What is E-commerce? Defined, Types, History, and Examples

Electronic commerce (E-commerce) is the trade in labor and products, or the transmission of assets or information, through an electronic organization, essentially the Web. These business transactions occur as business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer, or consumer-to-business

Table of Contents

• What Is E-commerce?
• How does e-commerce work?
• History
• Pros and Cons
• Types
• e-commerce applications
• E-commerce providers and platforms
• Examples
• How to start an eCommerce business?
• The Bottom Line

What is Electronic Commerce (E-commerce)?

The terms electronic commerce (E-commerce) are often used interchangeably. The term e-tail is also used from time to time in connection with the conditional cycles that make up Internet-based retail shopping.

Over the past few years, the wide-ranging use of web-based trading stages, for example Amazon and eBay, has added up to significant development in web-based retail.. In 2011, e-commerce accounted for 5% of total retail sales, according to the US Census Bureau. By 2020, with the onset of the COVID-19 pandemic, it had risen to more than 16% of sales… retailers.

KEY RESULTS

How does e-commerce work?

E-commerce is powered by the Internet. Customers access an online store to search for and order products or services through their own devices.

As the request is configured, the client’s Internet browser will communicate with the server that facilitates the online business site. Information related to the application will be communicated to a focal PC known as the application supervisor. Then, at that time, it will be sent to the data sets that monitor stock levels; a merchant framework that bypasses fee data, using apps like PayPal; and a bank pc. Finally, you will return to the order manager. This is to ensure that store inventory and customer funds are sufficient for the order to be processed.

After validating the order, the order manager will notify the store’s web server. It will display a message notifying the customer that their order has been successfully processed. The order administrator will then send the order data to the warehouse or fulfillment department, informing them that the product or service can be shipped to the customer. At this time, important or computer items may be sent to a client, or admission to a service may be granted.

Platforms that host e-commerce transactions include online marketplaces that sellers sign up with, such as Amazon; software as a service (SaaS) tools that allow customers to “rent” the infrastructure of the online store; or open source tools that companies manage with their own developers.

History of e-commerce

Electronic commerce began during the 1960s, when organizations began using EDI to deliver business reports to different organizations. In 1979, the American Organization for Public Principles created ASC X12 as a general standard for organizations to share records through electronic organizations.
After the number of individual users sharing electronic documents increased in the 1980s, the rise of eBay and Amazon in the 1990s revolutionized the e-commerce industry. Consumers can now purchase many items online, only from e-commerce providers, also called e-retailers, and brick-and-mortar stores that have e-commerce capabilities. Presently practically all retail organizations are incorporating on the web strategic approaches into their plans of action.

The 2020 Coronavirus pandemic made web based business increment essentially. With customers bound to their homes for a drawn out period, web based business leaped to a record 16.4% in the second quarter of 2020, as per the US market. Census Bureau.

The Census Bureau has tracked quarterly e-commerce data since 1999.

Advantages and disadvantages of electronic commerce.

1. Advantages of e-commerce

The advantages of Electronic commerce include its 24-hour availability, speed of access, wide availability of goods and services, easy accessibility, and international reach.

Availability

Aside from outages and scheduled maintenance, eCommerce sites are available 24/7, allowing visitors to browse and shop at any time. Brick-and-mortar businesses tend to be open for a set number of hours and may even close completely on certain days.

Access speed

While crowds can slow down shoppers in a physical store, eCommerce sites run quickly, which is determined by computing and bandwidth considerations on both the consumer device and the eCommerce site. Item pages and shopping carts load in no time or less. An online trading exchange can include just a couple of snapshots and take less than five minutes.

Wide availability

Amazon’s first slogan was “The World’s Best Bookstore.” It could make this claim because it was an e-commerce site and not a physical store that had to stock all the books on its shelves. Internet business allows brands to make many items accessible, which are then delivered from a warehouse or multiple distribution centers after a purchase is made. Customers are likely to be more successful in finding what they are looking for.

Easy accessibility

Customers shopping in a physical store may have difficulty locating a particular product. Website visitors can browse product category pages in real time and use the site’s search function to find the product immediately.

International reach

Real organizations offer customers who actually visit their stores. With Internet businesses, organizations can offer to any individual who can access the web. Online businesses can possibly expand an organization’s customer base.

Lower cost

Pure e-commerce businesses avoid the costs of operating physical stores, such as rent, inventory, and cashiers. However, they may incur shipping and storage costs.

Personalization and product recommendations

E-commerce sites may track a visitor’s browsing, search, and purchase history. They can use this data to present personalized product recommendations and gain insights into target markets. Examples include sections of Amazon product pages labeled “Frequently bought together” and “Customers who viewed this item also viewed.”

Pros

• Owners can generate income semi-passively
• Consumers can easily search for specific products
• Greater acquisition potential as there are no impediments in the actual area as long as you can deliver there
  Reduced costs assuming digital presence costs less than construction, insurance, taxes and repairs.
• Increased marketing control, including customer data mining, targeted ads, and pop-up placement

2. Disadvantages of e-commerce

Perceived disadvantages of e-commerce include sometimes limited customer service, consumers being unable to see or touch a product before purchasing it, and the wait time for product shipping.

Limited customer support

If customers have a question or problem in a brick-and-mortar store, they can ask the store clerk, cashier, or manager for help. In a web-based merchant store, customer support may be restricted: the web page may only offer help during specific hours, and its web-based help options may be difficult to navigate or fail to respond to a particular query .

Information of restricted elements

Seeing images on a page can give you a smart idea about an item, but it’s not the same as finding the item directly, like playing a guitar, assessing the nature of a TV image, or stabbing a shirt or dress. Internet business customers may end up purchasing items that disagree with their assumptions and must be returned. In some cases, the customer must pay to ship a returned item to the retailer. Augmented reality technology is expected to improve customers’ ability to navigate and try e-commerce products.
Wait time. In a store, customers pay for a product and go home with it. With online business, customers have to trust that the item will be shipped to them. Although shipping windows are shrinking as overnight and even same-day delivery becomes common, it is not instantaneous.

Security

Talented programmers can create attractive sites that allow you to sell remarkable items. Ultimately, the site sends customers misrepresentations or imitations of those items, or simply grabs credit card details. Authentic online places of business also provide opportunities, especially when customers store their Mastercard details with the retailer to work with future purchases. If the retailer’s site is hacked, threat actors can steal credit card information. A data breach can also damage a retailer’s reputation.

Cons

• Limited customer service opportunities as there are few or no face-to-face opportunities
• You need in-the-moment satisfaction as customers need to have faith in an item before seeing it face to face
  Products cannot be seen or handled until they are delivered (cannot be tried before buying)
• Loss of revenue or income when websites go down
• High reliability in shipping restrictions
• Increased competition due to lower barriers to entry and higher customer potential

Types of Electronic commerce

• Business-to-business (B2B) electronic commerce refers to the electronic exchange of products, services, or information between businesses rather than between businesses and consumers The models incorporate Internet-based registries and commodity and supply commerce sites that allow organizations to search for products, services, and information and initiate exchanges through electronic purchasing interaction points. A Forrester report distributed in 2018 anticipated that by 2023, online B2B business will reach $1.8 trillion and reach a record 17% of US B2B exchanges.

• Business-to-consumer (B2C) is the retail part of electronic commerce on the Internet. It is when companies sell products, services or information directly to consumers. The term was popular during the dotcom boom of the late 1990s, when online retailers and merchandise sellers were a novelty. Today, there are countless virtual stores and shopping centers on the Internet that sell all kinds of consumer goods. Amazon is the most recognized example of these sites. Dominate the B2C market.
• Consumer-to-consumer (C2C) is a type of electronic commerce in which consumers exchange products, services, and information with each other online. These transactions are usually made through a third party that provides an online platform on which the transactions are made. Massive online sales and featured promotions are two instances of the C2C stages. EBay and Craigslist are two notable examples of these stages. Since eBay is a business, this type of internet business could probably be called C2B2C: Shopper to Business to Customer. Places like Facebook Mall and Depop, a design exchange arena, also allow C2C exchanges.
• Consumer-to-business (C2B) is a type of electronic commerce in which consumers make their products and services available online for businesses to bid on and buy. This is the opposite of the traditional B2C commerce model. A popular example of a C2B platform is a marketplace that sells royalty-free photos, images, media, and design elements, such as iStock. Another example would be a job board.
• Business-to-administration (B2A) refers to transactions carried out online between companies and public administration or government agencies. Many branches of government rely on various types of electronic services or products. These products and services often refer to legal documents, records, social security, tax data, and employment. Companies can supply them electronically. B2A administrations have filled up significantly of late as projects in e-government capabilities have been realized.
• Consumer to Government (C2A) refers to transactions made online between consumers and public administration or government agencies. The government rarely buys products or services from people, but people frequently use electronic media in the following areas:

Social Security. Distribute information and make payments.

taxes. File tax returns and make payments.

Health. Schedule appointments, provide test results and information on health conditions, and make payments for health services.

Mobile e-commerce (m-commerce) refers to online sales transactions using mobile devices, such as smartphones and tablets. Includes mobile shopping, banking and payments. Mobile chatbots facilitate mobile commerce, allowing consumers to complete transactions through voice or text conversations.

E-commerce applications

Many Internet retail business applications use web-based advertising strategies to get customers to use the stage. These include email, online indexes and shopping carts, electronic data transactions (EDI), document transfer conventions, web services, and portable applications.

These methodologies are used in B2C and B2B exercises, as well as different types of effort.. They include sending targeted email advertisements and electronic newsletters to subscribers and sending SMS text messages to mobile devices. Sending unsolicited emails and text messages is generally considered spam. More companies are now trying to attract consumers online, using tools like digital coupons, social media marketing, and targeted ads.

Another area of ​​focus for e-commerce companies is security. Developers and administrators should consider consumer data privacy and security, regulatory compliance mandates related to data control, personally identifiable information privacy rules, and data protection protocols when developing systems and e-commerce applications. Some security features are added during an application’s design, while others must be continually updated to address evolving threats and new vulnerabilities.

E-commerce providers and platforms

An ecommerce platform is a tool used to run an ecommerce business. Ecommerce platform options range in size from small to large enterprises. These eCommerce platforms include online marketplaces like Amazon and eBay, which simply require signing up for user accounts and little to no IT implementation.

Another ecommerce platform model is SaaS, where store owners sign up for a service where they essentially rent space on a cloud-hosted service. This approach does not require internal development or local infrastructure. Other eCommerce platforms include open source platforms that require a hosting environment (cloud or on-premises) or full manual implementation and maintenance.
Some examples of eCommerce marketplace platforms include the following:

• alibaba
• Amazon
• difficult
• ebay
• etsy
• cram
• new egg
• Rakuten
• walmart market
• fair path

Providers that offer e-commerce platform services for customers who host their own online store sites include the following:

• big trade
• ecwid
• Magento
• Oracle Net Suite Commerce
• Salesforce Commerce Cloud (B2B and B2C options)
• Shopify
• square space
• WooCommerce

E-commerce example

Amazon is a giant in the eCommerce space. In fact, it is the largest online retailer in the world and it continues to grow. As such, it is a huge disruptor in the retail industry, forcing some major retailers to rethink their strategies and change their approach.

The organization launched its business with a web-based business model of online deals and item delivery. It was established by Jeff Bezos in 1994 as a web-based bookstore, however it has since expanded to incorporate everything from clothing to housewares, appliances, food and snacks, and hardware.

The company’s businesses expanded 9% in 2022 over the prior year, adding $513.98 billion compared to $469.82 billion in 2021. Amazon’s operating income fell from $24.88 billion in 2021 to $12.25 billion in 2022. The company posted a net loss of $2.72 billion in 2022, compared to a net income of $33.36 billion in 2021.

How to start an eCommerce business?

Be sure to do your research before starting your business. Find out what products and services you are going to sell and analyze the market, the target audience, the competition and the expected costs.

Then think of a name, choose a business structure, and obtain the necessary documentation (tax numbers, licenses and permits, if applicable).

Before you start selling, choose a platform and design your website (or have someone do it for you).
Remember to keep everything simple at first and make sure you use as many channels as you can to market your business so it can grow.

The bottom line

E-commerce is only one part of running an e-business. While the latter involves the entire process of running an online business, e-commerce simply refers to the sale of goods and services over the E-commerce organizations like Amazon, Alibaba, and eBay have radically changed the way the retail business works, forcing significant brick-and-mortar retailers to influence the way they do business.

If you’re considering starting an eCommerce site, be sure to do your research before you begin. And be sure to start with a small, narrow approach to ensure you have room to grow.