March 31nd, 2011
MGMT230
Unit 2: Discussion Board
In the market world there are two different types, we have the traditional walk-in stores and the e-commerce stores; e-commerce being an online store. Walk-in stores in the past were much smaller compared today due to the simple fact that if you buy more in bulk, your inventory will be cheaper, thus these stores today are very large in size (e.g. Wal-Mart). Being in the information age today, e-commerce stores are becoming more popular compared to traditional walk-in stores. Consumers shopping at e-commerce stores do not have to worry about the travel for walk-in stores. In fact, what they desire can be just a few clicks away. Also, in some cases e-commerce does not enforce sales taxes. Particularly for the store owners, and possibly the most important reason why e-commerce is becoming more common is because developers have access to open-source applications, in other words meaning the applications are absolutely free and are able to be customizable however the owner choices.
Open source e-commerce applications probably hurt the market world more than it helps it because of the simple fact of being free. In this case, specifically subjecting towards the current economic recession around the world is taxes. E-commerce businesses in the USA, for example, are by law, required to have a sales tax as long as the business is located somewhere within the USA and if “the value of goods and services sold online” (IRS.GOV, 2009). There is a catch, due to anyone throughout the world may own their own online business, and consumers from one country purchasing a product from another country are not obliged to pay taxes limited to the location of the seller. For example, if I live in the USA, and want to buy some special socks from an online store located in Kenya, then “those transactions are left out of a VAT (Value Added Tax) bracket for both USA and Kenya” (Juma, 2010). Now for consumers, that is a great thing because of lower prices; however for governments needing to meet their budgets, that is a bad thing.
Another reason is that the competition level between each online business is way too high. For example, BestBuy.com is a major walk-in store as well as a well known e-commerce store. Being that anyone may have access to open-source e-commerce application, they may duplicate a store quite similar to BestBuy.com. Not limited to a business such as BestBuy.com, given that open-source applications are fully customizable and FREE, the keyword there is important, the possibilities for any e-commerce business are near limitless. For example, say I enjoy buying products from BestBuy.com, but one day I come across a website called GreastestBuy.com (not affiliated with the actual GreatestBuy.com) offering the same products as BestBuy.com but cheaper. Then the next day, I discover PerfectBuy.com (not affiliated with actual PerfectBuy.com) which offers an even better deal than GreatestBuy.com. Logically any consumer will favor the cheapest deal of the same product. The scenario could continue on and on, and for that matter the competition level continually increases given that anyone can start an e-commerce business using open-source application.
Ironically, I’ve come across some websites using open-source based applications, such as e107, WordPress, Blogger selling custom open-sourced e-commerce applications. Moreover, open-source e-commerce applications can be found even in mobile technology today such as the Android Market or Apple Apps Store.
To consider what may happen in the future for open-source e-commerce to be open-sourced, I do not know. But my best guess is that these applications will become the standard. Technically, it already is due to the fact of how easy they are to obtain. Unless you heavily funded and want a custom design e-commerce store, open-sourced is the way to go! Though it may not be best for e-commerce businesses in general, but you can’t force the developers to not give away their work when they choose to do so.
References:
Electronic Business & Electronic Commerce. (2009). Retrieved from http://www.irs.gov/businesses/small/industries/article/0,,id=209249,00.html
Juma, V. (2010) Kenya: Online shopping keeps consumers out of revenue authority's reach. Retrieved from http://allafrica.com/stories/201008160015.html
Do you like this article? Share It!
2 comments to "The ups and downs to e-commerce"
Popular Posts
-
Sir Shannon Scott Williams Microeconomics Unit 4: Individual Project Pure, Per Se and Natural Monopolies American InterContential Univ... -
Sir Shannon Scott Williams January 24 th , 2010 ECON220 Unit 3: Discussion Board Pure, Per Se and Natural Monopolies Importin... -
Sir Shannon Scott Williams Microeconomics Unit 1: Individual Project Economic Concepts American InterContential University, Onlin... -
Sir Shannon Scott Williams Microeconomics Unit 3: Individual Project Production and Perfect Competition American InterContential Univer... -
Sir Shannon Scott Williams Microeconomics Unit 2: Individual Project Microeconomics and Market Systems American InterContential Uni... -
Sir Shannon Scott Williams January 10 th , 2010 ECON220 Unit 2: Discussion Board Microeconomics and Market Systems The winte... -
As an asset management contractor, fulfilling clients demands are very specific and technical due to the expectation. When clients ... -
Sir Shannon Scott Williams January 17 th , 2010 ECON220 Unit 3: Discussion Board Production And Perfect Competition When I th... -
Sir Shannon Scott Williams December 30, 2010 ECON220 Unit 1: Discussion Board Economic Concepts A time ago, around 2008, I m... -
Innovation is define by a product of means to which it introduces a breakthrough in performance, quality, price, and gener...
Someone says:
great post man! looks really good :D
Cary says:
e-commerce is like selling pixels to fools lol. Brilliant.