The essence, pros, and cons of e-commerce
The technical basis on which e-commerce is built seems even simpler than the set of components that an offline store cannot do without. SECLGroup can help you with any e-commerce situation. So, technical content includes
- website or online store;
- database with goods;
- inventory balance accounting system;
- CRM system;
- system for delivering goods to the buyer, etc.
Of course, this is a greatly simplified model, because each of these categories can be described separately: however, the most important component of the listed ones will be a well-functioning and well-built server, since the site loading speed depends on it.
E-commerce, due to its convenience and versatility, is implemented in many niches, depending on its target audience. Here are examples of its successful implementation:
- Online cinemas, music, and book subscriptions. They allow you to legally enjoy the fruits of intellectual labor.
- Electronic bulletin boards.
- Online services for payment of public services. They owe their popularity to saving time – you no longer need to stand in lines to pay for an apartment.
- Online stores and marketplaces. Almost the entire sphere of e-commerce is based on them.
What are the types of e-commerce?
The following classification is based on the difference in the target audience:
- Business-to-Business is a mutually beneficial relationship between entrepreneurs. Manufacturers and merchants establish contacts with each other using special Internet platforms.
- Business-to-Consumer – Companies sell products to consumers on various online marketplaces. Represents a large number of advantages for both entrepreneurs and customers.
- Business-to-Government – business provides services to the state or its bodies, for example, the municipality. In this case, strict requirements are imposed on the business, usually, it is necessary to pass a selection by competition because the level of transactions is extremely high.
- Consumer-to-Consumer – relationships between consumers that are carried out through electronic bulletin boards.
- Government-to-Citizens – interaction between a citizen and the state – paying taxes and fines, obtaining various certificates and documents. It is not always a commercial activity, as it often carries an information load.
- Government-to-Government – business relations of government bodies.
- Business-to-Partners – interaction between “colleagues” – branches or companies from the same field.
- Business-to-Employee – automated management of business processes and tasks within a corporation.
- Business-to-Business-to-Customer is a merging of two types – dropshipping model is an example. An entrepreneur buys goods in China and arranges with warehouses so that they send orders to the right addresses, bypassing the need to store the goods at home.
- Exchange-to-Exchange – interaction between various electronic exchanges in currency exchange services.
Pros and cons of online trading
Like any other field, e-commerce has its advantages and disadvantages. Let’s start with a list of obvious advantages:
- Reducing the amount of money spent. E-commerce makes many processes easier – to open a trading platform, you no longer need to rent space, look for employees, and negotiate delivery. All of the above can be set to automatic mode, as a result, products become cheaper, which customers like.
- Dynamic growth of the sphere. The international e-commerce market is growing every year. Users are gradually getting used to making purchases online, and more and more services are appearing aimed at increasing the efficiency of online entrepreneurs.
- Wide coverage of target audience. Through the Internet, you can easily cross physical borders and go to conquer foreign markets. If you’re selling physical goods, consider how the product will be delivered to the customer.
- Reducing the number of intermediaries. You can contact directly the manufacturer of goods, completely excluding the participation of third parties.
- Visual analytics and tracking. The business and its promotion are completely under your control.
Cons of working with e-commerce:
- Technological addiction. Any overlay with technology and Internet access will affect the conversion.
- Nuances of working with payment systems. To receive funds, registration of an individual entrepreneur or LLC is required. In addition, in order for the reception and withdrawal of funds to be stable, it is necessary to provide high-quality service for customers. Otherwise, they may open disputes (disputes) through the bank, as a result of which the payment system may restrict the Internet entrepreneur’s ability to accept payments from customers.
The acceptance of international payments has its own characteristics, which we talked about in the article.
- Constant changes in legislation and regulation. Since the sphere is developing dynamically, it is subject to many changes, including legislation.
- Data protection. When working in the field of e-commerce, one cannot do without the use of complex certification, authorization, and other cybersecurity methods.
- Compliance with intellectual property rights. Unauthorized copying of copyrighted products is a huge problem for any business, as it does not bring profit to its owners.
The future of e-commerce
As expected, 2022 has not gone unnoticed by the ever-changing eCommerce market. More and more entrepreneurs stop using traditional methods of sales, preferring something new, which competitors do not yet have, and which would allow them to stand out in the eyes of customers because the conversion of the store directly depends on this. More and more interesting “chips” come into use – some are becoming obsolete, while others are just beginning to flourish.
The latest industry trends include
- growing popularity of marketplaces
- targeting the younger generation
- increase in the use of chatbots
- environmental Protection
- use of voice commerce
- video consultations from offline stores
- product subscription
- reduced delivery times
- payment variety
- rising customer acquisition costs
You can read more about each trend in our article. All of the above trends point to one thing – the e-commerce industry continues its active development. Millions of people are enjoying how easy it is to shop online, and trust in online retailers is growing.
Shopping platforms are becoming more and more convenient: new payment and delivery methods are being added, and marketing strategies are improving, which attract more and more new customers. No wonder e-commerce is booming.
As you probably already understood from the text of our article, e-commerce is one of the most promising and rapidly developing market segments. A large number of advantages over offline trading, as well as the constant improvement of the system, attract the attention of new buyers and manufacturers.
However, do not think that it is easy to achieve success in this area and that you do not need to make any efforts for a quick result – such a strategy is unlikely to be effective.