E-commerce

Definition

E-commerce refers to the buying and selling of goods and services over the internet. It encompasses a wide range of online business activities, including retail sales, auctions, and online marketplaces. E-commerce models can significantly influence how businesses generate revenue, as they often leverage technology to reach broader audiences and streamline transactions.

5 Must Know Facts For Your Next Test

1. E-commerce has drastically changed consumer behavior, with more people shopping online than ever before, especially after the pandemic.
2. There are several types of e-commerce models, including B2C, B2B (business-to-business), C2C (consumer-to-consumer), and C2B (consumer-to-business).
3. The global e-commerce market is projected to continue growing, reaching trillions in revenue, driven by mobile commerce and technological advancements.
4. E-commerce platforms often provide tools for inventory management, customer relationship management, and analytics to help businesses track performance.
5. Security is a critical concern in e-commerce; many businesses invest in SSL certificates and encryption technologies to protect customer data during transactions.

Review Questions

• How does e-commerce impact traditional retail businesses?
  • E-commerce has transformed traditional retail by providing customers with more convenient shopping options and access to a wider range of products. Retailers must now compete with online marketplaces that offer lower prices and faster delivery options. This shift has forced many brick-and-mortar stores to adopt an omnichannel strategy, integrating their physical presence with online sales to meet changing consumer expectations.
• Discuss the various revenue streams that e-commerce businesses can utilize.
  • E-commerce businesses can generate revenue through multiple streams such as direct sales from their website, subscription models where customers pay regularly for products or services, affiliate marketing where they earn commission from promoting other companies' products, and advertising on their platforms. Diversifying revenue streams can help businesses mitigate risks associated with fluctuations in consumer demand.
• Evaluate the future of e-commerce in relation to emerging technologies and consumer trends.
  • The future of e-commerce looks promising as emerging technologies like artificial intelligence, augmented reality, and blockchain are set to redefine the shopping experience. AI can personalize recommendations for consumers, while AR allows shoppers to visualize products in their own space before purchasing. Additionally, as sustainability becomes a priority for consumers, e-commerce platforms are likely to adapt by promoting eco-friendly products and practices. This integration of technology and consumer values will drive innovation and growth in the e-commerce sector.

Related terms

Business-to-Consumer (B2C): A model where businesses sell products or services directly to consumers through online platforms.

Payment Gateway: A service that authorizes credit card or direct payments for e-commerce transactions, enabling secure online payments.

Dropshipping: A retail fulfillment method where a store doesn’t keep the products it sells in stock, instead purchasing items from a third party and having them shipped directly to customers.