Despite the popularity and pervasiveness of e-commerce, survival of the many small businesses without an online presence is critical. However, to earn money online e-commerce is now a business requirement. E-business and e-commerce are not synonymous terms.
The Internet will continue to create opportunities for small businesses. It is now possible to buy a wide range of specialized products and services that are not available everywhere. The Internet has provided a lifeline for many small producers and has allowed entrepreneurs to enter retail without having to invest heavily in physical outlets. Small businesses can easily enter the e-commerce arena as pure-play businesses using e-business.
E-commerce is the most important application of new communication technology. Manufacturers, traders and consumers can now reach the market more quickly and get more information than they could ever before. Electronic commerce has penetrated businesses in many ways.
E-commerce has tremendously reduced the transaction costs allied with purchase, sales, operating, holding inventory and financial costs. The application of e-commerce through the development of a website enhances the potential global market and sales revenue, product, potential new customers, services and geographical areas.
In terms of non-financial benefits, e-commerce has significantly helped improve human resources and timeliness, quality of services, customer satisfaction and some other indirect effects.
An e-commerce business model is a method that a business uses to generate revenue online. Some models are very simple; others are more complicated. New business models are being introduced all the time.
Understanding the E-Business:
E-business in terms of using the Internet and online technologies to create operational efficiencies, thereby increasing customer value called the E-business.
For small businesses, it is important to understand the nature of e-business and how it can facilitate operations as well as the growth of the small business. It is noticed that not all small businesses look for growth, choosing instead to happily remain small. However, e-business can help them Grow.
E-business involves several major components: Business intelligence, customer relationship management, supply chain management, enterprise resource planning, e-commerce, conducting electronic transactions within the firm, collaboration, and online activities among businesses.
Business intelligence is about the activities that a small business may undertake to collect, store, access, and analyze information about its market or competition to help them in decision-making. When conducted online, business intelligence is efficient and quick, helping companies to identify significant trends and make better decisions faster and quickly.
Customer relationship management refers to a customer service approach that focuses on building long-term and sustainable customer relationships that add value for the customer and the company. The goal should be to reduce costs and increase profitability while providing customer satisfaction.
Every small business has a supply chain, a network of vendors that provide the raw components that are needed to make a product or deliver a service. The management of this network is known as supply chain management.
Supply chain management is about efficiently and effectively improving the way that a company finds those raw components and then delivers the product or the service to the customer.
Enterprise resource planning is about integrating all departments and functions across a company (sales, marketing, human resources, finance, accounting, production, engineering, Quality and Regulatory Affairs, etc.) into a single computer system that can serve the particular needs of each department. The objective is to provide information quickly and efficiently to those who need it.
E-commerce is the marketing, selling, and buying of goods and services online. It generates revenue, which e-business does not. E-commerce is typically associated with e-marketing.
Conducting electronic transactions within a firm can occur through an intranet, e-mail, and instant messaging. An intranet is a private network within a business that is used for information sharing, processing, and communication.
The goal is to “streamline the workplace and allow easy information exchange within an organization.
Collaboration can occur internally or externally, and it often involves business partners. The goal is to help business partners communicate with each other more effectively, and efficiently, manage projects and shared materials and save the company’s costs of travel.
E-mail, instant messaging, newsgroups, discussion boards, virtual team rooms, and online meetings are common means of collaboration.
Intranet – When online activities between businesses focus on information sharing and communication via e-mail, online meetings, and instant messaging. An intranet is made available to business partners, vendors, or others outside a company.
It allows a business to share documents, business calendars, and project information with distributed employees, partners, and customers. It makes communication easier, eliminates redundant processes, reduces paperwork, increases productivity, provides immediate updates and information, and provides quick response times to problems and various issues.
The result is money and time saved for employees, the company, vendors, and your customers.
Understanding the E-commerce:
The moment that an exchange of value occurs, e-business becomes e-commerce. E-commerce is the revenue generator for businesses that choose to use the Internet to sell their goods and services. Some small businesses rely on the Internet to grow and survive.
Many small businesses use e-commerce strategies for their own business needs, such as computers and office technology, capital equipment and supplies, office furnishings, inventory for online sales, or other business-related goods.
Types of E-commerce:
Every business on the Internet is either pure-play or brick-and-click such as Amazon, Alibaba and Flipkart, has an online presence only and uses the capabilities of the Internet to create a new business.
There are several different types of e-commerce. A common classification system is with respect to the nature of transactions or the relationships among small businesses. There are seven major types of e-commerce.
1) Business-to-business (B2B)
B2B e-commerce, where businesses focus on selling to other businesses or organizations, is the largest form of e-commerce. Cisco, Staples, and information technology companies and IT networks for small- and medium-sized businesses are all B2B companies.
2) Business-to-consumer (B2C)
B2C is the earliest form of e-commerce, but it is second in size to B2B. It refers to retail sales between businesses and individual consumers. Consumers gather information; purchase physical goods, such as books and clothing; purchase information goods, such as electronic material or digitized content, such as software; and, for information goods, receive products over an electronic network.
3) Consumer-to-consumer (C2C)
C2C e-commerce is where consumers sell products and personal services to each other with the help of an online market maker to provide a catalogue, search engine, and transaction-clearing capabilities so that products can be easily displayed, discovered, and paid for. The most well-known C2C business is eBay, but there are many other online market makers as well.
4) Business-to-government (B2G)
B2G e-commerce can generally be defined as transactions with the government. The Internet is used for procurement, bidding, filing taxes, licensing procedures, business registrations, and other government-related operations. This is an insignificant segment of e-commerce in terms of volume, but it is growing.
5) Consumer-to-business (C2B)
C2B e-commerce is between private individuals who use the Internet to sell products or services to organizations and individuals who seek sellers to bid on products or services. Upwork is an example of C2B where a consumer posts a project with a set budget deadline and within hours companies and/or individuals review the consumer’s requirements and bid on the project. The consumer reviews the bids and selects the company or individual that will complete the project.
Mobile commerce (m-commerce) refers to the purchase of goods and services through wireless technology, such as cell phones or iPhones.
6) Peer-to-peer (P2P) technology
P2P makes it possible for Internet users to share files and computer resources directly without having to go through a central web server beginning with Napster offering free music downloads via a file-sharing system. Tamago launched the world’s first P2P commerce system, which allowed people to sell every type of digital media directly from their computers to customers.
People who publish videos, photos, music, e-books, and so forth can earn royalties, while buyers earn commissions for distributing media to others. There are many companies that are engaged in more than one type of e-commerce business.
Advantages of the E-Business:
1) Lower business costs.
2) 24/7 accessibility anywhere.
3) It reduces the inventories
4) Lower sales and marketing cost
5) Small businesses have the potential for stronger customer service.
6) Ability to introduce a niche product.
7) Ability to reach global markets on a more equalized basis with larger firms or businesses,
8) Making mass customization possible with greater customer loyalty.
9) Digitization of products and process
10) Freedom to make the choice of a better product
11) Freedom from time-bound shopping
12) Easy payment process
13) Quick delivery of the purchased product
14) Shopping from anywhere
15) Comparison shopping
E-commerce Business Models:
The decision to engage in e-commerce is an important one. An e-commerce business model is a method that a business uses to generate revenue online. The business model spells out how a company makes money by specifying where it is positioned in the value chain.
Some models are quite simple. A company produces a good or service and sells it to customers. If all goes well, the revenues from sales exceed the cost of operation and the company realizes a profit. Other models can be more complicated.
Another way to look at a business model is that it reflects management’s hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so and make a profit.
There are many models to choose from, and new models will continue to emerge as technology evolves and businesses look for new and creative ways to generate revenue. Some of the many e-commerce business models are as follows.
The virtual merchant model is used by online retailers that operate over the Internet only. Amazon is an example of a virtual merchant.
The brokerage model brings buyers and sellers together and facilitates transactions. Supply Chain Connect is a small business that helps “companies optimize their purchasing and sales purchasing and sales processes through the use of e-commerce across a broad range of products including chemicals, plastics, wire and cable, and manufactured goods.
The incentive marketing model is a “customer loyalty program that provides incentives to customers such as redeemable points or coupons for making purchases from associated retailers. Cool Savings, a small business that uses this model, wants to be its customers’ free resource for valuable coupons, discounts and special offers from their favourite brands and stores.
While preparing for any business model then need to consider the value proposition (Why should the customer buy from you?), Revenue model (How will you earn your money?), Market opportunity, competitive environment, competitive advantage, Market strategy, organizational development and management team. However, E-commerce will continue to grab more market share and the line between online and offline commerce will become less defined.
E-commerce Platforms:
An e-commerce platform is software that makes it possible for a business to sell online. In general, the core e-commerce platform should support basic requirements such as custom styling, search engine optimization, credit card processing, promotions, business catalogue management, analytics, product browsing, checkout, and order management.
Additionally, e-commerce platforms should provide self-service content management systems (CMS), support multiple languages, and support multiple stores. These requirements may vary slightly depending on which type of e-commerce is being conducted. Analytics refers to the tools that can track the different ways people use your website and then make sense of the data.
The all-in-one e-commerce platform solution has become more popular with online merchants. This solution provides everything: the core e-commerce platform plus hosting, accounting, analytics, and marketing tools such as e-mail management. Because all the tools are integrated, they work together. E-commerce platforms now enable retailers to better reach consumers through mobile devices and social media sites online.
The list of e-commerce software providers is always growing, but there are many products that are tailored specifically for small to medium-sized businesses. Small businesses are typically managed by BigCommerce, Magento, and Affinity Internet.
However, this list is not exhaustive, and new products enter the marketplace all the time.
The current ongoing shift from E-commerce to M-Commerce:
Now a day’s continuous use of the internet on various devices is pertinent. Among various electronic devices like computers, laptops, TVs, large screens and mobiles.
Mobiles are at the top used by people for their regular purpose. Now mobile e-commerce (m-commerce) refers to the purchase of goods and services through wireless technology, such as cell phones, mobiles and handheld devices.
It consists of two primary components – the ability to use a wireless phone or other mobile devices to conduct financial transactions and exchange payments over the Internet and the ability to deliver information that can facilitate a transaction by making it easy for various businesses via a mobile Web browser to creating mobile marketing campaigns such as text promotions and loyalty programs etc.
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