What is E-commerce?

E-commerce, also known as online retail, refers to the buying and selling of goods and services over the internet. Companies use various digital tools, such as online platforms, to automate the sales process. Customers search for offers, order products, and pay online. The merchant delivers the goods largely automated from the warehouse, and invoices are sent electronically.

Goals of E-commerce

E-commerce aims to maximize sales and minimize effort by automating digital processes. Companies benefit from the efficiency of order processing, warehousing, and customer service, which can reduce labor costs and increase profits.

Types of E-commerce

There are various forms of e-commerce, which differ according to the trading partners. Essentially, these mirror traditional retail:

Business to Consumer (B2C): Companies sell to private customers. For example, a private individual orders medication from an online pharmacy.
Business to Business (B2B): Companies trade with each other, e.g., when purchasing production materials.
Business to Administration (B2A): Companies supply government institutions.
Consumer to Consumer (C2C): Private individuals trade with each other, e.g., on online auction platforms like eBay or Etsy.

Benefits

Opening up new sales markets,
Easy customer care via digital channels,
Independence from location and opening hours,
Reduced logistical effort,
Efficient warehousing,
Diverse marketing opportunities,
Personalization of products,
High reach even with a small budget.

Disadvantages

High initial investments,
Required expert knowledge,
Lack of personal customer contact,
Lack of advice,
Threat to local businesses (extinction of city centers),
Necessity of data security,
Strong competition, partly with oligopoly formation.

Online vs. Brick-and-Mortar Retail

While e-commerce scores with cost efficiency, reach, and flexibility, brick-and-mortar retail offers advantages such as personal customer contact and less competition. The choice between both forms depends on a company’s individual goals and resources. Nevertheless, e-commerce is steadily gaining importance in today’s economy.