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Glossary – Electronic commerce (e-commerce)

Electronic commerce (e-commerce)

Nikiforov Alexander
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What is e-commerce?

E-commerce, known as electronic commerce, is a field of activity related to the online buying and selling of goods and services. This term comes from the English "electronic commerce" and encompasses a wide range of business processes conducted over the internet. Historically, the first online purchase occurred on August 11, 1994, in the USA, when a Philadelphia resident bought a Sting CD on the Net Market website using a credit card. Since then, e-commerce has rapidly evolved, increasing its market share.

As of 2023, the retail e-commerce market in Russia reached a volume of 7.8 trillion rubles, corresponding to 5.03 billion orders, with a growth rate of 78%. The most popular products purchased online by Russians include electronics, furniture, clothing, and footwear.

How does e-commerce work?

The purchasing process in e-commerce includes several sequential steps. For example, when a consumer decides to buy a product, they visit the online store's website and select the item of interest. The browser on their device establishes a connection with the store's server, and the manager receives the request. After checking the product's availability through the database, the manager either confirms the request or sends a query to the manufacturer to clarify delivery times.

Once the product's availability is confirmed, the customer makes a payment using a bank card. The payment processing occurs through a bank or financial system, and if all conditions are met, the transfer is approved. After this, the online store notifies the customer of successful payment, and the order is sent to the warehouse for delivery. In the case of digital products like music subscriptions, access is granted immediately after payment.

Types of e-commerce

E-commerce is classified by the types of interactions between participants. The main types include:

  • B2B (business-to-business) — trade between commercial organizations, where businesses enter into mutually beneficial agreements.
  • B2C (business-to-consumer) — a company sells goods directly to consumers through online platforms.
  • B2G (business-to-government) — supply of goods and services to government institutions.
  • C2C (consumer-to-consumer) — trade between consumers conducted through platforms for personal ads.
  • G2C (government-to-citizens) — interaction of citizens with government authorities via the internet.
  • C2B (consumer-to-business) — consumers offer their services to businesses.
  • G2G (government-to-government) — exchange of information between government institutions.
  • B2P (business-to-partners) — commercial relationships between companies within the same sector.
  • B2E (business-to-employee) — automation of business process management for employees.
  • B2B2C (business-to-business-to-consumer) — a model where a company sells goods to the end consumer through an intermediary.

Advantages and disadvantages of e-commerce

E-commerce offers many advantages:

  • Time and cost savings: A low entry threshold allows for quick business start-up with minimal investment.
  • Wide target audience: Access to millions of users worldwide.
  • Detailed analytics: The ability to track customer data using analytical tools.
  • Convenience for customers: 24/7 access to goods and services.
  • Broad opportunities for growth: A constantly growing market and new technologies.

However, e-commerce also has its disadvantages:

  • Security issues: Risk of personal data leaks and fraud.
  • High competition: Many similar offers in the market.
  • Storage and logistics challenges: The quality of delivery and storage of goods is critical for business success.

How to start a business in e-commerce

To start a business in e-commerce, it is necessary to define a niche and legally register the online store. Key steps include:

  • Finding suppliers and delivery services.
  • Creating a website or using trading platforms.
  • Launching advertising campaigns to attract customers.

Small businesses can start by selling through social media or marketplaces that provide access to a wide audience and simplify the logistics process. Customer attraction can be achieved through targeted advertising, collaboration with bloggers, and search engine optimization.