E-commerce is the buying and selling of goods or services via an internet connection. E-commerce also includes the e-payment options such as Visa, Humbl Pay, MasterCard, PayPal, Payoneer, etc. In simple terms, it means running an online business.
E-commerce is mostly used to describe the sale of products online, but it also describes any services or commercial transactions facilitated through the online network. E-commerce also encompasses other activities such as online auctions, online ticketing, internet banking, and payment gateways. E-commerce is also called electronic Commerce.
E-commerce refers to the selling and buying of goods and services over an online network where the exchange of money and data takes place via connections to a transaction. Briefly; E-commerce is any business activity that happens online.
M-commerce, which stands for Mobile Commerce, is part of e-commerce. These business transactions occur mostly as business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer or consumer-to-business. But also some other forms which are C2C, G2B, GTC, B2G,…
In the last decade, e-commerce platforms have grown exponentially. The increase in people shopping online has caused the market share of e-commerce sites to increase in every country. As of 2020, US retail e-commerce sales share 38%. Walmart and eBay are the other two companies following Amazon in the US e-commerce market. In China, Alibaba, JD, and Tmall are the leading companies.
Smartphones and tablets are now the primary devices for online shopping for many people. Mobile phones are more secure in terms of authentication, and the rate of shopping over mobile applications of e-commerce companies is increasing day by day instead of on websites. Undoubtedly, mobile devices have a large share in the acceleration of e-commerce. Today, 70% of e-commerce site traffic around the world is carried out on mobile devices.
E-Commerce Business Models
There are four primary types of e-commerce business models. However, we will also touch on less-used title names as well.
Business-to-business (B2B) E-commerce
B2B e-commerce refers to when a company purchases goods or services online from another enterprise. B2B sites and its pioneer, Alibaba, have overgrown since the early 2000s as the development phase of trade between China, the USA, and Europe. In short, B2B sites where manufacturers can enter sales and buyers can enter purchase notices, covering a significant part of the international trade between companies.
Example companies: Alibaba, Global sources
Business-to-Consumer (B2C) E-commerce
The B2C e-commerce model refers to a company selling goods or services online directly to its customers. Today, the most used e-commerce type is B2C. The growth rate in the B2C market is causing classical retailing in the retail sector to melt away rapidly. Amazon, the world’s oldest online shopping site, is the largest e-commerce site in the USA and globally. Zalando SE, founded in Berlin in 2008, is Europe’s largest e-commerce company.
Example companies: Amazon, Zalando
Consumer-to-Consumer (C2C) E-commerce
C2C refers to the sale of goods or services between two consumers. eBay and Fiverr are examples of e-commerce platforms we can give for C2C. While products are usually sold on eBay, services are generally sold on Fiverr. Sites such as eBay mediate money transfers between users who post and sell products in the ad. We can also evaluate second-hand automobile sites and real estate sites under the C2C title. Thanks to these sites, people who market their products and services reach each other.
Business-to-government (B2G) E-commerce
The B2G model is a variant of the B2B model. It is an E-commerce model that makes transactions from business to government. The state was opening auctions online, and the companies following this tender online and selling products or services to the government. Sample; the ministry of health opens a tender for the purchase of medical equipment, which must be applied online.
Example companies: Any Government Ministries
Machine-to-Machine (M2M) E-commerce
M2M (Machine to Machine) This e-commerce model is expected to be in the future. The work of this technology continues rapidly. It is called inter-machine trade. For example; The refrigerator in your home is programmed to contain a minimum of 3 eggs. When the number of eggs drops below three, your refrigerator sends an egg order to an online shopping site. Information and tracking link regarding the order passage reaches your mobile phone. For now, the missing point is an autonomous device, such as a home robot that will open your door and place the incoming eggs in the fridge.
Example companies: Future Smart house
Brief History Of E-commerce
People started to define the term e-commerce as internet-based shopping using security links and electronic payment services.
E-commerce became possible in 1991 when the Internet was commercialized, but it took four years for the idea of online sales to come to life.
Founded in 1994 under Jeff Bezos’s leadership, Amazon is considered to be the pioneer of e-commerce sites. Amazon started selling online in 1995. In the same year, eBay was established as an e-commerce site in the USA. On the other hand, Alibaba, founded in 1999 and is based in China, is among the giants of the e-commerce industry.
Security problems regarding e-commerce sites were caused by accessing these sites via web browsers. When Netscape developed Secure Sockets Layers (SSL) encryption certificates, consumers began to feel more comfortable transferring data over the Internet. Web browsers can detect whether a site has an authenticated SSL certificate and help consumers determine whether a site is trusted. SSL encryption is still a vital part of Web security today.
Although e-commerce did not originate with Amazon, Amazon is a company that has identified with e-commerce. It is an American e-commerce and cloud computing firm located in Seattle (Washington, USA). It is the largest internet-based retailer in the USA.
In 2000, many businesses in Western Europe and America started offering their services on the Internet. The crash of the NASDAQ (dot-com bubble) in 2000 caused many e-commerce companies to go bankrupt.
It is seen that the market volume of mobile Commerce and its share from total electronic Commerce in the USA and European countries increased rapidly in the 2010-2012 period. The rate of shopping via mobile devices, which currently exceeds 70%, is expected to overgrow the effect of new generation technologies such as QR code2.
The Security Standards Council (PCI) was established to set compliance standards for any company that processes credit cards. Services like PayPal can handle payment transactions for online suppliers and have proven to be popular with online shoppers and businesses. On the other hand, with the virtual card service offered to credit cardholders, banks can shop with a virtual card that is different from the actual credit card information, with the card limit that users can instantly determine.
Shopping from the cashier-free AmazonGo stores opened by Amazon is done via the mobile application. Before entering the store, customers have the application on their smartphone read into the entrance system. This new store concept, which is entered with the Amazon application and payments are made through the application, shows that e-commerce will gain a different dimension through mobile payment in the next ten years.
The Future of E-commerce for Retailers
70% of global e-commerce takes place on mobile devices. A feature of mobile devices is that e-commerce sites, e-marketplaces, and banks have attracted users with applications that both work more stable and offer more secure transactions. At this point, we see that huge retailers direct their customers to shop through their applications and e-marketplaces, with more than one brand and company stand out. Because users both want to shop safely and want to add different companies’ products to a single shopping cart using a single application.
The increase in mobile usage has deeply affected retailers and classic stores that sell physically. Another development is the acceleration of work on autonomous stores. Even if you enter a store on the street soon, you will read the products via your mobile phone and mobile application and pay with mobile pay-on-time methods. In the near future, digital stores will be competitors, independent stores without salespeople, cashiers.
Classic E-commerce Types:
- Business to Consumer (B2C)
- Business to Business (B2B)
- Consumer to Consumer (C2C)
- Consumer to Business (C2B)
Underused E-commerce Types:
- Government to Business (G2B)
- Business to Government (B2G)
- Goverment to Goverment (G2G)
- Government to Consumer (G2C)
- Consumer to Government (C2G)
- Business to Employee (B2E)
New Generation E-commerce Types:
- Direct-to-consumer (D2C)
- Social to Business (S2B)
- Social to Consumer (S2C)
- Machine-to-Machine (M2M)
Types of E-Commerce
It is possible to classify e-Commerce sites in different ways. At this point, what is important to compare. They can be classified according to product groups, the way they do business, and the platform they are in. In this section, we will talk about e-commerce types that will be available for businesses and consumers.
E-retailing: It is the direct sale of a product to a customer without an intermediary. The customer base is the end-user. Typical retailing businesses selling their products and services over the Internet is called e-retailing.
Dropshipping: It means sales without stock. Dropshippers do not keep product stock. It organizes the shipping of incoming orders through the supplier company. Dropshipping makes a payment with the company from which the goods are supplied after receiving the payment from the customer. It is recommended that companies working in this way strictly control their supplier’s stocks and, if possible, work with more than one supplier from whom they can supply the same products.
Downloadable items like e-books, e-courses, software, or media files. Digital products are not physical products, so there is no need to make any shipment process.
Wholesale: The e-commerce process of wholesaler companies is now inevitable. It is a digital world, and retailers expect the same treatment from wholesalers as consumers do. The number of B2B e-commerce is increasing day by day.
Services: These are skills like coaching, graphic design, writing, influencer marketing, etc.. These kinds of services mostly serve by a freelancer. These services are purchased and paid for online.
Subscription: It’s a primary business model for businesses like Amazon Prime Video and Spotify. Subscription services are the recurring purchases of services regularly. For example, a TV platform membership should be renewed monthly or annually. That is, purchases should be made periodically.
Crowdfunding: It is an e-commerce model to enable many investors to finance your project with small donations. In crowdfunding platforms, the project owner explains the project’s purpose, how it will be realized, the amount of capital it needs, and the resulting product or work. In this way, important projects have been signed on crowdfunding sites. “The Veronica Mars” movie project is supported by 91,585 backers and also with 2 million dollars collected. It was the most-backed crowdfunding project in Kickstarter history.
E-Commerce Types by Product Sold
Paying and delivering goods and services online instead of a store or platform is defined as direct e-commerce. We can exemplify direct e-commerce elements as: ” computer programs, entertainment, and music, c, consultancy services,” etc. For example, purchasing a music listening application such as Spotify for a certain fee and installing it on your phone is an example of direct e-commerce. So, direct e-commerce includes intangible goods and services directly buying from the Internet with digital form.
Buying a product from any e-commerce site is considered an indirect business. For example, you bought a pair of sunglasses from amazon.com. You made the payment with PayPal. Amazon company supplied the product and shipped it to you. Finally, the cargo company delivered the product to your address. Commerce that covers these processes is called indirect e-commerce. Indirect eCommerce is explaining for electronic ordering of physical goods
Mobile Application vs Mobile Website
There are many reasons for the rapid acceptance of mobile applications by consumers. Compared to mobile sites, mobile applications are faster, more stable, using basic functions such as product search, listing, and purchasing is more comfortable for the user, and mobile applications have 5 times higher conversion graph than mobile sites 2020 USA statistics.
Retailers serious about mobile users invest in their shopping apps as the primary way to showcase their products. Good mobile web browsing is still important for user experience, but that that’s not enough.
Applications can send “push messages” on mobile devices that will attract the user’s attention, and in this way, you can remind the user of your e-store at regular intervals with remarkable messages such as a campaign, discount, new product, an up-to-date announcement or news.
In addition to the benefits of one-click payment and fast page loading, easy product filtering, apps are more reliable in protecting user data. Since 2019, many banks have started sending messages to their users with the following content: “Do not request your statement via e-mail, check it through mobile banking transactions, this way you will protect your user data.”
70% of US Citizens have Access to the internet with smartphones, and 50% with tablets. These mobile devices account for 75% of the country’s digital traffic. Approximately 45% of e-commerce expenditures in the USA are made through mobile devices. In terms of mobile data, other developed and developing countries do not have lower data. 75% of internet traffic in Mexico is via mobile devices, 71% in China, and 67% in Spain.
What is Required to Establish an E-Commerce Site?
a) Domain name: A domain name that defines the brand name or service must be registered. You may need to establish a company to be able to do E-commerce in your country. Before you decide to start e-commerce, research the legal obligations in your country.
b) Server (Hosting): You should purchase a service from a hosting company where your e-commerce site will be hosted. Our recommendation is to buy a package that includes e-commerce infrastructure and an SSL certificate.
c) Payment Methods: Methods that offer different payment options to customers should be added. (Credit/debit card payment, PayPal.)
d) Security Certificate: SSL certificates must be obtained for the security of customers. If you purchased a package that includes an e-commerce module and SSL during the hosting phase, you would be deemed to have passed the third and fourth steps. Despite setting up a website, many firms trade by opening stores in popular virtual marketplaces such as Amazon. In this way, it reaches a wide range of customers, and customers do not have security concerns at the payment stage.