What is e commerce?

Electronic commerce, commonly known as E-commerce or eCommerce, is trading in products or services conducted via computer networks such as the Internet.

Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.


Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices, social media, and telephones as well.ecommerce transactions

Opportunities of ecommerce for businesses:

Increased Market

If you have a physical store, you are limited by the geographical area that you can service. With an ecommerce website, the whole world is your playground.

Reduced costs

One of the most tangible positives of ecommerce is the lowered cost. Ecommerce results in lower advertising and marketing cost, lower personnel cost by automating of checkout, billing, payments, inventory management, and other operational processes. Further, there is no need to invest in real estate as an ecommerce merchant does not need a prominent physical location.

Create Targeted Communication

Using the information that a customer provides in the registration form, and by placing cookies on the customer's computer, an ecommerce merchant can access a lot of information about its customers purchasing habbits. This, in turn, can be used to communicate relevant messages. An example: If you are searching for a certain product on Amazon.com, you will automatically be shown listings of other similar products. In addition, Amazon.com may also email you about related products.

Better information

There are limitations to the amount of information that can be displayed in a physical store. It is difficult to equip employees to respond to customers who require information across product lines. Ecommerce websites can make additional information easily available to customers. Most of this information is provided by vendors, and does not cost anything to create or maintain.

Threats of Ecommerce for businesses

Exposure to increased competition

A bigger market for ecommerce business means more competition. The business might not be able to compete with other business in the field and might not flourish. In order to remain competitive they might have to operate on very thin margins which many businesses might not be able to sustain for long.

Technical challenges

There can be lack of system security, reliability or standards owing to poor implementation of e-Commerce. Software development industry is still evolving and keeps changing rapidly. In many countries, network bandwidth might cause an issue as there is insufficient telecommunication bandwidth available. Special types of web server or other software might be required by the vendor setting the e-commerce environment apart from network servers which will involve huge investments.

User resistance

User may not trust the site being unknown faceless seller. Such mistrust makes it difficult to make user switch from physical stores to online/virtual stores.

Security/ Privacy

It is always a challenge for ecommerce business to ensure security or privacy on online transactions. Further these businesses are prone to cyber attacks where hackers would want to steal valuable consumer data and financial information.

Touch and feel factor

Lack of touch or feel of products during online shopping might limit the sale of certain goods on the internet. Consumers might still be interested in touching and feeling the product before they purchase it. This might limit the market for ecommerce businesses.

Internet access and cost

Ecommerce needs access to a safe and secure high speed internet access. Internet access is still not cheaper and is inconvenient to use for many potential customers like one living in remote villages.

Opportunities of ecommerce to consumers


An online store is open 24 hours a day. Customer can do transactions for the product or enquiry about any product/services provided by a company anytime, anywhere from any location.

Lower cost

Products available through ecommerce are usually lower in price as the seller does not have to invest in maintain physical stores and high inventory. This benefit is usually passed on to the consumers as lower prices. Further E-Commerce increases competition among the organizations and as result organizations provides substantial discounts to customers.

Easy to locate the right product

It is no longer about pushing a shopping cart to the correct aisle, or scouting for the desired product. On an ecommerce website, customers can click through intuitive navigation or use a search box to immediately narrow down their product search. Some websites remember customer preferences and shopping lists to facilitate repeat purchase.

Eliminate Travel Time and Cost

It is not unusual for customers to travel long distances to reach their preferred physical store. Ecommerce allows them to visit the same store virtually, with a few mouse clicks.

Consumers can make informed decision

There are limitations to the amount of information that can be displayed in a physical store. It is difficult to equip employees to respond to customers who require information across product lines. Ecommerce websites can make additional information easily available to customers. Most of this information is provided by vendors, and does not cost anything to create or maintain.

Further, Ecommerce facilitates comparison shopping. Consumers can browse multiple ecommerce merchants and find the best prices.

Threats of ecommerce for consumers


For the buyer, reliability can be an issue. We live in an era where online storefront providers bring you the ability to set up an ecommerce store within minutes. The lowered barriers to entry might be a great attraction to the aspiring ecommerce fraudsters. This could lead customers to restrict their online purchases to famous ecommerce websites.


When making an online purchase, you have to provide at least your credit card information and mailing address. In many cases, ecommerce websites are able to harvest other information about your online behavior and preferences. This could lead to credit card fraud, or worse, identity theft.

Ecommerce Lacks That Personal Touch

Usually most of the physical retailers have personal touch with their consumers.  As a result, shopping at those retail outlets is reassuring and refreshing. This might be lacking in online purchases.

Delay in getting the goods

In Ecommerce transactions, even with express shipping, it takes a while to get the goods to the consumer. Sometimes the goods might be delayed due to unavailability, or postal/courier delays.  Moreover, if there is an urgency to get the product at the same time then Ecommerce might not be the best option. For example, candy that you want to eat now, a book that you want to read tonight, a birthday gift that you need this evening and so on.

Cannot test the product before purchase

In many cases, customers want to experience the product before purchase. Ecommerce does not allow that. If a consumer wants to buy a music system, he cannot play it online to check if it sounds right!

Returning items

There are times when a product is to be returned to the store. Ecommerce makes it very difficult. Usually the process is cumbersome and expensive.

Use of the internet and social networks for promotion

Recently, more and more businesses are using internet to promote their products. Also known as Internet advertising, it involves the use of Internet to deliver promotional marketing messages to consumers. It includes email marketing, search engine marketing, social media marketing, many types of display advertising (including web banner advertising), and mobile advertising.

Using social media to market your business

Social media are internet services that let you interact with others and share and create content through online communities. Social networking websites allow individuals to interact with one another and build relationships. When companies join the social channels, consumers can interact with them and they can communicate with consumers directly. That interaction feels more personal to users than traditional methods of strictly outbound marketing & advertising. The most popular social media website include Facebook, Twitter, YouTube, blogging websites such as wordpress and Tumbler.

Social media present great marketing opportunities for businesses of all sizes. Businesses can use social media to:

  • promote the name of their brand and business
  • tell customers about their goods and services
  • find out what customers think of their business
  • attract new customers
  • build stronger relationships with existing customers.

Advantages of using social media

Social media marketing has many advantages:

  • broad reach - social media can reach millions of people all around the world
  • ability to target particular groups - many forms of social media (e.g. Facebook, Foursquare) allow businesses to target specific groups, often in particular locations
  • free or low-cost - many forms of social media are free for business, and paid options are usually low-cost
  • personal - social media allow you to communicate on a personal basis with individual customers and groups
  • fast – you can quickly distribute information to many people
  • easy - you don't need high-level skills or computer equipment to participate in social media. The average person with a standard computer should have no difficulty.

Risks of using social media

Marketing through social media also has its risks. These include:

  • Wasted time and money for little or no tangible return
  • The rapid spread of the wrong kind of information about your business (e.g. incorrect information accidentally posted by you, negative reviews posted by others)
  • Legal problems if the business don't follow privacy legislation and the laws regarding spam, copyright and other online issues.


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