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Customers are now able to buy goods from manufactures all over the world on their sofa. There is no need to go to another country to purchase a product anymore. One has just have to order on website, pay shipping if necessary and it will be delivered to the door step. This was not easy before e-commerce. People had to travel where the product was to buy and hence incurring travels expenses and accommodation. Reduction in cost of doing business Small firms have reduced cost by utilising modern ICT systems to reduce transaction costs.
This has enabled them to do more business across geographical boundaries.
Better marketing techniques E-commerce has enabled better marketing technics which ensures target markets are reached without wasting resources and time. All economic and political barriers have been crossed by these effective marketing techniques. Difficult to ensure delivery of goods On global stage, shipped products may be intercepted and hence customers may not get the products they bought.
Warranty might also be an issue when transporting goods internationally, especially if individuals are involved other than companies.
The term Digital divide means a lack of equal access to computer technologies and the internet in particular, creating a gap between those who have and those who have not. One dimension of the digital gap follows demographics of gender, race and social class. Another dimension follows the economic gap between wealthy and poor countries (Lubbe, 2004). Some people may not have access to a computer or the internet, and there left out when technology comes to play.
Or it may be the case that someone does not have the required training to use e-commerce. This is true in developing countries where there’s poverty and people cannot even afford the basic stuff to survive.
These days there’s a real treat from hackers and viruses. Virus can attack information systems and destroy data or steel it. This data then may be used for criminal activities. There are instances of criminals operating in other countries, attacking business systems remotely and stealing trade secrets. Customers may lose money through fraud or identity theft. Information may also be altered and systems may be shut effecting services like banking to the general public. This has become a concern to many countries as of now and they are developing defensive mechanism to defend various systems from potential attacks. (Lubbe, 2004).
Tax bases may be eroded because taxes are levied at a place of consumption. These taxes are set by individual governments and countries and may be undermined by e-commerce. Generally the generation of money is supposed to come from physical assets and activities. Which is not the same in e-commerce. The buying and selling is across wide area, in different countries and jurisdictions. This makes tax planning a challenge. ‘’A Few European countries suggest implementation of a tax called “bit tax” (i.e., a tax on the “bits” of information zooming around computer networks). These Countries support such a tax, partly because Europe (with high rates of VAT) stands to lose the most from untaxed electronic sales. In America, which does not have a Federal sales tax, the idea has not found much favour and the present US administration rejects the idea of any new taxes on the Internet. The basic problem with a ‘bit tax’ is that it is indiscriminate: it taxes not just online transactions, but all digital communications. In addition, the question of valuation would be difficult to determine’’ (Lubbe, 2004)
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