Definition of E-commerce

E-Commerce simply means Electronic Commerce; E-commerce is the buying and selling of goods, products,
or services using the internet as a medium whereby the buyer gets to see the products online, order it and
make payment through the mode accepted by the seller. The seller then delivers these products to the
consumer via available and accepted means.

E-commerce is also known as internet commerce. Online stores like Amazon, Shopify, Ebay, Olx are examples
of E-commerce websites.

E-commerce concept is a fast rising one, gaining steady popularity as there is Increased accessibility and
availability of Internet access which is making many small and medium and even large-scale businesses to be
considering e-commerce as a valid and more profitable sales channel. Ecommerce is better understood with
the concepts of the 5Cs, the 5C model consists of:

Commerce which is like a market place that consist of the buyers and sellers, transaction terms and facilities
to perform business transactions. This helps create and strengthen a universal supply chain.

Collaboration: the internet being a network of networks supports interrelationships among businesses and
individuals in a manner that is not limited by space, time, national or organizational constraints.

Communication: the internet technology and the world wide web provides a great interactive medium for self-
expression (as in reviews or comments of clients) and self-presentation (as a means for businesses to
showcase their products or services; a kind of marketing)

Connection: it is likely that different businesses use different software platforms to run their business
processes, leveraging on the advantages of the internet, it is achievable to incorporate the different software
platforms of different businesses that want to collaborate.

Computation: large scale sharing of resources is paramount to a successful business transaction. The
internet technology facilitates this to ease successful completion of business processes.

Features of E-commerce

 Wider range of audience: with the internet as the backbone of ecommerce, business transactions can
take place across national boundaries in a more convenient and cost-effective form.

 Universal standard: internet technology has a universal standard.

 Rich content: ecommerce allows for integration of the various forms of content, one can use video, audio,
combination of two or all three.

 Ease of interaction: clients interact with businesses from the comfort of their homes. There is no need to
physically visit a store as in the place of the traditional commerce.

 Personalization or customization: the various technologies integrated to the internet allows businesses
to send personalized/customized messages that can be delivered to individuals or even groups.

 Ubiquity: the internet technology is widely available and accessible from anywhere at any time; be it at
home, at work via mobile devices like a mobile phone phone, ipad, and even PCs.

 Business digitalization: this involves comprehensively using the internet and other tools of Information
and Communication Technologies to link information and cooperate seamlessly every stakeholder of the
business.

 Automation of business processes to increase delivery speed.

Types of E-Commerce

E-commerce can be divided into different types, some are: Business to Business (B2B), Business to Customer
(B2C), Customer to Customer (C2C), and Customer to Business (C2B).

 Business to Business (B2B): only the companies are doing business with each other. Here, the final
consumers are not involved. Therefore, the online transactions that are carried out in a business to
 business e- commerce transaction involve parties like the manufacturers, wholesalers, retailers etc. B2B e-
commerce is simply the electronic exchange of products, services or information between businesses
rather than between businesses and consumers as expected. Examples include companies such as Xero
that offers inbound marketing and sales and accounting software for small to medium businesses or a
construction materials company selling its products to architects and interior designers. Business to
business ecommerce is the largest form of ecommerce and it requires high level of security in exchanging
data.

 Business to Customer (B2C): here, the business sells directly to customers. The customers can browse
the website, see reviews and order directly from the business. After the order, the good is shipped directly
to them (the customers). Some of the most popular business to customer websites are; Amazon, Jumia
and Konga. The businesses strive to reach individuals and not businesses as in business-to-business type.
Various means are employed for this purpose like newsletters, email list, instant messaging and the likes.
Advertisers and content providers can as well assist in the marketing process of ensuring that these
businesses reach the intended audiences using contents like digital news, photos, music, videos and even
artworks.

 Customer to Customer (C2C): for this model, the consumers are in direct contact with one another and
they can buy or sell freely without any middleman. This model enables the consumers to buy and sell used
goods like furniture, mobile phones or electrical appliances. Examples of websites that use this model are:
OLX and Jiji. Consumer to consumer ecommerce presents a means for consumers to set their rules for the
business transaction, they set their prices as well and the buying party checks for themselves if the set
prices and rules are favorable before making a deal with the selling party. The consumer that is selling
prepares the product to be sold and place it on sale on their own while the consumer that is purchasing
chooses from the different displayed good s to be sold or uses the search engine to search for what to be
purchased and chooses from the returned results of the search like on eBay.

 Consumer to Business (C2B): this model is the inverse of business to consumer because here, as the
name implies, it is the consumers that sell to the business. Freelancers and businesses that buy from then
are a perfect example for this model of E- Commerce. Here, individuals (that is, consumers) create value
(could be goods or services) that businesses consume. A programmer for instance can give his/her service
and abilities to utilize and maintain the online resources of a system as a specialist in the programming
field. A platform known as “fiver” works on this model.

 Business to administration: also known a s business to government which usually involve exchange of
data between businesses and the government via the internet, an example is when a business wants to
advertise its product or service at the government level. Business to administration type of ecommerce
includes different services like legal documents, social security, fiscal measures and the likes.

 Consumer to administration: also known as consumer to government entails electronic transaction

between individuals (consumer) and the government. When an individual makes a request or a query from
the government, it works on the model of consumer to administration type of ecommerce. It creates a way
that is easy for communication between governments and individuals. Examples include payment of health
services, distance learning, information dissemination and so on.
 M-Commerce (mobile commerce) is the buying and selling of goods and services through wireless
technology-i.e., handheld devices such as cellular telephones and personal digital assistants (PDAs).

It does not always require internet, such as mobile banking. It is also referred to as next generation e-
commerce. Japan is seen as a global leader in m- commerce.

As content delivery over wireless devices becomes faster, more secure, and scalable, some believe that
m-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions.

Benefits of E-Commerce

 Cheaper cost: E-Commerce is usually much cheaper than because a physical store is not necessary.
Businesses that have a physical store in a popular location will have higher cost of operation and
maintenance.

 Wider reach: with e-commerce, there is no restriction, no limitation to how large the audience to reach will
be. People from different countries who are willing and able to patronize an ecommerce business can
contact the business, place orders and the business works out delivery to them. With ecommerce,
businesses can have as many clients as possible.

 Direct (face to face) interaction is not needed: unlike the traditional means of commerce which is based
on face-to-face interaction for when clients have an enquiry and for the business’s response too;
ecommerce does not need this. The electronic channels like email, live chats and the likes are used for
these purposes and more.

 E-Commerce removes geographical barriers. Which means you can buy and sell from any part of the
world.

 E-Commerce enables sellers to lower transaction cost as they don’t need to pay rent for a physical store.
This will enable them to maximize their profit.

 Goods are delivered quickly and easily with little efforts on the side of the consumer.

 Complaints are addressed quickly and consumers can see reviews of other consumers before purchasing
an item.

 E-Commerce saves time, effort and energy of the consumers and of the seller.

 With E-Commerce, customers get to shop any day at any time as there is no closing hour like physical
stores.

 E-Commerce enables the buyer and seller to be in direct contact with no intermediary. This gives room for
 personal touch and quick transaction.

Disadvantages of E-commerce
 Security: The platform being used for the ecommerce can be hacked which can lead to client’s details
being compromised and used for illegal and fraudulent purposes.

 Trust: It might take time for the ecommerce to get clients that will actually patronize it. People have trust
issues to entrust their money or details via the internet as ecommerce usually has no physical store which
makes tracing very difficult or even impossible.

 Credit card fraud is another security threat that ecommerce is exposed to and this is like the most common
and most accepted means of payment for ecommerce transactions.

Key Ideas in E-commerce

 D2C: means direct to consumer. Middle men are cut off and business deliver their product or services
directly to the consumer without wholesalers or retailers. It is direct!

 White labelling: when a business applies its brand name to a generic product after purchasing from a
distributor. If a food business buys snacks from a distributor of food company and then applies its own
business brand name on the snacks it has purchased, that is white labelling.

 Private labelling: a business makes a deal with the manufacturer directly to create a unique product
specially for the business with an exclusive right for them as the sole seller. If a food business approaches
the manufacturers of a certain product to exclusively start producing say chips for them with an exclusive
right that only this business can sell the chips, this is private labelling.

 Wholesaling: wholesaling involves a retailer carrying out the business process like a wholesaler by
offering a discount in price when its products are sold in bulk. The business will have piece prices and bulk
prices so they can sell in bit and also in bulk but there will be a discount in price for bulk purchase.

 Drop-shipping: is a way of marketing and selling items that will be delivered by a third party (manufacturer
or supplier). Consumers pay the drop- shipper, drop-shipper pays the supplier for the good or service to be
delivered to the consumer. Drop-shippers are like middle men that connect suppliers to consumers.
Shopify is a good example of drop-shipping platform.

 Subscription: consumers pay certain agreed amount to business and business delivers the equivalent
good or service to consumer regularly at scheduled intervals. A good example is DSTV subscription