what is electronic commerce e commerce 
electronic commerce e commerce refers to companies and individuals that buy and sell goods and services over the internet e commerce operates in different types of market segments and can be conducted over computers tablets smartphones and other smart devices nearly every imaginable product and service is available through e commerce transactions including books music plane tickets and financial services such as stock investing and online banking as such it is considered a very disruptive technology investopedia laura porterunderstanding e commerceas noted above e commerce is the process of buying and selling tangible products and services online it involves more than one party along with the exchange of data or currency to process a transaction it is part of the greater industry that is known as electronic business e business which involves all of the processes required to run a company online 12e commerce has helped businesses especially those with a narrow reach like small businesses gain access to and establish a wider market presence by providing cheaper and more efficient distribution channels for their products or services target tgt supplemented its brick and mortar presence with an online store that allows customers to purchase everything from clothes and coffeemakers to toothpaste and action figures right from their homes providing goods and services isn t as easy as it may seem it requires a lot of research about the products and services you wish to sell the market audience competition as well as expected business costs once that s determined you need to come up with a name and set up a legal structure such as a corporation next set up an e commerce site with a payment gateway for instance a small business owner who runs a dress shop can set up a website promoting their clothing and other related products online and allow customers to make payments with a credit card or through a payment processing service such as paypal 3e commerce may be thought of as a digital version of mail order catalog shopping also called online commerce e commerce is the transaction between a buyer and a seller that leverages technology special considerationse commerce has changed the way people shop and consume products and services more people are turning to their computers and smart devices to order goods which can easily be delivered to their homes as such it has disrupted the retail landscape amazon and alibaba have gained considerable popularity forcing traditional retailers to make changes to the way they do business but that s not all not to be outdone individual sellers have increasingly engaged in e commerce transactions via their own personal websites and digital marketplaces such as ebay or etsy serve as exchanges where multitudes of buyers and sellers come together to conduct business the u s department of commerce recognizes e commerce businesses such as transactional sites static content sites online marketplaces and auction sites 4history of e commercemost of us have shopped online for something at some point which means we ve taken part in e commerce so it goes without saying that e commerce is everywhere but very few people may know that e commerce has a history that goes back to before the internet began e commerce actually goes back to the 1960s when companies used an electronic system called the electronic data interchange to facilitate the transfer of documents it wasn t until 1994 that the very first transaction took place this involved the sale of a cd between friends through an online retail website called netmarket 3the industry has gone through so many changes since then resulting in a great deal of evolution traditional brick and mortar retailers were forced to embrace new technology in order to stay afloat as companies like alibaba amazon ebay and etsy became household names these companies created a virtual marketplace for goods and services that consumers can easily access new technology continues to make it easier for people to do their online shopping people can connect with businesses through smartphones and other devices and by downloading apps to make purchases the introduction of free shipping which reduces costs for consumers has also helped increase the popularity of the e commerce industry advantages and disadvantages of e commercee commerce offers consumers the following advantages there are certain drawbacks that come with e commerce sites too the disadvantages include owners can generate revenue semi passivelyconsumers can easily browse for specific productsgreater earning potential as there are no limitations on physical location as long you can ship therereduced costs assuming digital presence costs less than building insurance taxes and repairs greater marketing control including data extraction from customers targeted ads and pop up placementlimited customer service opportunities as there is little to no face to face opportunitieslacks instant gratification as customers must believe in a product before seeing it in personproducts can t been seen or handled until delivered can t try before they buy loss of revenue or income when websites go downhigh reliance on shipping constraintshigher competition due to lower barriers of entry and greater customer potentialtypes of e commercedepending on the goods services and organization of an ecommerce company the business can opt to operate several different ways here are several of the popular business models b2c e commerce companies sell directly to the product end user instead of distributing goods to an intermediary a b2c company performs transactions with the consumer that will ultimately use the good this type of business model may be used to sell products like your local sporting goods store s website or services such as a lawn care mobile app to reserve landscaping services this is the most common business model and is likely the concept most people think about when they hear the term e commerce similar to b2c an e commerce business can directly sell goods to a user however instead of being a consumer that user may be another company b2b transactions often entail larger quantities greater specifications and longer lead times the company placing the order may also have a need to set recurring goods if the purchase is for recurring manufacturing processes some entities specialize as government contractors providing goods or services to agencies or administrations similar to a b2b relationship the business produces items of value and remits those items to an entity b2g e commerce companies must often meet government requests for proposal requirements solicit bids for projects and meet very specific product or service criteria in addition there may be joint government endeavors to solicit a single contract through a government wide acquisition contract established companies are the only entities that can sell things e commerce platforms such as digital marketplaces connect consumers with other consumers who can list their own products and execute their own sales these c2c platforms may be auction style listings i e ebay auctions or may warrant further discussion regarding the item or service being provided i e craigslist postings enabled by technology c2c e commerce platforms empower consumers to both buy and sell without the need for companies modern platforms have allowed consumers to more easily engage with companies and offer their services especially related to short term contracts gigs or freelance opportunities for example consider listings on upwork a consumer may solicit bids or interact with companies that need particular jobs done in this way the e commerce platform connects businesses with freelancers to enable consumers greater power to achieve pricing scheduling and employment demands less of a traditional e commerce relationship consumers can interact with administrations agencies or governments through c2g partnerships these partnerships are often not in the exchange of service but rather the transaction of obligation for example uploading your federal tax return to the internal revenue service irs digital website is an e commerce transaction regarding an exchange of information alternatively you may pay your tuition to your university online or remit property tax assessments to your county assessor investopedia sabrina jiangthe u s census bureau conducts estimates of retail e commerce sales in the united states in the first quarter of 2023 retail e commerce accounted for 15 1 of total sales in the country totaling roughly 272 6 billion these figures are adjusted for seasonal variation 5types of e commerce revenue modelsin addition to crafting what type of e commerce company a business wants to be the business must decide how it wants to make money due to the unique nature of e commerce the business has a few options on how it wants to process orders carry inventory and ship products often considered one of the easier forms of e commerce dropshipping allows a company to create a digital storefront generate sales then rely on a supplier to provide the good when generating the sale the e commerce company collects payment via credit card paypal cryptocurrency or other means of digital currency then the e commerce store passes the order to the dropship supplier this supplier manages inventory oversees the warehouse of goods packages the goods and delivers the product to the purchaser white label e commerce companies leverage already successful products sold by another company after a customer places an order the e commerce company receives the existing product repackages the product with its own package and label and distributes the product to the customer although the e commerce company has little to no say in the product they receive the company usually faces little to no in house manufacturing constraints a more capital intensive approach to e commerce wholesaling entails maintaining quantities of inventory keeping track of customer orders maintaining customer shipping information and typically having ownership of the warehouse space to house products wholesalers may charge bulk pricing to retailers or unit prices for consumers however the broad approach to wholesaling is to connect to buyers of large quantities or many smaller buyers of a similar standardized product private labeling is a more appropriate e commerce approach for companies that may not have large upfront capital or do not have their own factory space to manufacture goods private label e commerce companies send plans to a contracted manufacturer who makes the product the manufacturer may also have the ability to ship directly to a customer or ship directly to the company receiving the order this method of e commerce is best suited for companies that may receive on demand orders with short turnaround times but are unable to handle the capital expenditure requirements e commerce companies can also leverage repeating orders or loyal customers by implementing subscription services for a fixed price the e commerce company will assemble a package introduce new products and incentivize locking to a long term agreement at a lower monthly price the consumer only places an order once and receives their subscription order at a fixed cadence common subscription e commerce products include meal prep services agriculture boxes fashion boxes or health and grooming products example of e commerceamazon is a behemoth in the e commerce space in fact it is the world s largest online retailer and continues to grow as such it is a huge disrupter in the retail industry forcing some major retailers to rethink their strategies and shift their focus the company launched its business with an e commerce based model of online sales and product delivery it was founded by jeff bezos in 1994 as an online bookstore but has since expanded to include everything from clothing to housewares power tools to food and drinks and electronics company sales increased by 9 in 2022 from the previous year totaling 513 98 billion compared to 469 82 billion in 2021 amazon s operating income dropped from 24 88 billion in 2021 to 12 25 billion in 2022 the company posted a net loss of 2 72 billion in 2022 compared to net income of 33 36 billion in 2021 6