Define Electronic Commerce. Explain the concepts, features & functions of E-commerce.
Answers
E-commerce is the activity of buying or selling of products on online services or over the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collectionsystems.
Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction's life cycle although it may also use other technologies such as e-mail. Typical e-commerce transactions include the purchase of online books (such as Amazon) and music purchases (music download in the form of digital distribution such as iTunes Store), and to a less extent, customized/personalized online liquor storeinventory services.[1] There are three areas of e-commerce: online retailing, electric markets, and online auctions. E-commerce is supported by electronic business.[2]
E-commerce businesses may also employ some or all of the followings:
Online shopping for retail sales direct to consumers via Web sites and mobile apps, and conversational commerce via live chat, chatbots, and voice assistants[3]
Providing or participating in online marketplaces, which process third-party business-to-consumer or consumer-to-consumer sales
Business-to-business buying and selling;
Gathering and using demographic data through web contacts and social media
Business-to-business (B2B) electronic data interchange
Marketing to prospective and established customers by e-mail or fax (for example, with newsletters)
Engaging in pretail for launching new products and services
Online financial exchanges for currency exchanges or trading purposes
Benefits of E-commerce
Starting an E commerce business has never been easier. Solutions such as Shopify and WooCommerceallow even the least tech-savvy individuals to set up a store.
Gone are the days where hiring a designer and a web developer to get your ecommerce company off the ground are necessary.
Nowadays design templates and WYSIWYG systems enable people to launch an ecommerce store in a matter of minutes.
As a result, people are reaping all the benefits ecommerce stores have to offer.
Below are seven reasons why ecommerce is such an attractive option for entrepreneurs:
Global Reach – With a physical brick and mortar store you're limited geographically to nearby markets, i.e., if you have a store in New York and want to also sell in New Jersey, you’ll need to open another physical location.
Ecommerce doesn’t have this limitation. Instead, you can sell to anyone, anywhere in the world via your digital ecommerce business.
Always Open – Physical businesses usually have limited hours, but an online ecommerce shop remains “open” 24 hours a day, seven days a week, 365 days a year. This is hugely convenient for the customer and an excellent opportunity for merchants.
Cost Savings – Ecommerce businesses have significantly lower operating costs compared to physical shops. There's no rent, no staff to hire and pay, and very little in the way of fixed operating costs. This makes ecommerce stores extremely competitive on price, which usually increases the market share dramatically.
Automated Inventory Management – It’s far easier to automate inventory management through the use of electronic online tools and third-party vendors. This has saved ecommerce businesses billions of dollars in inventory and operating costs.
Inventory management has also become increasingly sophisticated. You can now manage your stock across multiple channels with great ease. So, you can sell and monitor your stock in your own store as well as marketplaces like eBay, Amazon, Etsy or a physical shop.
Laser Targeted Marketing – Online merchants can collect an amazing amount of consumer data to ensure they target the right people for their products.
This lowers the cost of customer acquisition and allows ecommerce online businesses to remain extremely agile. Imagine being able to target just males between 18-24 years old, living in urban areas. That’s laser focused marketing for you- there's no way you'd get that with just a physical store.
Niche Market Dominance – Because of the lower operating costs, the ability to target your ideal customer, as well as reaching a global audience that an ecommerce website brings, this ensures your companies profitability.
Location Independence – An ecommerce business owner isn't tied to any one location when running their business. As long as you have a laptop and an internet connection you can run your ecommerce business.