What is e-commerce and how does it work?

What is electronic commerce or e-commerce?

Electronic commerce or e-commerce is called the transactions related to the purchase and sale of products and services through online platforms that can include websites, applications, social networks or any other means that allows this type of operations to be carried out over the internet.

This includes any sales transaction you carry out online, such as buying new shoes on a clothing website, buying electronic products on websites like Amazon, buying and selling items on eBay between individuals or buying products on a special website for employees of a company, among many other cases.

Advantages and disadvantages of electronic commerce

E-commerce and business

Online commerce has been a revolution in recent years not only for customers, but also for all types of companies that take advantage of the advantages offered by this medium to expand or start their business in a way that until years ago was unthinkable. However, this activity has its advantages and disadvantages:

Advantages of e-commerce as a business

  • Cost reduction
  • Access to clients from anywhere in the world as the internet is a global medium
  • Ease of inventory, order and customer control
  • Ability to easily offer a large amount of information to the interested customer
  • Ease of sending commercial campaigns to clients

Disadvantages of e-commerce as a business

  • Great competition, especially in already established sectors
  • Constant maintenance of the platform is necessary
  • In case of problems with the platform, the consequences can be serious
  • From one day to the next, changes to a search engine can cause you to lose a large customer base
  • Great dependence on the cost of shipping costs

Different types of e-commerce

B2B: business to business

B2B online commerce (business-to-business) or between companies is one of the most popular types of electronic commerce and encompasses all kinds of activities between two companies through the Internet. A concrete example of this could be a supermarket portal aimed at the hotel sector or a platform for purchasing construction materials for companies engaged in masonry.

B2C: from business to consumer

B2C (business-to-consumer) or business-to-consumer transactions are probably the most popular type of electronic commerce operations. Under this modality, private consumers acquire products or services from a business through electronic commerce, generally through a virtual store on their own website or on specialized platforms in which various sellers offer their services.

Example of B2C transactions are acquiring a computer on a portal such as Amazon, making a purchase in a supermarket as a private individual or offering products to private customers in a virtual store on a platform such as eBay.

B2E: from company to employee

Although this is not such a model in use, B2E (business-to-employee) or company-to-employee e-commerce is a way that some companies have to offer various products or payment services to their employees, generally to a price lower than the market. Its objective is usually that employees enjoy benefits for belonging to the company regardless of salary, either in the form of services and products from the company itself or from other companies through a specialized portal, generally with restricted access.

Some Spanish banks, for example, offer a shopping portal to their employees with a variety of products with significant discounts, while some airlines or hotel chains offer discounts on trips or hotels through their own exclusive portals for their employees.

C2C: consumer to consumer

Another business model is electronic commerce between consumers or C2C (consumer-to-consumer), which basically refers to transactions between private users, which generally encompasses second-hand purchases of products that have already been used previously.

Although traditionally this type of shopping was limited to the local sphere and among acquaintances, they have evolved to the point that not only are there platforms such as eBay, Craigslist or Milanuncios that make it easier for private users to dispose of goods that they do not need, but that have emerged even specialized C2C applications such as Wallapop in which the clients themselves negotiate the sale of second-hand products of all kinds such as telephones, accessories, clothing, comics or any other type of article.

G2C: from government to consumer

G2C (government-to-consumer) transactions from government to consumer are probably the least common and occur when a government of any field offers citizens access to online services or products through its own portals or platforms.

Generally, these require identification to associate each procedure with a specific citizen. Although the offer is usually very limited, normally in this area electronic service transactions, such as online tax returns or access to certificates, claims or government procedures by the consumer, generally move.

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