E-commerce

From CEOpedia | Management online

Electronic commerce (e-commerce) describes the business transaction using technological infrastructures like the internet or other telecommunication technology [1]. This term includes not only the buying and selling of goods and services itself but also all processes connected to those transactions. Thus, the digital payment process and the digital exchange of data are also part of e-commerce [2].

Development of e-commerce

In 1997 the term e-commerce was first mentioned by IBM [3]. As the barriers to accessing the internet lowered and the general public was able to use the internet and other telecommunication technologies, e-commerce experienced its boom. The number of online shops as well as the number of customers shopping online increased year by year. Even today, the e-commerce sector is still growing steadily. The increase in internet speed and the expanding global spread of the internet are driving factors of e-commerce. However, it should be noted that the development of e-commerce varies not only from continent to continent but also from country to country [4]. During the Covid-19 pandemic, the e-commerce sector experienced another strong increase. Due to lockdowns in many countries, consumption via online shops increased strongly and this trend is still very much in evidence [5].

E-commerce categories

There are various categories into which e-commerce can be divided:

  • Business to Business (B2B): transactions between two companies; this is the fastest-growing e-commerce sector
  • Business to Consumer (B2C): transactions between a company and the consumer; a traditional buyer-seller combination
  • Consumer to Business (C2B): transactions between a company and a consumer but the consumer takes the role of the seller and the company the role of the buyer
  • Consumer to Consumer(C2C): transactions between two customers

If state administration is also considered, the following categories can be added:

  • Business to Government (B2G) or Business to Administration (B2A): transactions between a party from the business sector and a representative from the public sector
  • Government to Business (G2B): transactions between a public office and a company
  • Government to Consumer(G2C): transactions with a flow from the public sector to a consumer
  • Consumer to Government (C2G): transactions involving a consumer and a public sector body
  • Government to Government (G2G): transaction where two parties of the public sector are involved

It is important to note that especially in G2B, G2C, and G2G sectors the transactions often contain the flow of administrative information, customer documents, and statistics. Therefore, it does not necessarily have to be a purchase or sale of goods or services [6].

Advantages and adaptations

E-commerce brings advantages to customers. 24-hour availability, easy and fast home delivery, and simple payment methods are just some of them [7]. However, suppliers also profit from doing business via the internet. Considering the supplier side, e-commerce, for example, eliminates the cost of retail space, reduces administration costs, and they don’t have to adhere to the legal opening hours of shops. The use of the Internet and other telecommunications technologies also makes it possible to collect customer data. Data on the shopping behavior of customers enables suppliers to tailor their offers and their communication with each customer individually. Such personalization would not be possible in a non-electronic transaction [8]. However, to make use of this data and maximize the profit, suppliers must first attract customers to their online shop and ensure that customers visit the website again. In a physical shop, for example in a shopping center, this is attempted through furnishing, decoration, and services. In e-commerce, however, a good user experience (UX) is necessary to achieve this effect. Companies in the e-commerce sector should therefore always keep the improvement of the UX for their online shop in mind in order to achieve the best possible success for their business [9].

Examples of E-commerce

  • Online Shopping: E-commerce is best known for online shopping, which is the process of buying goods and services over the internet. This can be done through websites such as Amazon, eBay, Walmart, and many others.
  • Digital Marketplaces: Digital marketplaces are another form of e-commerce. These are websites that allow buyers and sellers to come together to trade goods and services. Examples of digital marketplaces include Etsy, Alibaba, and Fiverr.
  • Online Payments: E-commerce also includes the ability to pay for goods and services online. This is commonly done through payment processors such as PayPal, Stripe, and Square.
  • Mobile Commerce: Mobile commerce, or m-commerce, is the practice of buying and selling goods and services using mobile devices such as smartphones and tablets. This can be done through apps such as Uber, Airbnb, and Amazon.
  • Social Media Commerce: Social media commerce, also known as s-commerce, is the process of selling goods and services on social media platforms such as Facebook, Instagram, and Twitter.
  • Voice Commerce: Voice commerce, or v-commerce, is the practice of buying and selling goods and services using voice commands. This can be done through virtual assistants such as Amazon Alexa and Google Assistant.

Limitations of E-commerce

E-commerce has become an increasingly popular form of business transaction, but there are several limitations that must be taken into consideration:

  • Security risks: As e-commerce relies on the internet, it is vulnerable to cyber security threats, such as data breaches and hacking. This can have a negative impact on customers’ trust in the system, as well as the financial losses that can be caused by such attacks.
  • Lack of personal interaction: In e-commerce, customers are unable to directly interact with salespeople and ask for advice or recommendations. This can be a disadvantage for customers who are looking for a more personalized shopping experience.
  • Technical issues: Technical issues can be a big problem in e-commerce. If the website is slow or unreliable, or if the payment system is down, customers may be unable to complete their transaction.
  • Payment issues: Customers may be reluctant to pay online due to concerns about their personal information being compromised, or because of the fees associated with certain payment methods.
  • Legal issues: E-commerce businesses must comply with relevant laws and regulations in order to operate legally. This can be a challenge for businesses that are not familiar with the applicable laws.

Other approaches related to E-commerce

E-commerce is a business transaction facilitated by technological infrastructures such as the internet or other telecommunication technologies. Other approaches related to E-commerce include:

  • Mobile commerce (m-commerce): This term is used to describe the use of mobile devices such as smartphones and tablets for online shopping.
  • Social commerce (s-commerce): This term is used to describe the use of social media platforms such as Facebook, Twitter, Instagram, and YouTube for online shopping.
  • Online payments: This term is used to describe the use of digital payment methods such as credit or debit cards, PayPal, Apple Pay, Google Pay, and other digital wallets for online payments.
  • Omni-channel retailing: This term is used to describe the use of multiple physical and digital touchpoints to create an integrated, seamless shopping experience for customers.

In summary, e-commerce is a business transaction facilitated by technological infrastructures such as the internet or other telecommunication technologies. Other approaches related to e-commerce include mobile commerce, social commerce, online payments, and omni-channel retailing.

Footnotes

  1. ↑ Jędrzejczak-Gas, Barska and Siničáková, 2019, p. 210
  2. ↑ Nescott, 2011, p. VII
  3. ↑ Jędrzejczak-Gas, Barska and Siničáková, 2019, p. 210
  4. ↑ Gregor and Kalińska-Kula, 2020, pp. 184-186
  5. ↑ Sudhakaran, 2022, p. 81
  6. ↑ Jędrzejczak-Gas, Barska and Siničáková, 2019, pp. 210-211
  7. ↑ Gregor and Kalińska-Kula, 2020, p. 184
  8. ↑ Jędrzejczak-Gas, Barska and Siničáková, 2019, p. 211
  9. ↑ Moczarny, de Villiers and van Biljon, 2012, pp. 216-217, 223-224


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References

Author: Janina Klüsch

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