Generally speaking, when we think of eCommerce, we think of a business transaction that takes place through the internet between a supplier and a customer. In eCommerce (electronic commerce), transactions take place over electronic networks, often the internet, where products and services can be exchanged or payments or data can be transferred.
ECommerce: How Does it Work?
The Internet is the driving force behind eCommerce, which allows people to shop for goods and services from the convenience of their own homes or offices.
The customer’s web browser will communicate back and forth with the server running the online store website when they place their order. After that, information about the order is sent to a central computer known as the order manager, which then relays it to databases used to track inventory levels, a merchant system used to track payment information (using applications such as PayPal), and a bank computer before returning to the order manager again. This is to ensure that there is enough stock in the shop and money in the customer’s account to fulfill the order. To tell the consumer that their order has been processed, the store’s web server will show a message after the order manager has confirmed it. In order for the product or service to be delivered to the client, the order manager must submit order data to the warehouse or fulfillment department. When a consumer orders a product or service, it is possible that it will be supplied to them or that they will have access to the service.
Online marketplaces like Amazon.com, software as a service (SaaS) solutions that allow consumers to ‘rent’ online store infrastructures, or open-source tools that businesses may employ in-house development to administer are all examples of eCommerce transaction platforms.
The Advantages of Having an Online Store
The primary benefit of eCommerce is its capacity to access a worldwide market without necessitating a significant financial commitment on the part of the seller. Consumers may make a worldwide decision, receive the required information, and evaluate offers from all possible suppliers, regardless of where they are located because the boundaries of this sort of business are not dictated by geography.
Due to the fact that it allows for direct engagement with the ultimate customer, eCommerce shortens the product distribution chain, and in certain cases, eliminates it entirely. A direct route is established between the manufacturer or service provider and the ultimate user, allowing them to offer products and services that are tailored to the specific tastes of the target market.
When suppliers are closer to their consumers, productivity and competitiveness for businesses grow; as a result, the consumer benefits from an improvement in quality service. Consumers now have access to virtual storefronts that are open 24 hours a day, seven days a week, thanks to these new forms of electronic commerce.
Another extremely major advantage of electronic commerce is the reduction in costs, which is typically connected with it. Generally speaking, when it comes to custom eCommerce website development, the more simple a business process is, the more likely it is to be successful. This results in a large decrease in transaction costs, and therefore of the prices offered to clients.
Disadvantages of Having an Online Store
The following are the most significant drawbacks linked with online shopping:
- Dependence on information and communication technology (ICT) is high
- Nationally and globally, there is a dearth of law that appropriately controls the emerging eCommerce operations
- The market culture frowns upon electronic commerce (since clients cannot physically touch or sample the items)
- The loss of privacy for users, as well as the loss of cultural and economic identity for areas and nations
- When it comes to doing online commercial transactions, there is a lack of security
Types of eCommerce
With eCommerce getting increasingly more present on the Internet, there has been a need to categorize it. eCommerce is simply divided into six categories, as follows:
- Business-to-Business transactions (B2B)
- Business-to-Consumer marketing (B2C)
- Consumer-to-Consumer transactions (C2C)
- Consumer-to-Business transactions (C2B).
- Business-to-Administration communication (B2A)
- Consumer-to-Administration communication (C2A)
We will look into some of the features of each of these categories down below.
1. Business-to-Business (B2B)
Business-to-business (B2B) eCommerce refers to all electronic transactions involving the purchase or sale of products or services between two or more businesses. Producers and conventional commerce wholesalers are the most common types of businesses that engage in this sort of electronic commerce.
2. Business-to-Consumer (B2C)
The formation of electronic commercial interactions between firms and ultimate customers distinguishes the Business-to-Consumer kind of eCommerce from other types of eCommerce. It refers to the retail portion of eCommerce, which is where conventional retail trade is typically carried out in the traditional manner.
These sorts of relationships can be more convenient and lively, but they can also be more sporadic. In recent years, as a result of the Internet’s widespread use, this type of commerce has grown significantly, and there are now numerous virtual stores and malls on the Internet that sell a wide range of consumer goods such as computers and software, books, and shoes, automobiles, food and financial products as well as digital publications, among other things.
The consumer typically has more information available in terms of content when compared to purchasing retail in traditional commerce. There is also a widespread belief that you will be able to purchase for less money while still receiving the same level of personalized customer service and having your order processed and delivered quickly.
3. Consumer-to-Consumer marketing (C2C)
Consumer-to-Consumer (C2C) eCommerce refers to any electronic transaction involving the purchase or sale of products or services between two or more customers. In most cases, these transactions are carried out through a third party that offers the web platform on which the transactions are carried out in their entirety.
4. Consumer-to-Business (C2B)
The typical concept of transferring products is completely flipped in the case of business-to-business transactions. When it comes to crowdsourcing-based ventures, this form of eCommerce is fairly widespread. There are a great number of individuals who make their services or products accessible for purchase by businesses who are specifically looking for these kinds of services or items.
Typical examples of such tactics include websites where designers submit multiple designs for a corporate logo, just one of which is picked and essentially purchased. iStockphoto, for example, is a marketplace where royalty-free photographs, images, media, and design elements are available for purchase.
5. Business-to-Administration (B2A)
It is included in this category of eCommerce since it includes all transactions that take place online between businesses and administration. The scope of this sector is broad and includes a wide range of services, notably in areas such as fiscal administration, social security administration, employment administration, legal papers and registries, and so on. These sorts of services have seen a significant expansion in recent years as a result of investments in electronic governance.
6. Consumer-to-Administration (C2A)
When it comes to electronic transactions, the Consumer-to-Administration model includes all transactions that take place between individuals and government agencies.
Travis Dillard is a business consultant and an organizational psychologist based in Arlington, Texas. Passionate about marketing, social networks, and business in general. In his spare time, he writes a lot about new business strategies and digital marketing for Find DigitalAgency.