Key definitions and features of e-commerce

E-commerce involves trading goods and services through online systems and computer networks, such as the internet. It has transformed how businesses operate and how consumers shop by overcoming traditional limitations.

Important definitions in e-commerce

• E-commerce - The trading of goods and services using online electronic systems and computer networks such as the internet.
• E-tailers - Businesses that primarily sell online, such as Amazon or eBay.
• Spam - Unsolicited electronic messages, often called junk mail, including unwanted emails, texts, instant messages, faxes, or pop-up ads.

Main features of e-commerce

• 24/7 accessibility - Allows shopping at any time, breaking restrictions imposed by traditional store hours.
• Global reach - Overcomes geographical limits, enabling businesses to access customers worldwide.
• Low entry barriers - Involves minimal setup costs, making it easier for new businesses to start.
• Interactive elements - Includes tools like search functions, easy navigation, zoom capabilities, and product demonstrations to engage users.
• Social integration - Connects with social media for purchases and uses customer reviews to guide buying choices.
• No physical stores - Eliminates overheads such as rent and utility bills for e-tailers.
• Extensive product variety - Permits a wide range of items without the need for physical stock space.
• Flexible locations - Operations can be based anywhere, without needing high-traffic sites.
• Consumer empowerment - Facilitates simple price comparisons and sharing of feedback.
• Payment methods - Relies mainly on credit cards for transactions.
• Efficient supply chains - Shortens delivery processes for quicker fulfilment.
• Mass market targeting - Appeals to large audiences across multiple areas.

Effects of e-commerce on the marketing mix

E-commerce influences the traditional marketing mix (product, price, promotion, and place) by adapting it to digital environments. It also affects the extended mix elements like people, processes, and physical evidence.

Impact on product

• Enables sales of almost any item if well-targeted.
• Gives customers quick access to current product details.
• Cuts down on printed materials and excess packaging.
• Supports customisation, such as personalised engravings.
• Recommends related items to encourage extra buys.

Impact on price

• Increases transparency, allowing easy comparisons.
• Leads to lower prices due to competition and reduced costs.
• Involves factoring in delivery fees.
• Uses multiple currencies for international sales.
• Makes pricing complex across global markets.
• Allows consumer-driven pricing via auctions.

Impact on promotion

• Provides multimedia for interactive product info.
• Uses viral sharing between users.
• Depends on social media and online ads.
• Enables targeted direct marketing.
• Lessens reliance on physical packaging.
• Includes virtual demonstrations.
• Lowers costs, though response rates may vary.
• Faces issues like ad overload and spam blocks.

Impact on place

• Allows direct access without middlemen.
• Shortens supply chains to cut expenses.
• Offers content in various languages.
• Partners with delivery services for distribution.
• Complements traditional sales channels.
• Demands strong logistics for reliable shipping.

Impact on the extended marketing mix

• People - Decreases the need for in-person staff but keeps customer support essential.
• Processes - Streamlines payments and loyalty programmes.
• Physical evidence - Becomes less relevant in digital spaces.

Types of e-commerce

E-commerce can be categorised based on the parties involved in transactions, each with distinct characteristics and applications.

Business to business (B2B)

B2B involves transactions between companies, such as a manufacturer supplying a wholesaler.

Key characteristics:

• Features bulk orders at low prices with credit terms.
• Emphasises quick delivery and competitive pricing.
• Uses social media for business networking.
• Simplifies getting quotes from suppliers.
• Forms the biggest part of e-commerce.
• Includes webinars and industry connections.
• Focuses on wholesale deals.

Business to consumer (B2C)

B2C covers sales from businesses directly to individuals.

Key characteristics:

• Targets end-users with items like gadgets.
• Began in 1979 with early online shopping.
• Now common for most retail firms.
• Cuts out intermediaries to lower costs.
• Handles payments via processing services.
• Often runs alongside B2B activities.
• Covers general retail sales.

Consumer to consumer (C2C)

C2C allows individuals to sell directly to each other via platforms.

Key characteristics:

• Earns income through fees or commissions.
• Focuses on used goods, like second-hand tools.
• Includes auction and bidding features.
• Uses classified ad sites.
• Builds on existing online systems.
• Grows with secure payment options.
• Deals with quality issues for pre-owned items.

Benefits and costs of e-commerce to firms and consumers

E-commerce offers advantages but also presents challenges for both businesses and buyers.

Benefits to firms

• Avoids high rents for prime sites.
• Lowers supply chain and intermediary costs.
• Accesses customers globally.
• Spreads product info quickly via social channels.
• Operates round-the-clock for constant sales.
• Stocks more items with minimal overheads.
• Uses digital promotion to save money.

Costs to firms

• Weakens pricing control for physical retailers.
• Increases risks of product imitation.
• Exposes to fraud in transactions.
• Relies on tech, with risks of breakdowns.
• Needs spending on IT experts.
• Can cause staff relation issues.
• Raises expenses from delivery problems.
• Affected by outside factors like cyber threats.
• Not ideal for some goods, like fresh local produce.

Benefits to consumers

• Allows shopping from anywhere at any time.
• Supports better choices with clear pricing.
• Provides easy access to company details.
• Offers direct buys at good rates.
• Enhances convenience without time limits.
• Simplifies paying for purchases.
• Often includes free delivery.

Costs to consumers

• Poses risks to payment security.
• Increases chances of data breaches.
• Lacks face-to-face service.
• Involves waits for delivery and item doubts.
• Complicates returning products.
• Leads to excess marketing emails.
• Excludes people without web access or skills.
• Prevents trying items before buying.
• May add extra charges for credit.