What Is Ecommerce?

Date First Published: 17th April 2022

Topic: Computer Networking

Subtopic: Network Services

Computer Terms & Definitions

Difficulty Level: 2/10

Learn more about what ecommerce is in this article.

Short for electronic commerce, ecommerce refers to the buying and selling of products electronically on the internet. Ecommerce often refers to the selling of physical products online, but it can describe any type of commercial transaction that takes place over the internet. For example, Amazon and eBay are ecommerce sites since they allow people to buy and sell physical products over the internet.

All that is required for ecommerce to take place is a seller who has physical products that are displayed electronically, a buyer who has the necessary equipment, the technology required to view the seller's products, such as a device, and an internet connection that allows the seller and buyer to exchange information and payment.

Advantages and Disadvantages Of Ecommerce

• People can buy and sell 24/7. Unlike physical stores that are not usually open 24 hours a day, ecommerce allows people to make electronic transactions over the internet at any time of day.
• Anyone around the world with an internet connection can buy and sell, attracting a wider range of customers and expanding the customer base.
• Reduced costs. Buying and selling products online eliminates the need for a physical store, reducing costs for the business.
• It eliminates the need for people to travel. If the store is far away, this will be better for the environment as there will be less traffic, causing less air pollution. This also leads to lower costs for potential customers.

• Customers do not receive items instantly. When customers buy items, there is always a waiting time for delivery. This is why ecommerce is not recommended for customers that need items instantly.
• Risk of scams. The use of ecommerce has increased the chances of people getting scammed. There are lots of online stores out there that sell fake products that were not as described on the page. Online stores might not be legitimate and people might pay money for a product they never actually receive.
• Customers do not get to properly take a look at products before they make a purchase. Ecommerce solely relies on images, descriptions, and promotional videos to help customers decide whether to make a purchase. As a result, returns occur much more often on products bought online than in a physical store.
• Ecommerce fully depends on an internet connection. If there were any technical issues, like a loss of internet connection, people will be unable to buy and sell products.
• There is a lack of regulation with products provided online. For example, unlicensed medicine can be purchased online that may put someone's health at risk.

Types Of Ecommerce

Four types of ecommerce exist, which include:

• Consumer to consumer (C2C) – When a consumer sells a product to another consumer. (e.g. a consumer sells their dining table to another consumer on eBay).
• Consumer to business (C2B) – When a consumer sells a product to a business. (e.g. a consumer sells stock photos to a business).
• Business to consumer (B2C) – When a business sells a product to a consumer. (e.g. a consumer buys a pair of shoes from an online store, operated by a business).
• Business to business (B2B) – When a business sells a product to another business. (e.g. a business sells office equipment, such as pens and paper to another business).

Is It Spelt 'Ecommerce' or 'E-commerce'?

There is no right or wrong answer to this question. Spelling the word 'ecommerc' or 'e-commerce' is a matter of style and a personal choice. In this article, the name for buying and selling of products electronically on the internet was spelt 'ecommerce'.

History

Ecommerce goes back to the 1960s. At that time, companies used an electronic system called the Electronic Data Interchange to transfer documents. However, the very first ecommerce transaction did not take place until 1994. This transaction involved the selling of a CD through an online retail website, called NetMarket.

On 6th July 1994, ecommerce became more popular with the launch of Amazon by Jeff Bezos. A year later, eBay was released on 3rd September 1995 by Pierre Omidyar. The release of new technology and websites greatly increased the use of ecommerce. As of now, most people choose to shop online and nearly all businesses have their own online store.