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E Commerce Definition

E-commerce stands for electronic commerce. E-commerce is the activity of purchasing or selling products via the internet. E-commerce offers almost everything to buy, making it extremely competitive. Some notable examples of successful e-commerce businesses are Amazon, Flipkart, eBay, and Myntra.

E Commerce Definition

E-commerce utilizes technology like mobile commerce, electronic funds transfers, supply chain management, inventory management systems, internet marketing, online transaction processing, EDI, and automated data collection mechanisms.

How does E-Commerce work?

  1. Customers visit your online store and browse the products.
  2. The customer finally chooses a product (e.g. dress).
  3. Customer selects the size and colour before placing the product in their shopping cart.
  4. Order management software checks the product's availability.
  5. If the item is in stock and the consumer is ready to check out, he enters his payment card details and delivery information on the payment page.
  6. The bank verifies that the client has sufficient money to complete the transaction.
  7. After successful payment, the customer gets a notification on the site that the order has been successful.
  8. The order is picked up from the storehouse and shipped.
  9. The customer will get an email with a link to track their order.
  10. Once the order is delivered, the transaction is marked as complete.

Types of E-Commerce business models

1. Business-to-Consumer

Business-to-consumer is a business strategy that involves selling goods directly to consumers rather than going through wholesalers, retailers, or other middlemen. Business-to-consumer is referred to as B2C. The B2C model can be used in any business transaction where the consumer receives products or services directly, such as restaurants, retail stores, and hospitals. Amazon, Netflix, and Etsy are examples of B2C e-commerce stores.

2. Business-to-Business

Business-to-business is referred to as B2B. Business-to-business companies produce goods and services for other businesses and organizations. Examples of B2B companies are marketing agencies, software as a service (SaaS), and companies that produce and sell numerous goods.

3. Consumer-to-Business

Consumer to business is referred to as C2B. In this business model, the consumer produces value, which is then consumed by businesses. For example, when a customer writes reviews or gives a valuable suggestion for a new product, this customer adds value to the company if the company uses that input.

4. Business-to-Government

When a company offers its goods and services directly to a government body, this is known as the business-to-government (B2G) strategy. For example, a private engineering business sells its engineering services to a country's government to build a new water and sewer system for the community.

5. Consumer-to-Consumer

Consumer-to-consumer is referred to as C2C. C2C e-commerce directly sells products or services between customers. C2C is frequently made possible through third-party websites or marketplaces, which handle transactions on behalf of buyers and sellers. C2C transactions don't involve any type of company. Smaller companies or hobbyists can offer goods on e-commerce marketplaces without maintaining their web presence. C2C platforms are beneficial for both buyers and sellers, and the platforms make money by charging a small cost for each transaction, such as the advertising fee for products.

Types of E-commerce revenue models

1. Drop-shipping

Drop-shipping is a retail company where vendors accept consumer orders without maintaining inventory. The seller sends information about the order to the manufacturer, a wholesaler, or another store, which then sends the product directly to the consumer. In the drop-shipping model, a third-party supplier stocks, packages, and ships a product. B2C companies frequently employ the drop-shipping delivery model because it's simple to sell small quantities straight to customers.

2. Subscriptions services

In a subscription-based model, clients pay a recurring price (monthly or annually) to get scheduled goods delivery or anytime access to a service. Subscriptions are effective for e-commerce models like B2C, B2B, and C2B.

3. Wholesaling

Selling items in large quantities to another company rather than to the final consumer is known as wholesaling. Wholesaling requires more capital than other methods. Maintaining inventory levels, tracking client orders, keeping track of client shipping details, and owning the warehouse space to store goods are all essential for wholesaling business. B2B brands frequently use the wholesaling method.

4. Private labelling

A private label is used by businesses to take goods from other companies, package them as their own, and deliver the goods to clients. A private label strategy allows businesses to fulfil orders more creatively without keeping goods on hand. The private label method is a type of direct-to-consumer (D2C), which fits well with D2C business strategies.

5. White labelling

White-label applications are simple to integrate with your brand. In the white label method, a product is sold under your brand's name and logo, but the product is manufactured and obtained from a different distributor. Online retailer frequently uses the white-label method. Customers can see all information, including shipping costs and delivery times.

Social media E-commerce

Marketing and promoting e-commerce stores to a large audience can be done using social media. Social media helps you connect with friends and family and can also help your business by attracting new clients.

Benefits of social media

  1. Attract new consumers.
  2. Enhance brand awareness.
  3. Boost online sales.

Advantages of E-commerce

1. Offers large market for business

E-commerce allows businesses to connect with customers throughout the nation and around the globe. Customers can buy anything at any time and anywhere. E-commerce allows companies to interact with customers while relaxing in their homes.

2. Gathers client information

Businesses can collect more customer information by selling products online, such as addresses and emails. Additionally, it helps businesses to learn more about their shopping preferences.

3. Low cost

The cost of operating shops or warehouses for the products is avoided with e-commerce.

4. Convenience

Customers can purchase and complete transactions while comfortably sitting at home or at work.

5. Information

Customers can access essential information about goods and services from their homes or workplaces.

6. Personalized suggestions

Data analytics are used by e-commerce sites to monitor the data and displays the item that suits your demands.

7. Customer care

Customer assistance is available. Customers can call or use live chat to solve the problem.

Disadvantages of E-commerce

1. Physical unavailability

Customers can't touch or see the products, making them unhappy when they receive something different from what they were expecting.

2. Security

Security is a major problem with e-commerce. Hackers can quickly duplicate a website and obtain information about credit or debit cards used by customers.

3. Lack of privacy

Privacy is another reason for people's scepticism about e-commerce. Customers must provide their personal information to the seller, including address, mobile number, and other information. However, several websites do not use advanced technologies required to protect sensitive data, and some illegally gather consumer data.

4. Connectivity and website issues

E-commerce is an internet-based industry that is dependent on a reliable internet connection. Any situation that breaks this link to the consumer might lead to substantial losses. Problems like website crashes, lengthy load times, and a bad user experience highly impact the loss of connection and sales.

5. Fear

People typically hesitate to purchase online. Customers are scared by the news of data theft, card fraud, and scams and hesitate before making an online purchase, especially if the item is pricey. Customers fear being robbed while purchasing online, as many online sellers don't have a physical presence.

FAQs on E-commerce

1. What are the primary functions of e-commerce websites?

Answer: E-commerce websites offer an online platform for several businesses. It allows customers to buy safely from online sellers.

2. What are the characteristics of a successful e-commerce website?

Answer: The characteristics of a successful e-commerce website are as follows:

  1. Explicit policies.
  2. Fast loading time.
  3. Simple to use.
  4. Simple product descriptions.

3. Compare the pros and cons of E-Commerce.


Pros of E-Commerce Cons of E-Commerce
1. Allows placing orders at any time and from any location. 1. There is no assurance of the quality of the goods.
2. Easy to communicate with people around the world. 2. The option to try anything out before buying it is not available.
3. There is usually complete product information available. 3. Lack of security.

4. What is meant by digital product shops in e-commerce?

Answer: Digital product shops do not sell physical things. They provide digital goods, which are distinct from services. Digital goods can include online courses, artwork, audio files, etc. The most common type of digital product is software.

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