What is E-Commerce? Definition and Meaning - TechTarget

E-commerce (electronic commerce) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, ... Home Apps,infrastructureandoperations Internettechnologies e-commerce Sharethisitemwithyournetwork: By WesleyChai, TechnicalWriter BrianHolak, SiteEditor BenCole, ExecutiveEditor E-commerce(electroniccommerce)isthebuyingandsellingofgoodsandservices,orthetransmittingoffundsordata,overanelectronicnetwork,primarilytheinternet.Thesebusinesstransactionsoccureitherasbusiness-to-business(B2B),business-to-consumer(B2C),consumer-to-consumerorconsumer-to-business.Thetermse-commerceande-businessareoftenusedinterchangeably.Theterme-tailisalsosometimesusedinreferencetothetransactionalprocessesthatmakeuponlineretailshopping. Inthelastdecade,widespreaduseofe-commerceplatformssuchasAmazonandeBayhascontributedtosubstantialgrowthinonlineretail.In2007,e-commerceaccountedfor5.1%oftotalretailsales;in2019,e-commercemadeup16.0%. Howdoese-commercework? E-commerceispoweredbytheinternet,wherecustomerscanaccessanonlinestoretobrowsethrough,andplaceordersforproductsorservicesviatheirowndevices. Astheorderisplaced,thecustomer'swebbrowserwillcommunicatebackandforthwiththeserverhostingtheonlinestorewebsite.Datapertainingtotheorderwillthenberelayedtoacentralcomputerknownastheordermanager--thenforwardedtodatabasesthatmanageinventorylevels,amerchantsystemthatmanagespaymentinformation(usingapplicationssuchasPayPal),andabankcomputer--beforecirclingbacktotheordermanager.Thisistomakesurethatstoreinventoryandcustomerfundsaresufficientfortheordertobeprocessed.Aftertheorderisvalidated,theordermanagerwillnotifythestore'swebserver,whichwillthendisplayamessagenotifyingthecustomerthattheirorderhasbeensuccessfullyprocessed.Theordermanagerwillthensendorderdatatothewarehouseorfulfillmentdepartment,inorderfortheproductorservicetobesuccessfullydispatchedtothecustomer.Atthispointtangibleand/ordigitalproductsmaybeshippedtoacustomer,oraccesstoaservicemaybegranted. Platformsthathoste-commercetransactionsmayincludeonlinemarketplacesthatsellerssimplysignupfor,suchasAmazon.com;softwareasaservice(SaaS)toolsthatallowcustomersto'rent'onlinestoreinfrastructures;oropensourcetoolsforcompaniestousein-housedevelopmenttomanage. Typesofe-commerce Business-to-business(B2B)e-commercereferstotheelectronicexchangeofproducts,servicesorinformationbetweenbusinessesratherthanbetweenbusinessesandconsumers.Examplesincludeonlinedirectoriesandproductandsupplyexchangewebsitesthatallowbusinessestosearchforproducts,servicesandinformationandtoinitiatetransactionsthroughe-procurementinterfaces. In2017,ForresterResearchpredictedthattheB2Be-commercemarketwilltop$1.1trillionintheU.S.by2021,accountingfor13%ofallB2Bsalesinthenation. Business-to-consumer(B2C)istheretailpartofe-commerceontheinternet.Itiswhenbusinessessellproducts,servicesorinformationdirectlytoconsumers.Thetermwaspopularduringthedot-comboomofthelate1990s,whenonlineretailersandsellersofgoodswereanovelty. Today,thereareinnumerablevirtualstoresandmallsontheinternetsellingalltypesofconsumergoods.ThemostrecognizedexampleofthesesitesisAmazon,whichdominatestheB2Cmarket. Consumer-to-consumer(C2C)isatypeofe-commerceinwhichconsumerstradeproducts,servicesandinformationwitheachotheronline.Thesetransactionsaregenerallyconductedthroughathirdpartythatprovidesanonlineplatformonwhichthetransactionsarecarriedout. OnlineauctionsandclassifiedadvertisementsaretwoexamplesofC2Cplatforms,witheBayandCraigslistbeingtwoofthemostpopularoftheseplatforms.BecauseeBayisabusiness,thisformofe-commercecouldalsobecalledC2B2C--consumer-to-business-to-consumer. Consumer-to-business(C2B)isatypeofe-commerceinwhichconsumersmaketheirproductsandservicesavailableonlineforcompaniestobidonandpurchase.ThisistheoppositeofthetraditionalcommercemodelofB2C. ApopularexampleofaC2Bplatformisamarketthatsellsroyalty-freephotographs,images,mediaanddesignelements,suchasiStock.Anotherexamplewouldbeajobboard. Business-to-administration(B2A)referstotransactionsconductedonlinebetweencompaniesandpublicadministrationorgovernmentbodies.Manybranchesofgovernmentaredependentone-servicesorproductsinonewayoranother,especiallywhenitcomestolegaldocuments,registers,socialsecurity,fiscalsandemployment.Businessescansupplytheseelectronically.B2Aserviceshavegrownconsiderablyinrecentyearsasinvestmentshavebeenmadeine-governmentcapabilities. Consumer-to-administration(C2A)referstotransactionsconductedonlinebetweenindividualconsumersandpublicadministrationorgovernmentbodies.Thegovernmentrarelybuysproductsorservicesfromcitizens,butindividualsfrequentlyuseelectronicmeansinthefollowingareas: Education.Disseminatinginformation,distancelearning/onlinelectures,etc. Socialsecurity.Distributinginformation,makingpayments,etc. Taxes.filingtaxreturns,makingpayments,etc. Health.Makingappointments,providinginformationaboutillnesses,makinghealthservicespayments,etc. Mobilee-commerce(M-commerce)isatypeofe-commerceontherisethatfeaturesonlinesalestransactionsmadeusingmobiledevices,suchassmartphonesandtablets.M-commerceincludesmobileshopping,mobilebankingandmobilepayments.Mobilechatbotsalsoprovidee-commerceopportunitiestobusinesses,allowingconsumerstocompletetransactionswithcompaniesviavoiceortextconversations. Advantagesanddisadvantagesofe-commerce Benefitsofe-commerceincludeitsaround-the-clockavailability,thespeedofaccess,thewideavailabilityofgoodsandservicesfortheconsumer,easyaccessibilityandinternationalreach. Availability.Asidefromoutagesorscheduledmaintenance,e-commercesitesareavailable24x7,allowingvisitorstobrowseandshopatanytime.Brick-and-mortarbusinessestendtoopenforafixednumberofhoursandmayevencloseentirelyoncertaindays. Speedofaccess.Whileshoppersinaphysicalstorecanbeslowedbycrowds,e-commercesitesrunquickly,whichisdeterminedbycomputeandbandwidth considerationsonbothconsumerdeviceande-commercesite.Productpagesandshoppingcartpagesloadinafewsecondsorless.Ane-commercetransactioncancompriseafewclicksandtakelessthanfiveminutes. Wideavailability.Amazon'sfirstsloganwas"Earth'sBiggestBookstore."Theycouldmakethisclaimbecausetheywereane-commercesiteandnotaphysicalstorethathadtostockeachbookonitsshelves.E-commerceenablesbrandstomakeawidearrayofproductsavailable,whicharethenshippedfromawarehouseafterapurchaseismade.Customerswilllikelyhavemoresuccessfindingwhattheywant. Easyaccessibility.Customersshoppingaphysicalstoremayhaveahardtimedeterminingwhichaisleaparticularproductisin.Ine-commerce,visitorscanbrowseproductcategorypagesandusethesitesearchfeaturethefindtheproductimmediately. Internationalreach.Brick-and-mortarbusinessesselltocustomerswhophysicallyvisittheirstores.Withe-commerce,businessescanselltoanycustomerwhocanaccesstheweb.E-commercehasthepotentialtoextendabusiness'customerbase Lowercost.pureplay e-commercebusinessesavoidthecostassociatedwithphysicalstores,suchasrent,inventoryandcashiers,althoughtheymayincurshippingandwarehousecosts. Personalizationandproductrecommendations.E-commercesitescantrackvisitors'browse,searchandpurchasehistory.Theycanusethisdatatopresentusefulandpersonalizedproductrecommendations,andobtainvaluableinsightsabouttargetmarkets.ExamplesincludethesectionsofAmazonproductpageslabeled"Frequentlyboughttogether"and"Customerswhoviewedthisitemalsoviewed." Theperceiveddisadvantagesofe-commerceincludesometimeslimitedcustomerservice,consumersnotbeingabletoseeortouchaproductpriortopurchaseandthewaittimeforproductshipping. Limitedcustomerservice.Ifacustomerhasaquestionorissueinaphysicalstore,heorshecanseeaclerk,cashierorstoremanagerforhelp.Inane-commercestore,customerservicemaybelimited:Thesitemayonlyprovidesupportduringcertainhoursoftheday,oracalltoacustomerservicephonenumbermaykeepthecustomeronhold. Notbeingabletotouchorsee.Whileimagesonawebpagecanprovideagoodsenseaboutaproduct,it'sdifferentfromexperiencingit"directly,"suchasplayingmusiconspeakers,assessingthepicturequalityofatelevisionortryingonashirtordress.E-commercecanleadconsumerstoreceiveproductsthatdifferfromtheirexpectations,whichleadstoreturns.Insomescenarios,thecustomerbearstheburdenforthecostofshippingthereturneditemtotheretailer. Waittime.Ifacustomerseesanitemthatheorshelikesinastore,thecustomerpaysforitandthengoeshomewithit.Withe-commerce,thereisawaittimefortheproducttobeshippedtothecustomer'saddress.Althoughshippingwindowsaredecreasingasnextdaydeliveryisnowquitecommon,it'snotinstantaneous. Security.Skilledhackerscancreateauthentic-lookingwebsitesthatclaimtosellwell-knownproducts.Instead,thesitesendscustomersforfeitorimitationversionsofthoseproducts--or,simplycollectscustomers'creditcardinformation.Legitimatee-commercesitesalsocarryrisk,especiallywhencustomersstoretheircreditcardinformationwiththeretailertomakefuturepurchaseseasier.Iftheretailer'ssiteishacked,hackersmaycomeintothepossessionofcustomers'creditcardinformation. E-commerceapplications E-commerceisconductedusingavarietyofapplications,suchasEmail,onlinecatalogsandshoppingcarts,ElectronicDataInterchange(EDI),thefiletransferprotocol,webservicesandmobiledevices.ThisincludesB2Bactivitiesandoutreach,suchasusingemailforunsolicitedads,usuallyviewedasspam,toconsumersandotherbusinessprospects,aswellassendingoute-newsletterstosubscribersandSMStextstomobiledevices.Morecompaniesnowtrytoenticeconsumersdirectlyonline,usingtoolssuchasdigitalcoupons,socialmediamarketingandtargetedadvertisements. Theriseofe-commercehasforcedITpersonneltomovebeyondinfrastructuredesignandmaintenancetoconsidernumerouscustomer-facingaspects,suchasconsumerdataprivacyandsecurity.WhendevelopingITsystemsandapplicationstoaccommodatee-commerceactivities,datagovernance-relatedregulatorycompliancemandates,personallyidentifiableinformationprivacyrulesandinformationprotectionprotocolsmustbeconsidered. E-commerceplatformsandvendors Ane-commerceplatformisatoolthatisusedtomanageane-commercebusiness.E-commerceplatformoptionsexistforclientsranginginsizefromsmallbusinessestolargeenterprises.Thesee-commerceplatformsincludeonlinemarketplacessuchasAmazonandeBay,thatsimplyrequiresigningupforuseraccounts,andlittletonoITimplementation.Anothere-commerceplatformmodelisSaaS,wherestoreownerscansubscribeto"rent"spaceinacloud-hostedservicethatdoesnotrequirein-housedevelopmentoron-premisesinfrastructure.Othere-commerceplatformsmaycomeintheformofopensourceplatformsthatrequireahostingenvironment(cloudoronpremises),completemanualimplementationandmaintenance. Afewexamplesofe-commercemarketplaceplatformsinclude: Amazon eBay WalmartMarketplace Chewy Wayfair Newegg Alibaba Etsy Overstock Rakuten Vendorsofferinge-commerceplatformservicesforclientshostingtheirownonlinestoresitesinclude: Shopify WooCommerce Magento Squarespace BigCommerce Ecwid SalesforceCommerceCloud(B2BandB2Coptions) OracleSuiteCommerce Governmentregulationsfore-commerce IntheUnitedStates,theFederalTradeCommission(FTC)andthePaymentCardIndustry(PCI)SecurityStandardsCouncilareamongtheprimaryagenciesthatregulatee-commerceactivities.TheFTCmonitorsactivitiessuchasonlineadvertising,contentmarketingandcustomerprivacy,whilethePCISecurityStandardsCouncildevelopsstandardsandrules,includingPCIDataSecurityStandardcompliance,whichoutlinesproceduresfortheproperhandlingandstorageofconsumers'financialdata. Toensurethesecurity,privacyandeffectivenessofe-commerce,businessesshouldauthenticatebusinesstransactions,controlaccesstoresourcessuchaswebpagesforregisteredorselectedusers,encryptcommunications,andimplementsecuritytechnologies,suchastheSecureSocketsLayerandtwo-factorauthentication. Historyofe-commerce Thebeginningsofe-commercecanbetracedtothe1960s,whenbusinessesstartedusingEDItosharebusinessdocumentswithothercompanies.In1979,theAmericanNationalStandardsInstitutedevelopedASCX12asauniversalstandardforbusinessestosharedocumentsthroughelectronicnetworks. Afterthenumberofindividualuserssharingelectronicdocumentswitheachothergrewinthe1980s,theriseofeBayandAmazoninthe1990srevolutionizedthee-commerceindustry.Consumerscannowpurchaseendlessamountsofitemsonline,frome-tailers,typicalbrick-and-mortarstoreswithe-commercecapabilities.Now,almostallretailercompaniesareintegratingonlinebusinesspracticesintotheirbusinessmodels. Disruptiontophysicalretail Giventhelargeriseine-commerceinrecentyears,manyanalysts,economistsandconsumershavedebatedwhethertheonlineB2Cmarketwillsoonmakephysical,brick-and-mortarstoresobsolete.Thereislittlequestionthatonlineshoppingisgrowingatasignificantrate. E-commercecontinuestogrowin2020 ResearchfromBigCommercehasfoundthatAmericansareaboutevenlysplitononlineversusoffline,traditionalretailshopping,with51%ofAmericanspreferringe-commerceand49%preferringphysicalstores.However,67%ofmillennialsprefershoppingonlineoveroffline.AccordingtoForbes,40%ofmillennialsarealsoalreadyusingvoiceassistantstomakepurchases,withthatnumberexpectedtosurpass50%by2020. Anexampleoftheimpacte-commercehashadonphysicalretailisthepost-ThanksgivingBlackFridayandCyberMondayshoppingdaysintheUnitedStates.AccordingtoRakutenMarketingdata,in2017,CyberMonday,whichfeaturessalesthatareexclusivelyonline,saw68%higherrevenuesthanBlackFriday,whichistraditionallythebiggestbrick-and-mortarshoppingdayoftheyear. AccordingtodatafromShopperTrakin2017,physicalstoretrafficonBlackFridaydeclinedby1%yearoveryear,andthetwo-dayThanksgiving-BlackFridayperiodsawa1.6%declineintraffic.Nearly40%ofsalesonBlackFridaycameviaamobiledevice,upnearly10%fromthepreviousyear,anindicationthate-commerceisbecomingm-commerce.Alongwithphysicalretail,e-commerceistransformingsupplychainmanagementpracticesamongbusinesses,asdistributionchannelsbecomeincreasinglydigitized. ThiswaslastupdatedinDecember2020 ContinueReadingAboute-commerce Androidinstantappsworkinane-commerceenvironment Thefutureofe-commerceandCRM:Whattowatch 5CXimprovementse-commercebrandshavetomakethisyeartoremaincompetitive E-commercepackagingwastebecomingabiggerissue Pandemice-commercetrendspointtomassivegrowth RelatedTerms AdobeFlashPlayer AdobeFlashPlayerissoftwareusedtostreamandviewvideo,audio,multimediaandRichInternetApplicationsonacomputeror... 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