A brief overview on E-Commerce

“Data Data Data! I can’t make bricks without clay” -Sir Arthur Conan Doyle, Physician and Writer

“When you say it, it’s marketing. When your customer says it, it’s social proof.” -Andy Crestodina, Co-Founder / Strategic Director Orbit Media Studios

Introduction

What is E-commerce? E-commerce is the buying and selling of goods or services via the internet, and the transfer of money and data to complete the sales. It’s also known as electronic commerce or internet commerce.[1] It uses internet, where consumers can access different stores and place their orders online for products and services on their own devices. It eliminates the need to go to retail stores and provides convenience at the fingertip to look at options and make a choice. After an order is placed the customer’s browser communicates constantly with the server hosting the online store website. Data is shared back and forth. Common E-commerce marketplace platform we use regularly are Amazon, eBay, Wayfare etc. Vendors offering E-commerce platform services for clients hosting their own online store sites include Shopify, WooCommerce etc.

Salient features of e-commerce

E-Commerce has several unique features of its own. Some of them are described here.

• Global Reach– E-commerce allows business transactions to be easier, faster and on a global scale. Any product is made available to anyone who can afford it and has access to internet. In the changing times where the entire world is becoming one tech village, E-commerce is the next step to consuming products and content. It can be more convenient and more effective as compared to traditional commerce. The market potential is huge, as it caters to the populace of the whole world.
• Information Density– The market information, business quality information, as well as that of consumers is condensed and consolidated better than before. The electronic commerce technology reduces the information collection, storage, communication and processing costs. It is more cost effective than forms of physical stores. At the same time, the accuracy and timeliness of the information technology has greatly increased. “The goal is to turn data into information, and information into insight”- Carly Fiorina, ex-CEO of Hewlett-Packard.
• Universal Standards– E-commerce technology cites universal technical standards followed and carried out all across the globe. It follows the technical standard of the internet. Standard affects such things as market entry costs, cost of the goods in the market etc. The standard can make the existence of technology business easier, which can reduce the cost, technique of indirect costs in addition can set the electronic commerce website 10$ / month.
• Publicity– For the publicity and marketing purpose, E-Commerce is as good as television technology. It can put up billboards, signs, video, audio etc. Branding has a different face value in commerce, and creative advertising is a predominant practice in business. E-commerce also enjoys this.
• Personalization– Catering to each customer’s unique need is a feature of E-commerce. The user experience is monitored and targeted ads are provided to the customer’s liking. User preferences and previous behaviour helps in that.
• Ubiquity– A shoe or clothing retail store invites customers to go to the physical store and purchase what they desire. Its physical presence makes it practically impossible to be available in every corner of the world. However, E-commerce is ubiquitous, present everywhere, bringing customers closer to sellers of products and services on a virtual platform.
• Interactivity– There is a two way communication, where consumers can track orders, send feedback, put complaints, communicate their worries to the seller. And the sellers can address the same. It tries to emulate the retail experience at this point.

Advantages of E-commerce

 Like all things, E-commerce has its own set of virtues and vices. The advantages of it are discussed here.

• Lower cost– E-commerce businesses can avoid the costs associated with physical stores, such as rent, inventory and cashiers etc. However, they may incur shipping and warehouse costs.
• Personalization and product recommendations– As discussed in the features, E-commerce sites can track visitors’ browse, search and purchase history. They can use this data to present useful and personalized product recommendations, and obtain valuable insights about target markets. Examples include the sections of Amazon product pages labelled “Frequently bought together” and “Customers who viewed this item also viewed.” It streamlines the options to the customer’s liking.
• Availability– Unlike physical stores which have fixed opening and closing times, online services of commerce are available almost throughout the day. This excludes outages or scheduled maintenance. Apart from those, consumers can browse and order almost at any time.
• Wide access- An online store brings almost everything under its ambit so customers have more success finding exactly what they are looking for. Amazon’s first slogan was ‘World’s largest bookstore’. True or not, they could claim that given it does not require a huge physical store, stacking each book on the shelf. Customers can type and browse through what they need through just a click. Besides, E-commerce provides an efficient system where products are usually stored in warehouses and shipped to customers upon receiving orders.
• Ease of accessibility– E-commerce eliminates the hassle of going out and looking for a particular product from store to store.
• Facilitating small entrepreneurships– Brick-and-mortar businesses sell to customers who physically visit their stores. With E-commerce, businesses can sell to any customer who can access the web. It has the potential to extend a business’ customer base, it levels the playing field for small businesses and gives them opportunity to expand.
• Speed of access– An e-commerce transaction can comprise of just a few clicks and take less than five minutes. Internet issues and bandwidth on both user device and E-commerce sites may slow it down. But it is definitely a lot faster than crowded retail stores.

Disadvantages/challenges faced

The vices come side by side with convenience. They are as follows-

• Security- Skilled hackers can create authentic-looking websites that claim to sell well-known products. Instead, the site sends customers forfeit or imitation versions of those products, or, simply collects customers’ credit card information. Legitimate E-commerce sites also carry risk, especially when customers store their credit card information with the retailer to make future purchases easier. If the retailer’s site is hacked, hackers may come into the possession of customers’ credit card information.
• Wait time- There is a wait time for a week on average before the product is delivered. In retail stores, it is instantaneous when a customer pays for his product and is free to leave with it. However, this problem is decreasing day by day since most platforms are including options of speedy delivery that could be the very next day as well.
• Limited customer service- An E-commerce platform tries to emulate a retail store in this regard, having two way communication, trying to make the user experience better. However, nothing can compare against the customer service of a physical store where an issue or question is directly conveyed to a clerk or store employee. E-commerce sites may provide support for a specific duration of time or relating to a special issue or may put calls on hold for indefinite time.
• Not being able to touch or see- While images on a webpage can provide a good sense about a product, it can be quite different from experiencing it “directly,” such as playing music on speakers, assessing the picture quality of a television or trying on a piece of clothing. E-commerce can lead consumers to receive products that differ from their expectations, which leads to returns. In some scenarios, the customer has to bear the burden for the cost of shipping the returned item to the retailer. The size or quality of a product may differ vastly than what its online description is.

Models of E-commerce

There are several models of  E-commerce that are discussed below.

Business-to-business (B2B) E-commerce refers to the electronic exchange of products, services or information between businesses rather than between businesses and consumers. Online directories, and data exchange as well as product and supply exchange websites are examples of B2B model. These allow businesses to look for information on products and services and to initiate transaction. B2B E-commerce is primarily concerned with a business selling a good or service to another business, like a manufacturer and wholesaler, or a wholesaler and a retailer. This kind of E-commerce isn’t consumer-facing. It usually involves products like raw materials, software, or products that are combined.

Business-to-consumer (B2C) is the retail part of E-commerce on the internet. It is the kind where businesses sell products, services or information directly to consumers. B2C E-commerce is the most popular E-commerce model. Business to Consumer means that the sale is taking place between a business and a consumer, like when someone buys a rug from an online retailer. The term was popular during the dot-com boom of the late 1990s. at that point of time, online retailers and sellers of goods were a novelty. Today, there are plenty of virtual stores and malls on the internet that are engaged in selling all kinds of consumer goods. Amazon dominates this model worldwide.

Consumer-to-consumer (C2C) is a type of E-commerce in which the consumers trade products, services and information with each other online. These transactions are generally conducted through a third party that provides an online platform on which the transactions are carried out. Online auctions and classified advertisements are two examples of C2C platforms. Consumer to consumer sales take place on platforms like eBay, Craigslist, Etsy, Fivver, etc. eBay is a very interesting case. Even though it is a business, this form of E-commerce could also be called C2B2C which is ‘consumer-to-business-to-consumer’.

Its difference with C2B is that consumer-to-business (C2B) is a type of E-commerce in which consumers make their products and services available online for companies to bid on and purchase. This is the opposite of the orthodox model of B2C.  C2B encompasses influencers offering exposure, photographers, consultants, freelance writers, etc. iStock is an example. Another example would be a job board.

Business-to-administration (B2A) is a type of E-commerce which brings under its ambit transactions made between companies and public administration or government bodies. State administration requires several e-services concerning fiscal, security, legal and other matters. This kind of E-commerce has gone through a considerable growth in the past few years.

Consumer-to-administration (C2A) refers to transactions conducted online between individual consumers and public administration or government bodies. The government rarely buys products or services from citizens, but individuals frequently use electronic means in the following areas- in case of education, it encompasses and uses disseminating information, distance learning/online lectures, etc. In case of social security, distributing information, making payments. Under the sub category of taxation, it include filing tax returns, making payments, etc. Government considers matters of health as well by making appointments, providing information about illnesses, making health services payments among others.

Mobile E-commerce (M-commerce) is a type of E-commerce on the rise that features online sales transactions made using mobile devices, such as smart phones and tablets. M-commerce includes mobile shopping, mobile banking and mobile payments.

Examples:- Here are some examples of types of e-commerce. Retail is sale of products directly to a consumer without an intermediary. Dropshipping is the sale of products that are manufactured and shipped to consumers via a third party. Digital products are downloadable items like templates, courses, e-books, software, or media that must be purchased for use. Wholesale products are usually sold to a retailer in bulk, who then sells the products to consumers. Services are skills like coaching, writing, influencer marketing, etc., that are purchased and paid for online. Subscription is a popular D2C model where services are the recurring purchases of products or services on a regular basis. Crowdfunding allows sellers to raise start-up capital in order to bring their product to the market. Once enough consumers have purchased the item, it’s then created and shipped. Some top E-commerce companies are- Amazon, Alibaba, Walmart, eBay, Wayfair. Vendors offering e-commerce platform services for clients hosting their own online store sites include: Shopify, WooCommerce, Magento, Squarespace, BigCommerce, Ecwid etc.

Legal aspects

There are several legal aspects like intellectual property issues, consumer protection issues, content regulation, intermediary liability etc. and statutes that help in bringing principles of E-commerce under discipline. For example, Foreign Exchange Management Act (FEMA) regulates the foreign investment in E-commerce. Mukesh Bansal-led Myntra secured $50 million investment led by Premji Invest along with existing investors Accel Partners and Tiger Global. In February 2014, Kunal Bahl led Snapdeal amassed $133 million funding led by eBay, Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital.

The IT Act deals with the Data Protection aspects. For example, in the case of LIC India v. Consumer Education & Research Center[2] the Supreme Court interpreted an insurance policy issued by Life Insurance Corporation of India by bringing in certain elements of public purpose. The court declared certain term clauses in the policy, pertaining to restricting the benefit of the policy only to those people employed in the Government as void under article 14 of the Constitution.

Conclusion

This is but a brief view on E-commerce which is an all encompassing industry with various statutes regulating many parts of it. ‘You cannot wait for customers to come to you. You have to figure out where they are, go there and bring them back to your store.’ This quote describes the tenet of E-commerce quite well.

[1] https://www.the-future-of-commerce.com/2020/01/19/

[2] 1995 AIR 1811, 1995 SCC (5) 482       

Author: Debasrita Choudhury  (K.L.E. Society Law College)