I guess you have landed on this page because you want to know more about what eCommerce is. Therefore, I am going to try to explain everything that is related to this concept. We will analyze what Electronic Commerce (or eCommerce) is, its main characteristics, the types of electronic commerce, as well as the advantages and disadvantages or the evolution of the market. Let us begin!
What is eCommerce? Concept
Electronic commerce, also known as eCommerce in English, consists of buying and selling products or services over the Internet.
These transactions are normally made through an online payment. This basically consists of an electronic exchange of funds that is carried out through a payment gateway or payment service provider. Online payments can be made by electronic bank transfer, with a debit or credit card, a digital wallet, etc.
Ecommerce vs Traditional Commerce
Traditional trade is mainly characterized by the exchange of products and services through physical personal interaction of the different parties.
Ecommerce focuses on the sale of goods and services over the Internet, using electronic means of payment. In this case only a digital interaction takes place.
Types of Ecommerce
The rise of Ecommerce has made more and more companies enter fully into this business model.
To analyze in depth the different types of Ecommerce business models that exist, we are going to classify electronic commerce based on the commercial relationship of the participants.
There are at least nine types of Ecommerce Business Models depending on the business relationship of the participants.
Here we list the different types of e-commerce briefly and explain what they mean:
- B2B Ecommerce (Business to Business)
This type of Ecommerce is based on the exchange of products and services between different companies (suppliers, retailers, intermediaries, etc.). B2B e-commerce involves transactions between a manufacturer and a wholesaler, or a wholesaler and a retailer, through an online sales portal.
Examples : Boards & More (surf equipment wholesaler), Wrike (platform that facilitates the management, planning and visibility of advertising campaigns)
- B2C Ecommerce (Business to Consumer)
The B2C e-Commerce is oriented to the exchange through digital means of products and services between companies and private consumers.
Examples : Amazon, MediaMarkt, Netflix
- B2A Ecommerce (Business to Administration)
It refers to the purchase by the public administration of the products or services of a company through digital means.
Example : The public administration hires a company to develop a web page.
- B2E Ecommerce (Business to Employee)
B2E Ecommerce refers to the purchases that companies make for their workers.
Example : When a company pays for a software license so that its employees can use it.
- B2I Ecommerce (Business to Investor)
B2I Ecommerce is the business activity aimed at attracting investments, standardizing them, organizing them and offering them to investors.
Example : Etoro
- C2C Ecommerce (Consumer to Consumer)
When consumers participate in transactions with other consumers through the Internet, we are talking about C2C e-Commerce. These platforms are very popular and allow people to display their own (usually second-hand) products.
Examples : Wallapop, Ebay
- C2B Ecommerce (Consumer to Business)
C2B e-Commerce occurs when a consumer sells or contributes money to a company. This model is less common on the Internet.
Example : Influencer promotes and recommends a product or service of a company and receives a commission for sales.
- A2B Ecommerce (Administration to Business)
This type of Ecommerce refers to trade between companies and public administrations. This may involve the electronic exchange of taxes, the payment of fees, etc.
Examples : corporate income tax return and filing, VAT return and filing, Social Security contributions
- A2C Ecommerce (Administration to Consumer)
This is one of the types of Ecommerce refers to trade between the public administration and consumers.
Examples : when the administration collects a tax from a private consumer electronically (Real Estate Tax, Circulation Tax, Garbage collection fee, etc.)
What are the advantages of Ecommerce?
Online shopping has become one of the most popular activities carried out today. In this article, we try to break down the advantages and disadvantages of e-commerce.
- Global Reach: Allows you to buy from and sell to anyone, anywhere in the world.
- Comparison of prices and products: the client finds advantages that facilitate decision making. You can easily compare prices and products.
- Total Availability: Open 24 hours a day, seven days a week, 365 days a year.
- Cost savings: e-commerce companies have significantly lower operating costs than traditional businesses that need a specific place to sell.
- Automated Management: Businesses can easily manage inventory, returns processes, sending emails, or requesting reviews by using automated online tools.
- Targeted Marketing: Online sellers can collect multiple data from consumers so they can target the right people for the sale of their products.
- Improving the user experience: Thanks to the collection of information, companies can improve the shopping experience of users, as well as make it more personalized and meaningful.
What are the disadvantages of Ecommerce?
Although everything may seem like a simple path for both the consumer and the entrepreneur, there are also certain disadvantages compared to traditional commerce. Next, we are going to highlight the main disadvantages of Ecommerce.
- High Competition: Because the barriers to entry in the e-commerce market are very low, the levels of competition are very high.
- There is no direct treatment: face-to-face contact with the client practically disappears. That directly implies that it costs more to keep customers loyal.
- User impatience: while in traditional commerce the customer can receive almost immediate attention, in online commerce most businesses take time to answer their customers. Likewise, the purchase of a product becomes slower due to the processing times and shipments of products.
- Customers cannot try the product: one of the main handicaps in the sector is that the sales process is more complex because the customer cannot try the product they intend to purchase. There are eCommerce businesses that have tried to minimize this impact by offering many facilities in terms of returns. However, this means a higher cost for the company.
- Technical errors: Online stores are not exempt from technical problems. The stores can be inactive due to any technological problem and this basically implies having the business closed.
- Aversion to online payments: Many shoppers still refuse to make online payments. That means that there is a part of the population that will not buy from e-commerce stores.
- Reduction of commercial margins: with greater online competition, profit margins have been adjusted a lot. Now, eCommerce companies need to apply strategies to obtain additional income.
The future of Ecommerce
The COVID-19 pandemic has caused a total disruption in the world of e-Commerce. This has meant a change in the trends of Ecommerce . Consumers have opted for online shopping, and most of them will continue to use this method of purchase. Where is the future of Ecommerce going?
- Voice Commerce boom: this trend is becoming a key element in the future of e-Commerce. This trend focuses on voice recognition of the user when searching for a product. Online stores must take into account the new ways of searching to adapt their strategies to these new user needs.
- Chatbot Implementation: The implementation of chatbots in e-commerce is booming. A chatbot is software that uses structured messages to issue responses from a machine to a human interlocutor. This allows companies to obtain qualified databases and improve services to respond to their customers more efficiently.
- Use of Big Data: focuses on handling large amounts of data. Enables e-Commerce to improve decision-making in operational processes, reduce costs and understand customers better
- More personalization: Customers will enjoy more personalized experiences, such as discounts and sales suggestions based on their purchase history.
- New payment methods: online stores should study the possibilities offered by cryptocurrencies and make decisions about the convenience of implementing new payment methods. That will be a competitive advantage.
- Improved Display: The trend is towards better display of products. Technologies such as virtual reality, 3D images or augmented reality will be used.
- Faster deliveries: Product deliveries will be drastically shortened. The sector is evolving towards a delivery model on the same day and even in a few hours.
What is the volume of business worldwide?
E-Commerce continues to grow. It stands as one of the fastest growing sectors in recent years.
According to market research firm Statista, global retail e-commerce sales will reach $4.89 trillion in 2021 . By the end of 2024, the volume is expected to reach $6.39 trillion.