Introduction
Electronic commerce (e-commerce) is process of buying and selling goods and services over the internet or other computer networks.
E- commerce and its application
There are various forms of trade conducted through this method ranging from electronic funds transfer, supply management, internet marketing, data exchange and internet transactions.
The virtual part of ecommerce is done electronically while the physical goods are transported in some means such as shipping and air transportation.
E-commerce facilitates sharing of data for easier transfer of money between the buyer and seller. Firms make their goods known to their customers through online marketing and advertising. Shoppers are in position to sample different products of different firms over the company’s websites.
By just click of mouse one can order goods from different countries as he or she is at home. The virtual part of both domestic and international payment is done electronically as well sharing information between the business and the clients. E-commerce is faced with various problems ranging from failure of the parties to honor agreement, changes in exchange rates in international forex markets and delays in shipments of the goods. “Credit card fraud and shipping are the two primary issues regarding selling internationally” ( Rachael).
How can a company protect itself from repudiation?
Repudiation is refusal of one party in contract to honor his or her promises. Business which transact over the internet have found themselves facing this problem. Because better part of e-commerce is done electronically; viewing picture, hearing sound and reading information, (no physical meeting) in transactions, then one of the parties may fail to honor his promise. Therefore, firms practicing ecommerce should learn this problem and take appropriate measures to protect themselves.
Companies can learn from past experience and take precaution; a company stops shipment of orders to countries which in past have had high rates of card fraudulent, as a measure to protect itself from loss of money. Thorough scrutinizing or analyzing of orders made by customer could serve as a precaution to the company. Companies should call the customer making the order to confirm whether they are fake or genuine orders to avoid delivering orders to “virtual” customers. Rejecting orders which look too good or not so good may affect sales but it is the best move to prevent itself from loosing money through stolen credit cards. Company should properly analyze the address of the customer to ensure their county’s postal services are reliable.
Shipping charges
Shipping of orders is great issue to international traders. Before making orders online to customers, companies must be aware on how the product will reach the customers. Shipping charges have proved costly to many merchants selling internationally. Different shipping firms have varying shipping charges depending on amount of packages being shipped. Shipping could be so expensive such that the cost of the goods doubles, therefore companies should adopt the least expensive shipping terms.
Merchants are mostly likely to go for shipping firms that provide enough security of their deliveries. “Restrictions by countries on what kind of good should or should not” ( Brian) enter into that country is another shipping problem. Before a company puts its good online it should understand these restriction and advice customer of the affected countries accordingly. Goods imported are required to be accompanied by specific documents. Processing of these documents may take a lot of time and some fee is charged in processing the same. For instance certificate of origin is required in shipments as a proof of originality of the good. Commercial invoice provides information regarding what is in the package; its weight, quantity and cost. Helps the custom authority to understand the package.
Apart from papers, there are duties and taxes imposed by the shippers. Free on board is terminology which refers to payment of duties while goods are on transits. The companies pays the required duty until that good reaches country of destiny, from there customers pays other charges which may arise.
How does exchange rates affect online purchase?
Corporations operating in the global marketplace react to and manage exchange rate volatility” (Gail & Eliza). Volatility in exchange rates of different currencies is the reason of existence of speculators and hedgers in international trade. The prices of domestic currency against foreign currencies differ from time to time due to market forces of demand and supply of the currencies in forex market. If demand for foreign currency is high its value rise, in such cases importers are disadvantaged because they will have to pay more in term of domestic currency to get the good. On other hand the exporter will earn more than he could have.
If domestic currency becomes stronger due to reduced supply of foreign currency, then importers ( buyers) are likely to gain from the transaction because, they are now paying less in terms of domestic currency. As result of this uncertainties manufactures( exporters), would attach a forex adjustment amount to the prices of their products to protect themselves against losses caused by exchange rate volatility. “United states of America dollar is commonly used in online payments” (the knowledge exchange), hence depending on its value with respect to domestic currencies, one may find gaining or losing.
Many businesses argue that they can earn more on online selling more than selling locally because of the benefits that come with rate of exchange rate. Its because of changes exchange rate that, speculator will buy currencies when exchanges rates are low with anticipation that they will rise, thus selling them at high prices whiles.
Difference between U.S.A customer and international customer
Online purchasing is done by different customers across the world. Online merchants in U.S are purchased by both US citizens and citizens from other countries. I think the difference between a U.S customer and an international customer who each purchase from U.S merchant online is: U.S customers are citizens of U.S.A living within the country and usually make their purchase online. They use U.S dollar in their transactions because it’s the local currency. Whiles, international customers, are those customers who are non-U.S residents or citizens but purchase U.S goods online. Usually use their domestic currencies which is then exchanged to U.S dollars upon making orders.
References
Brian, Getting international shipments worth effort, Web.
Gail D. foster and Eliza winger, do exchange rate matter, Web.
Rachael Coleman. Don’t let selling internationally scare you, Web.
The knowledge exchange, an introduction to e-commerce, Web.