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To What Extent Is an E-Commerce Strategy the Best Way for Businesses to Increase Their Profits? (40 Marks)

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To what extent is an e-commerce strategy the best way for businesses to increase their profits? (40 marks)

E-commerce is the online transaction of goods and services, which has completely revolutionized business and the way in which businesses can operate. It’s now easier for customers to compare prices/products with a little time spent browsing the Internet opposed to dragging themselves to the stores. This means that e-commerce is having an impact on what and how much businesses sell, therefore influencing the profits the business gets. In this essay I will consider whether an e-commerce strategy is the best way for a business to increase their profits, or whether e-commerce is not the best strategy to do this. I will be arguing that with the use of e-commerce businesses have more reach to customers and can provide more options to increase their profits. Alternatively I will also talk about how e-commerce may not work for all business plans/strategies, therefore increasing the risk of loss.

Introducing an e-commerce strategy allows the business to increase its customer reach, creating a larger customer base, as e-commerce is accessible to anyone who can use the Internet. E-commerce also creates an ease of use/purchase for customers, which means they do not have to go the physical stores, saving money and time. The combination of ease of use/purchase and larger customer reach results in the ability for companies to increase sales, and so this would lead to higher revenues. Costs would also be lower as store staff are not needed as much, resulting in higher profits being made. 92% of adults in the UK (2014) use the Internet, along with 76% purchasing online; a clear example of a large customer base providing the opportunity for higher sales and therefore profits. HMV are a business that provides an example of this. In 2015 their e-commerce website was

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