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What is E-commerce?
E-commerce, or electronic commerce unabbreviated, is the process of online shopping.
It’s that simple.
If that’s all the information you wanted, we are glad to be of help and we wish you well.
Otherwise, you probably found this answer a little flippant.
If that is the case, we do apologise as we were trying to highlight the difficulty in answering.
It is not entirely our fault, as the question itself is ambiguous. It is open to interpretation and answers depend on where you stand in the marketplace- if at all?
E-commerce means different things to different groups.
If you want a more profound and meaningful explanation such as, “What does e-commerce mean to you?”, we will attempt to explain in this article.
In the literal sense, for those just getting started and who don’t know what e-commerce is: E-commerce is the practice of buying and selling products or services commercially and electronically through the internet.
An analogy may assist your understanding;
Search engines are like ‘the bricks and mortar’ for online selling; the hub.
While E-commerce is the ‘shopping mall’ where trading takes place.
Domain names are the shop signs (taking this parallel further), and web design is the layout for the shop.
A ‘supply chain’ is formed to stock the shop.
The supply chain is between the manufacturer or distributor, retail and trade customers, or purely business to business.
Knowing the history of e-commerce assists in the relationship to an e-commerce activity.
History of E-commerce
As early as the 1970’s, business to business (or B2B), transactions were being carried out electronically.
Credit for the concept of e-commerce in a recognised form goes to an English inventor and entrepreneur named Michael Aldrich.
While walking with his wife and dog, Aldrich bemoaned their long-distance shopping experience and came up with a creative solution.
He connected a modified domestic tv set to a transaction processing computer at a shop he often used, and linked it to a telephone line.
This ‘long distance telephone shopping’ is in effect what we now know as e-commerce.
In 1990, another English inventor, Tim Berners Lee, created the web browser known as the ‘World-wide-web’, or ‘www’.
This invention facilitated retail trading throughout the world, the most successful of which is undoubted ‘Amazon.com’.
‘Amazon’ is created (Who founded ‘Amazon’)
By 1994, an American entrepreneur, Jeff Bezos, was already establishing himself as a book salesman from his garage in Seattle, Washington.
His business was growing so exponentially that he feared he wouldn’t cope with the number of sales he was achieving.
Being in the right place at precisely the right time concerning the concept of e-commerce, Bezos had the forethought to utilise the web as a place for transactions.
His use of e-commerce generated massive profits making Amazon.com today one of the world’s largest online retailers.
(If Amazon’s turnover interests you, take a real-time look here.)
E-Commerce Success Stories
The opportunity to succeed is still as relevant today as when the world wide web began.
Success stories are constantly published about entrepreneurs who find a niche with their e-commerce websites.
All you need is a great business idea, professional support, possibly an adaptive mindset, and a smattering of luck!
What type of E-commerce business set up is right for you?
Types of E-commerce
E-commerce falls into six main categories for business transactions.
What you sell online determines into which type of electronic commerce category that you fit.
In some cases, your online business may fit into more than one category as you deal with many sources.
1) Business to consumer, (or B2C as abbreviated online).
This sort of e-commerce ranges from one person doing business through an online auctions site or online store, to as complicated as ‘Amazon’ with hundreds of thousands of consumers per day.
If you’re just starting out (or even if you are open to change), choose your domain name wisely.
Make it relevant to your industry and easy to spell and remember.
A lot of revenue is lost because companies feel they have a good domain name, but that is in fact, forgettable.
Unless you can build your website cheaply, there is little point in wasting money on outsourcing website design.
It is not cost effective for a tiny business online with low turnover.
As turnover grows, most businesses find the need for their selling platform to have product or service specific web design, and inventory management software.
When you have reached a point where you cannot organise manually, good Inventory management software is one of the ‘must have’ business tools for any company wishing to expand.
It is vitally important to understand your profit and loss accounts at this juncture, as some companies misread their turnover!
You may feel your company is doing much better than it is; this is when this type of stock control software comes into its own.
Once turnover reaches a particular crisis point (which alters from business to business), supply chain management is paramount.
When to expect shipments, how much is arriving and how much is going out, only just touch the surface of some of the tasks performed within supply chain management and stock control software.
One of the most common downfalls of new business is overselling products.
Understanding when that transitional phase has arrived becomes crucial to success or failure.
If you are not up to date with your stock, you will disappoint your consumers and receive negative reviews, which in turn will harm your business. There are few great business tools out there that help prevent this.
Use Social Media to your advantage
If starting out, make a habit of taking advantage of selling through social media.
Free or competitively priced online advertising and social networking should already be in your business plans.
Social media helps promote your business name, and in turn, gives you useful feedback from consumer reviews of your sales -and that of your competitors.
Be Security Aware
Online retailers need to provide secure methods of payment for their product or service.
Get professional advice on security threats through hacking or scamming on your website.
Consider credit card facilities or other methods of online payment such as ‘Paypal’, ‘Sagepay’ or ‘Worldpay’.
Simple payment methods are also always advisable as If a consumer finds it difficult to pay, they will look elsewhere.
Organise Payments efficiently through a payment gateway incorporated into Inventory management software.
A payment gateway is a secure merchanting service that helps provide the consumer with a purchasing system.
2) Business to Business -B2B.
As familiar as B2C, business to business transactions take place on the net millions of times a day throughout the world.
Generally, one company supplies stock or services to another, who in turn, sell to consumers as retail sales, (B2C).
Where B2B tends to differ from B2C is through marketing.
In many cases, the buyer is already aware of the supplier, so there is less of a need for the seller to promote themselves.
In B2B, prices are negotiated and agreed between say, a manufacturer and distributor, and for bulk purchases, there are usually discount incentives.
Difficulties arise when the manufacturer cannot or does not supply the goods at an agreed date or standard expected.
This ‘ripple effect’ means the distributor has incomplete orders or worse still, cancelled purchases.
3) Business to Administration -B2A.
As the term implies, these types of e-commerce transactions revolve around businesses selling online to governmental or council services.
The benefits of e-commerce online are that formal and bureaucratic meetings are less necessary so freeing up time for both seller and buyer.
B2A can range from supplying public amenity and emergency service products, printing leaflets and promotional documents, and even employment databases.
Conversely, governments may invite businesses to tender for remedial or construction work via online.
4) Consumer to Business -C2B.
From time to time, sole traders or consumers may come up with a product or service that businesses want to buy: In e-commerce, This is ‘consumer to a business’.
Perhaps more ambiguously, the same is true when a company asks for reviews or feedback from a consumer. Often they are encouraged to do so for discounts on their next purchase, or a gift.
A further C2B business model is that of consumers sending suggestions to improve businesses’ reliability or productivity.
5) Consumer to Consumer -C2C.
C2C transactions have been around for hundreds of years.
‘Bartering’, (a method of swapping products or service for products of similar value), was a normal process before the invention of money.
Nowadays we see favourite auction sites or even local newspapers advertising unwanted items for C2C sales.
6) Consumer to Administration -C2A.
Utilise C2A when individuals complete their annual tax returns, or when invited to vote online for a government or council representative.
C2A also comes into play when authorities advertise events or events that impact upon the public as a whole.
The Advantages and Disadvantages of E-Commerce
Here are some distinct advantages of E-commerce selling over physical stores.
- Overheads are (in the main), comparatively less in an e-commerce store than those of a physical store.
- Prices are generally lower online as competition is fierce.
- Brand perception via a well designed online store can make your business appear much more significant than it is.
- There is the opportunity to view items or service provider’s information out of regular shopping hours.
- You can offer more choices for the same items without having to rush the customer.
- It is easier to gain a competitive advantage over other online marketplaces and their prices.
- Delivery is in many cases, quick and easy- to your doorstep or local collection point.
- Less travelling overall reduces the carbon footprint.
- With reliable sources, there is no need to stock products to sell until a purchase is made.
- E-commerce gives an option for drop shipping products to sell for online markets.
- Most consumers have internet access, so communication is simple.
- There is always an opportunity to sell, as mobile devices invariably link to the internet 24 hours a day.
Some of the perceived disadvantages of E-Commerce sales
- Often, customers buy because they like you. Online selling is more difficult than physical presence when there is no face to face human interaction.
- Some customers when purchasing products prefer the physical, more tangible method of shopping; getting to feel the item, weighing it up.
- When things go wrong, many consumers like to buy locally. They feel this gives them the opportunity to ‘niggle’ at the sales representative or manager until they resolve the matter.
- Frequently, an unrehearsed conversation between a buyer and seller bring about a further unplanned sale.
- Customers like to see how a product works.
- Security fraud is riskier online than in a store.
- Consumers sometimes feel exposed to scams.
The Future Of E-commerce (and E-commerce ‘knock-on’ effects)
It is generally accepted worldwide that E-commerce business is having a detrimental effect and contributing to high street shop closures.
It may surprise you that still today, retail sales only amount to around 9% of the U.S market, and 17% of the UK, though the trend is forecast for sustained growth.
Online shopping is proving to be so lucrative that even social media has latched on to the concept and began to allow sales through their platforms.
In today’s modern society, we are being sold to either directly, or subliminally almost every minute of the day.
Most online websites will make it difficult to enter without you first filling in some information about yourself before being allowed to view their site.
(covering E-commerce platforms and associated questions)
If you are looking for further help, there are hundreds of free e-commerce ebooks to be discovered online; Either for those just getting started or others who want to stay ahead of the competition.
- Are you interested in help with web design or web hosting?
This site gives you the top 10 free hosting sites.
- Want to start an e-commerce business but not sure about your first steps?
Selfstartr.com takes you through each one, in turn, exploring individual e-commerce solutions.
- Perhaps you are reading this from the U.S.A and want information regarding Federal Trade Commission laws?
https://www.ftc.gov/enforcement deals with trade enforcement regulations and consumer protection details, covering any transaction conducted online.
- Want to win more shoppers?
Demandware.com has some great tips on the art of buying and selling, and e-commerce strategy ideas for business plans.
- Interested in drop shipping?
The art of selling physical items online without ever having to possess them. Shopify.co.uk is a great place to begin your research. You’ll learn the basics of a store setup, and about dropshipped products. Inspiring and successful ‘Shopify’ is currently promoting a 14-day free trial.
- Want to read more about the future of E-Commerce?
Shopify.com has an interesting read.
- Looking for more inspiration around e-commerce success stories?
Forbes.com has ten lessons that might help influence your thinking.
- Interested in the Founder of ‘Amazon’, Jeff Bezos?
The news article Independent delves deep into his background and what makes him tick today.
- Beginning to sell on an online auctions site?
eBay themselves have a simple article on how to achieve this.
- Not sure how to set up online payment sales?
Entrepreneur.com gives you an insight into what is required regarding online credit card payment and customers’ buying behaviour within e-commerce transactions.
- If you require information on shopping cart software, Magento.com is one of the biggest e-commerce sales platforms on the market.
- Want to stock your e-commerce store and not sure what products are popular? Oberlo.co.uk gives information on methods to determine trending products.
Further reading …