How does E-business differ from traditional business?

One simple thing that certainly differs e-business from traditional business is the technology that underpins the business itself.
E-business is built electonically on a network; therefore, without a network it’s completely impossible for an e-business to survive (please refer to What is E-Business).The use of technology will bring a huge impact on the way of a business communicates with its customers. This business communication models are categorized by Schneider into three different types [1]

communication model

Personal contact (one to one)

In this type of communication model, the organization assigns its employees to identify and reach the prospective customers [1]. The simplest example for this approach is the sales person who calls the potential customer and introduces the products offered by his company. This approach has been widely implemented by traditional business.

Mass media (one to many)

The mass media approach allows the organization to broadcast advertising and promotional materials on its products [1]. Examples for this approach are advertisement on television, radio, newspaper or magazine. This approach has also been widely adopted by traditional business.

The web (many to one or many to many)

The internet is neither a mass media nor a personal contact device [1]. It stands on the middle of the fine line where mass media is allocated at the first side and personal contact at the other side. The web provides more interactivity than mass media does to its audience but less than personal contact could offer. For example, an internet user can type in his keywords on a search engine tool (e.g. google) and click on the products that catch his attention. The web is the approach that is adopted by e-business.

So, what impacts that the web can bring to-business as its business communication model? The communication model adopted by e-business will surely raise new barriers that need to be brought to attention.

The low level of trust

Unlike traditional business who can gain trust from its prospective customers through a straight, personal contact, the web eliminates the customers’ privileges to experience such personal contact with both the products and organization they want to buy the products from. In traditional business, customers come to a store and have personal interaction with the organization through its sales person and then, possibly, have personal contact with the product. These types of experience somehow develop trust towards the organization and are very important for certain types of product.

The need of good electronic marketing strategies

It is undeniably that internet provides the facilities for business to ‘broadcast’ their advertisement. However, it doesn’t have such power to force its audience to view or click on the ads [2]. An audience has the opportunity to create a list of product by using search engine tool (e.g. google) and click on the product that catches his attention. Therefore, some traditional marketing strategies are not applicable in e-business. New marketing strategies such as how to increase the rank of a company on search engines are more likely to gain attention in running an e-business.

Other related topics:

What is E-Business?
Selling on the web: Can we sell everything online?
How does e-business earn money online?
Using MySpace and Facebook for your business?
What is CRM? How can it affect on e-business?
Your e-business and YouTube
Do we need a better payment system for e-business?
How does search engine work?

[1] Schneider, G.P. (2006). Electronic Business. 7th Ed., Course Technology

[2] Dann, S. (2008). Lecture. 14 March 2008.


4 Responses

  1. Regarding the unability of the companies to force the audience to view the ads in the internet, I believe it is not 100% correct. As we can see, internet video streaming becomes a trend lately. In some sites, when we wish to view a video, they sometime force us to watch a 30-second commercial first before streaming the video we want to watch.

  2. SEO is good for gaining new visitor or even better new customer. But it’s a good CRM which will make visitor (or customer) come back again and become loyal customer.

    It’s no use to attract a huge amount of visitor if they just looking around and then go somewhere else because they can’t find what they need or what that makes them interested to visit your website after seeing some advertisement about your website.

    An advertisement somehow stronger than the product itself. And that makes a lot of disappointment on customer side hence the customer won’t easy to trust them or any similar business.

  3. I am currently do reserach on CRM and CEO. Will post atricles talking about those issues soon.

  4. interesting material, where such topics do you find? I will often go

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