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Lesson 3 The impact of e-commerce on business models
Objective Describe how e-commerce influences and changes the dynamics of business.

Impact of e-commerce on Business Models

Describe how ecommerce influences and changes the dynamics of business.
Why has Web-based ecommerce already revolutionized business in so many industries? Although there are many different factors, the overriding reason has to do with geographic market reach. Quite simply, companies that previously were limited in terms of geography, marketing, and distribution, can instantly become global players by selling goods and services over the Web. On the Web, all businesses automatically possess a worldwide reach.
On the surface, the Web's global reach can make for appealing stories. The Web offers the opportunity for businesses to dramatically alter the flow of products and services, and to change the playing field in many industries.
As a result, start-up Web specialty businesses (the notorious "dot-coms") tried to take early mover advantage of the opportunities afforded by the Web's reach. Brick-and-mortar companies (companies which pre-existed Web-based e-commerce) reacted to the changes set in motion by the dot-coms, and fought back with their own Web-based e-commerce. In many cases, the brick-and-mortars, renamed "click-and-mortars" once they earned their Web stripes, creatively went beyond even the dot-coms in terms of their application of e-commerce.

How the Web affects industry change

The Web affects industry change in several areas, including competition, marketing, service, and sales. The risks are real, and businesses cannot enter into e-commerce lightly.
The following Slide Show describes some of the specific business model changes and risks associated with the Web:

Impact of ecommerce

Impact of global reach, virtual sales, and online payment

With the incredible global reach offered by e-commerce comes an array of risks that many businesses and organizations never even considered. Global reach, virtual sales, and online payment all carry dangerous risks that can potentially put a company out of business.

Risks of Web-based e-commerce

  1. Payment fraud and other security issues,
  2. new forms of tax and customs considerations, and
  3. misrepresentation of products and services
all mean that these risks are real, and that businesses cannot enter into e-commerce lightly.
In summary, Web-based e-commerce empowers all kinds of businesses, start-ups and established players alike, to test new markets, form creative partnerships, and chase previously untouchable business opportunities on a worldwide basis by means of a few simple keystrokes and clicks.
In the next lesson you will learn more about B2B, B2C, and e-marketplaces.

Web Business Model Changes

Click the exercise link below to complete an exercise on specific business model changes associated with the Web.
Web Business Model Changes