Electronic commerce (ecommerce)

economic-dictionary

Electronic commerce (popularly known as ecommerce) is the sale and distribution of goods and services through the internet or other computer networks.

It constitutes a new support for commercial activity because it lacks materiality and physical guidelines (space and time) but gives it accessibility and speed. In such a way that transactions can be carried out every day of the year at any time and anywhere in the world.

Origin and development of ecommerce

Electronic commerce is the last phase in the evolution of commerce, understood as the exchange of goods and services that has taken place throughout history.

In the 70s, the first computers appeared and with them, the first commercial relationships. These first transactions offer very limited services such as purchase orders or invoices. However, it was not until 1989 when the www (Word Wide Web) was created, the system that promoted the transmission of information worldwide. That is, the web pages that we are now used to accessing.

During the 90s, the rise of electronic commerce began, as we know it today. At this time, the giants of the Amazon or Ebay sector were created.

It is in 1995 when the G7 and G8 created a Global Market for SMEs, with the aim of promoting electronic commerce in this sector and giving them the possibility of opening up to new markets.

In the 21st century, electronic commerce is one more integrated shopping method among consumers worldwide. It is carried out from different mobile devices, and web 2.0, as well as social networks, help its dissemination and expansion.

Jurisdiction of electronic commerce

In global electronic commerce there are three areas of protection: national, intra-community and international. In order to have a uniform law of international electronic commerce, the Model Law on Electronic Commerce was elaborated in 1996. It is the first major legal text that formulates the bases and limitations of ecommerce, from there, each territory develops its jurisdiction.

Types of e-commerce

These are the main business models in electronic commerce according to the agents involved:

B2B: Buying and selling between companies

B2C: Sale of goods and services from companies to consumers. The traditional online store. An offline store can have its channel online or only be done through the internet.

B2G: Companies that sell their goods and services to public institutions.

C2B: Individuals who sell their goods and services to companies. For example, blogs of individuals who offer their space to insert company advertising.

C2C: Buying and selling of goods and services between consumers, which is known as the collaborative economy.

Advantages and disadvantages of electronic commerce

We are going to analyze the advantages and disadvantages from the perspective of buyers and sellers:

Benefits for Consumers

  • Flexibility. Since it offers the possibility of buying 24 hours a day and anywhere in the world without leaving the web.
  • Possibility of customizing products and access to a greater offer of them.
  • Greater access to product information, price comparison, opinions of other consumers ...

Benefits for sellers

  • Reduction of distribution, communication and final price costs.
  • It makes it easy for anyone to have a small business. The opening and maintenance costs are lower than traditional offline commerce.
  • Global market: it offers the possibility of approaching consumers from anywhere in the world and opening up to new markets more easily.

Disadvantages for consumers

  • Higher risk of dissatisfaction: As products cannot be viewed or tested prior to purchase. Return methods and guarantees tend to be less clear than in physical stores.
  • Higher risk of fraud in payment methods: There is a great distrust of giving bank and personal data through the internet, due to the multiple deceptions that can occur.
  • Difficulties in communication to transmit a complaint or an incident: Contact forms may be forgotten or there is no natural person to contact for these procedures.

Disadvantages for sellers

  • Lack of technical knowledge: To develop an ecommerce, a technical team is necessary to program and design the platform. A constant improvement of the user experience, web positioning, promotion and updating of information is necessary. On many occasions, it is difficult to find professionals to carry it out.
  • Higher competition: Selling online means competing with the big boys players of the sector, and that implies that you have to be very differentiated or lower prices as much as they do. For a small ecommerce, it may not pay to enter such a wide market.
  • High shipping costs: If it is the seller who assumes these costs, in many cases, it is a high amount and reduces profit margins considerably.

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