A Physical Destination Where Goods And Services Are Exchanged
The market basically refers to a physical destination where goods and services are exchanged. For e.g., the Sarojini market in New Delhi is well known for its cheap products, on the other hand, Sarafa, Indore is a well know spot for late-night street eating. Humans need to transport themselves to these locations to indulge in commerce (transfer of funds) but nowadays everyone prefers to bring the market to themselves. The citizens don’t wish to go outside their comfortable home and prefer to shop while relaxing in their sofas and beds. The marketers upon realizing these conditions have successfully managed to bring giants like Amazon, Alibaba, Flipkart, Snapdeal, Myntra, and many more online. These apps help the customers to shop whenever and wherever they wish. My study focuses on how E-commerce helps these giants to earn profit and maintain themselves in such a competitive market.
What Do We Mean By E-Commerce?
Commerce refers to paperless exchange during a business. The full form of E-Commerce is Electronic Commerce and as the name suggests it refers to the exchange of funds electronically, that is using electronic devices. This sector boomed in 2014 and a lot of people now prefer e-commerce for day-to-day purchases. E-Commerce allows businesses to function 24*7 hours, and 7 days a week giving customers a big-time window to fulfill their demands. In other words, e-commerce refers to buying and selling of products and services online. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is in turn driven by the technological advances of the semiconductor industry and is the largest sector of the electronics industry. Modern-day e-commerce generally uses World Wide Web and online apps. The concept of e-commerce started in 1971 or 1972 when the ARPANET was used to conduct a cannabis sale between the students of Stanford Artificial Intelligence Laboratory and the Massachusetts Institute of Technology, and this was later described as a seminal act of e-commerce. Later in 1975, Micheal Aldrich introduced and demonstrated the first online shopping system. The first business-to-business online shopping system was installed in 1981. In all the following year’s e-commerce started to take place and people became aware of such activities. All of this gave rise to Amazon in 1995, eBay in 1995, and Alibaba in 1999, and it is known to everyone how profitable these companies are. Also, the richest man in the world is the owner of Amazon, Jeff Bezos.
Types of E-Commerce
- B2C: It stands for Business to Consumer. It refers to the selling of goods directly to the final consumers bypassing any middlemen. B2C became popular during the 1990s when most retailers used online services to sell products to the final consumers. This idea was first used by Micheal Andrich in 1979, who used television to reach out to customers. Traditionally it would mean eating at a restaurant, buying items at a factory outlet, etc., but e-commerce has given it a different definition. It was not profitable during the starting years and many fell into the trap but leaders such as Amazon and Priceline survived and have been at the top ever since. To be profitable in this field, the business should have good relations with the customers. There are typically 5 models pf B2C that companies use online to target customers – Direct Retailers (directly buying products online from various sites), Online Intermediaries (bring different buyers together; Trivago, Expedia), Free based (Netflix, The New York Times), Advertising based B2C (Huffington Post) and Community based (Facebook)
- B2B: It stands for Business to Business. It is a transaction that takes place between 2 businesses, like a manufacturer and a wholesaler or a wholesaler and a retailer. So, basically, one business sells to another. It tends to happen in the form of a supply chain when one company buys raw materials from another. For e.g., Intel manufactures and sells its chips to many other companies. Late in 2018, Forrester said the B2B e-commerce market topped $1.134 trillion—above the $954 billion it had projected for 2018 in a forecast released in 2017. These transactions are conducted after many considerations and are done by the top personals of the organizations. For e.g.; Apple holds B2B relations with Samsung, Panasonic, and Intel.
- C2C: It stands for Consumer to Consumer. C2C is a business model where customers can buy or exchange goods or information with each other in an online environment. Some online C2C sites are eBay, Etsy, and Craigslist which use auctions to sell products. It does have some limitations being, lack of quality control or guarantee of payments. These sites charge a fee for the seller to list their items. This market is projected to grow in the future because of its cost-effectiveness. It is increasing popularity among the sellers, for e.g. apps like OLX provide a platform to sell second-hand goods online and also at a reasonable price.
- C2B: It stands for Consumer to Business. For better performance, generally, the companies ask for suggestions and complaints from the consumers. Consumers find it easy to communicate with companies using the internet. Consumers can find and reach the sellers on the web easily. It can also be regarded as an economic relationship that is an inverted business type, as sometimes the companies can buy goods and services from the customers themselves.
- B2G: It stands for Business to Government. It is derived from the Business to Business model and is usually referred to as “Public Sector Marketing”. The government helps the business to grow by auctioning and advertising its products. On the other hand, the business starts to keep the poor sector in consideration, and works according to the government, and supplies goods at a reasonable rate. It is generally done by the Public sector industries as they are owned by the government, however large private companies, upon realizing their social responsibility start working for the lower sectors too.
How Does E-Commerce Help Companies?
E-Commerce helps everyone, right from startups to big multinational companies. These companies can sell their products online and the customer to gets benefited as they don’t have to leave their houses to do shopping. E-Commerce helps the business to be open 24 hours a day and 7 days a week along with online customer services, blogs, and social media, which would allow a company to make a mark in the market and grab the opportunity to expand its product ranges. Due to the internet’s accessibility, the company’s websites can reach millions of people, even at the same time. This cannot be done through any other way of advertising or local stores. An E-commerce site also helps to scale the business according to the need of the customers. The needs can be understood and accordingly unnecessary items can be avoided and new payment methods can be added. These sites also help in saving money as the organization does not have to invest in a physical store, insurance, or infrastructure, it is a lot more economical and reasonable.
E-Commerce in Relation to Amazon
Amazon is an American multinational company that was started in the year 1994 by Jeff Bezos. It is based in Seattle, US. It currently employees over 7,50,000 employees all over the world. It focuses on Electronic Commerce, Artificial Intelligence, Cloud Computing and Digital Streaming. It is one of the 4 big tech companies, along with Google, Microsoft, and Apple. It had a very well-developed infrastructure and is liked by people all around the world. It is the world’s largest marketplace as measured by revenue and market capitalization. Amazon is the largest Internet company by revenue in the world. It is the second-largest private employer in the United States and one of the world’s most valuable companies. Initially, Amazon traded books but later on, it expanded its products to electronics, software, video games, apparel, furniture, food, toys, and jewelry. It does provide everything ranging from A to Z. in 2017, it bought World Food Market for $ 13.4 billion, which helped Amazon to turn into a retailer and sell grocery products online. Amazon has turned so big that it has many apps of its own, such as Amazon Prime (online streaming), Amazon Music (to hear songs and podcasts), Amazon Audiobooks (allows to listen to books anytime anywhere), Amazon publishing, Amazon Studies, and Amazon Web providers. It produces its own electronics, namely Kindle, Amazon TV firestick, Fire tablets, and Echo devices. As of November 2019, Jeff Bezos is the present President, CEO, and Chairman of Amazon and the latter has made him the richest man in the world. Amazon has various agreements with different companies to sell their products online like Apple, Toys “R” Us, DC Comics, and Nike. It has separate retail websites for some countries and offers international shipping of some of its products to certain countries. Its first distribution centers were Seattle and New Castle, as of now the total fulfillment centers have reached 75 in number and also have 25 sortation centers with over 1,25,000 employees. The domain of Amazon is “amazon.com” and it has different domains for different countries, for India, it is “amazon. in”. Amazon also allows users to submit reviews regarding its services on the website. Reviews must also rate the product on a rating scale. Customers may comment or vote on the reviews, indicating whether they found a review helpful to them. Amazon sells many of its products through third-party sellers, who sell their products using Amazon. These sellers get their commission on each product sold online. All the payments are handled by Amazon itself. Amazon started by focusing on business-to-consumer relationships between itself and its customers and business-to-business relationships between itself and its suppliers and then moved to facilitate customer-to-customer with the Amazon marketplace which acts as an intermediary to facilitate transactions. The company allows almost everyone to sell products using its platform. As of 2018, Amazon ranked 8th on the Fortune 500 ratings of the largest US corporations based on revenue. Since its first year 2007, the revenue has increased from 14.834 billion to 232.887 billion, thanks to the excellent E-Commerce strategies used by Amazon. Amazon’s market capitalization went over US$1 trillion again in early February 2020 after the announcement of the fourth quarter 2019 results. Amazon’s total employees now number 798,000. Amazon has also understood and undertaken its part of social responsibility. In September 2019, a walk-out as part of the Global Climate Strike was organized by the workers. Amazon has also introduced the Shipment Zero program, however, Shipment Zero has only committed to reducing 50% of its shipments to net-zero by 2030. Amazon also funds many organizations that work towards a healthy Earth. Amazon has not been free of any controversies. Its work has been questioned many times by reporters, journalists, and customers.
Seeing the recent events, Amazon is making an impact during the Covid-19 pandemic. Amazon is determined to provide products of basic necessities to the customers; however, the deliveries are taking a longer period. But it is a great initiative that is taken by Amazon. However, many protests have taken place in many warehouses of Amazon during the initial months of the Covid-19, in order to stop the workings as the number of cases was increasing.
E-Commerce plays a very important role in our daily lives. It provides a great opportunity to start a new business and expand it online. Big companies have to think a lot before applying any new policy as it would affect many employees and customers all over the world. The emergence of new technologies has sparked a lot of change in developing countries, like India. Virtual walls help customers scan barcodes for items on an electronic wall using their mobile phones and place orders with retailers. Thanks to rising internet penetration, the gross number of online users in India now exceeds the number of people who have compiled primary education. This shifting emphasizes the increasing relevance of India’s digital economy. The World Bank has predicted a big increase in the Indian GDP and Indian E-Commerce has played a huge role in it. The e-commerce sector is maturing and a number of serious players are entering the market. This will not be without its share of challenges, be it operational, regulatory, or digital.