E-Commerce – Definition, Functions, Benefits, and Types

E-Commerce – Definition, Functions, Benefits, and Types – The United States is a superpower with the largest economic and business growth in the world. However, the fact published by liputan6.com states that China will rise to the top position of the world’s largest economy, overtaking the United States, which has been number 1 for a long time. This happens because China has entered into a growing global market throughout the 21st century. As we all know that China produces almost all household products to electronic goods that we use every day.

And China didn’t stop there, they started venturing into electronic commerce. Of course, to dominate the digital market which is currently controlled by Amazon.com which is predicted to be the largest e-commerce in the world. Jack Ma, the owner of Alibaba.com, began to expand his international e-commerce market roots to every Asian country, to beat Jeff Bezos’ Amazon.com in the trade war between the United States and China.

What is E-commerce?

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We’ve talked about commerce and e-commerce earlier, but what is e-commerce really? According to several experts such as Shely Cashman, he explained that e-commerce is a business transaction that occurs in an electronic network. In the sense that e-commerce is a trading activity that includes the sale, purchase, and marketing of goods online. Of course, by utilizing the Internet as a liaison between sellers and buyers.

But since when did e-commerce start in the world? The answer is found in the Wikipedia article, which states that e-commerce was first introduced in 1994. At first, electronic banners were used for promotional and advertising purposes on a website. And also between 1998 and 2000 many businesses in America and Europe developed this trading website.

Also read: What is a Reseller? Definition, Benefits, and Tips for Success

Even though they look the same, in fact, e-commerce and the marketplace are two different things. When the Marketplace sells other people’s merchandise by bringing together the seller and the buyer. So e-commerce is an online market that sells its own goods to buyers digitally. Even if there are other items that are sold by e-commerce, these items come from giant companies such as Samsung, LG, SONY, and others. Some examples of e-commerce such as Amazon, eBay, JD, Lazada, and many others.

Functions and Benefits of E-Commerce

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Benefits and advantages are needed as a goal that boosts the running of a business. Moreover, a business involving trade, where a buyer is involved in it as a subject that determines the company’s losses and profits. E-commerce itself is counted as a trading company that moves digitally. Therefore we need to know what benefits are obtained between the business person, and also the buyer for this e-commerce.

1. Business globally

For a business actor, the breadth of the business area is a profitable gold field. With the advancement of advanced digital technology as it is today, an e-commerce businessman has no limits in expanding his market throughout the world without having to worry about limited building space.

Consumers are also getting easier with the existence of e-commerce, why? The distance between goods and buyers is getting closer, limited to the touch of their fingers with their gadget screens. Transactions are also easier with digital wallets such as OVO, DANA, PayPal, and Doku which make payments much faster and simpler. What’s more, without having to bother calculating the nominal amount of money in the original wallet in hand.

Also read: What is Dropshipping? Definition, Advantages, Success Tips, etc

2. E-commerce is more time-efficient

“Time is Money” This slogan often boosts business people around the world in achieving their goals and dreams to develop their companies to be more advanced. The existence of e-commerce is increasingly realizing the slogan with the shorter time for goods transactions where business actors can receive goods orders for 24 hours without having to open or close a store because everything is done digitally.

Buyers benefit from the e-commerce system, they don’t need to worry if they want to spend and look for free time to buy a product. Because e-commerce is open and operates 24 hours non-stop.

3. E-commerce is more cost-effective

E-commerce provides business people with a solution, where they can establish a trading area without having to think about the expense of paying employees and expensive company operational costs. In addition, the risk of accidents at work is lower. Given that physical contact is much less than those who run a real business.

The nominal price of the products sold becomes cheaper. This can happen because the trading company cooperates officially with the manufacturer of the goods themselves. So that consumers can get products at prices that are more affordable than the prices circulating in the market.

4. E-commerce is practical

The management of the company becomes easier because business people can monitor their store activities 24 hours a day. In this case, it can be done anytime and anywhere, as long as the internet signal is still covered. In addition, transactions can be carried out digitally, so that transferred funds can be obtained in an instant since the money is sent by the buyer through online payment support applications such as OVO and the like.

Consumers are much more advantaged in terms of purchases, starting from the steps of searching for the products purchased to checkout of goods that are short and fast. The availability of a cashback and promo system also benefits buyers in minimizing the cost of buying cheap and easy goods.

Types of E-commerce

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For modern society, e-commerce has become a familiar business trend, this can happen due to various types of factors. One of these factors is practical and beneficial to both parties, both producers and consumers. In the eyes of e-commerce business players themselves, the increasing number of Internet users in the world also expands the opportunities for digital trading businesses to become more diverse and interesting. Because of this diversity, various types of e-commerce have emerged in the digital market, including:

1. Business to Business

This type of e-commerce is carried out between companies and companies or more precisely between wholesalers and retailers. Such a system is commonly used in many transactions between traders in search of more profits. For example, such a seller who wholesales goods from Amazon.com to be resold at his digital trade stall at retail.

Generally, Business to Business or B2B uses EDI (Electronic Data Interchange) and email in the process of purchasing information, goods, and services. For those of you who don’t know, Electronic Data Interchange abbreviated as EDI is a structured data transfer process in an approved standard format from one computer system to another in electronic form.

2. Business to Consumer

The type of Business to Consumer is one type of e-commerce that is widely known by the general public, why is that? Because the type of B2C (Business to Consumer) is the opposite of B2B where e-commerce business actors transact directly with buyers.

Just like B2C retail stores sell products in retail form. However, the difference is that Business to Consumer is run online, starting from the purchasing system to the transaction system.

3. Consumer to Consumer

C2C (Consumer To Consumer) is a type of e-commerce that uses a transaction process between customers through a third party as an intermediary for the transaction. C2C generally uses a classified model which provides freedom in the transaction process between sellers and buyers in conducting transactions.

The disadvantage of C2C is that the products sold are usually used goods that are still suitable for use. In addition, third-party platforms do not facilitate the process of payment transactions in buying and selling, and only provide information about goods and sellers.

4. Consumer to Business

If usually business transactions only occur from business people to consumers, then Consumer to Business is the complete opposite of Business to Consumer. Generally, C2C is a type of e-commerce that provides service needs for companies that are larger than the consumers who provide the company’s needs. Such as logo creation services, Content Writer, design, and so on.

People who implement an e-commerce business with a C2B model are usually freelancers whose services can be hired to make various kinds of orders related to the services offered.

5. Business to Administration

Business to Administration is a type of e-commerce business model that is engaged in public administration. B2A carries out its business activities in the realm of government services, such as tax administration, social security, legal documents, and all government administration provided in digital form.

In running this e-commerce, business people will offer various types of products and services needed in carrying out government operations through transactions by submitting tenders.

6. Consumer to Administration

Consumer to Administration has similarities with Business to Administration, except that transactions are carried out between consumers and public administration digitally. Usually, this type of C2A e-commerce is applied to the fields of education, law, document administration, health, and the like.

Both C2A and B2A have the same goal, namely increasing the ease and efficiency of public services by using information and communication media. Of course, it is easy to reach the wider community based on digital technology.

7. Online to Offline

Online to Offline or O2O is a digital business that develops the concept of sales and promotions in which the business actor, apart from making a profit through his online store, also promotes his physical store so that his customers can visit him offline. Usually, a concept like this is applied to digital markets which provide an option for buyers to pick up the purchased goods from a physical store or deliver same-day delivery.

This system was created not without reason, but rather to give the impression that buying goods at physical stores still has several advantages over online stores. For example, it’s like buying food at a restaurant whereas if you buy directly at a physical store, you will get a more affordable price and you can eat food while it’s warm.

Also read: What is Direct Selling? Types, Advantages, Disadvantages and Tips

Conclusion

E-commerce is a modern sales system that has contributed a lot in providing services to the wider community to trade through new ways that are more efficient and easier. It is undeniable that humans must change in a modern direction in the face of an increasingly violent world economic wave. Through e-commerce, it is hoped that many people can develop a business method that is cheaper and easier to implement as an ideal trading business in the future.

That’s a brief discussion that we can convey about the meaning of e-commerce, along with its benefits and types. Hopefully, the reviews above can be helpful and useful. If there is something you want to ask or convey, please write it in the comments column below. Thank you!

FAQ:

Are e-commerce and marketplace the same?

The two are different, the marketplace is a third party that provides a place for sellers to market their wares to buyers, while e-commerce is more focused on selling their own products.

Are e-commerce and online shops the same?

There are several differences between the two, one of which is that e-commerce sells products from their own brand or other brands that have officially collaborated with them. While an online shop is a retail store that sells various products without having to have official cooperation from the product brands they sell.

What are the benefits of e-commerce for a trading business?

Business people have a trading area that is much wider than the trading area in a physical store. Trading operational costs are also cheaper and more practical without having to think about expenses for employees and so on.

What are e-commerce and an example?

According to Wikipedia, e-commerce is electronic commerce that involves distributing, buying, selling, and marketing goods and services through digital systems such as the internet, television, and other computer networks.