4.8 E-commerce

Question 1

E-commerce

Answer 1

E-commerce is the buying and selling of goods and services online. The key features of an e-commerce business, are:

Global markets
Unrepresentative groups
Increasingly mobile
The importance of peer reviews
Market segmentation
The role of security

Question 2

Types of e-commerce

Answer 2

All online businesses fall into one (or more) of the following three categories, which are:

Business to consumer
Business to business
Consumer to consumer

Question 3

Business to consumer (B2C)

Answer 3

Business to consumer e-commerce can be thought of using a traditional business model. A company makes or purchases some goods, then attempts to sell them to the end consumer. The majority of e-commerce companies operate using this model. As a result, there is likely to be a lot of competition, which in turn leads to squeezed profit margins.

Question 4

Business to business (B2B)

Answer 4

Business to business e-commerce involves supplying other companies the goods and services they need. Companies have different priorities from those who sell directly to the end consumer. Suppliers have to be able to deliver an agreed quality at an agreed time. Long-term relationships and customer loyalty are much more common than in consumer markets.

Question 5

Consumer to consumer (C2C)

Answer 5

Consumer to consumer e-commerce businesses allow members of the public to sell to each other. Ebay is often cited as the classic example of a consumer to consumer business model, but others include Amazon Marketplace and Taobao. These companies do not sell anything themselves. Instead, they provide platforms for others to trade. An important part of their service is payment protection. Consumer to consumer e-commerce companies have to protect both buyers and sellers from potential fraud. They make money by charging a commission on every item that is sold.