What is Electronic Commerce? – Types, Features, and More
Table of Contents
What is Electronic Commerce?
Electronic commerce is that economic activity that allows the purchase and sale of products and services through digital media, such as web pages, platforms, mobile applications, and social networks.
This means accessibility and speed since transactions can be carried out at any time and anywhere in the world. There are no schedules.
Likewise, e-commerce has managed to increase the sales of several companies because many people prefer not to have any contact with sellers; they want to get the products or services from the ease of their homes in just a few clicks.
For this reason, more and more organizations choose to have web pages and create profiles on different social networks to achieve a greater reach and an increase in their sales since they have realized that this is what is happening today. They have to adapt to the needs and tastes of their audience.
Although people do not trust much in buying and selling online, these are less and less since purchasing formulas have been created that generate greater trust among users.
Types of Electronic Commerce
The main types of e-commerce that you can implement to sell online are the following:
The electronic commerce store is a virtual store where a brand is responsible for selling its products and services. These usually have their online platform. An example of e-commerce of this type is the Zara digital store.
Marketplace: It is a virtual platform responsible for selling products and services of different brands or companies. Unlike electronic commerce stores, sellers do not have their platform but a shared one. Two examples of e-commerce of this type are Amazon and MercadoLibre.
Social Commerce: It is a type of electronic commerce that implements social networks as a direct means of selling products. Currently, the same social networks have enabled spaces for online sales. An example of social commerce is Facebook stores, a space for companies and people to market their products. One of the advantages of e-commerce on Facebook is that you can take advantage of a platform to which millions and millions of users connect every day.
Dark store: It is also called a dark store. They are commerce companies that sell their products entirely online. They do not have physical stores open to the public. And also, they only have a warehouse and logistics space from where they store, manage and distribute their products (through delivery services). An example of this type of e-commerce is Walmart’s dark store in Chile. Another example of electronic commerce under this modality is dark kitchens.
Features of Electronic Commerce
Electronic commerce advantages and disadvantages characteristics of electronic commerce are very distinctive for both users and companies. Those peculiar qualities allow us to enjoy the different advantages of electronic commerce, whether to sell or buy.
That said, among the main characteristics of electronic commerce, we can mention the following:
Personalization: it is possible to carry out marketing strategies aimed at a very well-segmented target audience. This feature is considered one of the significant advantages of electronic commerce. The company can make offers and promotions with a very high degree of personalization and spread them through advertising on social networks or email marketing, which can also personalize to the max.
Versatility: If the e-commerce store is a sales channel of an already established physical store, then the business can be easily adapted to the different buying habits of the customers. For example, the e-commerce trends of web rooming and showrooming come into play here. Web rooming is when customers first investigate the product in the store online and then buy in physics. Showrooming is the opposite when the customer explores the development in the physical store and then buys it online. This characteristic is the fundamental basis of the many advantages of electronic commerce for those companies that want to maintain their physical stores.
Strategic Warehouses and Delivery Service: Delivery service may be the most prominent feature of e-commerce in the consumer’s mind. In this sense, for delivery to have comprehensive coverage and truly effective service, warehouses and dispatch centers are usually located in strategic areas.
Advantages of Electronic Commerce for the Company
The main benefits of electronic commerce that companies can take advantage of are the following:
Cost reduction: this is one of the advantages of electronic commerce best valued by companies, thanks to the fact that sales are made online. They do not need to invest in physical spaces or customer service personnel (if not want), and with this, they manage to reduce their logistics costs considerably.
Visibility in the market: thanks to the internet, electronic businesses can reach a more significant number of attracting more actual and potential customers. Something challenging and costly in traditional commerce.
24/7 availability: unlike physical stores that have specific hours, products on the internet expose at all times so that a person can find them. And buy them at any time of the day and year.
On the other hand, for customers, there are also several advantages of e-commerce that are very attractive. Among them, the following:
Practical shopping experience: users buy the product they want very easily, quickly, and comfortably. They do not even need to leave home. They only need to have an internet connection.
Access to information: another advantage of electronic commerce for customers and consumers is that they can evaluate products, comparing prices and available offers between one or more brands.
Delivery: in the same sense as the advantage of electronic commerce described in the previous point, a vital aspect of the convenience of the buyer is that he can receive the product directly at his home by requesting that, after the purchase, the merchandise sent to you through an order delivery service.
Disadvantages of Electronic Commerce
Now, as we have said, different types of e-commerce have both advantages and disadvantages. In this sense, some of the disadvantages are the following:
High level of competition: Thanks to all the advantages of e-commerce, this business model has been gaining popularity among brands worldwide and in all industries. Therefore, as more companies venture into electronic commerce, the level of competitiveness increases.
There is no direct dealing with the customer: Because it type of commerce carries out through the Internet, personal contact with buyers is almost wholly lost. Therefore, if the company does not commit to working on the shopping experience. It is likely that it will not retain its customers.
Technical failures are critical: either because the product arrived in poor condition, not deliver on time, or worse, it could not return. Brand reputation can undermine by not dealing with mishaps at such crucial stages as the last mile.
For all the benefits of e-commerce to pay off, you need to prepare to attack its downsides. Today, this is possible thanks to specialized software that allows you to manage last-mile deliveries from start to finish. Thus guaranteeing an optimal delivery service.
Now you know everything about e-commerce, what benefits it brings, and how to start setting up your online store.
Don’t pass up the opportunity to reach new people through more innovative means. Remember that it is important to stay updated. And always seek to provide a better shopping experience for your customers in the world of sales.
Also, do not think that because everything is online, things will be easier. You will be able to leave your business, and it will continue to work. Electronic commerce requires the same attention as traditional commerce, even more, to give it life and presence; otherwise, it will be challenging for someone to know your company or brand.
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