What is E-Commerce?
Differences between e-commerce and e-business
E-commerce is often confused with e-business, although they have nothing to do with one another.
E-commerce only refers to the goods and services transaction between a seller and a consumer, whereas e-business refers to the complete process necessary to manage an online business.
Types of e-commerce
The e-commerce field is really large and there are a lot of different models.
We are going to use two categories:
A general one based on who the buyers and sellers are.
Another one with different e-commerce “models”.
Let’s have a look at them.
1. According to the commercial profile
Each business focuses on a type of client, and depending on who they are, we can classify them:
B2B (Business-to-Business): businesses whose clients are also businesses or organizations. For example, we could think about a construction materials company selling its products to arquitects and interior designers.
B2C (Business-to-Consumer): businesses that sell their products or services directly to the consumer. This is the usual type and there are thousands of examples of clothes, shoes or electronics stores.
C2B (Consumer-to-Business): sites in which consumers offer products or services and businesses bid on them. We are talking about the traditional websites for freelancers such as Freelancer, Twago, Nubelo or Adtriboo.
C2C (Consumer-to-Consumer): businesses that facilitate the selling of products amongst consumers. The clearest example is eBay or any other second hand website.
In addition to these types of electronic commerce, there are other popular types such as G2C (Goverment-to-Consumer), C2G (Consumer-to-Goverment) or B2E (Business-to-Employer).
As you can see, e-commerce is more than a simply transaction in a store.
2. According to the business model
The online sector is still not very mature. Technology is always changing and the new online businesses that are popping up are trying to meet the new needs being created.
Depending on how the income is generated or how the exchange between buyer and seller takes place, they can be divided into:
Online shop with its own products: The first idea that came to you when you heard about e-commerce. They have the same characteristics as a physical store, but they in an online version.
Dropshipping: For the client, everything looks like a normal e-commerce shop. The difference is that it is not the e-commerce shop seller who sends the product, but rather a third party.
Affiliate e-commerce: A step further back in the buying process we can find affiliate businesses. In this case, not only does the shop not send the product, the purchase completion is not even carried out via its platform. What these businesses do is sending clients to different shops in exchange for a commission that they receive once the purchase is completed. Affiliation is very common with Amazon.
Membership: This type of e-commerce aims for recurring purchases. They achieve this by using periodic subscriptions (weekly, monthly, bimonthly, etc.). These types of memberships are in currently in fashion with the so-called “surprise boxes”. They are boxes that are sent each month with different products, for example, a monthly box with different craft beers. Instead of selling the product just once, the shops offer the option of receiving it with a predetermined frequency.
Marketplace: A marketplace is a department store. It is a website where different sellers offer their products from one or more sectors. Amazon, FlipKart is also an example of a marketplace. Although it also works as a normal e-commerce shop, everyone can sell using the platform in exchange for a commission for site owner.
Services: An e-commerce business doesn’t only have to be about selling products. Training, counselling, mentoring, or any other exchange of time for money is another viable option in order to start a business without risks.
Advantages and disadvantages of starting up an e-commerce shop
Why e-commerce has flooded the Internet and has become a standard so quickly?
Because the advantages of e-commerce compared to traditional commerce are really powerful.
More clients. There is no local store or company with sufficient offices in different cities that compares with e-commerce’s reach. The possibility of selling and buying from any part of the world expands the target public and allows the company to gain more clients.
No schedule: E-commerce does not run on schedules, whereas it is nearly impossible to find a traditional store that is open 24/7. Websites are open all day long and clients can buy whatever they want whenever they want it.
Less costs: not needing a physical store reduces the costs of running a traditional business. In addition, when e-commerce brings suppliers together with consumers there are not even production costs.
Bigger profit margin: cost reduction and market extension mean that, even with lower prices, a bigger profit margin can be obtained than with a traditional store. More products are sold and more money is made.
Scalability: This means that you can sell to either one or to a thousand people at the same time. In a physical store there is always a limit to the number of clients that you can assist at the same time. On the other hand, with e-commerce, the only limit is your ability to attract clients.
We wanted to call them challenges more than disadvantages to avoid showing a distorted picture.
Of course there are some disadvantages, as with everything in life, but if there were none, starting an e-commerce would be too easy and there wouldn’t be any perks to it at all.