E-commerce (or electronic commerce) is about the buying and selling of goods and services via the internet and the electronic transfers needed to perform these transactions, such as money and data. E-commerce has enabled businesses to surpass barriers that have previously held them back, including geography and time, and has helped to connect the retail industry on a global scale.
e-commerce as a concept and a practical retail solution has helped countless struggling businesses turn their fortunes around and transform their otherwise failing business prospects. Moreover, companies like Amazon, eBay and Etsy would not have been born were it not for the advent of the global e-commerce industry and consumer over the last few decades.
How Does E-Commerce Work?
E-commerce can work much like physical, traditional offline retail. There are typically three major components to e-commerce businesses, the first of which is receiving orders. Customers will place their order for something via an online platform usually a website, with the seller recording details of the order.
Then, the details of the order are processed by the seller and once completed, the goods or service are prepared for delivery. The final major step is the delivery process itself, where the goods or services of the order are dispatched to the customer.
Generally speaking, e-commerce will include many of the same practices involved in offline retail; a transaction whereby customers purchase goods or services from a seller, however online stores can enable customers to make purchases from anywhere in the world at any time of the day. E-commerce has transcended the convenience of the local corner shop, and revolutionised the way many of us shop today.
Whilst the online purchase of a physical product is one of the more popular examples of e-commerce, the word can be used to describe any commercial transaction that is made via the internet.
Types of E-Commerce Businesses
Since its creation, e-commerce, both in practice and as a concept has evolved into various different models, making retail more easily accessible whilst providing the perfect environment for businesses small and large to flourish. Some of the main types of e-commerce transactions include:
B2B business (business-to-business) – Referring to all electronic transactions involved in buying and selling goods and services made between two businesses.
C2C business (consumer-to-consumer) – Involving the electronic transactions taking place between two consumers. For example, a consumer purchasing something off Craigslist from another consumer.
B2C business (business-to-consumer) – One of the most common examples of e-commerce, referring to the process of buying and selling goods and services electronically from the business to the consumer.
C2B business (consumer-to-business) – Unlike B2C, with C2B e-commerce, consumers offer their products and/or services to businesses via an electronic transaction.
Scaling E-Commerce Businesses
E-commerce has enabled businesses of all types to sell at a scale impossible with offline, traditional tactics alone. It has also helped customers to discover and access new products and services like never before. The nature of the transactions themselves can also be quite dynamic. One of the most common types of transactions is general retail, involving the sale of a particular product from a business to a customer without any type of middleman.
Crowdfunding is another type of transaction that can take place in e-commerce environments. These types of transactions involves collecting money and raising enough funding for a product to be released.
Wholesale transactions can also occur through e-commerce. This type of transaction is typically a business selling products in bulk to another business/retailer. This retailer will then sell the products to consumers. Wholesale transactions can typically occur with B2B relationships.
Advantages of an E-Commerce Business
One of the greatest advantages of e-commerce is the flexibility it can provide businesses with, enabling them to reach a whole host of different customers without being limited by geography or time. Many people now make a considerable income running an internet business from home, managing their company quite literally with the click of a mouse.
E-commerce can also help a business to attract more customers. A lot of online retail is driven by traffic coming in from search engines. Customers searching for a particular product may stumble upon a business they would have otherwise never have known about if it weren’t for the likes of Google.
As well as driving traffic in, e-commerce businesses can also gain useful insights into their target market, and whether there are certain types of customers they should try to be appealing to more in order to boost interest and sales.
Another advantage is that businesses can become more cost-effective with e-commerce. Through such benefits as automated check-outs and no physical store to maintain, online businesses can lower the costs that typically come with running brick and mortar shops, such as paying for a physical store, the upkeep, and the wages of the employees to help run it.