E-commerce explanation with example in simple and easy words

E-commerce explanation

E-commerce (Electronic Commerce), or e-commerce, is an area of ​​the economy where trading and financial transactions are conducted on the Internet. In simple words, any transaction made from an electronic device connected to the network. An analog of a shopping center, but with a large assortment and comfort: you can visit it without leaving your home.

The Internet provides unique opportunities for communication with the audience. Initially, e-commerce started in the United States by launching electronic commerce in 1979, then a promising direction spread throughout Europe since 1981, and in the late 1990s, China and the countries of the former Soviet Union took up the baton.

The digital economy is gaining momentum every month, approximately 8 billion people inhabit our planet, while 7 billion devices connected to the Internet. Experts forecasts for 2022 tells us an increase in Internet connections to 50 billion devices data provided by research company Juniper Research. Now, e-commerce has allotted a substantial part of the global financial market.

With the growth of Internet penetration, only those companies will be competitive that have their own developed a niche in the digital world.

E-commerce in Ukraine is the distribution, sale, advertising, promotion of services and goods, any transactions on a worldwide network using digital devices.

Definition of E-Commerce

"Money transfers from electronic wallets and cards through payment systems on the Internet".

  • Internet banking.
  • Information sites: webinars, coaching, training.
  • Network Marketing.
  • Trade online.

How does it work?

The online store is one of the main niches in e-commerce. Now, we try to understand it.

The client selects the goods in the catalog online, from a laptop or smartphone.

The application from the server goes to the administrator, or to an automated order processing system.

It checks the availability of the product in stock with the database. Or it sends a request to the supplier about the delivery dates of the products. Then it transmits information to the buyer.

The customer pays for the purchase through an electronic payment system.

The buyer receives a notification of a successful transaction.

The application is transferred to the warehouse where they prepare the package for the buyer.

The customer receives an email or SMS stating that the goods are on the way.
Everything is simple and transparent.

The dominant types of e-commerce

E-commerce is divided into several recognized categories. Here are those that we most often meet in everyday life:

1- C2C (Consumer-to-Consumer). Consumer-to-consumer scheme. An example is the OLX marketplace, eBay, where a person if he is not an entrepreneur, can sell something.

2- B2B (Business-to-Business). The business-to-business scheme. It is characterized by the sale of wholesale batches of goods from the manufacturer to the dealer. The dealer gives the goods to small wholesale online stores, from where he goes to the end consumer. Actually, this is the third major category of E-Trade.

3- B2C. Business to consumers. A simple example of a B2C system is an online store in which a customer can select a product which he likes and pay for it using the online payment options.

4- E2E.  (Exchange-to-Exchange), Exchange-to-Exchange. On the Internet, the term E2E is used to refer to the exchange of information or transactions between websites that themselves serve as exchanges or brokers for the exchange of goods and services between enterprises. A simple example: a transaction from an electronic wallet to a bank card. We can see E2E as B2B.

5- G2C. (Government-to-Citizens), Government-to-Citizens. This includes paying taxes, utilities, licenses, and so on. Citizens also receive the necessary state information, which can no longer be called electronic commerce.

Ecommerce Benefits

  1. Free from geographical restrictions, you can now trade from anywhere in the world.
  2. When the brand becomes popular, the logo is recognizable; the business receives new users، people share links of interesting products, attractive prices, or USP (a unique selling proposition) on social networks. Thus, the Internet helps bring shareware clients.
  3. Trading equipment, hiring staff, renting premises - this is all for offline trading. On the Internet, you forget all these expenses.
  4. Searching for the target audience has become easier - people like to get together in interest groups, in social networks, on thematic forums and sites.
  5. The price of an item in an online store is most often lower than in offline stores. This is because of a reduction in the chain of intermediaries between the supplier and the customer, and a decrease in maintenance costs.

Benefits of e-commerce for organizations:

  1. The quality of customer service grows.
  2. Business processes become faster, more efficient, and easier.
  3. Much less paperwork.
  4. The productivity of the organization increases: the process starts when a request is received from the client - neither later, nor earlier, without unnecessary actions and delays.

Why online trading is good for a client?

  1. You can choose a product, make a purchase and delivery from any place where there is a network connection.
  2. The ability to select and compare products in different stores.
  3. You can leave a comment or see product reviews of other customers before making a purchasing decision.
  4. Detailed information about a product or service is always available.
  5. Because of the top competition in e-commerce, you force an entrepreneur to give discounts, hold promotions, and competitions. Many banks offer cashback when paying with a card.

Disadvantages of Online Commerce

  1. There is great competition in popular online trading stores. For example, selling household, video, and audio equipment, mobile phones will have to fight for every customer. Here, considerable marketing costs, SMM promotion, SEO site optimization are required.
  2. There is little trust in new online stores from users. 
  3. Lack of knowledge about networking. Here principles work differently from offline trading: analytics, logistics, order processing occur differently. Delays in responding to customer requests can ruin the company's image.
  4. A successful business depends on a stable fast Internet and the daily involvement of the owner in managing the business.
  5. To regulate business processes in the network, it needs a properly developed legislative framework, Protection of personal data, Integrating up-to-date software.
  6. The customer cannot come and pick up the purchase on his own. We need a perfectly tuned delivery mechanism.
  7. Responsible remote employees are difficult to find and train.
  8. These e-commerce issues are solvable. 

The goal of any business is to earn money, and the digital platform allows you to do this with minimal investment at the start. If we choose the niche correctly.
How to start an online business

Value definition

"People pay money for what is valuable to them."

One person knows how to cook deliciously according to original recipes, and another is willing to pay to be taught this.

Someone professionally plays the guitar, started a channel on YouTube, showed talent, and now wants to sell a video training course for mastery - there are buyers.

The product on the network does not sell itself, the description sells it, and someone is good at doing it. Such a person will not remain without earnings.
Fourth is a skilled organizer. Each person, without exception, has something valuable for other people. Those who suffer from insomnia are interested in how someone can get to sleep before dinner, for example. There is a reason to give a master class, and this is not a joke. Depends on how to present the information.

Where does any online trading begin?

Niche Selection

You need to start with market analysis and choosing a niche. There is a suitable service for this:

Google Ads Keyword Planner. It shows how often people clog certain words into the search, how these searches change over time. You can understand the relevance and seasonality of the product. An advertising campaign will require investments, and this tool will help determine the budget.

Having decided on the goods, you need to analyze competitors. To identify weaknesses, adopt operational techniques - this will avoid many mistakes and start a business with an advantage over competitors. Does a competitor have a boring website design, with a poor structure and without a filter to search for products? You must have this feature.

Strategy and Unique Trading Offer:

A detailed portrait of an ideal client is also important for developing a business development strategy. How will you promote it? Advertising, social networks, contests, promotions - it’s important to interest, not just anyone, but people who can become your customers. Therefore, you need to know the issues that concern your audience. Give useful information, show that you care about solving their problems. To increase the loyalty of visitors, get regular customers, and free advertising on social networks.

Set goals; focus on your target audience; Do not waste your time in vain on people who are not interested in your products - then success will come much faster.

You can order a design site, or you can build it yourself on the online designer, which are many on the network. When the store makes a profit, then you can transfer it to a more convenient platform.

Purchase a domain and hosting, fill the store with goods, run advertising, tell your friends, acquaintances, and relatives about it. Analyze, correct, improve, implement. Work hard to achieve your goal.

A responsible approach and hard work will make it possible to get a solid income.

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