What is e-Commerce?
E-commerce, 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. E-commerce 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.
Advantages and disadvantages of e-commerce
The benefits of e-commerce include its around-the-clock availability, speed of access, the wide availability of goods and services for the consumer, easy accessibility, and international reach.
Aside from outages or scheduled maintenance, e-commerce sites are available 24×7, allowing visitors to browse and shop at any time. Brick-and-mortar businesses tend to open for a fixed number of hours and may even close entirely on certain days.
Speed of access.
While shoppers in a physical store can be slowed by crowds, e-commerce sites run quickly, which is determined by computing and bandwidth considerations on both consumer devices and e-commerce sites. Product pages and shopping cart pages load in a few seconds or less. An e-commerce transaction can comprise a few clicks and take less than five minutes.
Amazon’s first slogan was “Earth’s Biggest Bookstore.” They could make this claim because they were an e-commerce site and not a physical store that had to stock each book on its shelves. E-commerce enables brands to make a wide array of products available, which are then shipped from a warehouse after a purchase is made. Customers will likely have more success in finding what they want.
Customers shopping a physical store may have a hard time determining which aisle a particular product is in. In e-commerce, visitors can browse product category pages and use the site search feature the find the product immediately.
Brick-and-mortar businesses sell to customers who physically visit their stores. With e-commerce, businesses can sell to any customer who can access the web. E-commerce has the potential to extend a business’ customer base Lower costs.
Pure-play e-commerce businesses avoid the cost associated with physical stores, such as rent, inventory, and cashiers, although they may incur shipping and warehouse costs.
Personalization and product recommendations.
E-commerce sites can track visitors’ browse, search, and purchase history. They can use this data to present useful and personalized product recommendations and obtain valuable insights about target markets. Examples include the sections of Amazon product pages labeled “Frequently bought together” and “Customers who viewed this item also viewed.” The perceived disadvantages of e-commerce include sometimes limited customer service, consumers not being able to see or touch a product prior to purchase, and the wait time for product shipping.
Limited customer service.
If a customer has a question or issue in a physical store, he or she can see a clerk, cashier or store manager for help. In an e-commerce store, customer service may be limited: The site may only provide support during certain hours of the day, or a call to a customer service phone number may keep the customer on hold.
Not being able to touch or see.
While images on a webpage can provide a good sense about a product, it’s different from experiencing it “directly,” such as playing music on speakers, assessing the picture quality of television, or trying on a shirt or dress. E-commerce can lead consumers to receive products that differ from their expectations, which leads to returns. In some scenarios, the customer bears the burden of the cost of shipping the returned item to the retailer.
If a customer sees an item that he or she likes in a store, the customer pays for it and then goes home with it. With e-commerce, there is a wait time for the product to be shipped to the customer’s address. Although shipping windows are decreasing as next day delivery is now quite common, it’s not instantaneous.
Skilled hackers can create authentic-looking websites that claim to sell well-known products. Instead, the site sends customers forfeit or imitation versions of those products — or, simply collects customers’ credit card information. Legitimate e-commerce sites also carry risk, especially when customers store their credit card information with the retailer to make future purchases easier. If the retailer’s site is hacked, hackers may come into the possession of customers’ credit card information.
Types of e-Commerce Models
There are four main types of e-commerce models that can describe almost every transaction that takes place between consumers and businesses.
1. 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).
2. 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)
3. 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).
4. Consumer to Business (C2B):
When a consumer sells their own products or services to a business or organization (e.g. An influence offers exposure to their online audience in exchange for a fee, or a photographer licenses their photo for a business to use).
Here are the five reasons which e-Commerce is important:
1. Mobile Adaptivity
More and more web traffic is generated by smartphones and tablets, driving e-Commerce sales. All major brands ensure that their websites are mobile-adaptive—enhancing the customer experience—and more often than not they have native mobile apps to make shopping even easier. If your website is not mobile and tablet adaptive, you will definitely be losing millennial customers and the youth of Generation Z.
2. Omnichannel Retailing
E-Commerce has progressed beyond search engine optimization to other channels of marketing to and interacting with customers. Businesses interact with their customers through their websites, email, social media, and physical stores. This creates multiple channels of purchase, receipt, and exchange of goods, with a prevalence of shopper-friendly shipping and return policies. Customers can purchase online, pick their purchases up at a physical store, return any defective items online, and avail discount offers based on a certain number of referrals. This integrated online and physical experience drives more sales.
The accessibility of a store is out of the purchase equation now.E-Commerce promises 24/7 accessibility, 365 days a year, with no downtime for public holidays, closing times, bad weather conditions etc. Customers can shop as and when they like, from where they want, be it the comfort of their own bed.
4. Greater Range of Offerings
With incredibly low overheads like negligible utility bills, skeletal staff, and the ability to provide a product or service from any location to a worldwide customer base, e-Commerce dramatically reduces costs of operations. This allows businesses to transfer some of these onward to price-sensitive customers in the form of cheaper products with automatic replenishment since warehouses are no longer restricted to certain geographic locations.
5. Individualized Products and Services
More sophisticated algorithms allow companies to offer more personalized, customer eccentric recommendations. A far cry from recommendations based on typical buying habits and products purchased together, e-Commerce today allows businesses to give customer suggestions based on their individual preferences. These encourage customers to purchase items that appear completely necessary since they are so aligned with their personal preferences. Lower start-up costs allow more sellers to operate, targeting niche markets with highly customized options, selling more sizes, colors, personalized designs etc. than would be feasible to offer in a physical store.