E-commerce
E-commerce (electronic commerce) is the buying and selling of goods or services over the internet. In a broader sense it also covers all the online processes connected with such transactions, including payments, marketing and logistics.
E-commerce takes various forms. The most common models are B2C (business to consumer), B2B (business to business) and C2C (consumer to consumer, through marketplaces such as Bazár or Vinted). Unlike traditional trade, the whole process — from browsing goods through ordering and payment to managing delivery — takes place online. This model has revolutionised the way companies sell and customers buy.
Advantages
- Global reach and 24/7 availability: the shop is limited neither geographically nor by opening hours. Customers from all over the world can buy at any time.
- Lower operating costs: compared with a bricks-and-mortar store there is no spending on renting large premises or on energy, and fewer staff may be needed.
- Measurability and personalisation: the business owner has detailed data about customer behaviour, which makes it possible to measure performance, optimise marketing and offer personalised recommendations.
- Convenience for the customer: shopping is fast, simple and done from the comfort of home. The customer can also easily compare prices and reviews.
Disadvantages
- Fraud risk and security threats: there is an increased risk of phishing attacks, identity theft or fraudulent e-shops, which demands greater caution from both sides.
- Logistics and delivery challenges: the drawbacks include additional shipping costs, the possibility of late delivery, and complications around complaints and returns.
- Dependence on technology: an internet outage or a failure of the website or payment gateway interrupts the sales process immediately and causes losses.
- Limited personal experience: the customer cannot physically handle or try the goods before buying, nor get immediate personal advice, which can lower satisfaction.
- Fierce online competition: setting up an e-shop is easy, which leads to enormous competition and the need for continual investment in marketing.
Practical example
A young entrepreneur interested in ecological products sets up an e-shop selling bamboo toothbrushes. Through social media and SEO they target environmentally minded customers. Operating costs are low (web hosting, a warehouse) but the reach is global. Customers simply browse the goods, pay online by card and have the goods delivered to their address. The entrepreneur can then use analytics to see which products sell best and adjust their range accordingly.