3. Define the benefits and drawbacks of the service:

Drawbacks
Overall
According to the research done by CommerceNet in 2000 of the top 10 barriers to E-commerce, the main disadvantage of E-commerce is the lack of a business model, lack of trust and key public infrastructure, slow navigation on the Internet, the high risk of buying unsatisfactory products, and most of all lack of security.
Technological
For the E-commerce system itself, there is no universally accepted standard for quality, security and reliability. The software of e-commerce development tools are always evolving, and have difficulties in integrating the Internet and E-commerce software with parts of the existing applications and databases.
For general users of e-commerce, the accessibility to Internet, such as Digital Divide, is unstable, expensive and insufficient in porticular areas. This will generate limitations for business in accessing wider markets. Another problem is that if a business system's scalability is not sufficient and upgradeable, it will result in degradation, slowdown, and eventually loss of customers. (Turban, 2004:19, Awad, 2003:18).
Nontechnologies
The lack of trust is one main reasons why customers are unwilling to accept E-commerce due to privacy and security concerns. According to a 2000 Economist article, there were 95 percent of Americans showed reluctance to release their credit card number via the Internet. Some C2C action organizations are under an unencrypted payment environment, in which a customers' number number might be stolen in the payment process. However, recent payment systems such as PayPal can solve this kind of problem (Turban, 2004:52). The danger of hackers accessing customer files and corrupting accounts is also related to privacy and legal issues (Awad, 2003:18).
For some customers, it is hard to change their habit of viewing merchandise online; those customers resist traditional ways of purchasing physical goods in actual shops and have difficulties in changing from a real to a virtual store.
Another drawback is that there are some products that people will not buy online. For some high-cost and unique item businesses such as those involved with jewelry or antiques which have difficulties in offering the items in the e-commerce mode in the same way as online books and CD sales. Another example is furniture companies: many of them have websites that allow customers to browse, but most customers still want to feel and touch the item before they make a decision. Different expectations of goods and services from customers are typical of the online purchasing environment. An example is in the perception of color. Due to different monitor settings, inaccurate information about color makes it difficult for customers to make an accurate decision when purchasing online. Because customers are unable to trial or access the actual goods before purchasing and delivery, many customers will not take the risk of purchasing via the Internet.
Source: http://wiki.media-culture.org.au/index.php/E-commerce_-_Overview_-_Disadvantages
Benefits:
1) Ecommerce allows people to carry out businesses without the barriers of time or distance. One can log on to the Internet at any point of time, be it day or night and purchase or sell anything one desires at a single click of the mouse.
2) The direct cost-of-sale for an order taken from a web site is lower than through traditional means (retail, paper based), as there is no human interaction during the on-line electronic purchase order process. Also, electronic selling virtually eliminates processing errors, as well as being faster and more convenient for the visitor.
3) Ecommerce is ideal for niche products. Customers for such products are usually few. But in the vast market place i.e. the Internet, even niche products could generate viable volumes.
4) Another important benefit of Ecommerce is that it is the cheapest means of doing business.
5) The day-to-day pressures of the marketplace have played their part in reducing the opportunities for companies to invest in improving their competitive position. A mature market, increased competitions have all reduced the amount of money available to invest. If the selling price cannot be increased and the manufactured cost cannot be decreased then the difference can be in the way the business is carried out. Ecommerce has provided the solution by decimating the costs, which are incurred.
6) From the buyer’s perspective also ecommerce offers a lot of tangible advantages.
a) Reduction in buyer’s sorting out time.
b) Better buyer decisions
c) Less time is spent in resolving invoice and order discrepancies.
d) Increased opportunities for buying alternative products.
7) The strategic benefit of making a business ‘ecommerce enabled’, is that it helps reduce the delivery time, labour cost and the cost incurred in the following areas:
a) Document preparation
b) Error detection and correction
c) Reconciliation
d) Mail preparation
e) Telephone calling
f) Data entry
g) Overtime
h) Supervision expenses
Source: http://www.ecommerceprogram.com/ecommerce/benefits-of-ecommerce.asp