Electronic Commerce (e-commerce):
Electronic Commerce or e-commerce means buying and selling of goods, products, or services over the internet. Services like transactions of money, funds, and data over the network are also considered as e-commerce. 'The standard definition of e-commerce is any commercial transaction which has happened over the internet. Online stores like Amazon, Flipkart, Ajio, Myntra, EBay, Quikr, Olx are examples of E-commerce websites. As of now, e-commerce is one of the fastest growing industries in the global economy. As per one estimate, it grows nearly 23% every year.
Types of E-Commerce Models:
Electronic commerce can be classified into four main categories. The basis for this simple classification is the parties that are involved in the transactions. So the four basic electronic commerce models are as follows:
1. Business to Business: This is Business to Business transactions. Here the companies are doing business with each other. The final consumer is not involved. So online transactions only involve the manufacturers, wholesalers, and retailers, etc, eg. Amazon Business, Flipcart wholesale.
2. Business to Consumer: Here the company will sell its goods and/or services directly to the consumer. The consumer can browse their websites and look at products, pictures, read reviews. Then they place their order and the company ships the goods directly to them. Popular examples are Amazon, Flipkart, Ajio etc.
5. Consumer to Consumer: Where the consumers are in direct contact with each other. No company is involved. It helps people sell their personal goods and assets directly to an interested party. Usually, goods traded are cars, bikes, electronics, etc. OLX, Quikr, etc follow this model.
4. Consumer to Business: This is the reverse of B2C, it is a consumer to business. So the consumer provides a good or some service to the company. Say for example an IT freelancer who demos and sells his software to a company, This would be a C2B transaction.
Advantages of E-Commerce
- E-commerce provides the sellers with a global reach. They remove the barrier of place (geography). Now sellers and buyers can meet in the virtual world, without the hindrance of location.
- Electronic commerce will substantially lower the transaction cost. lt eliminates many fixed costs of maintaining brick-and-mortar shops. This allows the companies to enjoy a much higher margin of profit.
- It provides quick delivery of goods with very little effort on part of the customer. Customer Complaints are also addressed quickly. It also saves time, energy, and effort for both the consumers and the company
- One other great advantage is the convenience it offers. A customer can shop 24x7. The website is functional at all times, it does not have working hours like a shop. Electronic commerce also allows the customer and the business to be in touch directly, without any intermediaries. This allows for quick communication and transactions. It also gives a valuable personal touch.
Disadvantages of E-Commerce:
- The start-up costs of the e-commerce portal are very high. 'The setup of the hardware and the software, the training cost of employees, the constant maintenance and upkeep are all quite expensive.
- Although it may seem like a sure thing, the e-commerce industry has a high risk of failure. Many companies riding the dot-com wave of the 2000s have failed miserably. The high risk of failure remains even today.
- At times, e-commerce can feel impersonal. So it lacks the warmth of an interpersonal relationship which is important for many brands and products. This lack of a personal touch can be a disadvantage for many types of services and products like interior designing or the jewelry business.
- Security is another area of concern. Only recently, we have witnessed many security breaches where the information of the customers was stolen. Credit card theft, identity theft, etc. remain big concerns with customers.
- Then there are also fulfillment problems. Even after the order is placed there can be problems with shipping, delivery, mix-ups etc. This leaves the customers unhappy and dissatisfied.
