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What is E-Commerce? Types, Benefits, and more

E-Commerce

E-commerce is the buying and selling of goods or services via the internet, and the transfer of money and data to complete the sales. It’s also known as electronic commerce or internet commerce.

Types of E-Commerce

Business to Consumer (B2C): B2C e-commerce is the most popular e-commerce model. Business to the consumer means that the sale is taking place between a business and a consumer, like when you buy a rug from an online retailer.

Business to Business (B2B): B2B e-commerce refers to a business selling a good or service to another business, like a manufacturer and wholesaler, or a wholesaler and a retailer. Business-to-business e-commerce isn’t consumer-facing, and usually involves products like raw materials, software, or products that are combined. Manufacturers also sell directly to retailers via B2B eCommerce.

Direct to Consumer (D2C): Direct to consumer e-commerce is the newest model of e-commerce, and trends within this category are continually changing. D2C means that a brand is selling directly to its end customer without going through a retailer, distributor, or wholesaler. Subscriptions are a popular D2C item, and social selling via platforms like Instagram, Pinterest, Facebook, Snapchat, etc. are popular platforms for direct-to-consumer sales.

Consumer to Consumer (C2C): C2C e-commerce refers to the sale of a good or service to another consumer. Consumer-to-consumer sales take place on platforms like eBay, Etsy, Fiver, etc.

Consumer to Business (C2B): Consumer to business is when an individual sells their services or products to a business organization. C2B encompasses influencers offering exposure, photographers, consultants, freelance writers.

What are the benefits of E-Commerce?

There is a reason why E-Commerce has demonstrated such explosive growth in the past couple of years. Of course, with the internet becoming an essential requirement of everyday life, businesses are learning to take advantage of the numerous benefits of E-Commerce, the most notable of which include:

Global market

A physical store will always be limited by the geographical area it can serve. An online store, or any other type of E-Commerce business for that matter, has the whole world as its market.

Around-the-clock availability

Another great benefit of running an online business is that it is always open. For a merchant, it’s a dramatic increase in sales opportunities; for a customer, it’s a convenient and immediately available option.

Reduced costs

E-Commerce businesses benefit from significantly lower running costs. As there’s no need to hire sales staff or maintain a physical storefront, the major E-Commerce costs go to warehousing and product storage.

Inventory management

E-Commerce businesses can automate (with CRM) their inventory management by using electronic tools to accelerate ordering, delivery, and payment procedures. It’s saving businesses billions in operational and inventory costs.

Targeted marketing

With access to such a wealth of customer data and an opportunity to keep an eye on customer buying habits as well as the emerging industry trends, E-Commerce businesses can stay agile and shape their marketing efforts to provide a better-tailored experience and find more new customers. Just consider for a moment that you have a chance to address thousands of your customers by their first name; that is something already.

Serving niche markets

Running a niche brick-and-mortar business can be tough. Scaling a niche product to become popular is effortful. By tapping into a global market, on the other hand, E-Commerce retailers can build a highly profitable niche business without any further investment. Using online search capabilities, customers from any corner of the world can find and purchase your products.

Working from anywhere

Often, running an E-Commerce business means that you don’t need to sit in an office from 9 to 5 or suffer through a commute day-in and day-out. A laptop and a good internet connection are all it takes to manage your business from anywhere in the world.

Why the e-commerce business has flooded the Internet so fast?

Because the advantages of e-commerce compared to traditional commerce are really powerful.

Advantages

  • More clients. There is no local store or company with sufficient offices in different cities that compares with e-commerce’s reach. The possibility of selling and buying from any part of the world expands the target public and allows the company to gain more clients.
  • No schedule: E-commerce does not run on schedules, whereas it is nearly impossible to find a traditional store that is open 24/7. Websites are open all day long and clients can buy whatever they want whenever they want it.
  • Less costs: not needing a physical store reduces the costs of running a traditional business. In addition, when e-commerce brings suppliers together with consumers there are not even production costs.
  • Bigger profit margin: cost reduction and market extension mean that, even with lower prices, a bigger profit margin can be obtained than with a traditional store. More products are sold and more money is made.
  • Scalability: This means that you can sell to either one or to a thousand people at the same time. In a physical store there is always a limit to the number of clients that you can assist at the same time. On the other hand, with e-commerce, the only limit is your ability to attract clients. Well, that and your server.

After having read this you may think that starting an e-commerce shop is the cure-all, E-Commerce does not come with only advantages.

That is why it is also advisable to analyze the challenges that you will have to face when you begin your online adventure.

Disadvantages (challenges)

We wanted to call them challenges more than disadvantages to avoid showing a distorted picture.

Of course, there are some disadvantages, as with everything in life, but if there were none, starting E-Commerce would be too easy and there wouldn’t be any perks to it at all.

    Lack of trust: Although payment platforms have evolved to the point of being as secure as any physical business, or even more so, a lot of people still think that less payment security, lack of trust. This means mistrust.    

Products and services that “cannot be seen or touched”: Everyone likes the feeling of making a good investment. A way of making that feeling real is by seeing and touching the products with our hands. That tangible feeling is missing in an e-commerce shop.

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