E-Commerce or Electronic Commerce

 A methodology of modern business which addresses the needs of business

organizations, vendors, and customers to reduce costs and improve the quality of
products while increasing the speed of delivery.
 The process of buying or selling of goods or services using an electronic medium
such as the Internet.
 This involves the transaction of goods and services, the transfer of funds, and the
exchange of data.
 E-commerce transactions are governed by Republic Act No. 8792 also known as
the "Electronic Commerce Act”.

Features of E-Commerce:
 Automated Inventory Management: Reports get generated when required which
makes e-commerce efficient.
 Communication Improvement: It provides ways for faster, efficient, and reliable
communication with customers and partners. It makes exchange of information
easier.
 Customer Support: It has various ways to provide pre-sales and post-sales
assistance to customers.
 Improved Sales: Orders can be generated without human intervention that give a
big boost to existing sales volume.
 Increased Advertising: It helps in better marketing management of
products/services.
 Non- Cash Payment: The use of credit cards, debit cards, smart cards, electronic
fund transfer, and other modes of electronics payment.
 Service Availability: It is available anytime and anywhere.

Advantages of E-Commerce to Organizations:

 E-commerce provides the sellers with a global reach. The barrier of place is
removed because it isn’t tied to a single geographic location – it’s open and
available to those who visit it online. So, an organization can easily locate more
customers, best suppliers, and suitable partners across the globe.
  E- Commerce has lower operational costs and reduces paper works. There is no
need to hire sales staff or maintain a physical store; the major E-Commerce costs
go to warehousing, product storage, and shipping.
 E-Commerce increases organization’s productivity. A business process starts
when a request comes from a customer and it uses just-in-time manufacturing
way.
 E-Commerce businesses can automate their inventory management. It uses
electronic tools to accelerate ordering, delivery and payment procedures. It saves
operational and inventory costs.

Advantages of E-Commerce to Customers:

 It provides quick delivery of goods with very little effort on part of the customer.  It
saves time, energy, and effort for both the consumers and the company.
 It provides customers with more options. It enables the customers to compare
and select better products.
 It provides readily available information. The customer can see the relevant
detailed information and reviews about the product within seconds.
 It offers convenience and around-the-clock availability. A customer can shop
anywhere and at any time possible without being constrained by operating hours
of a traditional store. The website is functional at all times.
 It can also provide personalized experiences. It is possible with the help of
automation and rich customer profiles. For example, showcasing relevant products
based on past purchase behavior can make the shopper feel like you truly
understand him/her as an individual.
 It allows the customer and the business to be in touch directly, without any
intermediaries. This results to quick communication and transactions.

Disadvantages of E-Commerce:
 Internet is required. It is not accessible without internet and not everyone has
access.
 Start-up costs of the e-commerce portal are very high. The setup of the hardware
and the software, the training cost of employees, the constant maintenance and
upkeep are all quite expensive.
  The e-commerce industry has a high risk of failure.
 There are limited interactions with customers. Without being face-to-face, it can
be harder to understand the wants, needs, and concerns of your e-commerce
customers. Although there are ways to gather this data (survey data, customer
support interactions, etc.), it does take a bit more work than talking with shoppers
in person on a day-to-day basis.
 Limited customer service. The site may only provide support during certain
hours of the day or a call to a customer service phone number may keep the
customer on hold.
 No ability to test or try-on. E-commerce experience can be limiting for shoppers
who want to get hands-on with a product Online images can provide a good sense
about a product but do not necessarily convey the whole story about an item. It is
different from experiencing it directly. E-commerce can lead to dissatisfaction and
returns when consumers received products that differ from their expectations.
 Security is another area of concern. Security breach where the information of the
customers can be stolen is possible. Credit card theft, identity theft, etc. remain big
concerns with the customers.
 Technology breakdowns can impact ability to sell. If your e-commerce website is
slow, broken, or unavailable to customers, it means you can’t make any sales. Site
crashes and technology failures can damage relationships with customers and
negatively impact your bottom line.
 E-Commerce is not instantaneous. There is a wait time for the product to be
shipped to the customer’s address.
 Fulfillment problems. Even after the order is placed, there can be problems with
shipping, delivery, mix-ups etc.

Types of E-Commerce Models:

The basis for this simple classification are the parties involved in the transactions.

1. Business to Business (B2B)

B2B business model relates to transactions made between business entities,
such as a manufacturer and a wholesaler or retailer. A website following this model
sells its products to an intermediate buyer who then sells the product to the final
customer.
 As an example, a wholesaler places an order from a company's website and after
receiving the consignment, sells the endproduct to the final customer who comes to buy
the product at one of its retail outlets.

2. Business to Consumer (B2C)

B2C business model encompasses transactions made between a business

organization and a consumer. A website following this model sells its products directly
to a customer. The consumer can browse their websites, view the products, and also
read reviews. The customer can place an order and the website will send a notification to
the business organization via email.

3. Consumer to Consumer (C2C)

C2C business model relates to the sale of products or services between

consumers. No company is involved. A website following this model helps consumers to
sell their assets like residential property, cars, motorcycles, electronics, etc., or rent a
room directly to an interested party by publishing their information on the website.
4. Consumer to Business (C2B)
In this model, a consumer approaches a website showing multiple business
organizations for a particular service. The consumer places an estimate of amount
he/she wants to spend for a particular service. For example, the comparison of interest
rates of personal loan/car loan provided by various banks via websites. A business
organization who fulfills the consumer's requirement within the specified budget,
approaches the customer and provides its services. A business model like iStockPhoto,
in which stock photos are available online for purchase directly from different
photographers or an IT freelancer who demos and sells his software to a company are
also C2B type of e-commerce.

5. Consumer to Government (C2G)

C2G business model refers to transactions conducted online between individual

consumers and public administration or government bodies. Every time consumers pay
taxes, health insurance, electronic bills, or request information concerning the public
sector, they’re engaging in C2G. C2A might include things like online consulting for
education, online tax preparation, etc. focused on increased efficiency within the
government via the support of information technology.

6. Business to Government (B2G)

B2G business model refers to transactions conducted online between

companies and public administration or government bodies. Such websites are used
by governments to trade and exchange information with various business
organizations. It provides a medium to businesses to submit application forms to the
government. An example would be the products and services related to legal
documents, social security, registers, fiscals and employment, etc.

7. Government to Business (G2B)

The G2B business model is used by the government to approach business

organizations. Such websites support auctions, tenders, and application submission
functionalities. Government procurement, data centres, and e-learning are all
examples of G2B ecommerce.

8. Government to Citizen

The G2C business model websites is used by the government to approach

citizen in general. It reduces the average time for fulfilling citizen’s requests for various
government services. Such websites provides services like registration for birth,
marriage or death certificates. It also support auctions of vehicles, machinery, or any
other material.