continues to undergo substantial transformations in the United States. In a nutshell, e-commerce has altered the practice, timing, and technology of B2B (business-to-business) and B2C (business-to-consumer) trading in a variety of ways. All sophisticated economies, including those in the United States, influence pricing, product offers, transportation patterns, and consumer behaviour. As a result, e-commerce has seen a significant surge in popularity over the previous few years. Based on the findings of Lorca et al (2019), despite past studies on factors that contribute to the deployment of e-commerce, little attention has been devoted to the impact that e-commerce has on both profit and revenues, which will be the subject of this research proposal.

Literature Review

Electronic commerce, often known as e-commerce, provides a plethora of new options for companies and consumers to interact and collaborate on a variety of projects and initiatives. E-commerce enables market participants to compare, choose, and securely buy things and services by using a variety of online sales platforms (websites, online marketplaces, and so on) and payment methods. As opined in the research of Šakovi? Jovanovi? et al (2020), companies often begin their online presentations by providing information about their company and its consumer-oriented products and services, to supplement their various sales channels. EU sales were responsible for 18% of total EU sales in 2018. The use of new technology to improve company operations has the potential to have a substantial influence on the performance of businesses. Electronic commerce is required to meet the challenges of economic globalisation and competitiveness. It can provide numerous benefits to businesses, including reduced costs (information exchange, transaction, and marketing costs), access to geographically dispersed markets, shorter delivery times and the ability to compete on more than just price, among many other advantages, as per Lorca, De Andrés & Garcia-Diez (2019). In order to stay up with the competition, e-commerce options are increasingly being seen as a need rather than a perk by businesses.

According to Shahjee, firms that employ internet sales outperform those who do not and generate more income overall (2016). People think that companies that don't use e-commerce would be left behind in their field. In other cases, this is not the case. E-commerce has the potential to be a key instrument for the overall economy, as shown by the present COVID-19 scenario. Using COVID-19 in B2B e-commerce has risen, according to the “World Trade Organization” (2020). According to the conclusions of the same article, the conference would encourage even more international collaboration and the formulation of policies connected to e-commerce policy, according to the global extent of COVID-19 and its influence. Additionally, the simplicity and convenience of doing business through the internet is a benefit for consumers (Lorca, De Andrés & Garcia-Diez, 2019). Consumers save time by placing digital orders from the comfort of their own homes, which reduces both transaction and product-search time. Shoppers may swiftly browse through the inventory of tens of thousands of retail establishments with the use of computer-driven search engines, which are becoming more popular.

A more in-depth investigation is required to account for the varying degrees of e-commerce adoption that have been seen. e-commerce between businesses is more frequent than e-commerce between businesses and consumers. However, both B2B and B2C e-commerce are being utilised by other businesses, therefore it is dependent on the business in question. As e-commerce has developed in recent years, according to Duch-Brown et al (2017), the question is whether businesses will be able to increase their revenues as a result. Overall, the introduction of the online channel has not resulted in lower prices in general, but it has had a significant positive influence because a huge majority of consumers consider the online channel to be more convenient. As a result, the online distribution channel displaces certain traditional sales, but the online distribution channels also stimulate those who find the online distribution route to be more appealing. According to Cao & Li (2015), cross-channel integration has a positive impact on a company’s revenue growth by increasing customer loyalty, improving conversion rates, increasing opportunities for cross-selling, and decreasing the distinctive characteristics of each channel.

E-commerce is gaining in popularity as a tool for increasing a company’s productivity in the modern-day. Accordingly, in most situations, the implementation of repeating procedures may be improved by e-commerce, which lowers the cost or eliminates it (Lorca et al, 2019). Direct shipping from a manufacturer or wholesaler to an end-user reduces logistics costs. A business can benefit from cheaper labour and real estate expenses if it solely engages in internet trade. Because e-commerce improves supply chain management, it reduces costs for companies. E-businesses can minimise the risk of stockouts by reducing the quantity of inventory. To put it another way, these companies can save money on warehouse space. In the case of e-businesses, advertising costs may be decreased. This is because these companies rely on the internet to sell their goods. Many more prospective clients may be reached for less money by using electronic infrastructures as low-cost platforms. According to Baršauskas, Šarapovas & Cvilikas (2008), this is because these companies are promoting their items through technological means.

E-infrastructures are cost-effective platforms that enable enterprises to access a larger audience at a reduced price. E-commerce also expands the product range. A company’s product or service specifications might be described in great depth as well. Products and services may be described in great detail, as well as images of the product in the foreground, by e-firms, for a low cost. Because of the wide range of products they provide, based on the opinion of Willis (2004), e-commerce companies may now operate more like a traditional brick and mortar retailers. Businesses use ICT extensively, thus transaction costs, stock levels, and advertising, marketing, and logistics expenses may all be reduced. E-firms utilise information and communications technology (ICT) extensively. In part, these savings are realised by reducing the quantity of labour necessary for each business process. Increased profitability is one of the most immediate results of cost reductions.

There is no doubt that e-commerce has a big influence on the expenses and output of businesses. On the basis of the research studies conducted by Zhu & Kraemer (2002), Xia & Zhang (2010) and Oh, Teo & Sambamurthy (2012), the “resource-based view” (RBV) of the company is one of the most common theories used to explain the link between e-commerce and firm success. E-commerce, according to Duch-Brown et al (2017), allows businesses to better market and distributes their items while providing new means of gauging consumer p