THE LIMITATIONS OF EC

EC has both technological and non technological limitations. The major limitations are :

Technological Limitations
1. There is a lack of universally accepted standards for quality, security and reliability.
2. The telecommunications bandwidth is insufficient.
3. Software development tools are still evolving.
4. There are difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases.
5. Special Web servers in addition to the network servers are needed (added cost).
6. Internet accessibility is still expensive and/or inconvenient.

Non technological Limitations
1. Security and privacy concerns deter customers from buying.
2. Trust in EC and in unknown sellers hinders buying.
3. National and international government regulations sometimes get in the way.
4. It is difficult to measure the benefits of EC, such as the effectiveness of online advertising. There is a lack of mature methodology.
5. Some customers like to feel and touch products. Customers are resistant to the change from a real to an online store.
6. People do not yet sufficiently trust paperless, faceless transactions.
7. There is an insufficient number (critical mass) of sellers and buyers needed for profitable EC operations

Despite these limitations, EC is expanding rapidly. For example, the number of people in the United States who buy and sell stocks electronically increased from 300,000 at the beginning of 1996 to over 25 million by the spring of 2002. In Korea, about 67 percent of all stock market transactions took place over the Internet in the spring of 2002 (versus 2 percent in 1998). According to the major financial institution J.P. Morgan, the number of online brokerage customers in Europe will reach 17.1 million in 2003 (versus 1.4 million in 1999). As experience accumulates and technology improves, the cost-benefit ration of EC will increase, resulting in greater rates of EC adoption.
The benefits presented here may not be convincing enough reasons for a business to implement EC. Much more compelling are the economic impact of EC and the digital revolution, along with the effects of EC on business competition.