E-business concepts and applications

E-Business

Many have agreed that e-business and e-commerce represent the new commercial trend of the 21st century. Indeed, they have argued that this is a much easier, cheaper and more efficient way of doing business. Partially, they are right, however, they underestimate some of the negative effects of e-business. These include security breaches that can cause financial frauds or extra costs related to maintaining and improving the e-commerce mechanism. We shall analyze below how e-business has developed at Home Depot, what it consists off and what its main advantages, limitations and risks were here.

The company was founded in 1978 and has grown to become the "world's largest home improvement specialty retailer and the second largest retailer in the United States." Indeed, sales have reached $58.2 billion in 2002 and the company continued to diversify its services so as to attract a larger category of consumers. Entering e-business was only one of the methods by which shopping at Home Depot became easier and simpler.

Having browsed the www.homedepot.com, I have noticed several defining elements of e- business at Home Depot. First of all, the website is not only a commercial portal. Besides the Browse and Buy Products option, the company offers theoretical advice on how to install or repair things within the house through its Know- How and Projects link and offers information on its Installation Services.

Having briefly analyzed the website, there are several advantages that are obvious and derive from the company's e-business. First of all, in terms of the marketing mix, promotion seems most privileged. Indeed, at minimum costs (only the creation and management of the website), the company can present all of its products and any customer can actually learn what the company is commercializing. This facility is complemented by the fact that any customer with an Internet connection can shop from his own home anything he wants.

In terms of the place element of the marketing mix, this means that every product is virtually in your own home, at any time of the day. The advantages this brings about are practically countless. First of all, it is to be assumed that anybody would rather buy from home rather than go all the way to the store, have to stay in line, etc.

Second of all, e- business means a certain reduction of costs from the fact that all the personnel that needed to physically work in the store are now needless. The distribution network needs to be supplemented, however, because one would estimate that the sales will increase when using e-business. On the other hand, the sales personnel is now much reduced, because e- business means an easier and efficient way to manage orders around.

The importance of the fact that the company is using an integrated set of services on its website is not to be minimized. Indeed, a person does not actually need to have the intention of buying a Home Depot product. He may be just searching for useful information in terms of repairing something in his house. However, once on the website, he may decide to take a look at some of the products Home Depot offers (again, we have a cheap and very efficient advertising form) and he may want to buy something from what the company has to offer. I am emphasizing here the fact that e-business may mean that a company can attract customers who are not necessarily set on buying a certain thing, but who may do so because of the system's easiness in use.

An additional advantage I need to refer to is the financial crediting system provided by the company through its website and the Credit Center facility. The credits are divided into three categories. The first one, Consumer Credit, is designed for physical persons and enjoys no interest on sums of over $299. The Commercial Revolving Charge and the Commercial credit line are provided for businesses of different sizes.

As we can see, the website provides, besides commercial and promotional activities, crediting facilities for the customers. As such, the services are almost complete and everything is done online. According to this system, you can actually buy something from your home, with virtually no money (see the financing capabilities) and can save a large amount of time.

I have so far presented several advantages provided by e-business for Home Depot. Resuming them, these include higher efficiency in contracting deals, an excellent a low cost promotion and advertising operation, where people can learn more about the company's products and perhaps recommend them to others, as well as a higher number of customers that can be served through the system. However, as in all good things, e-business may have some disadvantages which we will analyze here below.

If we are to refer to the limitations of the system, perhaps the most important one is the fact that distribution is still a mainly physical activity, with everything that this implies. Of course, the system provides the advantage that orders are better organized and that e-business means higher efficiency. It is expected however that all advantages deriving from the fact that you can contract in less than five minutes will lose their impact if distribution of the product will take five weeks

The most important and dangerous risk, however, is in terms of security and possible security breaches. We should image that the absence of a strong security system, including a powerful firewall, for example, means that anybody can break in and hack the website, with the consequences deriving from this.