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E-Commerce Definition and How It Works

E-Commerce Definition and How It Works

The evolution and growth of electronic systems like the internet, intranet and extranet have greatly contributed to changes in the way we do business. E-commerce is by far one of the biggest developments in recent years. Traditional businesses can no longer ignore e-commerce as it is becoming not only a contributor, but a necessity in the sustainability of all retail businesses.

E-commerce is short for electronic commerce, and it is defined as the use of electronic systems to engage in commercial transactions. With this system the parties do not need to meet physically, transactions are completed over the world wide web. With e-commerce, it becomes easier than ever to conduct business as payments for goods and services are debited and credited within seconds without the hassles of personally dealing with the credit card companies or banks.

There are several different types of e-commerce. Here is some basic information on each:

1. Business to Consumer (B2C)

This is where the business sells goods or services directly to the final consumer without going through any middlemen.

2. Business to Business (B2B)

Both the buyer and seller are businesses. Products or services are intended for other businesses as opposed to consumers. Examples of wholesalers come to mind for this type of e-commerce business.

3. Consumer to Consumer (C2C)

This is where consumers conduct transactions with other consumers without any kind of involvement from businesses. E-commerce sites of this type are generally auction sites or online marketplaces.

4. Peer to Peer (P2P)

This type of e-commerce is used by people who share computer content like files and software with each other.

5. Mobile commerce

This is a form of e-commerce that uses mobile devices to conduct transactions. Everything else about the website remains the same, except they are displayed in a mobile-friendly way making it easier for smartphone users to make purchases through their mobile phones.

So how does e-commerce work?

In order to build an e-commerce business, you need to first create a website with shopping cart and checkout capabilities. There are a couple of different ways to do this, one of the easiest is to use an e-commerce software solution to build the site. Using an example of a simple B2C website selling products, simply add the products that you want to put up for sale onto the database. Customers that come across your site and want to buy your products just have to add them to the virtual shopping cart, submit their billing and shipping details during checkout, make payments and then wait for the product to show up at their front door.

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