E-commerce or electronic commerce is an entrepreneurial activity that, in one way or another, is associated with the distribution, advertising, promotion, and sale of services or goods over the Internet. To simplify, any activity with a commercial bias in the global network falls under the definition of online commerce. This area originated in the United States, then developed in Europe, and in the late 90s of the last century began to actively develop in China and Russia
E-commerce brings together such global categories as online sales, internet banking, ticket and hotel reservations, payment system transactions, online marketing and advertising. In technical terms, e-commerce on the Internet stands on three pillars - a server, a database, and a system for delivering a product or service to a buyer. The first component is critical - a high-quality and fast server. The database is needed by large objects, and the delivery of electronic goods or services does not require complex logistics
Types of e-commerce on the Internet
The E-commerce sphere is divided into types depending on the target audience with which the company works:
1 B2B (Business-to-Business). The niche "Business for business" implies commercial relations between legal entities and economic entities of the market. That is, companies, and manufacturers interact with each other - conclude deals, and partnership contracts for the supply, sale, and purchase of goods or services. To establish contacts, search for partners and negotiate in B2B, specialized Internet platforms and interactive databases are used
2 B2C (Business-to-Consumer). The sphere "Business for the consumer" involves the trade in goods and services between legal entities and individuals. This is a kind of retail sales, but only with the help of online platforms - shops, services, banks, and so on. The advantage of customers in a larger range of choices, ease of ordering and delivery of goods to your home or office. E-commerce allows an entrepreneur to reduce the cost of maintaining retail and warehouse space
3 B2G (Business-to-Government). The “Business for Government” niche includes the following market participants: legal entities - companies, corporations, brands on the one hand, and municipal authorities, government agencies - on the other. A striking example is the public procurement portal of the Russian Federation. Transactions in B2G are carried out on the basis of competitions, tenders or quotations. This area of e-commerce operates with large transaction sizes, which places strict requirements on market participants. The company participating in the auction must have a high status and impeccable reputation
4 С2С (Consumer-to-Consumer). E-commerce in the "Consumer to Consumer" niche involves transactions between individuals. The success of such Internet sites as Amazon, eBay, and others is based on the commercial relations of users through the electronic ad system
5 G2C (Government-to-Citizens). Quite a popular type of e-commerce in recent years is "Government for Citizens" - providing access to government information through online services. For example, payment of taxes and fines, registration of projects and forms of commercial activity, obtaining permits and more. This category also includes information support for citizens, so G2C does not fully belong to the commercial niche
6 C2B (Consumer-to-Business). An interesting type of e-commerce is "Consumer for the company", where the client himself sets the cost of goods and services. That is, buyers, by voting, determine the price for which they would like to purchase the proposed product. However, the final decision “to sell or not” is made by the owner of the product. In the C2B system, the site or any other electronic platform acts as an intermediary broker who is looking for sellers for the formed price of potential buyers
7 G2G (Government-to-Government). The sphere of e-commerce "Government for Government" implies business relations between government agencies: the supply of products, the provision of services, and so on. Such interaction is implemented through online technologies
8 B2P (Business-to-Partners) or B2L (Business-to-Alliance). The "Business for Partners" niche is a commercial relationship with service and product providers, between affiliates, partner organizations of the same network, or third-party companies
9 B2E (Business-to-Employee). The sphere of relations with personnel can also be commercialized. "Business for employees" implies the use of various automation systems for managing business processes and corporate tasks. Such systems are combined into a network - an intranet, which has access to the global system through secure channels
10 B2B2С (Business-to-Business-to-Customer). An example of combining two types of e-commerce is Business to Business and Consumer. Integration of B2B and B2C systems in a single platform. For example, a company purchases goods in China enters into contracts with Cargo warehouses to send orders to buyers' addresses. It turns out the chain: the seller company (B2B) - the warehouse (B2B) - the buyer (B2C)
11 E2E (Exchange-to-Exchange). A highly specialized type of e-commerce is "Exchange for the exchange" when sellers and buyers interact between various electronic exchanges. For example, e-currency exchange services
Today, most of the niches are B2B and B2C. The public procurement sector has a fairly high entry threshold, so it does not stand out as a massive one. The G2C and C2C niches are developing well. In any case, e-commerce should include the following elements:
platform (website, account, online store, Landing Page);
channels for attracting traffic (SEO, SMM, contextual advertising, targeted advertising);
order processing systems, customer service - CRM, sales departments, support services;
procurement, supply, delivery, return of goods service
How E-Commerce Works
Let's consider the principle of E-commerce using the example of ordering goods in an online store. The algorithm is the following:
Step one - the buyer, looking through the online catalog, decides to choose a product. His PC or mobile device through the browser interacts with the server where the store is located
Step two - the server, having received the user's request, sends it to the manager in the order processing system
Step three - The manager makes a request to the database about the availability of goods in the warehouse. If the goods are not available, then a request is made to the manufacturer, the time of delivery to the warehouse is clarified, after which the client is provided with specific information
Step four - if the goods are in stock, the store employee continues processing the application
The fifth step is an appeal to the financial system with a request to process a transaction - a payment from a client
Step six - the financial system allows or blocks the transaction depending on the situation with the client's account (lack of money, non-working card, etc.). If the transaction is successful, then the manager confirms the transaction and notifies the server about it
Step seven - the server displays a message to the buyer that the payment has been successfully made, the order has been accepted for processing
Step eight - the application is sent to the warehouse, where the goods are formed for shipment to the client's address
Step nine - the logistics department employees deliver the goods to the client
Step ten - after sending the order from the warehouse, the server sends a notification to the client by e-mail or phone (SMS) that the goods are on the way
The algorithm for online services, Internet banking is approximately the same, except that the services may not have a physical embodiment. For example, selling access to the full functionality of the program, buying e-books, and more
E-Commerce Examples
Here are a few niches of successful E-commerce implementation:
Online services for receiving utility bills, fines, registrations, etc. The multi-meter queues at the bank to pay utility bills are long gone. Electronic services are available from any computer or gadget. It is enough to connect Internet banking and calmly pay from home for an apartment, rent, credit and other services
Catalog sites, bulletin boards, aggregators of services and goods. The popularity of Amazon, eBay, trading sites between individuals and companies is over the top. The possibility of booking tickets, hotel rooms opens up great prospects for the development of this niche
Sites distributing films, books on a paid basis, online cinemas and more. Intellectual property has also become a digital product, so the results of the work of writers, musicians, directors are actively sold in the online space.
Online shops, online auctions, online banking, advertising, marketing and many other areas thrive in a virtual environment
Since 1998, e-commerce has smoothly reached a turnover of 3-3.5 trillion dollars over 20 years of activity. E-commerce leaders - China, USA. Russia occupies 10th place in the ranking, but has a good chance to climb a few steps higher, thanks to close cooperation with Chinese online giants
Advantages and disadvantages
E-commerce, like any niche market, has its pros and cons. Let's consider in more detail
1 Cost reduction. E-commerce simplifies business processes in many industries. For example, to open an online store, you do not need to rent a physical space, hire sales staff and delivery staff. All actions can be automated, and, if the goods are electronic, then the delivery service can be greatly simplified. As a result, transaction costs are lower, which affects the cost of products or services
2 Expansion of the target audience. Through the Internet, you can sell around the world at no extra cost. Of course, if the business is related to physical goods, then you will have to break your head with delivery. A simple solution is cooperation with transport companies. But if you sell electronic goods, services - e-books, programs, services, etc., then the market is unlimited
3 Fewer intermediaries. E-commerce allows you to work directly with the manufacturer, eliminating the chain of intermediaries. This creates a direct channel between the seller and the buyer, which affects the cost of goods and the quality of service
4 The ability to analyze sales, promotion, business development online with 100% accuracy. Analytics and call tracking systems allow you to monitor the situation and take timely action
Disadvantages of e-commerce:
1 Dependence on information and communication technologies. Not all regions have free access to the Internet at high speed, this factor greatly hinders the development of electronic business
2 Peculiarities of legislation, taxes. The lack of legal regulation of online commerce often serves as an obstacle to the conclusion of certain transactions
3 Information security. Online trading and online business require a high guarantee of confidentiality of data of users, buyers, and participants in commercial activities. Certification, authorization, captcha and other anti-fraud options are being actively implemented
4 Copyright. Protecting property rights is not a new problem for the Internet for a long time. Pirated copies of the software, master classes, books and other products of intellectual work “merged” into free access - all this is becoming a problem for e-commerce all over the world
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