What is E-Commerce?

The shorthand for “electronic commerce,” or “e-commerce,” refers to the exchange of funds or data in addition to the exchange of products and services over an electronic network, most commonly the Internet. These exchanges might be business-to-business (B2B), business-to-consumer (B2C), consumer-to-business, or business-to-consumer. In this blog we  will discuss about Why leverage MBA skills in e-commerce.

Online retail purchasing involves transactional operations, often expressly referred to as e-tail. The phrases e-business and e-commerce are frequently used interchangeably.

Online retail has expanded dramatically over the past 20 years due to the widespread usage of online retailers such as Amazon and eBay. According to estimates from the U.S. Census Bureau, in 2011, 5% of all retail purchases were made online. But when the COVID-19 epidemic struck in 2020, this percentage shot up to more than 16% of overall retail sales. This change emphasises how important internet shopping is to modern business.

How does E-Commerce work?

E-commerce relies on the internet as a platform for customers to access online stores, browse products or services, and place orders through their devices. When customers place orders, their web browser communicates with the server hosting the e-commerce website. The order data is then transmitted to a central computer, known as the order manager, which forwards it to various databases managing inventory levels payment information through platforms like PayPal and banking systems. This process ensures sufficient store inventory and customer funds for order processing.

Once the order is validated, the manager notifies the store’s web server, displaying a message to the customer confirming successful processing. Subsequently, the order manager sends the order data to the warehouse or fulfilment department, declaring that the good or service is available to the consumer. This may involve shipping tangible or digital products or granting access to a service.

E-commerce transactions are facilitated through platforms such as online marketplaces like Amazon, software as a service (SaaS) tools that enable customers to “rent” online store infrastructures, or open-source tools that companies manage using their in-house developers. If you are intrigued by the intricacies of e-commerce and wish to delve into the digital marketing aspects of this evolving landscape, considering an MBA in Digital Marketing could be a strategic move. Explore reputable institutions offering specialised MBA programs in Digital Marketing to equip yourself with the knowledge and skills to navigate the dynamic intersection of e-commerce and digital marketing.

Types of E-Commerce

The electronic transfer of products, services, or data between companies, as opposed to between businesses and consumers, is known as business-to-business (B2B) e-commerce. Examples of this are online directories and websites that facilitate product and supply exchanges. They allow companies to look for goods, services, and information and start transactions using e-procurement interfaces. According to a 2018 Forrester study, B2B e-commerce would account for 17% of B2B sales in the United States by 2023, with a projected value of $1.8 trillion.

On the other hand, business-to-consumer (B2C) e-commerce represents the retail aspect of online commerce, where companies deal directly with customers to sell goods, services, or information. The term gained popularity during the dot-com boom in the late 1990s when online retailers and goods sellers emerged as a novelty.

Nowadays, a vast array of online virtual stores and malls cater to various consumer needs. Amazon stands out as the most prominent example, dominating the B2C market and serving as a widely recognised platform for online retail.

Consumer-to-consumer (C2C) is a type of e-commerce where consumers engage in the online exchange of products, services, and information directly with each other. These transactions typically occur through a third-party online platform that facilitates the exchange. Examples include online auctions and classified advertisements, with platforms like eBay and Craigslist being well-known examples. Additionally, platforms like Facebook Marketplace and Depop enable C2C transactions.

Consumer-to-business (C2B) e-commerce involves consumers making their goods and services offered online for businesses to bid on and buy. This is a reversal of the traditional business-to-consumer (B2C) commerce model. Examples of C2B platforms include markets selling photos, graphics, media, and design components that are royalty-free, like iStock.

Business-to-administration (B2A) refers to online transactions between companies, public administration, or government bodies. These transactions often involve e-services or products related to access to employment, social security, fiscal data, registrations, and legal papers. Investments in e-government capabilities have led to an increase in B2A services.

Consumer-to-administration (C2A) involves online transactions between consumers, public administration, or government bodies. Individuals commonly use electronic means for social security, taxes, and health services, including making appointments, providing test results, and making money transfers.

Online sales through mobile devices such as tablets and smartphones are called mobile e-commerce or m-commerce. It encompasses mobile shopping, banking, and payments, with mobile chatbots facilitating transactions through voice or text conversations.

E-Commerce platforms and vendors

One tool for managing an online store is an e-commerce platform, with options catering to businesses of varying sizes, from small enterprises to large corporations. These platforms come in different models, including online marketplaces like Amazon and eBay, which require user account sign-ups with minimal IT implementation. Suppose you want to explore the intricate world of e-commerce and its diverse platforms. In that case, Earning an MBA in e-commerce can provide you with the knowledge, abilities, and tactics you need to succeed in this fast-paced industry. Consider reputable MBA Colleges In Chennai offering specialised MBA programs in E-commerce to enhance your understanding and proficiency in this rapidly evolving field.

Another model is Software as a Service (SaaS), where store owners subscribe to a service and rent space in a cloud-hosted environment. This approach eliminates the need for in-house development or on-premises infrastructure. Additionally, some open-source platforms require a hosting environment in the cloud or on-premises and may involve manual implementation and maintenance.

Examples of E-Commerce marketplace platforms include:

• Alibaba
• Amazon
• Chewy
• eBay
• Etsy
• Overstock
• Newegg
• Rakuten
• Walmart Marketplace
• Wayfair

Vendors providing e-commerce platform services for clients hosting their online store sites include:

• BigCommerce
• Ecwid
• Magento
• Oracle NetSuite Commerce
• Salesforce Commerce Cloud (offering both B2B and B2C options)
• Shopify
• Squarespace
• WooCommerce

Disruption to physical retail

The significant rise in e-commerce has sparked debates among analysts, economists, and consumers about the potential obsolescence of physical brick-and-mortar stores. Online shopping is growing substantially, as evidenced by Gartner’s 2021 State of Digital Commerce Report, which found that 90% of digital commerce decision-makers surveyed aggressively expanded e-commerce investments, focusing on digital-first value creation and customer experience.

This transformative shift in the retail landscape underscores the importance of understanding the dynamics of digital business.

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Data from the U.S. Census Bureau and Federal Reserve Economic Data highlights the increasing importance of e-commerce in the retail market. The percentage of total U.S. sales from e-commerce has consistently grown since 1999, reaching 16.4% in Q2 2020. In Q1 2022, e-commerce accounted for 14.3% of total sales, several points higher than the pre-pandemic 11.1% in Q4 2019. Despite this growth, many shoppers still prefer brick-and-mortar stores, with Forrester projecting that physical stores will by 2024, make up 72% of retail sales in the US.

The adoption of new technologies also contributes to the growth of online retail. A 2021 study from Juniper Research predicted that e-commerce transactions made via voice assistants would grow by over 320% to $19.4 billion by 2023 from $4.6 billion in 2021.

An illustrative example of the impact of e-commerce The American shopping holidays after Thanksgiving are known as Black Friday and Cyber Monday in physical retail. The National Retail Foundation’s 2021 Thanksgiving Weekend Consumer Survey indicates that 88 million consumers made purchases online on Black Friday instead of 66.5 million in-store.

On Cyber Monday, 20.3 million in-person sales and 77 million internet purchases were made. This shift in consumer behaviour highlights the transformative influence of digital technologies on the retail landscape, emphasising the need for businesses to embrace digital transformation strategically. In this blog, we have understood about the Why leverage MBA skills in e-commerce. If you’re intrigued by such dynamic shifts in the business world, consider pursuing an MBA in Digital Transformation to equip yourself with the knowledge and skills needed to navigate the evolving intersection of technology and commerce.

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