Industry Analysis of eCommerce

By Prev Info - January 19, 2023

The e-commerce industry is made up of firms that develop and market software packages to small businesses and multinational corporations alike. The e-commerce software applications enable businesses to process orders, track shipments and manage inventory with an unprecedented level of speed and efficiency. As Internet technology expands from desktop PCs to laptops, tablets and smartphones, the e-commerce industry shows high potential for growth but must also keep up with the increasing demands of both its clients and their customers.

An industry analysis of e-commerce examines several factors.

Barriers to Entry

The barriers to entry in e-commerce are much lower than those in other industries, even when considering other facets of the software industry. The hardware, software and Internet connectivity required to start an e-commerce company can be obtained for a few hundred to a few thousand dollars, while the training and education required to develop e-commerce applications are readily available through universities, adult learning centers and training manuals. These low barriers to entry have enabled the e-commerce industry to grow by more than 250 percent from 2004 to 2012.

Driving Factors

When the e-commerce industry first launched in the early 1990s, the key driving factors were speed and convenience. Today, those factors still drive the industry but in a different direction. The advent of smartphones in the late 2000s allowed users to carry their Web browsers in their pockets. A study by online commerce analytics firm comScore published  showed that nearly 80 percent of smartphone customers used their Android and iPhone devices to shop online.

Advances in Technology

The lines between television, video games and Web browsing, once well-delineated, have become blurred to the point of obliteration. Users can now shop using their Internet-connected TVs and video game consoles. These advances in technology have opened up new avenues for e-commerce applications, such as those found on Sony's PlayStation Network and Microsoft's Xbox Live. Social networking sites, such as Facebook, Instagram and Pinterest, have also opened up new avenues for e-commerce marketing and transactional capabilities.

SWOT Analysis

A SWOT analysis examines the strengths, weaknesses, opportunities and threats that face an individual company or an industry as a whole. In the e-commerce realm, the strengths include ease of use and adaptability to different product lines. Weaknesses include lack of instant gratification that comes with brick-and-mortar shopping. New technological advances represent new opportunities for e-commerce developers. The biggest threat that may face e-commerce users is the move toward federal and state sales taxes on Web-based transactions.



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