In this lesson, learn about electronic commerce and its importance in our modern world. You will also find information about types of electronic commerce as well as some of the pros and cons of the process.
What Is Electronic Commerce?
Have you ever purchased a pair of shoes over the Internet? Or, maybe you’ve used your computer to sell an old phone? If so, you’ve taken part in electronic commerce. Also known as e-commerce, electronic commerce is the process by which businesses and consumers buy and sell goods and services through an electronic medium.Electronic commerce emerged in the early 1990s, and its use has increased at a rapid rate. Today, the majority of companies have an online presence. In fact, having the ability to conduct business through the Internet has become a necessity.
Everything from food and clothes to entertainment and furniture can be purchased online.Two familiar examples of electronic commerce companies are eBay and Amazon. Both of these companies allow consumers to purchase a variety of goods and services online from businesses and other consumers, while eBay also hosts online auctions.
Consumers on these sites typically have numerous payment options, as well as choices for how their products are delivered.
Types of E-Commerce
There are several types of electronic commerce. The most common is business to consumer in which a business sells products or services directly to consumers over the Internet. An example of a business to consumer e-commerce transaction would be an individual purchasing a pair of sneakers through Nike’s website.Another type of electronic commerce is business to business, where companies sell products or services to other companies over the Internet.
An example would be the company GoDaddy, which sells domain names, websites, and hosting services to other businesses.Consumer to business electronic commerce involves consumers selling products or services to businesses. You’ve taken part in this form of e-commerce if you’ve ever completed a paid online survey where you’ve given your opinion about a product.Finally, there is consumer to consumer e-commerce, which is where consumers sell products to other consumers. An example would be one consumer selling something that he or she no longer needs or wants to another consumer via a site like eBay or Amazon.
Advantages and Disadvantages
Let’s take a look at some of the advantages and disadvantages of electronic commerce.Advantages – Electronic commerce can allow consumers to access their favorite store at any time, day or night.
This benefits both buyers, who might not be able to visit a store during typical business hours, and sellers, who can peddle their products around the clock.Additionally, e-commerce lets businesses and consumers conduct business anywhere in the world. This broadens consumers’ shopping sphere, giving them access to businesses located in the next town over or even on the other side of the world.
Not only can this save them the time and money they’d spend to commute to a store, it also provides the opportunity to easily comparison shop so they get the best price on their purchases. For businesses, e-commerce can provide a larger consumer base and, thus, the potential for greater profit. It can also allow sellers to conduct business without ever opening a brick-and-mortar store.Disadvantages – Although electronic commerce is becoming increasingly popular, there are still a few concerns. Some people aren’t comfortable making financial transactions over the Internet and/or are worried about the possibility of identity theft. Additionally, some consumers are skeptical of items that aren’t sitting right in front of them or worried about not getting what they ordered.
Questions about sizing persist for consumers purchasing clothing or shoes, and products can get damaged or lost in the shipping process.
Let’s review. Electronic commerce has given consumers and companies the ability to conduct business anywhere in the world. The convenience and cost-effectiveness of electronic commerce has made it increasingly popular.
However, drawbacks, such as security issues and the lack of a tangible product, have prevented some consumers from buying into electronic commerce.
Information About Electronic Commerce
|Types of Electronic Commerce||Description|
|Business to Consumer||Sale of a product/service from a company directly to a buyer, i.e., buying shoes from Nike’s website|
|Business to Business||Companies sell directly to other companies, i.e., the selling of website services to other businesses by GoDaddy|
|Consumer to Business||Consumers selling services to businesses, for example, a person taking paid surveys for companies|
|Consumer to Consumer||Private sellers dealing with private buyers via sites such as eBay and Amazon|
Verify your readiness to perform the following actions when you’ve reviewed the lesson:
- Remember the meaning of electronic commerce
- Identify its various types
- Point out the advantages and disadvantages of eCommerce