What is E-commerce?
E-commerce (or electronic commerce) refers to the purchase and sale of goods and services or the transfer of data or funds over an electronic network, largely the internet. These transactions can occur as business-to-consumer (B2C), business-to-business (B2B), consumer-to-consumer (C2C), or consumer-to-business (C2B).
Significance of E-commerce
E-commerce has revolutionized the business landscape as we know it by providing a more cost-effective way of connecting with customers while bolstering trust due to its secure nature.
- E-commerce has made it easier for businesses to reach a large global audience, creating greater sales and marketing avenues.
- By engaging customers online, businesses can increase their chances of success by gaining valuable insights into customer needs and preferences.
- E-commerce reduces costs associated with traditional transactions, such as inventory, storage, and shipping expenses. This is done by outsourcing the key functions for online transactions directly to global entrepreneurs or third-party vendors.
- Many e-commerce platforms have payment gateways that make financial transactions faster and more secure, thus improving customer satisfaction.
Prerequisites to Calculate E-commerce and How It Works
- A basic understanding of business principles such as marketing, supply and demand, pricing, and customer service.
- Different e-commerce platforms have different features, so it is important to understand the platforms available and how they work.
- Basic financial literacy regarding different types of payments accepted, the costs associated with running an e-commerce business, and how to manage expenses is necessary to calculate e-commerce accurately.
- To measure the success of an e-commerce business, understanding analytics like website traffic, customer acquisition, and conversion rate is also essential.
Use Case with E-commerce
Suppose company ABC, dealing with lifestyle products, decides to extend its service to the global market through e-commerce. The company sets up an online store and allows customers worldwide to browse through their products and buy at their convenience. Upon order confirmation, ABC sends the product via courier service and allows customers to pay via online transaction.