What is e-commerce?
The term E-commerce is a word for activity that involves buying and selling products or services online. It’s a commercial transactions conducted electronically on the Internet. The standard definition of E-commerce is a commercial transaction which is happened over the internet. Online stores like Amazon, Shopify, Ebay, Quikr, Olx, Konga, Jiji, Jumia are examples of E-commerce websites.
How does e-commerce work?
Like many other regular business involvement, e-commerce is the process of buying and selling of products or services, settling payment through usage of credit card (MasterCard, Visa, Valve) by means of online payment gateway like Interswitch, PayPal, or direct bank transfers or deposit, and transferring data over an electronic medium (Internet). This network allows people to do business without the constraint of distance and time.
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What are types of e-commerce?
These business transactions can be done in four ways: Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), Customer to Business (C2B).
What are the advantage and disadvantage of e-commerce.?
By 2020, global retail e-commerce can reach up to $27 Trillion. Let us learn in detail about what is the advantages and disadvantages of E-commerce and its types.
So when you log into your Jumia and purchase an iPhone, this is a classic example of an e-commerce transaction. Here you interact with the seller (Jumia), exchange data in form of pictures, text, address for delivery etc. and then you make the payment, some time at delivery, depending on the method you choose.
As of now, e-commerce is one of the fastest growing industries in the global economy. As per one estimate, it grows nearly 23% every year. And it is projected to be a $27 trillion industry by the end of this decade.
Advantages of E-Commerce
- E-commerce provides the sellers with a global reach. They remove the barrier of place (geography). Now sellers and buyers can meet in the virtual world, without the hindrance of location.
- Electronic commerce will substantially lower the transaction cost. It eliminates many fixed costs of maintaining brick and mortar shops. This allows the companies to enjoy a much higher margin of profit.
- It provides quick delivery of goods with very little effort on part of the customer. Customer complaints are also addressed quickly. It also saves time, energy and effort for both the consumers and the company.
- One other great advantage is the convenience it offers. A customer can shop 24×7. The website is functional at all times, it does not have working hours like a shop.
- Electronic commerce also allows the customer and the business to be in touch directly, without any intermediaries. This allows for quick communication and transactions. It also gives a valuable personal touch.
Disadvantages of E-Commerce
- The start-up costs of the e-commerce portal are very high. The setup of the hardware and the software, the training cost of employees, the constant maintenance and upkeep are all quite expensive.
- Security is another area of concern. Only recently, we have witnessed many security breaches where the information of the customers was stolen. Credit card theft, identity theft etc. remain big concerns with the customers.