E-commerce is a rather broad term referring to the massive industry of buying and selling goods and services via the Internet or other similar networks. Almost all of today's e-commerce transactions do involve the internet proper in some fashion, however. Three contractual aspects of e-commerce include business-to-business transactions, business-to-consumer transactions, and online advertising.
B2B – transactions between businesses as opposed to consumer and business transactions. Often times this consists of multiple customer / supplier relationships, such as Ferrari buying brakes for their cars from Brembo, while selling race engines to Red Bull's Formula One team. Conducting b2b transactions in electronic form can often save time, money and headache from conventional transactions and paper invoices. This type of transaction can be expensive to setup and often requires a significant change in infrastructure to change from paper to EDI, but in many businesses, the cost can be justified by the various efficiencies gained over time.
B2C – these types of transactions are called business to consumer transactions and they take the place of physically walking into a store and handing your payment to a cashier for the goods or services you are purchasing. In fact, to cement this connection, the software used to select the items one is purchasing is called the "shopping cart," where items you wish to purchase are bundled together to make one purchase at "checkout," another term borrowed from the physical sales realm. According to the Wall Street Journal close to $ 200 billion in sales were generated in the United States in 2011, which is about 7% of all sales conducted. This may seem like a low percentage, but considering this covers all sales including things that do not ship well, like produce, and services like karate lessons that do not ship at all, this number is significant and expected to continue growing robustly. Currently Amazon and eBay are the two largest B2C companies in the world and two of the earliest purely online shopping websites.
Smaller companies should focus on providing goods and services that are hard to find or buy in physical stores, so enticing more shoppers to look for them online and increasing their chances of making a sale. Special markets like vinyl records or handmade home of jewelry items are examples of items places like a mall might not carry. Without the massive advertising might of, say, Amazon these smaller companies can find their niche and make their money that way.
Advertising is another facet of e-commerce. This advertising comes in a variety of forms including but not limited to e-mail, social media, banner advertising on websites, SERPs (search engine results pages), and blogs. This again has some benefits over traditional media of advertising. Online ads are instantaneously delivered and do not have to be limited to physical regional placement or delivery. One can advertise a company based in Omaha, NE and have the ads appear in Boston, MA via Google and have potential customers to buy their products online, which opens numerous capabilities for merchants worldwide. However, many web savvy users will either tune-out ads, because they are not using the web to search for things to buy, or will allow ad-blocking software to run in their web browser to stop the ads from displaying altogether. Still, this is a multi-billion dollar industry that continues to expand ace with the internet itself.
