How e-commerce works – Electronic commerce or e-commerce refers to transactions related to the purchase and sale of products and services through online platforms that may include websites, applications, social networks, or any other means that allows these types of operations to be carried out over the Internet.
This includes any purchase and sale transaction you make online, such as buying new shoes on a clothing website, buying electronic products on websites like Amazon, buying and selling items on eBay between individuals, or buying products on a unique website for employees of a company, among many other cases.
Advantages and disadvantages of electronic commerce
E-commerce and business
Online commerce has brought about a revolution in recent years, not only for customers but also for all types of companies that take advantage of the advantages offered by this medium to expand or start their business in a way that was unthinkable until years ago. However, this activity has its advantages and disadvantages:
Advantages of electronic commerce as a company
- Cost reduction
- Access to customers from anywhere in the world as the Internet is a global medium
- Easy to control inventory, orders, and customers
- Ability to offer a large amount of information quickly to the interested customer
- Easy to send commercial campaigns to customers
Disadvantages of e-commerce as a business
- Great competition, especially in already established sectors
- Constant maintenance of the platform is necessary
- In case of problems with the platform, the consequences can be serious
- From one day to the next, changes in a search engine can lose you a large customer base
- High dependency on the cost of shipping
E-commerce and the customer
In general, e-commerce is mainly advantageous for ccustomers,; this is shown by its share percenyearlyases every year. In any case, it is still not a perfect means of purchase and shows strengths and weaknesses:
Advantages of e-commerce as a customer
- Returns during 14 days by law
- Possibility to buy items without business closing hours
- It is straightforward to compare prices from different online stores
- Excellent availability of stocks and products
- Wide range of prices, which means it’s easy to find good deals
- You don’t have to travel, and you can do everything from home
Disadvantages of e-commerce as a customer
- Payment of shipping costs
- Lack of immediacy in access to products
- It is not possible to try the product before buying it
- Lack of trust and security depending on which online businesses
- In case of problems, the terms to enjoy the product can be extended, and your money will be withheld
Different types of e-commerce
B2B: business to business
Online commerce B2B (business-to-business) or between companies is one of the best-known types of electronic commerce and encompasses all kinds of activities between two companies over the Internet. A concrete example of this can be a supermarket portal aimed at the hotel sector or a construction materials purchase platform for companies dedicated to masonry.
B2C: from business to consumer
B2C (business-to-consumer) or business-to-consumer transactions are probably the best-known types of e-commerce operations. Under this modality, private consumers purchase products or services from a business through electronic commerce, generally through a virtual store on their own website or specialized platforms where various vendors offer their services.
Examples of B2C transactions are purchasing a computer on a portal such as Amazon, making a purchase in a supermarket as an individual, or offering products to private customers in a virtual store on a platform such as eBay.
B2E: from the company to the employee
Although this is not a widely used model, B2E (business-to-employee) or company-to-employee e-commerce is a way for some companies to offer various payment products or services to their employees, generally at a lower than market price. Its objective is usually for employees to enjoy benefits for belonging to the company regardless of salary, either in the form of services and products from the company itself or from other companies through a specialized portal, generally with restricted access.
Some Spanish banks, for example, offer their employees a shopping portal with a variety of products with significant discounts. In contrast, some airlines or hotel chains offer deals on travel or hotels through their own exclusive portals for their employees.
C2C: consumer to consumer
Another business model is electronic commerce between consumers or C2C (consumer-to-consumer), which basically refers to transactions between individual users and generally includes second-hand purchases of products that have already been used previously.
Although traditionally, this type of purchase was limited to the local sphere and between acquaintances, they have evolved to the point that there are not only platforms such as eBay, Craigslist,, or Milanuncios that make it easier for private users to get rid of goods they do not need, but instead that they have emerged even specialized C2C applications such as Wallapop in which the clients themselves negotiate the sale of all kinds of second-hand products such as telephones, accessories, clothing, comics or any other type of item.
G2C: from the government to consumer
G2C (government-to-consumer) transactions from the government to consumer are probably the least common. They occur when a government of any sphere offers citizens access to online services or products through its own portals or platforms.
Generally, these require identification to associate each procedure with a specific citizen. Although the offer is usually minimal, electronic service transactions typically move in this area, such as online tax filing or access to certificates, claims, or government procedures by the consumer.
What should I do to start my online commerce business?
A) Be sure of the type of e-commerce you are going to undertake
The most important thing if you are interested in opening a business of this type is to decide what kind of goods or services you are going to offer your customers and, above all, which online commerce model you are going to choose, since that will mark a whole series to a great extent. of factors that you should take into account and that will depend on the market you want to target.
Obviously, it is not the same to offer a freelance programming service over the Internet, which would fit into the B2B model, as to sell electronics and technology products, which would most likely be classified as B2C.
B) What platform do you want to use to access your customers?
There are different ways to make your products or services available to customers. In the case of dedicating yourself to the sale of articles through e-commerce, you have several methods at your disposal:
- Create your own website or web application
- Register your own store on platforms such as Amazon or eBay
- Offer your products in forums or social networks
TheSbill,ill,ut the investment, both monetary and effort, can be very high. most comfortable option among all of them is probably the creation of a store in a provider such as Amazon or eBay and thus take advantage of the technological advantages they offer and be able to ignore the technical part. If, on the other hand, you want to control the entire process and have all the possible tools at your fingertips, perhaps the best option is to create your own online platform and upload your products there. imes, simply offering the products through forums or social networks can be enough to start your online business. Still, in most cases it is best to merely use these means as a complement to the other options mentioned.
C) In which markets do you want to buy and/or sell, and how to get the most out of your money
Although you could direct your business only to clients from your country, today’s globalized world often allows you to offer products or services at a very similar price in almost the entire world. In the same way, it also allows you to take advantage of low prices in other countries to sell products in your country at a price that will enable you to have a sufficient profit margin.
Faced with so many possibilities, you must design a good business plan and inform yourself in depth to make decisions that allow you to save money. One of those decisions in the right direction may be the way you will use to manage your money. In the case of having to deal with several currencies, something typical in e-commerce, most banks offer their services with very high commissions and can make your small profits disappear.
Wise a service that offers a multi-currency account with a wide variety of functions, among them the possibility of having more than 50 currencies and doing all the transactions with meager commissions, including conversions to the accepted currencies, which will done with the average exchange rate without any surcharge, contrary to what the vast majority of banks do.
This, added to the fact that it allows you to have accurate account data in some currencies such as dollars, will make you enjoy all the advantages of managing payments in dollars, an internationally accepted currency, and always having the guaranteed average exchange rate to convert to other currencies.
D) How do you want to organize your business?
Another of the decisions that you will have to make is whether your business will have stock of the products or it will be a simple dropshipping service in which a third party serves the products directly while you are in charge of receiving the payment for the order, managing incidents and to pay the corresponding amount to the supplier so that he makes the shipment to the client effective.
Dropshipping has become very popular in recent times because it is an option that offers a wide range of products at reasonable prices, and the investment is minimal. That is why it is an option to take into account when opening a service related to electronic commerce.