Advantages and disadvantages of online purchasing

When organizations in any of these markets make buying decision these are influence by the following factors:

• Who is buying?
  • Different members are usually involved in the buying process. These include actual users, influencers, buyers and decision makers.
• What is the type and size of the purchase?
  • Purchases can be categorized by:
    • Volume
    • Value
    • Low frequency high value transactions such as the selling of large aircraft's tend to be purchased without any internet impact.
• How much information is required to make a purchasing decision?

The advantages of online procurement are:

• Higher transparency
• Reduced risk of maverick spent
• Price reduction though online negotiations
• Process optimization

The disadvantages are:

• Organizational risk
  • Depending on the level of integration (see M8-S3 - Reading - Strategies for E-Business - Chapter 9 - Choosing the appropriate strategy for the internal organization) there may be internal bottlenecks to online procurement
• Technology risk
• Supplier resistance
  • As online procurement may force price cuts and disrupt stocking and labor agreements.

Part of: M8-S3 - Reading - Strategies for E-Business - Chapter 10 - Choosing the appropriate strategy for interaction with suppliers