E-COMMERCE: TYPES AND SPECIFICS OF DOING BUSINESS
Electronic commerce or, as it is called, e-commerce is a type of business related to the sale of goods and services via the Internet. All actions that are aimed at earning money on the Internet, in fact, can be attributed to e-commerce.
The term itself originated in the U.S., where the first online sale was made - August 11, 1994 with the help of encrypted transaction was sold disc Ten Summoner's Tales by Sting. Since then, despite numerous difficulties, the sphere has become increasingly popular, and the pandemic has only pushed it to the peak of development.
What is the essence of e-commerce?
It is a very diverse field: in addition to online sales itself, it includes the broad categories of Internet banking, which deals with online transactions, and Internet marketing, which includes advertising and actions aimed at increasing conversion rates.
The technical foundation on which e-commerce is built seems even simpler than the set of components that an offline store cannot do without. The technical content includes:
Of course, this is a highly simplified model, because each of these categories can be described separately: however, the most important component of the listed will be a well-functioning and competently built server, because it is on it depends on the speed of loading the site.
E-commerce, due to its convenience and versatility, is realized in many niches, depending on its target audience. Here are examples of its successful implementation:
What types of e-commerce are there?
The next classification is built on the difference in the target audience:
Like any other field, e-commerce has its advantages and disadvantages. Let's start by listing the obvious pluses:
The term itself originated in the U.S., where the first online sale was made - August 11, 1994 with the help of encrypted transaction was sold disc Ten Summoner's Tales by Sting. Since then, despite numerous difficulties, the sphere has become increasingly popular, and the pandemic has only pushed it to the peak of development.
What is the essence of e-commerce?
It is a very diverse field: in addition to online sales itself, it includes the broad categories of Internet banking, which deals with online transactions, and Internet marketing, which includes advertising and actions aimed at increasing conversion rates.
The technical foundation on which e-commerce is built seems even simpler than the set of components that an offline store cannot do without. The technical content includes:
- website or online store;
- database with goods;
- a system of accounting for inventory balances;
- CRM-system;
- system of goods delivery to the customer, etc.
Of course, this is a highly simplified model, because each of these categories can be described separately: however, the most important component of the listed will be a well-functioning and competently built server, because it is on it depends on the speed of loading the site.
E-commerce, due to its convenience and versatility, is realized in many niches, depending on its target audience. Here are examples of its successful implementation:
- Online movie theaters, music and book subscriptions. Allow you to legally enjoy the fruits of your intellectual labor.
- Electronic bulletin boards. These include sites like Avito.
- Online payment services for government services. They owe their popularity to saving time - no more standing in lines to pay for an apartment.
- Online stores and marketplaces. Almost the entire e-commerce sector is based on them.
What types of e-commerce are there?
The next classification is built on the difference in the target audience:
- Business-to-Business - mutually beneficial relationships between entrepreneurs. Producers and merchants establish contacts with each other through special online marketplaces.
- Business-to-Consumer - companies sell goods to consumers on various online platforms. Presents a large number of pros for both entrepreneurs and customers.
- Business-to-Government - businesses provide services to the government or its agencies, such as a municipality. In this case, strict requirements are imposed on the business, usually it is necessary to pass a competitive selection, because the level of transactions is extremely high.
- Consumer-to-Consumer - consumer-to-consumer relationships that are carried out through electronic bulletin boards.
- Government-to-Citizens - interaction between a citizen and the state - paying taxes and fines, obtaining various certificates and documents. It is not always a commercial activity, as it often carries an information load.
- Government-to-Government - business relations between government agencies.
- Business-to-Partners - interaction between “colleagues” - branches or companies from the same sphere.
- Business-to-Employee - automated management of business processes and tasks within a corporation.
- Business-to-Business-to-Customer - merging of two types - the dropshipping model is an example. An entrepreneur buys goods in China and makes arrangements with warehouses so that they send orders to the right addresses, bypassing the need to warehouse the goods themselves.
- Exchange-to-Exchange - interaction between various electronic exchanges in currency exchange services.
Like any other field, e-commerce has its advantages and disadvantages. Let's start by listing the obvious pluses:
- Reducing the amount of money spent. E-commerce makes a lot of processes easier - to open a trading platform you no longer need to rent space, look for employees and arrange for delivery. All of the above can be put on automatic mode, as a result, products become cheaper, which pleases customers.
- Dynamic growth of the sphere. The international ecommerce market is growing every year. Users are gradually getting used to making purchases online, there are more and more services aimed at increasing the efficiency of online entrepreneurs.
- Wide coverage of CA. Through the Internet, you can easily cross physical borders and go to conquer foreign markets. If you sell physical goods, it is worth thinking about how the product will be delivered to the buyer.
- Reducing the number of middlemen. You can contact directly with the manufacturer of goods, completely eliminating the involvement of third parties.
- Clear analytics and tracking. The business and its promotion are completely under your control.
The cons of working with e-commerce:
Accepting international payments has its own peculiarities, which we talked about in the article.
How to create your online store?
If you are going to open an online store, you should spend a lot of time customizing it - every element of it, from the elegant homepage to the payment module, should be as user-friendly as possible.
- Technology dependency. Any overlap with technology and internet access will affect conversion rates.
- Nuances of working with payment systems. To accept funds, registration of an IE or LLC is required. In addition, so that the reception and withdrawal of funds was stable, it is necessary to provide quality service for buyers. Otherwise, they may open disputes (disputes) through the bank, as a result of which the payment system may limit the Internet entrepreneur's ability to accept payment from customers.
Accepting international payments has its own peculiarities, which we talked about in the article.
- Constant changes in legislation and regulation. As the sphere is dynamically developing, it is subject to many changes, including in legislation.
- Information protection. When working in e-commerce, one cannot do without the use of sophisticated certification, authorization and other cybersecurity methods.
- Observance of intellectual property rights. Unauthorized copying of copyright products is a huge problem for any business, as it does not bring profit to its owners.
How to create your online store?
If you are going to open an online store, you should spend a lot of time customizing it - every element of it, from the elegant homepage to the payment module, should be as user-friendly as possible.