E-commerce, also known as online trading, 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 retailer delivers the goods largely automatically 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, inventory management, and customer service, which can reduce labor costs and increase profits.
Types of E-commerce
There are various forms of e-commerce that differ according to the trading partners. Basically, these reflect brick-and-mortar 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 to government institutions.
- Consumer to Consumer (C2C): Private individuals trade among themselves, e.g., on online auction platforms like eBay or Etsy.
Vorteile
- Opening up new sales markets,
- Easy customer care through digital channels,
- Independence from location and opening hours,
- Reduced logistical effort,
- Efficient inventory management,
- 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 consultation,
- Threat to local businesses (extinction of city centers),
- Necessity for 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 the two forms depends on the individual goals and resources of a company. Nevertheless, e-commerce is steadily gaining importance in today’s business world.
