E-commerce

According to Statista, over two billion people globally bought at least one product or service online in 2020. This proves that E-commerce has become a favorable outlet for the buying and selling of goods and services. Let's examine what E-commerce is and explore its advantages and disadvantages!

E-commerce E-commerce

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Table of contents

    Definition of E-commerce

    Though e-commerce is generally regarded to be just the trading of goods and services online, e-commerce is actually more than that as it involves economic activities and electronic payments along with the trading of goods and services.

    E-commerce, also referred to as electronic commerce, is a type of business model in which business transactions are done over the world wide web or over an electronic medium.

    E-commerce is not to be confused with e-business, as e-business involves businesses conducting their activities online but e-commerce involves business transactions between buyers and sellers over electronic media.

    Currently, different types of goods and services are being regularly exchanged using the different types of e-commerce, with the majority of the world population currently preferring online services to offline services. This has led to e-commerce being termed a disruptive technology.

    Examples of e-commerce include dropshipping, crowdfunding, electronic payment, online subscriptions, internet banking, online shopping, and digital transactions. For example, online shopping through Amazon or electronic payment systems like PayPal.

    Types of E-commerce

    There are four main types of e-commerce, they are:

    • Business-to-Consumer (B2C)

    • Business-to-Business (B2B)

    • Consumer-to-Business (C2B)

    • Consumer-to-Consumer (C2C)

    B2C is the most common e-commerce model due to the ability of e-commerce businesses to create a direct link to their products or services with consumers electronically. Business-to-consumer involves the direct business transaction between businesses and their consumers over electronic means. It is also considered the retail model of the four e-commerce models.

    Examples of companies who practice the B2C e-commerce model include Facebook, Amazon, Walmart, Google, and Alibaba.

    B2B is an e-commerce model where businesses carry out business transactions with other businesses over an electronic means. This e-commerce model is generally appreciated within industries where high-end products or services are produced. These products or services are usually exchanged with other businesses which might then sell directly to consumers or use them in their manufacturing processes.

    Business-to-Business e-commerce model examples can be seen in small businesses buying goods from the Amazon marketplace to resell to consumers.

    This is the least common e-commerce model, popular mostly among freelancers. This business model involves consumers exchanging their products and/or services directly with a business over an electronic means. Consumer-to-business e-commerce model is the opposite of the business-to-consumer model and it usually does not involve a middleman or a wholesaler.

    Examples of the C2B model can be seen in an artist licensing his artwork to a business or social media influencers offering marketing services to brands.

    The consumer-to-consumer e-commerce model is also referred to as the peer-to-peer (P2P) e-commerce business model. This e-commerce model involves the electronic exchange of goods, services, or information between consumers through a third-party platform like eBay or Facebook Marketplace. These third-party platforms are usually referred to as peer-to-peer selling platforms.

    C2C is a direct opposite of the consumer-to-business e-commerce model where consumers exchange their products and/or services with a business.

    Examples of consumer-to-consumer e-commerce models are online auctions on eBay or business transactions on the Facebook marketplace.

    E-commerce benefits

    The benefits of the e-commerce industry are currently being experienced around the world among consumers and businesses. These benefits include:

    • The large variety and increased amount of different products and services available.

    • Diverse methods are available for business transactions.

    • The ability for businesses to reach a variety of potential consumers from different countries around the world.

    • The ease of putting products and services online.

    • The ease of access it provides to business and their consumers.

    Advantages of E-commerce

    Let's now take a look at some of the advantages of e-commerce.

    E-commerce platforms are easily accessible over a mobile phone, laptop, or through other electronic means. They also run quickly unlike physical stores whose speed of service can be affected by the presence of large crowds.

    Most e-commerce platforms are available all day long, giving room to businesses to transact with their customers without a time limit.

    The e-commerce industry is littered with a wide range of products and services made available by both businesses and consumers. This improves the chance of easily acquiring a good or service through an online search.

    The e-commerce industry enables business transactions to be done both locally and internationally without having to move about. This provides an opportunity for businesses to grow and develop a diverse customer base.

    The various electronic payment methods currently made available through e-commerce are easy and secure. Payment methods like online payments, electronic payments, and transfers are all a form of e-commerce.

    E-commerce graphic showing shopping with a smartphone, StudySmarterShopping with a smartphone, pixabay.com

    Disadvantages of E-commerce

    Unfortunately, e-commerce also comes with its own set of disadvantages. These may include:

    Unlike physical stores where a customer gets their product immediately after payment, buying products online requires a certain amount of wait time to get a product delivered.

    Although these are relatively rare, spam websites can be created to either sell fake or non-existent products or services to customers. Also, these websites can be used to acquire important and personal information about a customer.

    An image of a product online can differ from what it looks like offline. This often leads to customers feeling less satisfied upon the receipt of a product.

    E-commerce: Limited customer service

    E-commerce brands set aside hours during the day to provide customer services, unlike a walk-in store where a customer can easily ask an attendant to clear any confusion they might have.

    In conclusion, the growth of the e-commerce industry is rapid and it is becoming popular among businesses and consumers, especially after the events of COVID-19. With big e-commerce brands such as Alibaba, Amazon, electronic payments companies, and many others leading the change, the e-commerce business model is set to be the most accepted business model globally despite the disadvantages it might have.

    E-commerce - Key takeaways

    • E-commerce also referred to as electronic commerce is a type of business model in which business transactions are done over the world wide web or over an electronic medium.
    • Though e-commerce is generally regarded to be just the trading of goods and services online, e-commerce is actually more than that, as it involves economic activities and electronic payments along with the trading of goods and services.
    • E-commerce is not to be confused with e-business. E-business involves businesses conducting their activities online and e-commerce involves business transactions between buyers and sellers over electronic media.
    • There are four main models of e-commerce: Business-to-Consumer (B2C), Business-to-Business (B2B), Consumer-to-Business (C2B), and Consumer-to-Consumer (C2C).
    • Examples of e-commerce include dropshipping, crowdfunding, electronic payments, online subscriptions, and digital products transactions.

    Frequently Asked Questions about E-commerce

    what is e-commerce?

    E-commerce, also referred to as electronic commerce, is a type of business model in which business transactions are done over the world wide web or over an electronic medium.  

    What are the types of e-commerce?

    There are four main types of e-commerce, they are:


    • Business-to-Consumer (B2C)

    • Business-to-Business (B2B)

    • Consumer-to-Business (C2B)

    • Consumer-to-Consumer (C2C)

    What are the advantages of e-commerce?

    The advantages of e-commerce are:

    • Ease and speed of access
    • Availability
    • Wide range of products and services  
    • No domestic limitations  
    • Ease of payment  

    what are the differences between e-commerce and e-business?

    E-business involves businesses conducting their activities online and e-commerce involves business transactions between buyers and sellers over electronic media. 

    What are some examples of e-commerce?

    Examples of e-commerce include dropshipping, crowdfunding, electronic payments, online subscriptions, and digital product transactions.  

    Test your knowledge with multiple choice flashcards

    Which statement is true?

    ___ is the most common e-commerce model due to the ability of e-commerce businesses to create a direct link to their products or services with consumers electronically. 

    ___ is an e-commerce model where businesses carry out business transactions with other businesses over an electronic means. 

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    Team E-commerce Teachers

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