E-commerce| Unit-1| Introduction

E-commerce

Unit 1 - Introduction

E-commerce: E-commerce or electronic commerce is basically the sale and purchase of services and goods over an electronic medium like internet. Along with buying and selling ecommerce also involves the process of transferring data and funds between two or more parties.

In other words, Ecommerce is a modern business methodology that addresses the needs of organizations, merchant and consumer to cut costs while improving the quality of goods and services as well as decreasing the delivery period.

 

Why E-commerce?

Benefit to Organizations/Businesses

1. Global Reach: E-commerce allows businesses to overcome geographical limitations, enabling them to reach customers worldwide. This is achieved through online platforms that connect buyers and sellers regardless of their physical locations. For instance, a Nepali handicrafts business can showcase its products on global marketplaces like Amazon or eBay, attracting international customers who are interested in unique, handmade items from Nepal.

2. 24/7 Availability: E-commerce stores are accessible 24/7, providing customers with the flexibility to shop at any time that suits them. This continuous availability helps businesses cater to different time zones and customer schedules, ultimately increasing sales opportunities. For example, an online clothing store in Nepal can receive orders from customers in the USA even during nighttime in Nepal, ensuring a steady stream of sales.

3. Lower Operating Costs: Running an e-commerce business often requires fewer physical resources compared to a traditional brick-and-mortar store. This results in lower overhead costs, such as rent, utilities, and staffing. By leveraging digital platforms, businesses can reduce expenses and allocate resources more efficiently. For example, an online bookstore in Nepal can operate from a small warehouse, eliminating the need for a large retail space and associated costs.

4. Efficient Inventory Management: E-commerce platforms use advanced inventory management systems that track stock levels in real-time. This helps businesses maintain optimal inventory levels, reducing the risk of overstocking or stockouts. Efficient inventory management ensures that popular products are always available, leading to higher customer satisfaction. For instance, a Nepali electronics store can use inventory management software to monitor and reorder popular gadgets as needed.

5. Data-Driven Decision Making: E-commerce businesses collect and analyze vast amounts of data on customer behavior, preferences, and purchasing patterns. This data-driven approach enables businesses to make informed decisions, optimize marketing strategies, and improve customer experiences. For example, an online grocery store in Nepal can analyze customer data to identify popular products and tailor promotions to specific customer segments, increasing sales and customer loyalty.

6. Scalability: E-commerce platforms provide businesses with the ability to scale operations quickly and cost-effectively. As demand grows, businesses can easily expand their online presence, add new products, and accommodate increased traffic without significant additional investment. For example, a small startup selling organic honey in Nepal can use an e-commerce platform to reach a wider audience and handle increased orders without needing to open new physical stores.

7. Marketing & Advertising: E-commerce platforms offer a variety of digital marketing tools that enable businesses to reach their target audiences more effectively. These tools include social media advertising, email marketing, search engine optimization (SEO), and pay-per-click (PPC) campaigns. By leveraging these tools, businesses can create personalized marketing campaigns that resonate with their audience, driving traffic and sales. For example, a Nepali fashion brand can use Facebook Ads to target young adults interested in trendy clothing, increasing brand awareness and attracting potential customers.

Benefit to Customers

1. Personalization: E-commerce platforms can provide a personalized shopping experience by recommending products based on customers' browsing history and purchase behavior. For example, an online bookstore can suggest books based on a customer's previous purchases or preferences, making it easier for them to find new and relevant reads.

2. Diverse Payment Options: E-commerce platforms offer various payment methods, such as credit/debit cards, digital wallets, bank transfers, and cash on delivery. This flexibility allows customers to choose their preferred payment method, enhancing their shopping experience. For example, a Nepali e-commerce site might offer payment options like eSewa, Khalti, and direct bank transfers to cater to different customer preferences.

3. Customer Reviews and Ratings: E-commerce platforms often feature customer reviews and ratings for products, helping shoppers make informed decisions. For instance, if a customer is looking to buy a smartphone, they can read reviews and ratings from other customers to gauge the product's quality and performance, reducing the risk of dissatisfaction.

4. Enhanced Customer Service: E-commerce platforms provide multiple channels for customer support, such as live chat, email, and phone support. This ensures that customers can easily reach out for assistance with their orders or inquiries. For example, a Nepali online retailer might offer 24/7 customer support through live chat and a dedicated helpline to address any concerns promptly.

5. Easy Price Comparison: E-commerce platforms allow customers to easily compare prices of products from different sellers, ensuring they get the best deal. For example, a customer looking to buy a new laptop can compare prices on various Nepali e-commerce sites like SastoDeal and Daraz, helping them make a more cost-effective purchase.

6. Convenience: E-commerce platforms provide the convenience of shopping from anywhere, at any time, without the need to visit physical stores. This is particularly beneficial for customers with busy schedules or those living in remote areas. For instance, a customer in a rural part of Nepal can order household items and groceries online, saving time and effort.

 

Benefit to Society

1. Increased Access to Products: E-commerce provides people with access to a wider range of products that may not be available locally. This is particularly beneficial for individuals living in remote or rural areas. For example, a person in a village in Nepal can buy electronic gadgets, fashion items, or even specialty foods through online platforms, which might not be available in their local market. This increased access enhances the quality of life and broadens consumer choices.

2. Job Creation: The growth of e-commerce creates numerous job opportunities in various sectors, including logistics, warehousing, IT, customer service, and digital marketing. For instance, the rise of e-commerce companies in Nepal has led to the creation of jobs in delivery services, call centers, and tech startups. This contributes to reducing unemployment and fostering economic development in the country.

3. Environmental Impact: E-commerce can have both positive and negative environmental impacts. On the positive side, it can reduce the need for physical stores and the associated energy consumption. For example, by shopping online, customers can reduce the need for multiple trips to different stores, leading to lower carbon emissions. Additionally, e-commerce companies can implement sustainable practices, such as using eco-friendly packaging and optimizing delivery routes to reduce fuel consumption.

4. Economic Growth: E-commerce contributes to economic growth by increasing trade and business opportunities. It allows small and medium-sized enterprises (SMEs) to enter the market and compete with larger companies. For instance, local artisans and small businesses in Nepal can sell their products online, reaching a global audience and boosting their sales. This increased economic activity generates revenue, supports local industries, and contributes to the overall economy.

5. Customer Empowerment: E-commerce empowers customers by providing them with more information and control over their purchasing decisions. Online platforms offer detailed product descriptions, customer reviews, and price comparisons, enabling customers to make informed choices. For example, a customer in Nepal looking to buy a smartphone can read reviews, compare prices, and choose the best option based on their preferences and budget.

6. Entrepreneurship: E-commerce encourages entrepreneurship by lowering the barriers to entry for new businesses. Aspiring entrepreneurs can set up online stores with minimal investment, reaching a wider audience without the need for a physical storefront. For instance, a young entrepreneur in Nepal can start a business selling handmade crafts or organic products through an e-commerce platform, turning their passion into a viable business venture.

Some important difference between:

1. Traditional commerce vs E-commerce

Aspects	Traditional Commerce	E-commerce
Definition	Conducting business transactions in physcial stores.	Conducting business transactions over the internet.
Customer interaction	Face-to-face interaction with sales staff.	Digital interaction through chats, mails or phones.
Cost structure	Higher overhead costs (rent, utilities, staff)	Lower overhead costs (domain hosting, digital tools)
Customer reach	Local or regional customer base.	Global customer base.
Return process	In-person return and exchange.	Online return process with shipping and logistics.

 

2. E-business vs e-commerce

Aspects	E-business	E-commerce
Definition	Conducting business process online.	Conducting buying and selling  over the internet.
Tools and technologies	Utilizes CRM, ERO, SCM, etc.	Utilizes shopping cart, payment gateways, online marketplace,etc
Scope	Broader: includes all business activites online	Narrow: focus only on buying and selling.
Example	Managing supply chains, utilizing ERP system, HR processes.	Selling product through website like Amazon.

 

3. E-commerce vs M-commerce

Aspects	E-commerce	M-commerce
Platform	Internet via computer, laptops.	Mobile devices like smartphones, tablets.
Scope	Broad scope includes both desktop and mobile users.	Specifically designed for mobile users, mobile friendly interface.
Accessibility	Accessed through various devices.	Designed for mobile accessibility.
Payment methods	More options including online banking, card payments digital wallets.	Mobile specific options like mobile banking apps, digital wallets.

 

Unique feature of E-commerce

u Global Reach: E-commerce platforms allow businesses to extend their reach beyond local markets and cater to customers worldwide. This international exposure can lead to increased sales and brand recognition. For example, a small handicraft shop in Nepal can sell its products to customers in the USA, Europe, and Asia through an online marketplace.

u 24/7 Availability: E-commerce stores are accessible around the clock, allowing customers to shop at any time. This continuous availability caters to different time zones and customer schedules, increasing sales opportunities. For instance, an online grocery store in Nepal can receive orders from customers even during late hours, ensuring convenience for everyone.

u Personalization: E-commerce platforms can tailor the shopping experience to individual customers by analyzing their browsing history and purchase behavior. This can include personalized product recommendations, targeted marketing campaigns, and customized promotions. For example, an online fashion store can suggest clothing items based on a customer's previous purchases and preferences.

u Lowering Operating Costs: Running an e-commerce business often requires fewer physical resources, resulting in lower overhead costs such as rent, utilities, and staffing. This allows businesses to allocate resources more efficiently and offer competitive prices. For example, an online electronics store in Nepal can operate from a small warehouse, reducing expenses associated with maintaining a physical storefront.

u Efficient Inventory Management: E-commerce platforms use advanced inventory management systems to track stock levels in real-time. This helps businesses maintain optimal inventory levels, reducing the risk of overstocking or stockouts. For instance, a Nepali online electronics store can use software to monitor and reorder popular gadgets as needed, ensuring they are always in stock.

u Diverse Payment Methods: E-commerce platforms offer various payment options, such as credit/debit cards, digital wallets, bank transfers, and cash on delivery. This flexibility allows customers to choose their preferred payment method, enhancing their shopping experience. For example, a Nepali e-commerce site might offer payment options like eSewa, Khalti, and direct bank transfers to cater to different customer preferences.

u Data-Driven Decision Making: E-commerce businesses collect and analyze vast amounts of data on customer behavior, preferences, and purchasing patterns. This data-driven approach enables businesses to make informed decisions, optimize marketing strategies, and improve customer experiences. For instance, an online grocery store in Nepal can analyze customer data to identify popular products and tailor promotions to specific customer segments, increasing sales and customer loyalty.

u Scalability: E-commerce platforms provide businesses with the ability to scale operations quickly and cost-effectively. As demand grows, businesses can easily expand their online presence, add new products, and accommodate increased traffic without significant additional investment. For example, a small startup selling organic honey in Nepal can use an e-commerce platform to reach a wider audience and handle increased orders without needing to open new physical stores.

u Customer Reviews and Ratings: E-commerce platforms often feature customer reviews and ratings for products, helping shoppers make informed decisions. For example, if a customer is looking to buy a smartphone, they can read reviews and ratings from other customers to gauge the product's quality and performance, reducing the risk of dissatisfaction.

u Marketing and Advertising: E-commerce platforms offer various digital marketing tools that enable businesses to reach their target audiences more effectively. These tools include social media advertising, email marketing, search engine optimization (SEO), and pay-per-click (PPC) campaigns. By leveraging these tools, businesses can create personalized marketing campaigns that resonate with their audience, driving traffic and sales. For example, a Nepali fashion brand can use Facebook Ads to target young adults interested in trendy clothing, increasing brand awareness and attracting potential customers.

u Enhanced Customer Service: E-commerce platforms offer multiple channels for customer support, ensuring customers receive timely assistance and have a positive shopping experience. This can include live chat, email support, phone support, FAQs, and help centers. For instance, a customer shopping on Daraz can use the live chat option to ask questions about product availability, delivery timelines, or return policies. Enhanced customer service builds trust and loyalty among customers.

u Easy Price Comparison: E-commerce platforms allow customers to easily compare prices of products from different sellers, ensuring they get the best deal. This can be done through price comparison websites, search filters, and product listings that show prices from multiple sellers. For example, a customer looking to buy a new laptop can compare prices on various Nepali e-commerce sites like SastoDeal and Daraz, helping them make a more cost-effective purchase. Easy price comparison empowers customers and enhances their shopping experience.

Sorry Gurudev

Types of  E-commerce

1. Business-to-Consumer (B2C): This type of e-commerce involves businesses selling products or services directly to individual consumers. It is the most common form of e-commerce and includes online retailers, marketplaces, and service providers. For example, an online store like Daraz or Amazon sells apparel, accessories, and other goods directly to customers. B2C e-commerce offers convenience, a wide selection of products, and competitive pricing, making it popular among consumers.

2. Business-to-Business (B2B): In B2B e-commerce, businesses sell products or services to other businesses. This can include wholesale suppliers, manufacturers, and distributors selling to retailers, resellers, or other businesses. For example, Alibaba is a platform that connects suppliers with businesses looking to purchase products in bulk. B2B e-commerce often involves larger order quantities and longer sales cycles compared to B2C transactions.

3. Consumer-to-Consumer (C2C): C2C e-commerce involves transactions between individual consumers. Online marketplaces like Hamrobazar, OLX, and Facebook Marketplace facilitate these transactions, allowing individuals to buy and sell goods directly to each other. For example, a person selling a used smartphone to another person through an online platform. C2C e-commerce provides a platform for individuals to monetize their unwanted items and find unique, second-hand products.

4. Consumer-to-Business (C2B): In C2B e-commerce, individuals sell products or services to businesses. This model is common among freelancers and independent contractors offering services like graphic design, content writing, or photography to companies. Platforms like Upwork, Fiverr, and Freelancer enable individuals to showcase their skills and connect with businesses in need of their services. C2B e-commerce allows individuals to leverage their expertise and earn income by working with businesses.

5. Business-to-Government (B2G): B2G e-commerce involves businesses providing products or services to government agencies or public sector organizations. For example, a software company supplying cybersecurity solutions to a government department. B2G transactions often involve formal procurement processes, tenders, and contracts. This type of e-commerce allows businesses to engage in lucrative government contracts and contribute to public sector projects.

6. Government-to-Business (G2B): In G2B e-commerce, government entities provide products or services to businesses. This can include government portals offering business registration, tax filing, and other administrative services online. For example, a business registering for a trade license through a government e-portal. G2B e-commerce streamlines administrative processes, reduces paperwork, and improves efficiency for businesses.

7. Government-to-Consumer (G2C): G2C e-commerce involves government services provided directly to citizens. Examples include online portals for paying taxes, renewing licenses, or accessing government services like applying for passports. For instance, citizens can renew their driver's licenses or pay property taxes through an online government portal. G2C e-commerce enhances accessibility to public services and reduces the need for in-person visits to government offices.

8. Consumer-to-Government (C2G): In C2G e-commerce, individuals engage in transactions with the government. This can include paying fines, taxes, or fees online. For example, citizens paying their income taxes or traffic fines through an online government portal. C2G e-commerce simplifies the payment process for citizens and improves the efficiency of government revenue collection.

9. Mobile Commerce (m-commerce): M-commerce refers to e-commerce transactions conducted via mobile devices like smartphones and tablets. This includes mobile apps and websites optimized for mobile use. For example, customers using the Daraz app to shop for products on their smartphones. M-commerce offers the convenience of shopping on-the-go and caters to the increasing use of mobile devices for online activities.

10. Social Commerce: Social commerce involves using social media platforms to facilitate e-commerce transactions. Businesses can sell products directly through social media channels like Facebook, Instagram, or WhatsApp. For example, an Instagram boutique like Shringar.Hub selling beauty accessories through Instagram Shopping features. Social commerce leverages the power of social networks to reach potential customers, build brand awareness, and drive sales.

11. Subscription-Based Commerce: In subscription-based commerce, customers pay a recurring fee to access products or services. This model is common for services like streaming platforms (Netflix, Spotify). For example, a customer subscribing to an online meal kit delivery service for weekly meal plans. Subscription-based commerce provides businesses with a steady revenue stream and fosters customer loyalty through ongoing engagement.