E-Commerce

E-commerce, also known as electronic commerce, refers to the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. Electronic commerce draws on such technologies as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, Electronic Data Interchange (EDI), inventory management systems, and automated data collection systems. In the emerging global economy, e-commerce and e-business have increasingly become a necessary component of a business strategy and a strong catalyst for economic development.

Photo Credits: Grace Kim, The Balance

Business-to-Consumer (B2C):

Business-to-Consumer (B2C), also called B-to-C, refers to the transaction of goods and services that take place directly between a business and a consumer, who is the end-users of its products or services. This type of ecommerce is among the most popular and widely known sales models. B2C traditionally referred to mall shopping, eating out at restaurants, pay-per-view movies, and infomercials. However, the rise of the internet created a whole new B2C business channel in the form of e-commerce or selling goods and services over the internet. Amazon is an example of B2C e-commerce.

Business-to-Business (B2B):

Business-to-business (B2B), also called B-to-B, is a form of transaction between businesses, such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer. Simply put, it refers to business transactions between two companies. These transactions commonly happen in the supply chain, where one company will purchase raw materials from another to be used in the manufacturing process.

Consumer-to-Consumer (C2C):

Customer-to-customer (C2C), also called C2C, is a form of business model whereby customers can trade with each other, typically in an online environment. C2C transactions actually represent a form of bartering. It represents a market environment where one customer purchases goods from another customer using a third-party business or platform to facilitate the transaction. Two implementations of C2C markets are auctions and classified advertisements. eBay and Etsy are examples of C2C companies.

M-Commerce:

M-commerce, also called Mobile Commerce refers to the buying and selling of goods and services, paying bills, mobile ticketing and doing transactions through wireless handheld devices such as smartphones and tablets. Many choose to think of mobile commerce as “a retail outlet in your customer’s pocket.” M-commerce can be used by businesses to improve their customer base and increase their revenue. Some types of m commerce include online shopping, mobile banking, mobile app payments through PayPal and Google Pay, and booking tickets online.

F-Commerce:

F-commerce, also called Facebook Commerce, refers to the selling of goods and services on Facebook. It has become a major online trading vehicle. Facebook being a popular social media site provides a captive audience to transact business. Many small businesses rely more on their social media presence than they do on traditional websites. This is one of the newest forms of e-commerce, that has become popular with young entrepreneurs which makes shopping on Facebook pages convenient for the young generation.

The Impact of Ecommerce

The impact of e-commerce is far and wide with a ripple effect from small business to global enterprise.

  1. Large retailers are forced to sell online.

For many retailers, the growth of e-commerce has expanded their brands’ reach and positively impacted their bottom lines. But for retailers who have been slow to embrace the online marketplace, the impact has been different.

Retailers that fall into the middle ground are the ones feeling the biggest changes in response to the impact of e-commerce. 

 In February of 2019, online sales narrowly surpassed general merchandise stores for the first time, including department stores, warehouse clubs, and supercenters. Because Amazon Prime took away the price of shipping, more consumers are comfortable with online shopping.

  • Ecommerce helps small businesses sell directly to customers.

For many small businesses, e-commerce adoption has been a slow process. However, those who’ve embraced it have discovered e-commerce can open doors to new opportunities.

Slowly, small business owners are launching e-commerce stores and diversifying their offerings, reaching more customers, and better-accommodating customers who prefer online/mobile shopping. 

Pre-pandemic, small businesses were working to expand their e-commerce presence. Today, 23% of small business owners feel they’ll have to strengthen their e-commerce capabilities to survive in a post-pandemic world. Another 23% of small business owners have created a website or updated their existing one since COVID-19 lockdowns began.

2. B2B companies start offering B2C-like online ordering experiences.

B2B companies are working to improve their customer experiences online to catch up with B2C companies. This includes creating an omnichannel experience with multiple touchpoints and using data to create personalized relationships with customers.

Ecommerce solutions enable self-service, provide more user-friendly platforms for price comparison, and help B2B brands maintain relationships with buyers, too. 

 By 2026, B2B transactions are expected to reach $63,084 billion.

3. The rise of e-commerce marketplaces.

Ecommerce marketplaces have been on the rise around the world since the mid-1990s with the launch of giants we know today, such as Amazon, Alibaba, and others

4. Supply chain management has evolved.

Survey data shows that one of e-commerce’s main impacts on supply chain management is that it shortens product life cycles.

As a result, producers are presenting deeper and broader assortments as a buffer against price erosion. But, this also means that warehouses are seeing larger amounts of stock in and out of their facilities.

In response, some warehousers are now offering value-added services to help make e-commerce and retail operations more seamless and effective.

These services include:

  1. Separation of stock/storage for online vs. retail sales.
  2. Different packaging services.
  3. Inventory/logistics oversight.

5. New jobs are created but traditional retail jobs are reduced.

Jobs related to e-commerce are up 2x over the last five years, far outpacing other types of retail concerning growth. However, growth in e-commerce jobs is only a small piece of the overall employment puzzle.

A few quick facts on how e-commerce has impacted employment:

  • Ecommerce jobs are up 334%, adding 178,000 jobs since 2002.
  • Most e-commerce jobs are located in medium to large metropolitan areas.
  • Most e-commerce companies have four or fewer employees.

The flip side of this, however, is that upticks in efficiency paired with a shift away from traditional retail may lead to some job losses or reductions in workforces as well.

As with any major market shift, there are both positive and negative impacts on employment.

6. Customers shop differently.

Ecommerce (and now omnichannel retail) has had a major impact on customers. It is revolutionizing the way modern consumers shop.

Today, we know that 96% of Americans with access to the internet have made a purchase online at some point in their lives and 80% have made a purchase online in the past month.

And not only do customers frequently use eCommerce sites to shop: 51% of Americans now prefer to shop online rather than in-store. 

Millennials are the largest demographic of online shoppers (67%), but Gen X and baby boomers are close behind at 56% and 41% participating in online shopping activities respectively.

7. Social media lets consumers easily share products to buy online.

Researchers have discovered that e-commerce has made an interesting social impact, especially within the context of social media.

Today, e-commerce shoppers discover and are influenced to purchase products or services based on recommendations from friends, peers, and trusted sources (like influencers) on social networks like Facebook, Instagram, and Twitter.

If you’ve ever been inspired to buy a product you saw recommended on Facebook or featured in an Instagram post, you’ve witnessed this social impact as it relates to e-commerce.

8. Global e-commerce is growing rapidly.

In 2018, an estimated 1.8 billion people worldwide made an online purchase.

Chinese platform, Taobao, is the biggest online marketplace with a gross market value (GMV) of $484 billion. For context, Tmall and Amazon ranked second and third with $458 and $339 billion GMV in annual third-party global market value respectively.