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Question

Discuss the limitations of electronic mode of doing business. Are these limitations severe enough to restrict its scope? Give reasons for your answer


Solution

The following are a few limitations of the electronic mode of doing business.

(a) Lack of personal touch: Unlike the traditional business methods, e-commerce lacks a personal touch as both the buyer and the seller are not physically present when the deal is made. As a result, direct trading is preferred over e-commerce in case of products such as clothes, shoes and jewellery, as the buyer prefers the physical presence of the seller.

(b) Lack of security: Online trading and transactions are highly prone to internet risks and online threats. For instance, there may be leakage of credit/debit card details to third parties, the sellers may remain anonymous and there may be virus attacks, hacking and phishing.

(c) Technical drawbacks: Online trading requires basic knowledge of computers and Internet familiarity. This often creates distress for people who are less tech-savvy. Often, the increase in the popularity of computers and the Internet divides society into computer literates and computer illiterates (termed digital divide). Besides, because of technical problems including server glitches, websites may sometimes stop functioning, and this may cause frustration to consumers and even discourage them from revisiting the websites which face such problems frequently.

Despite these limitations of online trading, the scope of e-business remains wide, mainly owing to the continuous implementation of new technology and new updates that help in overcoming the limitations. The following are some of the reasons why the scope of online business is widening.

(i) Day by day, websites are becoming more interactive and consumer friendly. This overcomes the problem of lack of personal touch and gives the consumers the feeling that they are physically and directly trading with the sellers.

(ii) Continuous evolution of information technology has speeded up the flow of communication and information. This enables consumers to raise queries and clear doubts before purchasing a product.

(iii) The Government of India and various NGOs have been making efforts to extend the scope of e-business to rural areas. This not only eliminates the hesitation among people in rural areas to opt for online trading but also increases the overall consumer base of e-commerce.


Business Studies
Business Studies - NCERT Solutions (2019)
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