Business Studies Essay

416 WordsMar 23, 20152 Pages
http://smallbusiness.chron.com/ecommerce-can-reduce-business-transaction-costs-3503.html Electronic commerce, or eCommerce, is conducting business over the Internet. Usually it refers to buying and selling goods and services, and transferring funds digitally. There are many benefits to eCommerce business, not the least of which is reduced transaction costs. Quantity When offline stores calculate transaction costs, they have to factor in countless business expenditures along with the actual number of transactions. When there are fewer transactions, the cost of per transaction is higher. On the flipside, transactions arriving in high quantity can overwhelm your personnel and distributors. In an eCommerce business, the transaction cost is the same across the board, whether one order or thousands come in. Accuracy Electronic selling nearly eliminates processing errors that run rampant with human processors. This translates into less wasted time solving order and invoice problems. Although inaccuracies do not incur fees or penalties, they do take up considerable employee time and energy. ECommerce frees up staff members to focus on profit-generating activities. Related Reading: Do Transaction Costs Include Shipping & Handling? Brick And Mortar The money received for every transaction will pay for the item; it will also contribute to the salesperson’s salary, credit card fees, lease on storefront, electricity, telephone, heating/cooling, taxes, displays, repairs and maintenance to the building. However, the money received for an eCommerce transaction pays for the item, web hosting, shopping cart software, distribution and little else. The cost overall of maintaining a virtual store is far less than that of a brick and mortar store. Inventory With a brick and mortar store, you will have to maintain an inventory. This will entail purchasing,

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