Ecommerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet.
Whereas e-business refers to all aspects of operating an online business, e-commerce refers specifically to the transaction of goods and services.
EXAMPLES OF E-COMMERCE
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Retail | Wholesale | |
The sale of a product by a business directly to a customer without any intermediary. | The sale of products in bulk, often to a retailer that then sells them directly to consumers. | |
Dropshipping | Crowdfunding | |
The sale of a product, which is manufactured and shipped to the consumer by a third party. | The collection of money from consumers in advance of a product being available in order to raise the startup capital necessary to bring it to market. | |
Subscription | Digital products | |
The automatic recurring purchase of a product or service on a regular basis until the subscriber chooses to cancel. | Downloadable digital goods, templates, and courses, or media that must be purchased for consumption or licensed for use. | |
Physical Products | Services | |
Any tangible good that requires inventory to be replenished and orders to be physically shipped to customers as sales are made. | A skill or set of skills provided in exchange for compensation. The service provider’s time can be purchased for a fee. |
BENEFITS OF E-COMMERCE SYSTEM
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Gain New Customers with Search Engine Visibility |
Physical retail is driven by branding and relationships. In addition to these two drivers, online retail is also driven by traffic from search engines. It is not unusual for customers to follow a link in search engine results and land on an e-commerce website that they have never heard of. This additional source of traffic can be the tipping point for some e-commerce businesses. |
Overcome Geographical Limitations |
If you have a physical store, you are limited by the geographical area that you can service. With an e-commerce website, the whole world is your playground. Additionally, the advent of m-commerce i.e, e-commerce on mobile devices, has dissolved every remaining limitation of geography. |
Lower Costs |
One of the most tangible positives of e-commerce is the lowered cost. A part of these lowered costs could be passed on to customers in the form of discounted prices. Here are some of the ways that costs can be reduced with e-commerce:
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Locate the Product Quicker |
It is no longer about pushing a shopping cart to the correct aisle or scouting for the desired product. On an e-commerce website, customers can click through intuitive navigation or use a search box to narrow down their product search immediately. Some websites remember customer preferences and shopping lists to facilitate repeat purchases. |
Eliminate Travel Time and Cost |
It is not unusual for customers to travel long distances to reach their preferred physical store. E-commerce allows them to visit the same store virtually, with just a few mouse clicks. |
Provide Comparison Shopping |
E-commerce facilitates comparison shopping. There are several online services that allow customers to browse multiple e-commerce merchants and find the best prices. |
Enable Deals, Bargains, Coupons, and Group Buying |
Though there are physical equivalents to deals, bargains, coupons, and group buying, online shopping makes it much more convenient. For instance, if a customer has a deep discount coupon for turkey at one physical store and toilet paper at another, she may find it infeasible to avail of both discounts. But the customer could do that online with a few mouse-clicks. |
Provide Abundant Information |
There are limitations to the amount of information that can be displayed in a physical store. It is difficult to equip employees to respond to customers who require information across product lines. E-commerce websites can make additional information easily available to customers. Most of this information is provided by vendors and does not cost anything to create or maintain. |
Create Targeted Communication |
Using the information that a customer provides in the registration form, and by placing cookies on the customer's computer, an e-commerce merchant can access a lot of information about its customers. It, in turn, can be used to communicate relevant messages. An example: If you are searching for a certain product on Amazon.com, you will automatically be shown listings of other similar products. Also, Amazon.com may email you about related products. |
Remain Open All the Time |
Store timings are now 24/7/365. E-commerce websites can run all the time. From the merchant's point of view, this increases the number of orders they receive. From the customer's point of view, an "always open" store is more convenient. |
Create Markets for Niche Products |
Buyers and sellers of niche products can find it difficult to locate each other in the physical world. Online, it is only a matter of the customer searching for the product in a search engine. One example could be the purchase of obsolete parts. Instead of trashing older equipment for lack of spares, today we can locate parts online with great ease. |
TYPES OF E-COMMERCE MODELS
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There are four main types of e-commerce models that can describe almost every transaction that takes place between consumers and businesses. |
Business to Consumer (B2C) |
When a business sells a good or service to an individual consumer (e.g. You buy a pair of shoes from an online retailer). |
Business to Business (B2B) |
When a business sells a good or service to another business (e.g. A business sells software-as-a-service for other businesses to use). |
Consumer to Consumer (C2C) |
When a consumer sells a good or service to another consumer (e.g. You sell your old furniture on eBay to another consumer). |
Consumer to Business (C2B) |
When a consumer sells their own products or services to a business or organization (e.g. An influencer offers exposure to their online audience in exchange for a fee, or a photographer licenses their photo for a business to use). |