Global Impact Of E-Commerce On Society And Need For Regulators In Power And Telecommunications Industry

Online sales

E-business has introduced new opportunities for small and large organisations to compete in the global marketplace. 

Discuss the global impact of e-Commerce on society: 

Online sales,

Communication with customers,

Greater choices, lower prices,

Global markets and online advertising.  [P2.2]

Case Study: Utility

Utility firm, Npower, is to face an investigation by the energy regulator, Ofgem, over allegations about sales tactics. Following an undercover investigation by the Sunday Times, it is alleged that some door-to-door sales staff in London misled potential customers. Householders thought they are asking for more information about changing power suppliers when in fact the sales staff were switching them without their consent from their existing suppliers to Npower.
The company issued a statement in which it said: ‘Npower management will of course co-operate fully with Ofgem in its investigation. We were very concerned at the actions of a small number of individuals in a London sales team as reported in the Sunday Times. We took swift action to take the team off the road and investigate the problem. Following an in-depth investigation by our audit team, disciplinary hearing will be schedules shortly. We cannot prejudge the outcome of these meetings but the penalty for fraudulent activity is dismissal. We have also taken steps to confirm that the systems in place currently are working effectively and we taken the entire Npower sales force off the road to reinforce the standards that we require. Where appropriate we have introduced additional procedures to ensure we operate to the highest standards across all our sales teams’.
Adam Scorer of consumer watching Energywatch said: ‘More than 100 consumers contact us each month complain about Npower’s marketing tactics. No consumer should be subjected to such bully boy bahaviour and such poor service’.
An Ofgem spokesperson said it had the power to fine Npower up to ten per cent of its global income if it upheld the allegations. In the last case of mis-selling in 2002, Ofgem fined London Electricity, now part of EDF,  £2 million.

a-  Explain, using the data, why regulators are needed in industries such as power and telecommunications.

b-  Discuss whether the actions of regulators like Ofgem are likely to make markets more competitive and improve consumer choice.

E-commerce has had a great impact on the society over the past few years. These impacts include both positive and negative effects on the business on a global scale as well as on the consumers. The traditional bricks and mortar method had some serious drawbacks that the introduction of e-commerce helps to overcome (Zhong, 2013).

Communication with customers

E-commerce has given the consumers the opportunity to go online and choose from a large variety of products. Moreover the products are available online 24 hours and the customer is able to order a large number of items at a go with just a click. Previously, the aged and disabled customers had trouble whenever they wanted to shop from a store located in some distant place. But now the items are delivered directly to the customer’s home without the need to be physically present in the store in order to shop (Abdo, 2011). This method saves lot of time for both the business and the consumers. Another positive aspect brought to light by e-commerce is: the customers are able to view in advance the rating and feedbacks about the quality and value of certain product given by previous customers who bought the same product before.

But when there are so many facilities and advantages of carrying out online sales through the use of e-commerce, there has to be certain negative aspects of it. There are chances of leakage of confidential information that belong to the customers such as bank account number, credit card number etc (Krishna Gopal Gokhle and Taehwang Kim, 2013). A number of frauds and hackers can hack in to customer accounts to steal such valuable information or jeopardise a transaction. Other drawbacks include, existence of wrong information in the particular website of an online store, handling and managing customer complaints etc. With these threats included, e-commerce also brings a large amount of positive impacts on the business and the consumers which in turn bring positive changes in society (Liang and Turban, 2011).

Another aspect of online purchasing is that, the customers do not get a chance to be face-to face with the sales representatives while buying a product. This often turns certain customers away from making a decision to shop online. It is true especially for the older generation of people who are not so used-to with the internet and digital world. Shopping online also takes away the facility to try, touch or feel a product before making a decision to buy it. Moreover, if a particular product does not suit the needs of the customer and he or she wants to return it, there are not much scope to communicate with a representative about it directly (Mohanapriya.T, 2011). On the contrary, the reviews and comments from the past customers help making decisions. Generally it has been seen that the younger and more digital or technology-savvy people uses the internet and web to make orders and purchase products online as they are not much dependent on face-to-face communication and it saves certain amount of time for the busy people.

Greater choices, lower prices

E-commerce introduces a global market place where buyers can choose from a wide range and variety of products. By online web access consumers are now able to view and choose items in a national and international scale buy large items with just a click and add to their carts without worrying about overflowing the items.

Additionally, in online shopping sites often times there are discounts and free deliveries going on based on some specific terms and conditions. There are products available online in cheaper prices than traditional markets (Soopramanien, 2010). The payment method has become much easier, simpler, convenient and fast. Lot of payment options are available such as debit cards, credit cards, PayPal, cash on delivery etc. There are schemes for customer loyalty where they give products in lower prices to the consistent and trusted customers. News about new and special offers going on in a store are also communicated to the customers regularly through emails and text messages. It encourages the customers to spend certain amount and indulge in online shopping.

E-commerce enables people to buy products from a global marketplace. The international shopping sites sell products which are available everywhere around the world. The business of import and export is established with international traders (Zhong, 2013). Thus the customers have the facilities of choosing new products from international marketplace.

Online advertising is a brilliant approach and becoming more and more successful these days. Publishing ads in websites using banners, videos etc have become common for almost all the e-commerce sites. It can target customers and influence them to visit their websites. Business can allow other companies to publish ads which in turn earn revenues to the business.

Need of regulators in power and telecommunications industry

The main objective of regulators in telecom and power sectors is to protect public interest and ensure a legal electricity policy (Qinghe, 2013). Regulator is needed to manage the emerging risks and help promote an energy secure power service sector. They design the electricity tariff plans for the customers. Regulatory works are to co-ordinate with the operator and other standard bodies to develop and enforce a safe and properly executing power system. Regulators take care of the technical safety, system reliability. Expanding access to the underprivileged customers, improve monitoring is also a mandatory job for regulators (Mohanapriya.T, 2011). Thus in order to run a power sector successfully employing regulators is compulsory as regulators help to take up and handle the challenges regarding regulation of tariffs, compliance and consumer service. The need to have an independent regulatory body in industries like telecommunications and power sector is greatly felt with the emerging incidents and risks such as the one regarding Npower mentioned in the case study. To manage the telecom or power service, settling any dispute, avoid market failure or foster effective competition it is mandatory to follow the guidelines and have the presence of a regulatory body (Liang and Turban, 2011).

Ofgem fined Npower up to 10% of its global income. The overall objective of the regulators such as Ofgem includes fostering effective competition in the market by enforcing the standards and rules which were required (Soopramanien, 2010). The tariff is decided by the regulator in a competitive basis as and when the regulator will decide to introduce competition. Thus it will naturally make markets more competitive with the help of regulator as it has the responsibility of promoting competition and efficiency in the power industry.

The actions taken by Ofgem will necessarily improve and influence the consumer’s choice as it was based on the consumer’s interest. It deals with the compliance and improving the operation of monitoring and customer service. The objective was to provide electricity or power at reasonable and justifiable rates.

Reference List

Abdo, E. (2011). Power equipment engine technology. Clifton Park, NY: Delmar/Cengage Learning.

Krishna Gopal Gokhle, and Taehwang Kim, (2013). Impacts of Economic Reforms on Small – Scale Industries in India. thejournalofinternationaltradecommerce, 9(5), pp.143-168.

Liang, T. and Turban, E. (2011). Introduction to the Special Issue Social Commerce: A Research Framework for Social Commerce. International Journal of Electronic Commerce, 16(2), pp.5-14.

Mohanapriya.T, M. (2011). A Feasibility Study on Online Sales of Two Wheeler Among Retailers with Special Reference to Chennai. IJAR, 3(6), pp.330-332.

Soopramanien, D. (2010). Conflicting attitudes and scepticism towards online shopping: the role of experience. International Journal of Consumer Studies, 35(3), pp.338-347.

Zhong, W. (2013). The Analysis of Mobile Internet Impacts on Electronic Commerce System Construction. AMR, 765-767, pp.1349-1354.

Qinghe, Y. (2013). The online shopping change the retail business model: A survey of the people use online shopping in China. IOSR Journal of Business and Management, 15(5), pp.77-110.