To Assess And Evaluate The Future Prospects Of Electronic Commerce

Need of E-commerce in Today World

In the present context, even after the emergence of internet, e-commerce remains a new, fresh and constantly changing area. It has given lot of importance to business management and information technology. A lot of discussions and talking have been done about the phenomenon. Library catalogues and shelves are flooded with articles and books on the e-commerce (DeLone and McLean, 2004). Global internet audience is growing day by day in extreme manner having users worldwide. Because of this vast base of internet users, organizations feel more encouraged to offer more advanced and innovative range of online services (Heeks and Bailur, 2007). Some of the influential trends prevailing on the internet is the access through wireless instruments, cloud based software as a service and migration of entertainment to the web. Today customers are more focused towards finding the best prices because of keeping in mind the consequences of the recession (Schafer, Konstan and Riedl, 2001). As a result, many e-commerce companies offering high value at lower prices are well positioned to grow.

According to Riggins and Rhee, 2008, E-commerce is related with holding relationship, sharing information and performing transactions within the business through a telecommunication network. As per his views e-commerce is not only about buying and selling of products over internet but it also involves several trading procedures in the company. It plays a very important role in the sales aspect of the business. It facilitate financing and helps in making easier payments. It can be said as the market strategy under which the organization does not have to show its physical presence (Quayle, 2002). Consumers can now have access to almost every aspect of their routine life at favourable prices on the internet. All they need is an internet connection and a bank account. With it they can avail the products and services from any part of the world (Schafer, Konstan and Riedl, 2001). EDI (Electronic Data interchange) was the initiation pint for e-commerce development. Some industry groups made cooperative efforts producing a first attempt at common electronic data formats. These were used for activities related to transportation, buying and finance data. They were used majorly for the intra-industry transactions (Reynolds, 2000). EDI is the transmission of standardized business transaction between the computers of a sender and a receiver, over a private network. It was established to assimilate and coordinate information in greater parts of a company's value chain from design to maintenance. In this way firm can share the information with the different stakeholders, partners, designers etc (Schafer, Konstan and Riedl, 2001).

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Technological drivers

  • Telecommunication infrastructure
  • Access to advance technology developments
  • Rate of technological developments and implementation in the industry
  • Bandwidth

Political drivers

  • Government events and programmes to support the use and development of new technology.
  • Legislation
  • Public policies

Social drivers

  • Workforce skills
  • Number of users on-line
  • Penetration rate of Personal Computers
  • Information technology skills, education level, computer proficiency
  • Culture of information technology

Economic factors

  • Per capita income
  • Economic development
  • Cost of technology
  • Commercial infrastructure
  • New business models
  • Cost of access to telecommunication infrastructure

So these are the reasons behind such popularity of the e-commerce. Now it is been evident that this industry is gaining popularity day by day in a rapid manner. Consumers are becoming fond of making business transactions and events on the internet. It is making their work simpler and easier. Lot of firms, are taking entry into the e-commerce in order to reach large amount of audience and to create awareness worldwide. But apart from benefits, the industry is also suffering from some existing and potential challenges. These challenges will be discussed in the later part of the study.

Background of the study

E-commerce also known as electronic commerce is a platform through which individuals and bodies can interact with one another and engage into activities related to buying and selling of goods through the help of internet (Mazoor, 2010). It is a technology which in the last some years has evolved by great margins and today is one of the main ways through which business organizations transact with that of the customers. In this regard it may not be wrong to say that for contemporary companies it is a way through which they can not only reach to a great number of customers but also sell their offerings in a manner that large number of customers can be attracted (DeLone and McLean, 2004). Though today it is seen as a major using which firms of today tend to operate, and is very useful for the management in enhancing sales as well as brand reputation, but there are some challenges to using it as well. It includes issues such as high costs, difficulty in maintaining, trust issues, cyber attacks, etc (Heeks and Bailur, 2007). Herein for companies to be able to successfully operate such portals and sites they need to invest a lot in various kinds of resources and infrastructure, like website designers, digital marketers, servers, etc (5 Ecommerce Challenges for 2014, 2014). Even though these are very difficult challenges that can be met by the company, but it is important that they are dealt with because of reason that if they are solved, then such sites can be very beneficial to the firm, both in terms of revenues and brand image as well. Hence for this purpose, this study is designed which is aimed at assessing and evaluating the future prospects of electronic commerce in the 21st century.

Background of the organization is an American based e-commerce organization headquartered in Seattle, Washington, United states. Presently it is the world's greatest online trading firm. Going into the flashback, it is evident that in the late 70's, some bodies of the Western world started exchanging information and data in electronic manner. After that, concept of online business was firstly introduced in the year 1990. Next year an American entrepreneur initiated his online trading website named Cadabra.Com which is now prominently known as Amazon.Com. It is the first company to implement online transactions insecured manner. Initially the business was started with the selling of online books but later on due to overwhelming customer responses they expanded trading into retail goods, digital content, gadgets, electronic items, MP3s, videogames etc. Amazon has proved to be a successful business venture and has gained amazing popularity across the globe. Augmented library, user friendly website, online review system etc are the enormous assets of this e-commerce giant. Customer relationship management and information management are two successful business strategies of the Amazon. Hence this study is adopted with the purpose of measuring the future and growth prospects of the e-commerce industry in the 21st century. It will assess the evolution and developments of Amazon in this industry. It will also recommend the way through which challenges in the e-commerce can be met out.

Rationale of the study

For the contemporary business organizations, it has become imperative that they have some or the other kind of e-commerce strategy in place, mainly because of reason that it is a way through which their performance can be improved and also good revenues can be earned (Gefen, 2000). In the last some years, the very concepts and techniques of e-commerce have evolved by a great margin and today it is seen as an important way through which customers can be attracted and goods can be sold to them. This research study will be carried out with an aim to find out the various challenges that this industry and its players have to face and also what the future holds for the market. Through the analysis, challenges and opportunities for the sector and its growth potential will be evaluated along with providing a glimpse of what all issues it has to face in current market scenario. In the report it will be seen as to how the sector has evolved and become a major part of business operations, wherein not only its current market position will be evaluated, but also its image in the future will be assessed. It is a well known fact that for the modern companies it is a way through which they can attract a good number of customers, but also be able to attain their goals and objectives with efficiency and effectiveness.

E - commerce and developments of the industry

According to Qin, 2010, e – commerce or electronic commerce is known as the trading of goods and services through use of computer networks especially the internet. It enables an individual or a firm in order to conduct the business over an electronic network (Constantinides, 2004). It is based on advanced technologies like online transaction processing, mobile commerce, inventory and supply chain management systems as well as internet marketing. The modern electronic commerce typically makes use of extensive World Wide Web apart from other techniques like e mails, social media, telephones and mobiles (Qin, 2010). In addition to this, it also involves process of exchanging data in order to provide facilitation in financing and payments owing to the various business transactions.

E commerce in today’s scenario where everyone has an accessibility of information has a number of uses. It is used for providing security to the business transactions, gather and utilizing of demographic data through social media and web contacts. It helps in reaching of prospective as well as established customers through fax or e – mails. Apart from its various uses of e -commerce one of the most important is of buying or selling of goods and services through internet (Taylor and England, 2006). In the business to customer (B2C) transaction, this use of e commerce has been the highest as people all over the world now prefer to do shopping online or through e commerce. This is associated with online shopping by the people on internet. Today is trend of moving less for shopping of various products and so it is now preferred as goods reach to the customers at the place of requirement (Amazonian strength, 2008).

The use of e – commerce for a number of business activities has now been put to extensive use (Lubbe, 2003). The developments that took place in this industry have been quite fast and in no time it has spared to almost all business industries of the world. Apart from the developed countries, the trend of utilizing e commerce is fast growing in the developing nations as well. Regarding the past developments of this industry, it started in 1999-2000 when a number of big companies in United States and Western Europe started representing their goods and services onto the World Wide Web (History of Ecommerce, 2004). It was during this time that people began to define e commerce as the process of making purchases of various goods and services over the internet through electronic payment and secured connections. Followed by this, many of the retailers also started understanding the advantage of electronic commerce and thus began the use of adding their products on websites on internet. According to the data available, from this time, sales in e commerce continued to rise in the coming few years and the sales accounted for 3.4% of the total sales by the end of year 2007(History of Ecommerce, 2004).

With time, e commerce proved to be beneficial for retail stores as well the online vendors. The web and its search engines enabled customers to have information regarding the required products and services without requirement of conducting exclusive advertising campaigns. It even allowed the small shops situated in one part of the world to reach to the global markets. The technology of World Wide Web also allowed the companies to track the preferences of customers and deliver them such marketing that is individually tailored. With respect to the various developments that took place in the e commerce industry, the biggest names are that of Amazon and E bay (Laudon and Traver, 2014). Amazon is one of the most successful enterprises that are responsible for increasing the scope of e commerce all over the world. At the onset of this form of business, Amazon dealt mainly into book store but with the developments further it extended its business into a variety of products like DVDs , video games, music CDs and electronic, software as well as other range of goods like footwear, apparels and heath products also (Chaudhury and Jean-Pierre, 2002). Amazon is one of the first companies in e commerce that is able to establish an effective marketing program and according 2008 statistics the company attracted around 625 million customers towards the transactions over internet and availability of goods and services online at the year end. With the further developments, many companies came into the race of e – commerce business. Almost all the big enterprises in every sector is now involved in selling of goods through internet so as to provide convenience to the customers and satisfy them (Jonathan and Patrick, S., 2006).

The huge expansion and development of e – commerce industry can be illustrated from the fact that in 2013, B2C e – commerce sales have contributed to make more than 1.2 trillion of U.S dollars. The data also states that 40% of internet users worldwide have bought products online through mobile or desktop and tablet. This amounts to more than 1 billion of online buyers all over the world and it is also projected to grow at a fast rate in the future. Apart from purchasing of goods and services over internet digital payments are also connected to the business of e – commerce. Various alternative methods of payment like online and digital payments have been showing wide use and thus are showing rapid growth. Although B2C e – commerce is used in line with online shopping it also includes other categories like paid content as well as other paid online services (Statistics and Market Data about E-commerce, 2014).

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According to the latest statistics, United States is the biggest market of electronic commerce and is followed by China and United Kingdom. Among the items that are sold, DVDs/CDs/books are the ones that are sold the most followed by holiday packages and computer hardware. 42% of the consumers from all over the world are following at least one online retailer through the social media (Global E-Commerce Industry Statistics in 2014, 2014).

E – Commerce businesses as well as the other retailers are now seeing huge wings and increment in their profits owing to the quick developments that are taking place in the online industry. They are also able to gain profits by integrating websites of e – commerce with their business systems such that they are able to reach customers of all over the globe and increase their sales. Thus, with this, it can be said that developments in the commerce industry since its inception has been quite wide such that it is gaining popularity to a significant extent (Nissanoff, 2006).

Challenges for companies in e- commerce industry

Today, in the scenario, where there are huge developments in the e – commerce industry and businesses are also having huge profits owing to the large number of customers preferring and going for online shopping but however, on the other side, it can also be evaluated that there exists a number of challenges for the companies too. Enterprises like Amazon are also facing some significant difficulties in carrying on their e – commerce transactions. Some of the noted challenges as faced by various companies like Amazon and others all over the world are as follows –

Trusting of website–One of the biggest challenges that the companies in e – commerce business face are that of building trust of their websites among the customers (Fraser, Fraser and McDonald, 2000). Regardless of the fact that website of the company has a unique or sophisticated layout but still the problem arises as customers automatically do not trust the websites (LESCHLY, ROBERTS and SAHLMAN, 2003). This is especially true for those products of the company that are associated with sizeable or big amount of prices for them. They do not easily lay their faith on website of any company and owing to this fact they do not make purchases through internet. It is thus a challenge for the organizations in e – commerce business to develop their website in such a legitimate manner that they can easily trust on them (Burgess, Sellitto and Karanasios, 2009).

Offering of personalization and customization–Regarding the development of the e – commerce industry another big challenge for the companies is of offering personalization and customization to the customers and that too both inside and in marketing (Wong, Yen and Fang, 2004). This requires the marketing department of various retailers to collect a large amount of meaningful information regarding interests and preferences of the shoppers and thus according to that organize separate as well as customized campaigns around their needs and wants (Sheth and Sharma, 2005). With this, it can be said that owing to the huge competition and large number of industries in the e- commerce industry it has now become increasingly important for even big companies like Amazon to focus on marketing in such manner that is personalized as well a customized thus focussing on the needs of the individual customers. Developing such marketing campaigns is thus now the biggest challenge for the company (5 Ecommerce Challenges for 2014, 2014).

Taking advantage of social media but with caution–Today, a large number of youngsters make use of one or the other social media so as to interact with the products of the companies and also agree that they get influenced by Face book blogs and videos and also affect their perception related to the products. This shows that e – commerce merchants who are making an effective use of social media platforms like Twitter and Facebook benefit from the increased awareness and online reputation of these sites (Hawk, 2002). However, it can be critically evaluated that making use of social media is also a challenge for them. Those companies which make an extensive use of this tool for pushing their products cannot leave any kind of sporadic posts and expect a positive response to it (Bradley and et. al., 2012). Apart from this, it is also required to update the messages of marketing daily on the social media website and all inquiries and complaints should be addressed promptly. Thus, it can be said that it is a challenge for the companies in e commerce to make a judicious and cautious use of social media sites for the marketing of goods and services (Chau, 2003).

Security and privacy – Another major challenge for the companies in the e – commerce industry is that of safety and security of their websites. Through internet, information is published widely and is reached to a large number of people all over the world and the information can be used for criminal and non activities (Singh, 2002). In addition to this, internet is an open system and its details are available freely to everyone. Data passes freely through internet in the public domain and in such way data can get easily transferred (Mellahi and Johnson, 2000). In this respect, the challenge for the companies is to take proper measures in order to provide safety and security to their websites so that their data is protected and remains unhampered. It can be said that safety of their sites is an issue for the companies in e – commerce so that these can be saved from hackers (Dhillon, Coss and Hackney, 2001).

Future prospects of e commerce industry

Since the onset of e commerce industry, it has evidenced a huge growth with a large number of global companies as well as small ones entering into it. The industry has seen a number of developments within it by benefitting the retailers and other industries to a significant extent as well as enabling the customers to do purchasing sitting at one place. But, however, it is also associated with a number of challenges for the companies in e commerce to consider while doing business (Plunkett, 2009). Considering the fast developments as well as the challenges it can be said about the future prospects of the industry is that it still has a wide scope as companies are working on finding solutions to the identified challenges (Al#Mashari, 2002).

According to the data, B2C e – commerce sales has come out to be around 1.2 trillion U.S dollars in the year 2013 and this is expected to increase by 20.1% in 2014 to reach to sales of $1.5 trillion. It is also forecasted that growth is likely to come from rapidly expanding mobile user bases and online user bases that can increase the sales out of the business transactions (Global B2C Ecommerce Sales, 2014).

The big brands are working and putting in efforts to deliver capabilities and content to the customers so as to satisfy them and also to increase business opportunities. As electronic commerce in growing continuously enterprises also have increasing number of chances to take advantage of the upcoming new and advanced technologies that can help in meeting the demand of the customers (Melián-Alzola and Padrón-Robaina, 2007). These lie in form of rendering a customized experience to the customers, personalized promotion for them and implementing the latest technological measures in order to ensure safety and security to the website of the companies (Singh, Kumar and Baack, 2005). The large number of emerging web technologies can allow the retailers to interact with customers in an open manner and by becoming better acquainted with them they can tailor to the specific needs of the individuals. Technology will also help in understanding the preferences of customers such that it will be easier for companies to fulfill needs of respective buyers. With demands of customers getting fulfilled through the internet, it is likely that this will increase the trend of e commerce in the future (The Changing Face of eCommerce, 2012).

With this, it can be said that future if e – commerce is that it is likely to increase in the future as it is associated with a number of opportunities for the business as well as the customers (Javalgi and, 2005). It is certain that the industry of e commerce will continue to increment and improve the online shopping experience for the customers by expanding the products offered to them and thus maintain an impressive growth. Evaluation can therefore be drawn that by making an effective use of the upcoming opportunities in form of technological advantages companies can increase the scope of e commerce business operations. This can thus eventually result in expansion of the entire industry worldwide (Nissanoff, 2006).


From the analysis of various authors who have done previous studies on development of e commerce industry, it can be said that there are still some of the areas which are left uncovered. Research has been done on the process of growth and development of the e – commerce sector by highlighting on various companies that rose in this business and one of the chief among them being Amazon. Apart from this, studies have also been conducted on the challenges that are faced by the organizations in this industry while carrying on the business. These are quite significant with respect to implementation of various practices to conduct the business. In addition to this, there are some of the studies which highlight on the future prospects of the e – commerce industry in the 21st century. However, gaps have been found in this that though future prospects have been studies but research has not been done on how the organizations in the e commerce sector will grow and enhance by reducing the challenges in an effective manner. Thus, the present research will focus on identifying the future prospects for the growth of e- commerce industry by reducing the challenges faced.

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From the literature review, it can be concluded that electronic commerce or e – commerce is one the latest forms of conducting business that takes place through internet. It has not only enabled the big companies to increase their scope of business to almost all parts of the world but has also benefitted the customers as they can make purchases and payments at their own place and can have accessibility of a variety of products (Smith and Chiozza, 2001). It can also be said that since the onset of e – commerce industry, it has seen a number of developments and thus is growing at an expanding rate all over the world and in both developed as well as developing nations of the world. However, it can also be evaluated that e- commerce along with its developments is associated with a number of challenges which the companies into this business are facing (Sun and Finnie, 2004). The most significant challenges that are being faced by the organizations are difficulty in getting trust of website by the customers, issues of website security, personalization and customization as well as taking cautious use of social media tools. However, it can also be said that though there are challenges but companies are making serious efforts to reduce them by taking advantage of advanced technology. With this, it can be concluded that growth prospects of the e- commerce industry is in a positive direction and it is likely that it will expand further in the future (Melián-Alzola and Padrón-Robaina, 2007).

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