Select your language

Suggested languages for you:
Log In Start studying!
StudySmarter - The all-in-one study app.
4.8 • +11k Ratings
More than 3 Million Downloads
Free
|
|

All-in-one learning app

  • Flashcards
  • NotesNotes
  • ExplanationsExplanations
  • Study Planner
  • Textbook solutions
Start studying

E-commerce

Save Save
Print Print
Edit Edit
Sign up to use all features for free. Sign up now
E-commerce

According to Statista, over two billion people globally bought at least one product or service online in 2020. This proves that E-commerce has become a favorable outlet for the buying and selling of goods and services. Let's examine what E-commerce is and explore its advantages and disadvantages!

Definition of E-commerce

Though e-commerce is generally regarded to be just the trading of goods and services online, e-commerce is actually more than that as it involves economic activities and electronic payments along with the trading of goods and services.

E-commerce, also referred to as electronic commerce, is a type of business model in which business transactions are done over the world wide web or over an electronic medium.

E-commerce is not to be confused with e-business, as e-business involves businesses conducting their activities online but e-commerce involves business transactions between buyers and sellers over electronic media.

Currently, different types of goods and services are being regularly exchanged using the different types of e-commerce, with the majority of the world population currently preferring online services to offline services. This has led to e-commerce being termed a disruptive technology.

Examples of e-commerce include dropshipping, crowdfunding, electronic payment, online subscriptions, internet banking, online shopping, and digital transactions. For example, online shopping through Amazon or electronic payment systems like PayPal.

Types of E-commerce

There are four main types of e-commerce, they are:

  • Business-to-Consumer (B2C)

  • Business-to-Business (B2B)

  • Consumer-to-Business (C2B)

  • Consumer-to-Consumer (C2C)

B2C is the most common e-commerce model due to the ability of e-commerce businesses to create a direct link to their products or services with consumers electronically. Business-to-consumer involves the direct business transaction between businesses and their consumers over electronic means. It is also considered the retail model of the four e-commerce models.

Examples of companies who practice the B2C e-commerce model include Facebook, Amazon, Walmart, Google, and Alibaba.

B2B is an e-commerce model where businesses carry out business transactions with other businesses over an electronic means. This e-commerce model is generally appreciated within industries where high-end products or services are produced. These products or services are usually exchanged with other businesses which might then sell directly to consumers or use them in their manufacturing processes.

Business-to-Business e-commerce model examples can be seen in small businesses buying goods from the Amazon marketplace to resell to consumers.

This is the least common e-commerce model, popular mostly among freelancers. This business model involves consumers exchanging their products and/or services directly with a business over an electronic means. Consumer-to-business e-commerce model is the opposite of the business-to-consumer model and it usually does not involve a middleman or a wholesaler.

Examples of the C2B model can be seen in an artist licensing his artwork to a business or social media influencers offering marketing services to brands.

The consumer-to-consumer e-commerce model is also referred to as the peer-to-peer (P2P) e-commerce business model. This e-commerce model involves the electronic exchange of goods, services, or information between consumers through a third-party platform like eBay or Facebook Marketplace. These third-party platforms are usually referred to as peer-to-peer selling platforms.

C2C is a direct opposite of the consumer-to-business e-commerce model where consumers exchange their products and/or services with a business.

Examples of consumer-to-consumer e-commerce models are online auctions on eBay or business transactions on the Facebook marketplace.

E-commerce benefits

The benefits of the e-commerce industry are currently being experienced around the world among consumers and businesses. These benefits include:

  • The large variety and increased amount of different products and services available.

  • Diverse methods are available for business transactions.

  • The ability for businesses to reach a variety of potential consumers from different countries around the world.

  • The ease of putting products and services online.

  • The ease of access it provides to business and their consumers.

Advantages of E-commerce

Let's now take a look at some of the advantages of e-commerce.

E-commerce platforms are easily accessible over a mobile phone, laptop, or through other electronic means. They also run quickly unlike physical stores whose speed of service can be affected by the presence of large crowds.

Most e-commerce platforms are available all day long, giving room to businesses to transact with their customers without a time limit.

The e-commerce industry is littered with a wide range of products and services made available by both businesses and consumers. This improves the chance of easily acquiring a good or service through an online search.

The e-commerce industry enables business transactions to be done both locally and internationally without having to move about. This provides an opportunity for businesses to grow and develop a diverse customer base.

The various electronic payment methods currently made available through e-commerce are easy and secure. Payment methods like online payments, electronic payments, and transfers are all a form of e-commerce.

E-commerce graphic showing shopping with a smartphone, StudySmarterShopping with a smartphone, pixabay.com

Disadvantages of E-commerce

Unfortunately, e-commerce also comes with its own set of disadvantages. These may include:

Unlike physical stores where a customer gets their product immediately after payment, buying products online requires a certain amount of wait time to get a product delivered.

Although these are relatively rare, spam websites can be created to either sell fake or non-existent products or services to customers. Also, these websites can be used to acquire important and personal information about a customer.

An image of a product online can differ from what it looks like offline. This often leads to customers feeling less satisfied upon the receipt of a product.

E-commerce: Limited customer service

E-commerce brands set aside hours during the day to provide customer services, unlike a walk-in store where a customer can easily ask an attendant to clear any confusion they might have.

In conclusion, the growth of the e-commerce industry is rapid and it is becoming popular among businesses and consumers, especially after the events of COVID-19. With big e-commerce brands such as Alibaba, Amazon, electronic payments companies, and many others leading the change, the e-commerce business model is set to be the most accepted business model globally despite the disadvantages it might have.

E-commerce - Key takeaways

  • E-commerce also referred to as electronic commerce is a type of business model in which business transactions are done over the world wide web or over an electronic medium.
  • Though e-commerce is generally regarded to be just the trading of goods and services online, e-commerce is actually more than that, as it involves economic activities and electronic payments along with the trading of goods and services.
  • E-commerce is not to be confused with e-business. E-business involves businesses conducting their activities online and e-commerce involves business transactions between buyers and sellers over electronic media.
  • There are four main models of e-commerce: Business-to-Consumer (B2C), Business-to-Business (B2B), Consumer-to-Business (C2B), and Consumer-to-Consumer (C2C).
  • Examples of e-commerce include dropshipping, crowdfunding, electronic payments, online subscriptions, and digital products transactions.

Frequently Asked Questions about E-commerce

E-commerce, also referred to as electronic commerce, is a type of business model in which business transactions are done over the world wide web or over an electronic medium.  

There are four main types of e-commerce, they are:


  • Business-to-Consumer (B2C)

  • Business-to-Business (B2B)

  • Consumer-to-Business (C2B)

  • Consumer-to-Consumer (C2C)

The advantages of e-commerce are:

  • Ease and speed of access
  • Availability
  • Wide range of products and services  
  • No domestic limitations  
  • Ease of payment  

E-business involves businesses conducting their activities online and e-commerce involves business transactions between buyers and sellers over electronic media. 

Examples of e-commerce include dropshipping, crowdfunding, electronic payments, online subscriptions, and digital product transactions.  

Final E-commerce Quiz

Question

What is e-commerce?

Show answer

Answer

 E-commerce also referred to as electronic commerce is a type of business model in which business transactions are done over the world wide web or over an electronic medium. 

Show question

Question

E-commerce is just the trading of goods and services online, true or false?

Show answer

Answer

False

Show question

Question

Electronic payment is a form of e-commerce, true or false?

Show answer

Answer

True

Show question

Question

Differentiate between e-commerce and e-business 

Show answer

Answer

E-business involves businesses conducting their activities online but e-commerce involves business transactions between buyers and sellers over an electronic media. 

Show question

Question

List the types of e-commerce 

Show answer

Answer

There are four main types of e-commerce, they are:

  • Business-to-Consumer (B2C)

  • Business-to-Business (B2B)

  • Consumer-to-Business (C2B)

  • Consumer-to-Consumer (C2C)

Show question

Question

 B2C is the least common type of e-commerce, true or false

Show answer

Answer

False

Show question

Question

Explain the C2B e-commerce model

Show answer

Answer

This is the least common e-commerce model, popular mostly among freelancers. This business model involves consumers exchanging their products and/or services directly with a business over an electronic means. Consumer-to-business e-commerce model is the opposite of the business-to-consumer model, and it usually does not involve a middleman or a wholesaler. Examples of the C2B model is seen in an artist licensing his artwork to a business, social media influencers offering marketing services to brands, Google Adsense. 

Show question

Question

Give examples of the C2C e-commerce model

Show answer

Answer

Examples of consumer-to-consumer e-commerce models are online auctions on eBay, business transactions on Facebook marketplace. 

Show question

Question

Small businesses buying goods from Amazon marketplace to resell to consumers is an example of what e-commerce model?

Show answer

Answer

Business-to-business 

Show question

Question

Give two benefits of e-commerce 

Show answer

Answer

Two benefits of e-commerce are:

  • The different amount of products and services available 

  • The diverse ways available for business transactions 

Show question

Question

Give four advantages of e-commerce 

Show answer

Answer

Advantages of e-commerce include ease of access, speed of access, no domestic limitations, range of products available 

Show question

Question

E-commerce platforms do not provide international reach, true or false?

Show answer

Answer

False

Show question

Question

Delivery wait time is not a disadvantage of e-commerce, true or false?

Show answer

Answer

False

Show question

Question

Give two disadvantages of e-commerce 

Show answer

Answer

Limited customer service and security issues. 



Show question

Question

E-commerce is also referred to as... 

Show answer

Answer

electronic commerce. 

Show question

Question

Which statement is true?

Show answer

Answer

E-commerce and e-business are different terms.

Show question

Question

___ is the most common e-commerce model due to the ability of e-commerce businesses to create a direct link to their products or services with consumers electronically. 


Show answer

Answer

Business-to-Consumer (B2C) 

Show question

Question

___ is an e-commerce model where businesses carry out business transactions with other businesses over an electronic means. 

Show answer

Answer

Business-to-Business (B2B) 

Show question

Question

This is the least common e-commerce model, popular mostly among freelancers. What is it?


Show answer

Answer

Consumer-to-Business (C2B)

Show question

Question

This e-commerce model involves the electronic exchange of goods, services, or information between consumers through a third-party platform. What is it?


Show answer

Answer

Consumer-to-Consumer (C2C) 

Show question

Question

___ e-commerce model examples can be seen in small businesses buying goods from the Amazon marketplace to resell to consumers. 


Show answer

Answer

Business-to-Business 

Show question

Question

Examples of the ___ model can be seen in an artist licensing his artwork to a business or social media influencers offering marketing services to brands.


Show answer

Answer

Consumer-to-Business 

Show question

Question

The consumer-to-consumer e-commerce model is also referred to as the ___ e-commerce business model.


Show answer

Answer

peer-to-peer (P2P) 

Show question

Question

Facebook is an example of a platform that practices...

Show answer

Answer

Business-to-Consumer (B2C)  e-commerce model.

Show question

Question

Which statement is correct?

Show answer

Answer

Business-to-consumer involves the direct business transaction between businesses and their consumers over electronic means.

Show question

Question

The e-commerce industry enables business transactions to be done both locally but not internationally.

Show answer

Answer

False

Show question

Question

Most e-commerce platforms are available all day long.


Show answer

Answer

True

Show question

Question

___ involves businesses conducting their activities online.


Show answer

Answer

E-business 

Show question

Question

___ involves business transactions between buyers and sellers over electronic media. 

Show answer

Answer

E-commerce 

Show question

60%

of the users don't pass the E-commerce quiz! Will you pass the quiz?

Start Quiz

Discover the right content for your subjects

No need to cheat if you have everything you need to succeed! Packed into one app!

Study Plan

Be perfectly prepared on time with an individual plan.

Quizzes

Test your knowledge with gamified quizzes.

Flashcards

Create and find flashcards in record time.

Notes

Create beautiful notes faster than ever before.

Study Sets

Have all your study materials in one place.

Documents

Upload unlimited documents and save them online.

Study Analytics

Identify your study strength and weaknesses.

Weekly Goals

Set individual study goals and earn points reaching them.

Smart Reminders

Stop procrastinating with our study reminders.

Rewards

Earn points, unlock badges and level up while studying.

Magic Marker

Create flashcards in notes completely automatically.

Smart Formatting

Create the most beautiful study materials using our templates.

Just Signed up?

Yes
No, I'll do it now

Sign up to highlight and take notes. It’s 100% free.