Benefits and Drawbacks of Amazon E-Commerce

Benefits and Drawbacks of Amazon E-Commerce

Amazon e-commerce has plenty of pros and cons. On the one hand, it helps create a comfortable buying experience for customers. On the other hand, there are limitations such as the lack of universal Internet access. This essay explores advantages and disadvantages of Amazon company e-commerce.

Pros and Cons of Amazon E-Commerce: Introduction

Internet-based systems enable companies to simplify their information management process by removing complexity, which makes the organization more responsive and as a result, organization generates more profit through revenue and saving. The process of doing business over the Internet or any other electronic medium is known as e-commerce. Amazon has been able to embrace this opportunity by offering its customers a wide range of products, including music, toys, electronics, software, books, and clothes.

Advantages of Amazon Company E-Commerce

Selling products online has its own advantages and disadvantages. To begin with, there are several advantages that can be attributed to e-commerce model used by Amazon. First, the company is able to reach its customers directly because the Internet spans the world. This is also known as disintermediation, in which intermediaries such as suppliers, distributors, and retailers are reduced hence easy management of supply chain. Second, through the implementation of e-commerce, the company minimizes its transaction costs. Chadramita (2009) asserts that the costs incurred in trading goods or services, customer care, processing, and inventory can be reduced. For example, advertising a company’s products through Amazon enables it to reach many customers, therefore enhancing product awareness.

Third, the Internet enables Amazon to reduce the use of cash; handling a lot of cash is considered insecure due to the susceptibility of theft and fraud. The company uses electronic money transfer which is implemented through the internet. Customers are only required to submit their payment details, such as credit card numbers to proceed with purchasing. Fourth, e-commerce systems have the capability of operating daily at any time. This is a major boost of Amazon’s marketing strategy. The company’s physical markets do not need to be open daily for the consumers and suppliers to engage in electronic business. Thus, the Internet enabled the company to increase its market share with about 128% in 2007 (Marcial, 2007).

Disadvantages of Amazon Company E-Commerce

However, the Internet has several disadvantages. One of the drawbacks of e-commerce is that many people are still not conversant with the use of Internet. Others don’t trust the Internet when it comes to performing business transactions. There are also issues related to submission of private information, which can be manipulated by internet-based organizations. It is always difficult to reach out to such people. Sometimes companies use customers’ email addresses to send advertisement messages without considering the impact it would have on customers.

Another disadvantage is that Amazon cannot expand its product line to market perishable items such as food products. This limits the company’s market opportunity since people prefer to buy food through traditional ways. Highly priced products such as jewelry are difficult to handle using an e-commerce framework. People fear paying for expensive or luxurious products using electronic method due to security concerns.

Despite the ease of access, using the Internet to process the delivery of products such as books is still a problem. A customer might wait for more than a week before a physical product is delivered. This is because a lot of e-mails and phone conversations must be made before delivering the products. Furthermore, returning a product to the company is sometimes difficult in case a customer is not satisfied (Chandramita, 2009). This cuts down customer loyalty, hence preference is sometimes given to traditional ways of shopping.

Amazon provides download services for e-books in order to compete with the traditional physical stores. Electronic book device and e-books downloads were introduced by the company in 2007 with the aim of increasing customer base and market share (Stone, 2007). However, not all publishers supply their books in electronic form. Others argue that electronic books can be copied and misused without the consent of the author or the editor. This has been a major drawback in selling e-books.

But if books can be downloaded from Amazon’s website, the company is deemed to increase its revenue and customer base. As mentioned earlier, purchasing books online takes long as compared to walking in a local book store to buy or read a book. Electronic books are gaini