Commercial StudiesICSE Class 9 · E-commerce and E-trade

Merits and Demerits of Online Trading and Safe Practices (ICSE Class 9 Commercial Studies)

Updated 18 October 2026 · Fact-checked

Online trading offers buyers convenience, wider choice, easy price comparison, home delivery and digital payments, and offers sellers a wider market, lower costs and 24 x 7 orders. Its demerits include no physical inspection, delivery problems, fraud, privacy risks and dependence on internet access. Safe practices such as using secure websites and never sharing OTPs reduce the risks.

Weigh the green merits against the red demerits, then notice the safe habits that reduce the risks: secure websites and never sharing your OTP.

Illustration drawn for QuestionBuddy.

Understand Merits and Demerits of Online Trading and Safe Online Trading Practices

Merits for buyers.
1. Convenience: buy at any time from anywhere, without travelling or queuing.
2. Wider choice of products, brands and sellers, including goods not available locally.
3. Price comparison and often lower prices because online sellers have lower costs.
4. Information and reviews by other buyers to help decisions.
5. Home delivery and easy returns within the seller's policy.
6. Digital payments: cards, net banking, UPI and wallets, and cash on delivery in many cases.
7. For investors (e-trade): quick orders at live market prices, lower brokerage, transparency and access to holdings and statements at any time.

Merits for sellers.
1. A wider market, all over the country or abroad.
2. Lower costs: less spending on shop rent, display and sales staff.
3. Open 24 x 7.
4. Low entry barriers: small businesses and artisans can start with little capital.
5. Customer data and feedback, and targeted offers.
6. Faster payments and less cash handling.
7. Easy, low-cost promotion by online advertising and social media.

Demerits for buyers. No physical inspection (size, colour or quality may differ from the picture); delivery problems and slow refunds; fraud and cyber crime (fake websites, phishing, card fraud, counterfeit goods); privacy risks from misused or leaked personal and payment data; impulse buying; dependence on internet access and digital skills (the digital divide); lack of personal touch and bargaining.
Demerits for sellers. Intense competition and price wars; platform commissions and delivery costs; a high rate of returns and fake orders; cyber attacks and technical failures.
Demerits for e-trade investors. Technical glitches or network failure at crucial moments; easy access may encourage risky speculation and losses; fraud through fake trading apps and tips.

Safe online trading. Buy from known, secure websites (address starting with https and a padlock) and verified sellers; read reviews, product details and the return and refund policy; never share OTPs, PINs or passwords and beware of phishing links; use secure payment methods and check bank statements; keep invoices and order confirmations; for e-trade use only registered brokers and official apps and do not act on unverified tips; report fraud promptly to the bank and the authorities.

Neighbouring topics: the meaning and types of e-commerce and how e-trade works are on the previous page of this chapter.

Merits and Demerits of Online Trading and Safe Online Trading Practices: key facts

Buyer merits: Convenience
wider choice
price comparison
reviews
home delivery
digital payments; 24 x 7.
Seller merits: Wider market
lower costs
24 x 7
low entry barriers
customer data; Small businesses benefit.
Demerits: No inspection
delivery problems
fraud
privacy risk
internet dependence; Also competition for sellers.
Safe trading: https and padlock
read the policy
never share OTP
secure payment
register broker for e-trade; Reduces, not removes, the risk.

Merits and Demerits of Online Trading and Safe Online Trading Practices in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Local shop versus online price

Suppose a pair of sports shoes costs Rs 2,400 in a local shop, while the online price is Rs 2,050 plus Rs 100 for delivery.

How much does the buyer save by buying online, and what risk should she weigh against it?

Try it first, then show the solutionSolution

Online total: 2,050 + 100 = Rs 2,150.
Saving: 2,400 - 2,150 = Rs 250.
Risk: she cannot try the shoes before buying and a wrong size means a return.

Answer: She saves Rs 250 but cannot try the shoes before buying.

Memory hook: Cheaper, but check before you pay.

Tricks to remember Merits and Demerits of Online Trading and Safe Online Trading Practices

Short memory aids. Say each one aloud once, then use it on a question the same day.

C-W-P-R
Convenience, Wider choice, Price comparison, Reviews: buyer merits.
Use it when: Merits.
N-D-F-P
No inspection, Delivery problems, Fraud, Privacy: buyer demerits.
Use it when: Demerits.
https and padlock
Look for https and the padlock before paying.
Use it when: Safe trading.

Merits and Demerits of Online Trading and Safe Online Trading Practices: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: A merit for sellers · 1 mark · MCQBoard level

Which is a merit of online trading for sellers?
(a) goods can be inspected before buying (b) a wider market at lower cost (c) no risk of fraud (d) no competition

Try it first, then show the solutionSolution

Sellers reach customers across the country with little spending on rent and staff.

Answer: (b) a wider market at lower cost

Example 2: Price comparison · 3 marks · Short answerHarder board level

A buyer finds headphones at Rs 1,800 in a local shop. Online they cost Rs 1,500 plus Rs 80 delivery. Find her saving and state one risk of buying online.

Try it first, then show the solutionSolution

Online cost = 1,500 + 80 = Rs 1,580. (1 mark)
Saving = 1,800 - 1,580 = Rs 220. (1 mark)
Risk: she cannot inspect or test the product, or the delivery may be delayed or fraudulent. (1 mark)

Answer: Rs 220 saved; the product cannot be inspected.

Example 3: Merits for a small artisan · 3 marks · Short answerHarder board level

Explain three merits of online trading for a small artisan who makes cloth bags at home.

Try it first, then show the solutionSolution

A nationwide market instead of only local buyers. (1 mark)
Little capital is needed because there is no shop rent or showroom. (1 mark)
Orders can come at any time, with digital payments and customer feedback for improving the product. (1 mark)

Answer: Wider market, low cost and 24 x 7 orders with feedback.

Example 4: Case study: a fraud · 4 marks · Case-basedHOTS / competency

Mira receives a message that she has won a voucher. It asks her to click a link and enter the OTP she will get on her phone. She enters it and Rs 9,000 is debited from her account.
(i) Name the demerit shown. (1)
(ii) State two mistakes made by her. (2)
(iii) What should she do now? (1)

Try it first, then show the solutionSolution

(i) Fraud and cyber crime (phishing).
(ii) She clicked a link from an unknown sender and shared the OTP.
(iii) Inform the bank and the authorities promptly and change passwords.

Answer: (i) fraud (phishing) (ii) clicking the link and sharing the OTP (iii) report to the bank and authorities

Example 5: Safe practices · 3 marks · Short answerHarder board level

Write three precautions to be taken while shopping online or trading in shares online.

Try it first, then show the solutionSolution

Use secure, known websites (https and padlock) and read the return policy. (1 mark)
Never share OTPs, PINs or passwords; check bank statements. (1 mark)
For e-trade use registered brokers and official apps and avoid unverified tips. (1 mark)

Answer: Use secure, known websites (https and padlock) and read the return policy; never share OTPs, PINs or passwords, and check bank statements; for e-trade use registered brokers and official apps and avoid unverified tips.

Where students lose marks in Merits and Demerits of Online Trading and Safe Online Trading Practices

The slips examiners see most often, and what to write instead.

Mistake: One-sided answers
Only merits or only demerits are written.
Wrong working
Online shopping is convenient
Right working
Convenient, but goods cannot be inspected and fraud is possible
Do this: Give both sides when asked to evaluate.
Usually costs: 1 mark
Mistake: No examples
The points are generic.
Wrong working
Wider choice
Right working
Wider choice: thousands of products in one place
Do this: Add a short explanation.
Usually costs: 1 mark
Mistake: Forgetting the seller's view
Only consumers are considered.
Wrong working
Merits for consumers only
Right working
Add wider market and lower cost for sellers
Do this: Cover both parties.
Usually costs: 1 mark

Exam tips

Write merits and demerits under the headings buyer and seller.
Use specific words: https, OTP, digital divide, phishing.
Show a small calculation to support price comparisons.
Do not name real companies in examples.

Practice questions on Merits and Demerits of Online Trading and Safe Online Trading Practices

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
One demerit of online shopping for a buyer is:
(a) home delivery (b) price comparison (c) no physical inspection of goods (d) wider choice
Hint
What cannot be done online?
Answer
(c) no physical inspection of goods
Q2 · 2 marks · Very short answerBoard level
State two merits of e-trade for an investor.
Hint
Think of speed and cost.
Answer
Quick orders at live market prices and lower brokerage; transparency and access to holdings and statements at any time (any two).
Q3 · 3 marks · Short answerHarder board level
A seller's online platform charges 8 per cent commission on sales of Rs 1,20,000 and delivery costs Rs 9,000. Find the total of these two costs and the share of sales they form.
Hint
Commission first.
Answer
Commission = 8 / 100 x 1,20,000 = Rs 9,600. Total = 9,600 + 9,000 = Rs 18,600. Share = 18,600 / 1,20,000 x 100 = 15.5 per cent.
Q4 · 3 marks · Short answerHarder board level
Explain the digital divide as a demerit of online trading.
Hint
Who is left out?
Answer
Online trading needs internet access and digital skills. People without them, such as some villagers or elderly persons, cannot benefit, so they are left out; this gap is called the digital divide.
Q5 · 3 marks · Short answerHOTS / competency
A friend gives you a "sure profit" tip on a trading app that is not registered. Advise him with reasons.
Hint
Think of risk and registration.
Answer
He should not act on unverified tips or use unregistered apps: they may be fake or lead to fraud, and easy access can encourage risky speculation. He should use only a registered broker's official app and make his own informed decisions.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Name two merits of online shopping.Show answer
Convenience and wider choice.
2.Name two demerits.Show answer
No physical inspection and risk of fraud.
3.What is phishing?Show answer
A fake message that tricks people into giving passwords or OTPs.
4.What should you never share?Show answer
OTPs, PINs and passwords.
5.What does https with a padlock indicate?Show answer
A secure website.
6.Whom should you report fraud to?Show answer
The bank and the authorities.

Merits and Demerits of Online Trading and Safe Online Trading Practices: frequently asked questions

Are online prices always lower?

Often, but delivery charges and risks should be considered.

Can a seller lose money online?

Yes, through returns, fake orders, commissions and price wars.

What is cash on delivery?

Payment made when the goods are delivered.