Ecommerce – Advantages, Disadvantages and Limitation

Today, e-commerce is the new normal as people can buy anything like groceries, furniture, etc from online stores. E-commerce is transforming the way enterprises interact with consumers and governments very rapidly.

Ecommerce enables organizations to improve their competitiveness. In this article we are going to discuss e-commerce, how it works, types, applications, advantages, and disadvantages.

What is Ecommerce?

Ecommerce is a subset of e-business and refers to the way of trading goods and services through the internet. It is also known as electronic commerce or internet commerce and encompasses various other activities like internet banking, online transactions, ticket booking, etc. In a broader perspective, it defines the way companies are using the internet to do business in the way they think about logistics and marketing.

Need of E-commerce

With the rapid development in Information and Communication Technologies, the global market is moving towards B2B (Business to Business) e-commerce. E-commerce provides transparency of the market to both sellers as well as buyers.

Working of E-commerce

E-commerce works in the same way as any physical store. The only difference is that e-commerce is powered by the internet and is also not limited to any geographical area or region.

The process of operating an e-commerce website is divided into three steps:

• Accept the order- When the customer places an order on the website. You will get an alert of the same.
• Process the order- Depending on the payment mode provided, whether it’s COD or online transaction you need to process the order.
• Ships the order- The last step is the shipment, you need to make sure that the product gets delivered to the desired customer without any problem.

Types of E-commerce

There are various types of e-commerce discussed below

• Business-to-Business (B2B) – E-commerce is the way of doing electronic transactions between businesses. The transaction is carried out via EDI (Electronic Data Exchange) which comprises an automated format for exchanging information. For example, manufacturers, wholesalers are B2B companies.

• Business-to-Consumer (B2C) – B2C activities are focused on customers rather than businesses. B2C is the indirect trade between the company and consumers which is done through a third party that acts as a platform to host these activities. For example, Amazon, Flipkart, etc.

• Consumer-to-Consumer (C2C) – In this type of activity consumers can trade their products and services with each other online. For example, eBay.

The main advantages of C2C e-commerce are-

• Consumer prepares the product of market.
• Places the product for sale.
• Products can be easily displayed and discovered by other consumers.
• Consumer-to-business (C2B)- This is the opposite of B2C trade. Here consumers make their products and list them on online platforms for businesses to bid for the price. For example, Job Portals, Image selling websites.
• Business-to-administration (B2A)- B2A refers to the transactions held between private entities and government bodies. Many government activities are dependent on private entities such as the security of websites, employment, etc.
• Consumer-to-administration (C2A)- C2A refers to the transactions held between consumers and government bodies where consumers pay for services like taxes and legal document preparation.
• Mobile Commerce- It features the sales of stocks, marketing, mobile banking, and various other activities. Some of the M-Commerce services are-
  •  Mobile display advertising
  • Games and entertainments i.e. downloading games, video films, TV shows, etc.

Applications of E-commerce

Retail and Wholesale – It’s a type of business-to-consumer e-commerce and in some cases B2B commerce. The retailers use the e-catalog to showcase their products on various websites like Amazon, Flipkart, etc and the payment is done through the E-payment method.

Finance Sector – Finance and e-commerce are more connected than ever before. Banks use e-commerce extensively in their operations. Check balances, debt repayments, transfers, and other resources are available in online banking.

Production – In the manufacturing industry, e-commerce serves as a platform for firms to conduct e-transactions. 

Marketing – With the help of various data analytics tools the data of customers is collected which is then used in marketing activities to show the products you like, recent search across various platforms.

Auctions – An auction helps to break the geographic boundary and helps people to trade items with their price. For example, booking window seats in the train, buses, etc.

Various other advantages are-

• Internet Books
• Grocery Supplies
• E-newspaper
• Internet Banking

Advantage of E-Commerce

• Time-Saver – Consumers can buy or sell the product at any instance of time as its available 24×7.
• Low Cost – E-commerce avoids the expense of maintaining stores or warehouses for the products.
• Wide availability – E-commerce helps the brands and customers’ products to a wide range of people across various regions and borders. 
• Convenience – All the purchases and sales can be made from the comfort sitting home or working place.
• Information – Customers can find relevant information about the products and services from the comfort of home or working place.
• Personalized Recommendations – With the help of data analytics e-commerce sites track this information to show the product desired to your needs.
• Easy Customer Service – Customer service is available with just a click, either phone or chat with a representative both features are available to fix the issue.

Disadvantages of E-Commerce

• Physical Unavailability – Customer is not able to touch or see the product in e-commerce which can lead to customer dissatisfaction on receiving the different product from what is expected.

• Wait time – If the customer likes a product or service then there is a certain wait time in which the online retailer packs and ships the product to desired customer location.

• Security – One of the biggest threats to online businesses is the security concern. Hackers can easily replicate a website and can access the data of credit card or debit cards used by the customers to order on these fake websites.

Limitation of E-Commerce

There are various limitations of e-commerce such as

• Increase in competition with emerging new technologies.
• A threat of an increase in cybercrimes.
• Negotiation is not possible on online platforms.
• Creates social differences as technical knowledge is a must for using e-commerce.
• Cost of internet and equipment to access the e-platforms.

Conclusion

The e-commerce revolution has changed the business of transactions giving new opportunities to individuals breaking the borders. Convenience is one of the key benefits that a customer gets from e-commerce and thus increasing customer satisfaction. This is because the customer can place an order from anywhere with an internet connection. This is the end of the article. Thanks for reading.

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