Electronic Commerce Explained
Electronic commerce (e-commerce) is a business strategy that allows consumers and businesses to buy and sell goods and services over the Internet. E-commerce can be done on computers, tablets, smartphones, and other smart devices, and it operates in four key market categories. E-commerce transactions can be used to buy almost any commodity or service imaginable, including books, music, airplane tickets, and financial services like stock investing and online banking. As a result, it is regarded as a highly disruptive technology.
Understanding E-Commerce
E-commerce, as previously stated, is the practice of purchasing and selling actual goods and services over the internet. It entails the exchange of data or currency between multiple parties to complete a transaction. It’s part of the larger electronic business (e-business) industry, which encompasses all of the operations required to run a business online.
By providing cheaper and more effective distribution channels for their products or services, e-commerce has allowed firms (especially those with a limited reach, such as small businesses) to obtain access to and build a bigger market presence. Target (TGT) has expanded its online store, allowing customers to buy everything from apparel and coffeemakers to toothpaste and action figures from the comfort of their own homes.
It is not as simple as it may appear to provide goods and services. It necessitates extensive study about the products and services you desire to sell, as well as the market, target audience, competitors, and anticipated company costs.
After that, you’ll need to choose a name and establish a legal structure, such as a company. Create an e-commerce website with a payment gateway next. For example, a dress store owner can create a website to promote their clothing and other relevant products online and allow clients to pay with a credit card or through a payment processing service such as PayPal.
History of E-Commerce
We’ve all done some e-commerce at some point in our lives; thus, we’re all in the e-commerce club. As a result, it’s safe to assume that e-commerce is pervasive. E-commerce, on the other hand, has a long and rich history that predates the internet.
The Electronic Data Interchange (EDI) was first used in the 1960s to enable the transfer of documents between enterprises. However, it wasn’t until 1994 that the first transaction was completed. NetMarket was used to facilitate the selling of a CD between two acquaintances.
Since then, the industry has undergone a significant transformation. As companies like Alibaba, Amazon, eBay, and Etsy became household names, brick-and-mortar retailers were pushed to embrace new technology to stay viable. A virtual marketplace for goods and services has been formed by these companies for easy access by consumers.
People’s online buying experience is getting better and better with the help of new technology. Mobile devices, such as smartphones and tablets, as well as apps, allow customers to interact with businesses and make transactions. As a result of the provision of free shipping, the e-commerce industry’s appeal has increased.
Types of E-Commerce
As business evolves, so does the way it is done. Traditional e-commerce models include the following:
1. Business to Consumer (B2C) E-Commerce
The sale is between a business and a consumer, such as when you buy a rug from an internet store.
2. Business to Business (B2B) E-Commerce
This refers to a business selling a product or service to another business, such as a manufacturer and wholesaler, or a wholesaler and retailer. For example, things like raw materials, software, or products that are integrated are commonly sold to businesses in B2B e-commerce. B2B e-commerce allows manufacturers to sell directly to merchants.
3. Direct to Consumer (D2C) E-Commerce
If you’re interested in direct-to-consumer (D2C), you’ll need to keep an eye on the latest developments in this area. When a brand sells direct to the consumer (D2C), it means it does not go via a middleman like a retailer, distributor, or wholesaler. For direct-to-consumer sales, subscriptions are a popular D2C item, and social selling platforms such as Instagram and Pinterest are also popular.
4. Consumer to Consumer (C2C) E-Commerce
In C2C e-commerce, a product or service is sold directly to another consumer. On platforms like eBay, Etsy, and Fiverr, consumers may buy and sell directly to each other.
5. Consumer to Business (C2B) E-Commerce
When individuals sell their services or products to a business, this is known as “consumer-to-business” (C2B). C2B covers influencers, photographers, consultants, freelance writers, and other service providers who offer exposure.
E-Commerce: Pros and Cons
Pros of E-Commerce
Convenience
It’s convenient because e-commerce can take place at any time of the day or night.
Wide Range of Choice
As a result, many retailers now offer more things online than they do in storefronts. In addition, many online-only stores may have exclusive goods that are not accessible anywhere else.
Cons of E-Commerce
There are, however, some limitations to e-commerce websites. There are a few drawbacks, such as:
Limited Customer Service
You can’t ask an agent to demonstrate features in person when you buy a computer online. Although some websites allow you to communicate with a member of the staff via live chat; nevertheless, this is not the norm.
Delays
When you buy something online, you have to wait for it to arrive at your home or workplace. For some products, e-tailers like Amazon offer same-day delivery as a premium option, making the wait a little less agonizing.
Consumers Are Unable to Touch Products
E-commerce transactions might be unsatisfactory if the things acquired don’t match consumer expectations because online photos don’t always tell the complete story about an item. An example of this is a piece of clothing that appears to be made of a higher quality fabric than it is.
E-Commerce Example
Amazon dominates the e-commerce market. It is, in fact, the world’s largest online retailer, and it’s only getting bigger. Since it is a large disruptor in the retail industry, some major merchants have been forced to rethink their strategy and refocus.
An e-commerce-based model of online sales and delivery was used to begin the company’s business. When Jeff Bezos started the online bookshop in 1994, he didn’t expect it to become so much more than a place to buy books online.
Besides shopping, the corporation now offers cloud storage, movie and music streaming services, and electrical devices of all kinds (such as Alexa, the personal assistant, and its Fire TV digital media player).
Final Thoughts
Running an e-business is not a one-size-fits-all endeavor. E-commerce, as opposed to e-business, refers to the act of doing business through the internet, whereas e-commerce refers to the sale of goods and services. Ecommerce giants like Amazon, Alibaba, and eBay have reshaped the retail landscape, putting pressure on the industry’s traditional giants to adapt their business models.
If you’re thinking of launching an e-commerce site, do your homework first. Start small and narrow your focus to give yourself room to expand.