Understanding eCommerce
In our previous chapters, we saw how shopping has changed during the complete course of history. From barter systems to the development of coins, and then from supermarkets to the emergence of eCommerce stores.
After which, in the second chapter, we tried to understand what makes e-commerce stores and online shopping different. Why are more and more people choosing it than any other method of shopping? How can it be advantageous for both you, as a business owner, and a person who is looking for a place to shop?
But wait! What is e-Commerce? Are there different types of e-commerce? What was it before like and how has it evolved? There are so many questions that come to our mind when we think of it.
Let us find answers to all these questions. By the end of this chapter, you are going to:
• Understand what is e-Commerce
• Identify and define different types of e-Commerce
• Know the history and evolution of e-• Commerce
• Find out current trends and future predictions
• And finally, see how the government is helping and revolutionizing the structure of online business.
So, let us begin our discussion and understand all of this in detail.
What is e-commerce?
As we saw in previous chapters, there are different types when it comes to shopping. However, today, using our electronic devices, primarily our mobile devices and computers, we can browse the internet, find the product of our choice, and shop for it.
In addition, there are different e-commerce websites and applications that help us in our shopping experience. So, this buying and selling of goods and services on the internet or an electronic network is what we call e-commerce. It is also referred to as electronic commerce.
Hence, in the simplest of terms, e-commerce refers to the buying and selling of goods and services over the Internet or the transfer of funds or data. Today, there is hardly anything that you cannot find and shop online. From books, tickets, clothes, and music, everything is available online for purchase and sale, thus, being a crucial part of e-commerce. Do you know that the buying and selling of stocks and Internet banking also come under e-commerce?
What are Different Types of E-Commerce?
Now that we know what e-commerce is, let us proceed to understand different types of e-commerce. Really? Are there different categories into which e-commerce is divided? What are these categories? The following are the primary categories in which e-commerce is divided. Let us explore them in detail.
Business to Business (B2B): When a business exchanges its products and services with other businesses rather than consumers, this is known as B2B commerce. Here, two businesses are directly exchanging with each other. Some great examples of this can be a company selling its software to other businesses (eg: salesforce) and a platform where businesses buy wholesale products from manufacturers (eg: Alibaba).
Business to Consumer (B2C): When a business sells its products, information, or services directly to consumers, it is known as business to consumer. Online e-commerce stores such as Amazon, where consumers can directly purchase products on the business’s available platform. Subscription entertainment services like Netflix and restaurants selling food on e-commerce platforms are also examples of B2C.
Direct to Consumer (D2C): Now, as we saw in the earlier example of B2C, there would be a particular platform required for restaurants to sell their food to consumers, D2C is different from this. Here, the business that manufactures the products directly sells them to the consumers through the Internet without the involvement of a middleman. A prominent example of this can be companies directly selling their tech products to consumers (eg: Apple).
Consumer to Consumer (C2C): When we are talking about C2C, here consumers are directly trading services, products, or information with each other. However, in these exchanges, we generally see the involvement of a third party that provides a suitable platform for the transaction. Platforms for freelancing or platforms where you can sell used products are examples of C2C.
Consumer to Business (C2B): We observe that this type of e-commerce is opposite to B2C. How? Well, here, in C2B, the consumer provides their products and services to companies. Moreover, companies can bid on or purchase their services. Stock photography and freelance writing on Upwork can be suitable examples of this type of e-commerce.
Other than this, you will also see Business to Administration (B2A) and Consumer-to-administration (C2A) where the local authorities or the government of the country is at the receiver’s end of the service or the product. Tax filing services and online public surveys are examples of this.
Therefore, these are different types of e-commerce that you should be aware of as someone interested in learning about how e-commerce works.
History and Evolution of E-Commerce
Almost every one of us has shopped sometime or the other in our lives on an online platform, using e-commerce platforms. But have you ever thought about the origin of e-commerce? Have you ever wondered how it all must have started?
The history of e-commerce can be traced as back as 40 years ago, especially around the time when the internet came into existence. With early technology like Electronic Data Interchange (EDI) and teleshopping emerging in the year 1970, modern-day e-commerce as we experience today has come so far.
Do you know that the internet for the public was opened in the year 1991? Yes! It gave a kickstart to e-commerce and has made it like what we have today. Online shopping was invented in 1979 by Michael Aldrich.
After subsequent events, Amazon became a platform that used to sell books online and has evolved into a massive e-commerce giant today. The growth of e-commerce took a significant leap when companies like PayPal provided a secure method of online transactions.
Later, as mobile devices and internet connectivity became popular, e-commerce development also took a giant leap. Since then, e-commerce has exponentially grown. Here is a quick timeline for a better understanding:
1969: CompuServe, the first major e-commerce company, was founded in the United States, pioneering online services for businesses.
1984: Electronic Data Interchange (EDI) standards are adopted, enabling the digital exchange of business documents and laying the groundwork for e-commerce.
1991: The World Wide Web becomes publicly available, providing a platform for the future growth of e-commerce.
1994: Amazon and eBay launch, revolutionizing online retail and auctions, respectively.
1999: Alibaba is established in China, setting the stage for it to become a global e-commerce powerhouse.
2006: Shopify launches, providing an accessible online storefront service for businesses of all sizes.
2008: Bitcoin is introduced, changing the landscape of digital payments with the first cryptocurrency.
2014: Apple Pay is launched, transforming mobile payments and digital wallets with secure, contactless transactions.
2015: Cyber Monday sales reached a new record of $3 billion, highlighting the growing importance of e-commerce in holiday shopping.
2020: The COVID-19 pandemic accelerates e-commerce growth as consumers shift to online shopping, resulting in a significant surge in sales.
2023: The introduction of ChatGPT by OpenAI showcases the growing integration of AI in e-commerce for enhancing customer service and personalization.
Understanding Current Trends & Future Predictions
As someone who is looking to establish themselves in the e-commerce industry, you should know that the current trends are amazing and the future predictions of e-commerce are very promising.
Today, e-commerce has become a significant part of every industry. As we already know, technology has reached every corner of the world, and so does e-commerce. For instance, if you want to eat something. What is the first thing that comes to your mind? Zomato or Swiggy. Right?
You are going to an event in some days and you need clothes for it. What is the first thing that comes to your mind? Searching online stores, right? See, this is how efficient and important e-commerce has become today.
From ordering a small item like a book or groceries to ordering a giant electronic item, we can easily do it online, and that too with complete trust and reliability. And what to say about the future? The future looks as promising as never before.
With the evolution of technologies such as artificial intelligence, virtual reality, automated vehicles, and more, the overall online shopping experience of people will become better. Drones are expected to provide a faster delivery service that is reliable as well.
So, if we consider it from a broader perspective, the future of e-commerce looks promising.
How Is the Government Aiding in Revolutionizing the Structure of Online Business?
For any business to prosper and grow, it needs support and credibility from the government. Moreover, the environment has to be in such a manner that the policies and decisions of the government support the overall development and growth of the business.
How will it help? Well, if the government is supporting any sector, or the policies are in favor, more and more entrepreneurs are going to sign up for that sector. In addition, the general sentiment and support of the masses is mostly what the government favors.
So, are there any such policies in India? Is the Indian government in favor of online business? One prominent reason for the rapid growth of the e-commerce sector in the country is the government’s support and policies in favor of SMEs and online businesses.
Also, do you know about the ONDC initiative? ONDC is the Indian government’s open e-commerce network. At present, it has its network in 236 cities in the country. The platform lets you purchase services and commodities independently without any dependence on a specific digital platform. In addition, it favors small and local businesses to have a digital presence and deliver their services directly to the consumers.
Such initiatives provide support to businesses to have their online presence, which is ultimately necessary for the development of e-commerce. E-commerce has come a long way from the beginning and is set to go even further.
Are you ready to invest?
Crucial Takeaways from This Chapter
E-commerce refers to buying and selling goods and services over the Internet.
There are different types of e-commerce, including B2B, B2C, D2C, C2C, and C2B.
E-commerce has evolved from the early days of the Internet to a massive industry influenced by technology and innovation.
Current trends in e-commerce include AI, virtual reality, and drone deliveries, promising a bright future.
Government initiatives like India’s ONDC support the growth and digital presence of small and local businesses.
