E- Commerce: Meaning, Nature and Concept


E-commerce is a transaction of buying or selling online. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.

Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction’s life cycle although it may also use other technologies such as e-mail. Typical e-commerce transactions include the purchase of online books (such as Amazon) and music purchases (music download in the form of digital distribution such as iTunes Store), and to a less extent, customized/personalized online liquor store inventory services.

There are three areas of e-commerce:

(i) Online retailing,

(ii) Electric markets, and

(iii) Online auctions. E-commerce is supported by electronic business.

Nature of E- Commerce

It has also been described as a “fusion of telecommunications and computing technology to conduct business. That is the creation and management of relationships between buyers and sellers, facilitated by an interactive and pervasive electronic medium”. Some of the main reasons for the increase in electronic trading are:-

(I) The drive to reduce the costs;

(II) Easy accessibility to the Internet;

(III) The lack of regulation on the Internet;

(IV) Access to global markets for vendors;

(V) Greater choice and potentially lower prices for purchasers;

(VI) Lower inventory costs for vendors;

(VII) The ability to enter new markets more easily.

Examples of E-Commerce

Ecommerce can take on a variety of forms involving different transactional relationships between businesses and consumers, as well as different objects being exchanged as part of these transactions.

  1. Retail: The sale of a product by a business directly to a customer without any intermediary.
  2. Wholesale: The sale of products in bulk, often to a retailer that then sells them directly to consumers.
  3. Dropshipping: The sale of a product, which is manufactured and shipped to the consumer by a third party.
  4. Crowdfunding: The collection of money from consumers in advance of a product being available in order to raise the startup capital necessary to bring it to market.
  5. Subscription: The automatic recurring purchase of a product or service on a regular basis until the subscriber chooses to cancel.
  6. Physical products: Any tangible good that requires inventory to be replenished and orders to be physically shipped to customers as sales are made.
  7. Digital products: Downloadable digital goods, templates, and courses, or media that must be purchased for consumption or licensed for use.
  8. Services: A skill or set of skills provided in exchange for compensation. The service provider’s time can be purchased for a fee.

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