What is e-commerce system?

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What is e-commerce system?

Have you ever wondered what e-commerce is? Or did you want to know the exact meaning of the term?

What differences are there between this term and other similar terms?

There is no doubt that e-commerce is more popular than ever. However, many people still don’t really know what it means.

For this reason, the purpose of the post is to explain the exact definition of e-commerce, how it differs from similar terms, the different types that exist, and its advantages compared to traditional businesses. So without further ado let’s start learning everything you need to know about e-commerce.

So What is e-commerce?

Wikipedia’s definition of e-commerce is…

Electronic commerce is trading and carrying out commercial transactions (transactions) electronically, through computer communication.

In simple words, it is a normal transaction in which collection and payment are carried out electronically (on the Internet).

Differences between e-commerce

E-commerce is often confused with other digital businesses and solutions, although they have nothing to do with each other.

E-commerce refers only to a transaction of goods and services between a seller and a consumer, while a digital business refers to the process of setting up, marketing, and everything necessary to manage a sales site on the Internet.

Within digital businesses we can find, for example:

  • digital marketing.
  • Facebook marketing for businesses.
  • Building a digital store.
  • SEO.
  • Content marketing.
  • Building a landing page in WordPress.

The concept of the digital business is to provide services and solutions for e-commerce, and e-commerce is actually part of the digital business as it is a type of business model.

Types of e-commerce

The field of e-commerce is large and there are many different types. We are going to talk about 2 categories:

According to the business profile

Every business focuses on a type of customer, and depending on who they are, we can classify them:

B2B (business to business): businesses whose customers are businesses or organizations. For example, we can think of a building materials company that sells its products to interior designers.

B2C (Business to Consumer): Businesses that sell their products or services directly to consumers. This is the usual type and there are thousands of examples of clothes, shoes, or sales sites on the Internet.

C2B (Consumer to Business): Sites where consumers offer products or services and businesses offer a price for them. These are traditional websites for freelancers.

C2C (consumer to consumer): Businesses that enable the sale of products among consumers. The most obvious example is second-hand or eBay or any other second-hand site.

In addition to these types of e-commerce, there are other popular types such as G2C (government to consumer), C2G (consumer to government), or B2E (business to an employer).

According to the business model

Technology is always changing and the new digital businesses that are emerging try to meet the new needs that are created.

Depending on the way the income is generated or the way the exchange is carried out between the buyer and the seller, they can be divided into:

  • Online Sales Site: Probably the first idea that came to you when you heard about e-commerce. They have the same characteristics as a physical store, but it is online.
  • Drop shipping: For the customer, everything looks like a normal online sales site. The difference is that the website owner is not the one who sends the product, but a third party (the supplier).
  • Affiliate Program: What these businesses do is send customers to different stores in exchange for a commission they receive after the purchase is completed. Affiliates are very common with Amazon.
  • Shuk: Shuk is a department store. This is a website where different sellers offer their products. Facebook’s Marketplace is a good example of a marketplace.
  • Services: An e-commerce business does not have to be about selling products. Training, consulting, mentoring, or any other exchange of time for money.

See Home Page: Free Website Making.

Advantages and disadvantages of setting up an e-commerce store
Why did e-commerce flood the internet and become a standard in every business so quickly? Because the advantages of electronic commerce compared to traditional commerce are enormous.

More customers. There is no local store or company with enough offices in different cities to match the distribution of e-commerce. The possibility to sell and buy from any part of the world expands the target audience and allows the business to get more customers.

No schedule: e-commerce does not operate according to business hours, while it is almost impossible to find a traditional store that is open 24/7. Websites are open all day and customers can buy what they want when they want.

Less costs: not needing a physical store reduces the costs of renting. In addition, when e-commerce unites suppliers with consumers, there are not even production costs.

Greater profit: more products are sold and more money is made. Even with cheap prices, larger profit margins can be achieved than in a traditional store.

Scalability: This means you can sell to one or a thousand people at the same time. In a physical store, there is always a limit on the number of customers you can assist at the same time.

But despite all the advantages that an e-commerce store provides us, there are also disadvantages, it is recommended to analyze the challenges you will have to face when you start your digital journey.

Disadvantages (challenges)

We wanted to call them challenges rather than disadvantages to avoid misrepresentation. Of course, there are some disadvantages, as with everything in life, but if there are no disadvantages, setting up an e-commerce store will be too easy and then it will have no benefits at all.

Lack of trust: Although payment methods have evolved to the point where they are as secure as any normal physical business, or even more so, still many people think it is risky. How can we solve this? By adding an SSL certificate (HTTPS) that encrypts the transmitted information, as well as by adding seals that convey the necessary trust.

Products and services that cannot be seen or touched: this tangible feeling (seeing or touching them) is missing in an e-commerce store. How can we solve this? By adding pictures, videos, and very detailed descriptions of the products.

Requires internet access: This is obvious, but to be able to buy and sell, you need a device connected to the internet. Today, the vast majority of people have this approach, but there are some sectors where the target audience is older or less “technical”, which can be a challenge.

Technical problems: in the specific case of an e-commerce store, the technological part requires minimal knowledge that not everyone has. The best way to solve this is by outsourcing to an external company.

Competitors: The initial investment for setting up an e-commerce store is not as high as the initial cost of a physical business. This means more competition.

It takes time to get results: You can have a great product and a great system, but if you don’t work on your marketing, no one will see them.
We think there are more significant advantages than disadvantages. In fact, the improvement of the refund policy and the development of the security system will eventually lead to the elimination of these shortcomings.

Steps to set up an e-commerce store

The idea – do you already have an idea or are you starting from scratch? If you have no idea, there are several strategies for finding business opportunities.

In all of them by and large you need to “open” your mind and be attentive, observe the everyday situations from an entrepreneurial point of view (what things do people usually complain about?) take a day and an hour to go out and look for ideas.

See what people wear and how they act. Observe and write down any idea you might think of without filtering it.

Always think of a solution to people’s problems and remember that the entrepreneur’s mind needs training. The first few days you start going to the gym make your body ache until it gets used to it, and so do the extra creativity and abilities.

The most important thing you need to remember is that the main idea you have in mind is: don’t sell products, solve problems.

Analyze the idea – The second step is to narrow down the first list of ideas until you have just a few.
These are the characteristics you will analyze:

  • Value Proposition: What is its value? What need does it meet?
  • Market: Is this a new product? Is it an existing product with new functions?
  • Competitors: Who already believes in the needs you have identified? can you improve it?
  • Demand: Is the problem you are going to solve widespread enough to create sufficient demand? Check out how many people are searching for it on Google.
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