Limitations of E-Commerce

Electronic commerce is also characterized by some technological and inherent limitations which have restricted the number of people using this revolutionary system. One important disadvantage of e‐commerce is that the Internet has still not touched the lives of a great number of people, either due to lack of knowledge or trust. A large number of people do not use the Internet for any kind of financial transaction.

Another limitation of e‐commerce is that it is not suitable for perishable commodities like food items. People prefer to ship in the conventional way than to use e‐commerce for purchasing food products.
So e‐commerce is not suitable for such business sectors. The time period required for delivering physical products can also be quite significant in case of e‐commerce. A lot of phone calls and e‐mails may be required till you get your desired products. However returning a product and getting a refund can be more troublesome and time consuming than purchasing, in case if you are not satisfied with a particular product.

Some of the other limitations are:‐

• Credit card security is a serious issue if vulnerable
• Costs involved with bandwidth and other computer and server costs
• Extensive database and technical knowledge and experience required
• Customer apprehension about online Credit Card orders
• Constantly changing technology may leave slow business behind
• Some customers need instant gratification, and shipment times interrupt that
• Search utilities far surpasses the speed used to find products through catalogs
• Encourages competition between small and large online retailers

There was much publicity of Internet and E-Commerce over the last few years. But this type of commerce is not free from defects. These again will be dealt with according to the three major stakeholders - organisations, consumer and society.

Limitations E-Commerce to Organisations

1. Security:
One of the important limitations of e-commerce is the lack of sufficient system security, reliability, standards and communication protocols. There are numerous reports of websites and databases being backed into, and security loop holes in software. For example, Microsoft has over the years issued many security notices for their software. Several banking and other business websites have experienced breaches in security where a technical oversight or a fault in its systems led to confidential client information becoming available to all.

2. Pressure for innovation:
Under pressure to innovate and develop business models to exploit the new opportunities may sometime leads to strategies harmful to the organisation. The ease with which business models can be copied and imitate over the Internet increase that pressure and restrict longer-term competitive advantage.

3. Price wars:
Facing increased competition from both national and international competitors often leads to price wars and subsequent occurrence of losses for the organisation.

4. Problems with compatibility of older and new technology:
There are problems where old business systems cannot communicate with web based and Internet infrastructures, leading to some organisations running almost two independent systems where data cannot be shared. This necessitates the form to invest in new systems which connect the different systems. In both cases this is both costly as well as difficult to the efficient running of organisations.

Limitations of E-Commerce to Consumers

1. Financial commitment:
Computing equipment is needed for individuals to participate in the new ‘digital’ economy, which means an initial capital cost to customers’.

2. Computer literacy:
A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web.

3. Cost of internet:
Cost of access to the Internet, whether dial-up or broadband tariffs, is another important limitation.

4. Cost of computing equipment:
Not only the initial cost of buying equipment but additional investment to update technology regularly to be compatible with the changing requirement of the Internet, websites and applications is also a major limitation.

5. Lack of security and privacy of personal data:
There is no real control of data that is collected over the Web or Internet. Data protection laws are not universal and so websites hosted in different countries may or may not have laws which protect privacy of personal data.

6. No personal contact:
Physical contact and relationships are replaced by electronic processes. Customers are unable to touch and feel goods being sold on-line or gauge voices and reactions of human beings. A lack of trust exists because they are interacting with faceless computers.

Limitations of E-Commerce to Society

1. Breakdown in human interaction:
As people become more used to interacting electronically there could be an erosion of personal and social skills which might eventually be harmful to the world we live in where people are more comfortable interacting with a screen than face to face.

2. Social division:
There is a potential danger that there will be an increase in the social divide between technical haves and have-nots - so people who do not have technical skills become unable to secure better-paid jobs and could form underclass with potentially dangerous implications for social stability.

3. Wasted resources:
As new technology outdates quickly, creates the problems to dispose of all the old computers, keyboards, monitors, speakers and other hardware or software.

4. Facilitates Just-In-Time manufacturing:
This could potentially damage an economy in time of crisis as stocks are kept to a minimum and delivery patterns are based on pre-set levels of stock which last for days rather than weeks.

5. Difficulty in policing the Internet:
This means that numerous crimes can be committed and they often go undetected. This is also a rise in the availability and access of obscene material and ease with others can entrap children in chat rooms.


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