M.com Part 1 (Semester 2)
E- COMMERCE
Most Important Question Bank for Current Exam
Q.19. What are the limitations of e-enterprise?
ANS:
Though e-commerce
offers many advantages to customers, business, society and nation, there are
still some areas of concern that need to be addressed. The following are some
of the disadvantages or limitations of e-enterprise.
1. Security :-
The biggest drawback
of e-business is the issue of security. People fear to provide personal and
financial information, even though several improvements have been made in
relation to data encryption. Certain websites do not have capabilities to conduct
authentic transactions. Fear of providing credit card information and risk of
identity limit the growth of e-business.
2. Lack of
privacy :-
Many websites do not
have high encryption for secure online transaction or to protect online
identity. Some websites illegally collect statistics on consumers without their
permission. Lack of privacy discourages people to use internet for conduction
commercial transactions
3. Tax issues :-
Sales tax is another
big issues when the buyer and seller are situated in different locations.
Computation of sales tax poses problems when the buyer and seller in different
states. Another factor is that physical stores will lose business if web
purchases are free from tax.
4. Fear :-
People fear to
operate in a paperless and faceless electronic world. Some of the business
organizations do not have physical existence, people do not know with whom they
are conducting commercial transactions. This aspect makes people to opt
physical stores for purchase.
5. Legal issues
:-
The cyber laws that
govern the e-business transactions are not very clear and very from
country-to-country. These legal issues prevent people from entering into
electronic contacts.
6. Sectoral
Limitations :- The main
disadvantage of e-business is the lack of growth in some sectors on account of
product or sector limitations. The food sector has not benefited in terms of
growth of sales and consequent revenue generation because of number of practical
reasons, like food products becoming perishable items. Consumers do not look
for food products on the interent, since they prefer to going to the
supermarket to buy the necessary items as and when its require. Therefore,
e-business gets the online orders relate to food, grocery related products.
7. Costly
e-business solutions for optimization :- Substantial resources are required for redefining
products lines in order to sell online. Upgrading computer systems, training
personnel, and updating websites requires substantial resources. Electronic
Data management (EDM) and Enterprise resourse planning(ERP), necessary for
ensuring optimal business process, may be pose challenges to e-enterprise.
8. Challenges of
low Entry Barriers to existing Firms :-
In e-commerce there
is low entry barriers. The rapid growth of e-commerce sector is attracting new
entrants. One can start e-business venture with an initial investment of as low
as rs.5 to rs 10 lakhs, thereby leading to reduced competitive advantages. The
sector is also attracting the interest of Venture Capital Funds, and thus
enabling e-commerce enterpreneurs to secure funds easily. This enables new
companies to easily replicate the existing business models and , thereby
,increase competiton in the sector.
9. Low
Pentration of Internet in Rural Areas :-
India’s e-commerce market
is mainly dominated by urban areas, with the bulk of the business being
restricted to cities. Internet useage in rural areas is limited, although 70%
of india’s population lives in rural areas. The limited internet useage in
rural areas could be due to several factors such as low internet speed and
internet user base. The inadequacy of vernacular content of e-commerce websites
is another reason for low penetration in rural areas.
10. Problem in
payment gateways :-
Indian payment
gateways have high failure rate as comapred to other countries. Several
customers do not attempt payment after a transaction fails. Therefore, online sellers using payment gateways are losing out
on online sales.
