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Table of Contents

A definition of the industry and the extent to which it is operating in a global market .......... 2

An analysis of industry performance in terms of growth of the market, position in product

life cycles, profitability ................................................................................................................... 2


2.1

Growth of Market ............................................................................................................. 2

2.2

Product Life Cycles .......................................................................................................... 2

2.3

Profitability....................................................................................................................... 3

An analysis of the nature of competition within the industry.................................................. 3

The future prospects for this industry highlighting the effects of recent changes in the

international business environment and the impact these changes might have for the nature of
competition within the industry. ..................................................................................................... 3
5

References ............................................................................................................................... 5

A definition of the industry and the extent to which it is operating in a global market

Electronic commerce (e-commerce) is a buzzword for any business-to-consumer (B2C)


transactions that take place over the Internet. Simply put, e-commerce is the sale of goods online.
Companies like Amazon and Taobao created the online retail industry by putting the entire
customer experience - from browsing products to placing orders to paying for purchases - on the
Internet. The success of these and other companies encouraged more traditional retailers to create
an online presence to augment their brick-and-mortar outlets.
E-commerce is going global faster than ever, driven by the twin forces of rising consumer
demand overseas, and the rapid adoption of new ecommerce platforms by retailers. Todays
Internet retailers are operating in a very different environment than just a few years ago, as new
trends emerge with implications for anyone looking to do business online.
2

An analysis of industry performance in terms of growth of the market, position in


product life cycles, profitability

2.1

Growth of Market

Internet and e-commerce has developed a new facet of the trade industry coupled immense
market opportunities, unlimited exposure and humungous fiscal benefits. The consistent growth
of online trade industry is exceedingly encouraging and luscious for the new-comers in terms of
the massive monetary turnovers. Statistics also advocate the e-commerce and e-business culture
due to its rising popularity graph amongst the consumers worldwide. It is however significant to
note that establishing an e-commerce website may appear to be a convenient option but it
primarily involves technical support combined with a well thought-out plan before its
commencement as the online competition is extremely aggressive. The initiation of instituting an
e-commerce website requires huge investments and creativity to surface as a ground breaking
contender however, once the business has been established the prospects and economic returns
are absolutely remarkable. Despite numerous fiscal, technological and physical difficulties, the
future of e-commerce is inevitable brilliant.
2.2

Product Life Cycles

2.3

Profitability

An analysis of the nature of competition within the industry

In ecommerce, there are no patented technology, and only a limited amount of other proprietary
technology, that would preclude or inhibit competitors from entering the business. In addition,
the costs to develop and provide e-commerce services are relatively low. Therefore, producers
expect that they will continually face additional competition from new entrants into the market in
the future. There is also the risk that firms employees or independent contractors may leave and
start competing businesses. The emergence of these enterprises could have a material adverse
effect on producers. Existing or future competitors may better address new developments or react
more favourably to changes within the industry and may develop or offer e-commerce services
providing significant technological, creative, performance, price or other advantages over the
services offered by others.
As a result, barriers to entry will impact both small firms and large firms differently. There are
low barriers to entry into the e-commerce services market where producers face significant
competition in a rapidly evolving industry. An example of small firms or individual producers is
the individual sellers on the popular online website Qoo10 where any individual with a bank
account can set up an online shop.
However for large firms those have already established themselves, the barriers to entry is too
high for new entrants. An example would be YouTube and Facebook. Such services are unlikely
to proliferate with many suppliers to their network demand nature.
4

The future prospects for this industry highlighting the effects of recent changes in the
international business environment and the impact these changes might have for the
nature of competition within the industry.

The societal impacts of e-commerce activities are both positive and negative. Growth in business
opportunities, marked exposure in world arena, convenience of shopping and extensive choice of
products are some positive attributes of e-commerce. On the other hand, sluggishness, cyberabuse and less employment opportunities are some negative traits. However, the overall society

is benefited by the incorporation of advanced technological mechanisms in the business world.


The most significant aspects of e-commerce practice are the superior disclosure of innovation
and growing awareness about cross-broader business market. Both buyers and sellers are reaping
the benefits of scientific innovations that have brought almost everything in the reach of a
common man with the help of e-commerce exercise.

References
1. Caldwell, L. G. 2002. The Fast Track to Profit: An Insider's Guide to Exploiting the
World's Best Internet Technologies. Prentice Hall.
2. Chaffey, D., 2003. E-business and E-Commerce Management, Second Edition, FT
Prentice Hall.
3. Cohen, D. and Prusak, L., 2001. In good company: How social capital makes
organizations work. Boston: Harvard Business School Press.
4. Malmsten, E., Leander, K., Portanger, E. and Drazin, C. 2002. Boo Hoo: A Dot.com
Story, Random House Business Books.
5. Reagans, R. and Zuckerman, E., 2001. Networks, diversity, and productivity: The social
capital of corporate R&D teams. Organization Science, 12(4), 502-517.