Page 19 - DCAP306_DCAP511_E-COMMERCE_AND_E-BUSINESS

E-Commerce and E-Business

Southampton Supplies Goes Online

Caselet

Southampton Supplies Ltd. was established as a business in September 2001. Steve Campbell, a
member of the United Air Force Reserve, identified an opportunity in the US market for mail-order
supplies of garments to the cadets in the military reserve. Steve started running a mail-order business
out of a shop in the village at Trunk Bay.
The Web store has been online since January 2003. Search engines take several months to index a Web
site, so Southampton Supplies Ltd. used Pay Per Click (PPC) advertising as a method of increasing the
Web sites presence in the major search engines. This marketing method proved successful. The
partners were surprised as they had previously been doubtful about the prospect of the Internet
generating sales in this sector. Within six months of running the Web site, the company had increased
its turnover by two-fold, but further advances would result in high advertising cost. Hence, the
company implemented search engine optimization and Web site re-design to tackle this issue.
Source: Chaffey Dave, E-Business and E-Commerce Management.
1.5 Need for E-Commerce and E-Business

The following benefits clearly explain the need for e-commerce and e-Business:
Benefits to Organization

1. Global Reach: E-Commerce extends the market place to local and international markets. Internet
and Web-based e-commerce helps to reach a more geographically dispersed customer base and
more business partners as compared to the traditional business methods.

2. Reduction in Paper Costs: E-Commerce decreases the cost of creating, processing, distributing,
storing and retrieving information through the use of EDI (Electronic Data Interchange) systems.
This decreases the cost of paperwork in terms of the time taken and the manpower required. Also,
the data is more secure from theft and destruction. E-payments have also considerably reduced
the overhead cost in financial transactions.
3. Reduction in Inventories: A reduction in inventory is desirable to enable reductions in storage,
handling, insurance and administrative costs. Internet commerce can help firms to reduce
inventories by electronically linking the suppliers and buyers. The process starts from the
customer orders and uses JIT manufacturing. Information on inventory levels and production rate
is shared between the manufacturers and their suppliers. Such information keeps the delivery
schedules “fine-tuned” for JIT manufacturing, rather than maintaining large inventories.
4. Customization of Products or Services: The Web-based interactive e-commerce enables the
customization of products or services as per the customer needs. This provides a great competitive
advantage to business.

An online travel agency may customize the itinerary for customers who wish to
travel abroad, or a computer manufacturer may be able to supply a customized
computer to a user when compared to traditional commerce.
5. Reduced Production Cycle Time: The production cycle time is the time taken by a business to build
a product, beginning with the design phase and ending with the completed product. The
production teams electronically share design specifications and refinement processes over the
Internet to reduce the production cycle time.
The reduction in the production cycle time helps to reduce the fixed overheads associated with
each unit produced. This saving in the cost of production can be passed onto the customer or may
be used to achieve higher profits.

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