Concept of E-commerce
E-commerce is defined as the approach of purchasing and selling range of goods or services through internet in order to reach maximum number of customers. In addition to that, e-commerce also supports transfer of money & data in order to complete the sales. This approach is also known as internet commerce or electronic commerce. Due to rise in customer demand and advancement in technologies, many small and medium businesses have implemented this business approach. Studies shows that, e-commerce approach is comprised of four business model, that includes B2C, B2B, C2C & C2B.
Types of E-commerce business model
- B2C- Business to consumer- This is the most popular e-commerce business model, which means the sale is conducted between a business and consumer directly without the interference of third party. Purchasing any good from online retailer is one of the appropriate examples for such as business model.
- B2B- Business to business- This e-commerce model refers to the business selling good or service to another business such as any wholesaler or manufacturer and retailer. Business to business model of e-commerce is not consumer facing as it involves wide range of products such as raw materials or any type of software. Manufacturers are highly benefitted through this type of business model as they can sell their products directly through B2B e-commerce.
- C2B- Consumer to business- This type of e-commerce business approach is referred when an individual sells his services and products to any organization through any e-commerce platform. Experts believe that this approach encompasses influencers, photographers, freelance writers, consultants among many others.
- C2C- Consumer to consumer- C2C approach refers to the sale of goods and services to another consumer through internet commerce. Consumer to consumer business approach take place in e-commerce platforms such as Fivver, eBay, Etsy among many others.
Advantages Of E-commerce
Study shows that there are various advantages a firm might witness due to implementation of e-commerce model in their business. This includes:
- Faster buying process due to development of technologies in the external marketplace. Through e-commerce approach, customers can reduce their time for purchasing as they can browse many items at a same time.
- Availability of store & product listing in the e-commerce platforms can help the customers to search for an item and help the firm to expand their customer base thereby increasing overall customer traffic.
- With the help of this business approach, a firm can reduce their overall business expenses and increase profit margin. Physical stores require expenses in rents, store design, repairs, inventory among many others. However, the businesses operating in e-commerce platform do not require to include such business expenses.
- Another benefit or advantages gained by e-commerce businesses includes affordable marketing & advertising. As compared with the sellers in physical stores, the seller in e-commerce platforms do not invest capm Assignment Help huge amount in promoting their items.
- This business model provide flexibility to their customers, which can help in improving brand image and influence higher customer traffic. Furthermore, it can be observed that products and services provided by this platform are ready 24*7. With the help of customer flexibility, sellers can leverage to improve their rate of revenue generation.
Challenges of E-commerce. Recommendations
Even though there are various advantages an e-commerce platform provides however, a firm might also witness potential drawbacks that might reduce their overall effectiveness of their business.
- Challenges in security of customer data (which includes both financial and personal information). Even though many businesses have implemented various strategies for minimising these risks however, it is still considered as a potential threat. Some website that supports financial transactions do not provide authentic data encryption. Hence, in order to overcome these challenges, an e-commerce platform should emphasize on determining authenticated financial transactions website as well as proper Business Plan Assignment Help struture with . Additionally, they should also improve their firewall and other data encryption systems.
- As discussed, most of the e-commerce platforms are faced with major setbacks due to ineffective customer data security systems. Hence, it has been analysed that many websites emphasize on illegal collection of statistics about their customers (without their permission). In order to overcome this issue, the e-commerce brand should follow the laws and regulations implemented by government.
- Study shows that sales tax is one of the most concerning factors for this business as the buyer and seller are often situated in different geographic segmentation. In addition to that, computation of the sales tax poses various problems for the brand to retain their higher profit-margin. However, if the marketer emphasizes on expanding their business in different geographic locations, then it might help them to reduce potential risks associated with sales tax.
- Identification of product suitability can be referred as another major drawback for a firm that might cause economic losses. In addition to that, negative comments about product suitability in various online platform might also cause a negative impact on the brand image as well as the sales. Thus, if the marketer can focus on implementing total quality management in the firm, then it might help them to gain a competitive edge in the market.
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Study About Top E-commerce Companies
As discussed, e-commerce platforms provide several advantages to the firms hence, many small as well as medium businesses has expanded their core operations in this sector. On the other hand, multinational companies such as Amazon, eBay, JD.com among many others have gained significant benefits from the market due to their effective business approach.
Amazon is considered to be the largest e-commerce platform around the world. It has been analysed that the firm gained massive sales in the year of 2020 due to implementation of worldwide lockdown (because of Covid-19 pandemic). Furthermore, the annual revenue increased by 38% (which is an approximate profit of 386 billion dollars), which reflects the rise of total 100-billion-dollar profit. Similarly, eBay also gained a profit of 9.56 billion and 9.76 billion in ecommerce sectors and in their other business. Hence, it can be assumed that positive brand image has helped these firms to gain significant growth during the covid pandemic.