What is E-Commerce
E-Commerce or Electronics Commerce is a methodology of modern business, which addresses the need of business organizations, vendors and customers to reduce cost and improve the quality of goods and services while increasing the speed of delivery. E-commerce refers to the paperless exchange of business information using the following ways:
- Electronic Data Exchange (EDI).
- Electronic Mail (e-mail).
- Electronic Bulletin Boards.
- Electronic Fund Transfer (EFT).
- Other Network-based technologies.
E-Commerce provides the following features.
1. Non-Cash Payment
E-Commerce enables the use of credit cards, debit cards, smart cards, electronic fund transfer via bank’s website, and other modes of electronics payment.
2. 24×7 Service availability
E-commerce automates the business of enterprises and the way they provide services to their customers. It is available anytime, anywhere.
E-commerce increases the reach of advertising of products and services of businesses. It helps in better marketing management of products/services.
4. Improved Sales
Using e-commerce, orders for the products can be generated anytime, anywhere without any human intervention. It gives a big boost to existing sales volumes.
E-commerce provides various ways to provide pre-sales and post-sales assistance to provide better services to customers.
6. Inventory Management
E-commerce automates inventory management. Reports get generated instantly when required. Product inventory management becomes very efficient and easy to maintain.
7. Communication improvement
E-commerce provides ways for faster, efficient, reliable communication with customers and partners.
Traditional Commerce v/s E-Commerce
|Heavy dependency on information exchange from person to person.||Information sharing is made easy via electronic communication channels making a little dependency on person to person information exchange.|
|Communication/transactions are done in synchronous way. Manual intervention is required for each communication or transaction.||Communication or transactions can be done in asynchronous way. The whole process is completely automated.|
|It is difficult to establish and maintain standard practices in traditional commerce.||A uniform strategy can be easily established and maintained in e-commerce.|
|Communications of business depends upon individual skills.||In e-commerce, there is no human intervention.|
|Unavailability of a uniform platform, as traditional commerce depends heavily on personal communication.||E-commerce websites provide the user a platform where all the information is available at one place.|
|No uniform platform for information sharing, as it depends heavily on personal communication.||E-commerce provides a universal platform to support commercial/business activities across the globe.|
E-Commerce Business Model
E-commerce business models can generally be categorized into the following categories.
- Business – to – Business (B2B)
- Business – to – Consumer (B2C)
- Consumer – to – Consumer (C2C)
- Consumer – to – Business (C2B)
- Business – to – Government (B2G)
- Government – to – Business (G2B)
- Government – to – Citizen (G2C)
Business -to –Business
A website following the B2B business model sells its products to an intermediate buyer who then sells the product to the final customer. As an example, a wholesaler places an order from a company’s website and after receiving the consignment, sells the end-product to the final customer who comes to buy the product at one of its retail outlets.
Business -to -Consumer
A website following the B2C business model sells its products directly to a customer. A customer can view the products shown on the website. The customer can choose a product and order the same. The website will then send a notification to the business organization via email and the organization will dispatch the product/goods to the customer.
Consumer -to -Consumer
A website following the C2C business model helps consumers to sell their assets like residential property, cars, motorcycles, etc., or rent a room by publishing their information on the website. Website may or may not charge the consumer for its services. Another consumer may opt to buy the product of the first customer by viewing the post/advertisement on the website.
Consumer – to – Business
In this model, a consumer approaches a website showing multiple business organizations for a particular service. The consumer places an estimate of amount he/she wants to spend for a particular service. For example, the comparison of interest rates of personal loan/car loan provided by various banks via websites. A business organization who fulfills the consumer’s requirement within the specified budget, approaches the customer and provides its services.
Business – to – Government
B2G model is a variant of B2B model. Such websites are used by governments to trade and exchange information with various business organizations. Such websites are accredited by the government and provide a medium to businesses to submit application forms to the government.
Government – to – Business
Governments use B2G model websites to approach business organizations. Such websites support auctions, tenders, and application submission functionalities.
Government – to – Citizen
Governments use G2C model websites to approach citizen in general. Such websites support auctions of vehicles, machinery, or any other material. Such website also provides services like registration for birth, marriage or death certificates. The main objective of G2C websites is to reduce the average time for fulfilling citizen’s requests for various government services.
Advantages of E-Commerce
The advantages of e-commerce can be broadly classified into three major categories:
- Advantages to Organizations
- Advantages to Consumers
- Advantages to Society
Advantages to Organizations
- Using e-commerce, organizations can expand their market to national and international markets with minimum capital investment. An organization can easily locate more customers, best suppliers, and suitable business partners across the globe.
- E-commerce helps organizations to reduce the cost to create process, distribute, retrieve and manage the paper based information by digitizing the information.
- E-commerce improves the brand image of the company.
- E-commerce helps organizations to provide better customer service.
- E-commerce helps to simplify the business processes and makes them faster and efficient.
- E-commerce reduces the paper work.
- E-commerce increases the productivity of organizations. It supports “pull” type supply management. In “pull” type supply management, a business process starts when a request comes from a customer and it uses just-in-time manufacturing way.
Advantages to Customers
- It provides 24×7 support. Customers can enquire about a product or service and place orders anytime, anywhere from any location.
- E-commerce application provides users with more options and quicker delivery of products.
- E-commerce application provides users with more options to compare and select the cheaper and better options.
- A customer can put review comments about a product and can see what others are buying, or see the review comments of other customers before making a final purchase.
- E-commerce provides options of virtual auctions.
- It provides readily available information. A customer can see the relevant detailed information within seconds, rather than waiting for days or weeks.
- E-Commerce increases the competition among organizations and as a result, organizations provide substantial discounts to customers.
Advantages to Society
- Customers need not travel to shop a product, thus less traffic on road and low air pollution.
- E-commerce helps in reducing the cost of products, so less affluent people can also afford the products.
- E-commerce has enabled rural areas to access services and products, which are otherwise not available to them.
- E-commerce helps the government to deliver public services such as healthcare, education, social services at a reduced cost and in an improved manner.
In general, today’s businesses must always strive to create the next best thing that consumers will want because consumers continue to desire their products, services etc. to continuously be better, faster, and cheaper. In this world of new technology, businesses need to accommodate to the new types of consumer needs and trends because it will prove to be vital to their business’ success and survival. E-commerce is continuously progressing and is becoming more and more important to businesses as technology continues to advance and is something that should be taken advantage of and implemented.