E-commerce is the buying and selling of products (goods & services) over the internet. There are two sectors of the E-commerce.
1. Indirect E-commerce
Ordering goods & services over the internet obtain them physically by traditional channels like mail or courier.
2. Direct E-commerce
Ordering goods & services over the internet and consume them intangibly through the internet.
Ex : Software, electronic magazines, entertainment services
Mainly E-commerce can be divided into following major categories. There are;
- B2B (Business to business)
- B2C (Business to customer)
- C2B (Customer to business)
- C2C (Customer to customer)
B2B (business to business)
In this case, only the companies are doing their businesses with each other. For an example selling products for the distributors & selling products by wholesalers to retailers. In here the price of the product may depend on the number of quantities in the order and it can often be determined by each parties.
Example : BusyTrade.com
B2C (business to customer)
This means selling goods & services to customers through the e-shopping platforms. Mostly just buying and selling happens through this.
Example : Amazon.com
C2B (customer to business)
A customer posted the specific budget of his project through the internet and the companies are allowed to bidding for the project by summarizing the customer needs.
Example : Priceline.com
C2C (customer to customer)
A customer sells goods & services to another customer in this segment. There is another technology called intermediate payment service to support c2c activities.
Example : Ebay.com
Strategies of E-commerce
Many specialists and observers agreed that the business will starts from the beginning to activate e-commerce strategies because the processes which include e-commerce strategy aren’t connect with system distribution routes and business models. So it is very necessary to pay attention for the following elements when restart the business.
- What customers want to buy from us?
- What business should we be in?
- What kind of partners do we need?
- What product do we need to attract and retain customers?
There are three integrated stages to identify the changes required for the organization. They are,
Stage 1 – Introduce new technology to connect electronically with customers, suppliers and employees.
Stage 2 – Reorganize the labor force, processes, systems, strategies for make the maximum use of new technology.
Stage 3 – Repositioned the organization according to the emerging electronic economy.
Overall, it is not necessary for an e-commerce strategy to be integrated with the overall business strategy and there are 3 basic criteria for e- commerce strategic choice.
- Fitness – The e-commerce strategy should supports to overall business strategies.
- Recognition – It means the e-commerce strategy should be acknowledge by business affiliates.
- Feasibility-Feasibility means the attention on resources. In here, money is consider as the basic resource.
There are several formats of e-commerce
- Advertising format – In this format the organization supplies a good or a service to the customer without any charges. Instead of that they charge advertising revenue from advertisements, search engines & social medias such as face book.
- Internet format – Organization collects information about customers and their purchasing habits. And give those information to another organization. The price comparison model is another way of this format. In here an organization provides a web site for customers to compare the price of similar products from various suppliers. Customer doesn’t eligible to pay any charges and when customers are ordering products through the web site the price comparison company id capable to earn money by commissions.
- Trade format – In this, organizations use internet for sell their goods and services. Customers can online order products and make their payments. If the buying product is a physical product the company should distribute the buying good for the customers’ mailing address.
- Manufacture’s format – the organization markets their products through their own websites than using retail intermediaries.
- Subscription format – In this format customers have to do payments for enter to the usually a high value website.
Advantages of E-commerce
- breaks geographical boundaries
- reduces cost
- identifying new customers through search engine technology
- reduces transportation cost and the time
- provides many information
- creates a comparative purchase method
- the location of the product can be identified very quickly
Disadvantages of E-commerce
- E-commerce is very difficult to manage because of incorporate unusual concepts of owners of the web technology designers . therefore, expert supervision is required.
- If e-commerce is not activated from the beginning the organization will have to be restarted as it is not connected with the existing business systems. So it can be an underestimation of time and labor.
- Legal issues related to e-commerce are complex and still under development
E-commerce has made changes in businesses as follows
- E-commerce has increase the rivalries among competitors in an industry
- Continuously transfer the power to the customer
- Development of competitiveness locally, nationally, internationally and globally
- Accelerate the speed of the business
- Increase the business transactions and workflows
- Decrease the importance of the place
- Consider knowledge as a strategic asset
*However e-commerce is often confused with e-business. The difference between e-commerce and e-business is,
e-commerce use internet for only buying and selling processes and e-business use internet for transforming main business processes including marketing, operations, wholesale control etc.