Magoosh GRE

A Student’s Guide to E-Commerce

| April 4, 2012 | 0 Comments

E-commerce can be defined as buying, selling or exchanging goods and/or services via an electronic network connection, usually the Internet.  E-commerce does not necessarily relate just to online shops, as is widely thought, it also includes other online activities such as:

  • Auctions
  • Gambling
  • Banking
  • Peer-to-peer file sharing
  • Internet conferences


There are four separate categories or models of e-commerce commonly recognised:



Business to Business is the most widespread e-commerce model which is defined by the seller and the buyer being separate entities.  Common examples would be a wholesaler selling goods to a retailer or a manufacturer trading with distributors.



The Business to Customer model is the one most likely to correspond with the average person’s idea of what e-commerce is: an online business which sells goods to individual purchasers i.e. a digital shop.



The Consumer to Business category is the most difficult concept to get a grasp of.  An example would be a website which is frequented by freelance workers.  The ‘consumer’ would detail his project requirements and/or budget and ‘businesses’ will bid for the work on offer.



Consumer to Consumer is more straightforward and refers to transactions which take place between two individuals.  Sometimes this will take place using a third-party platform e.g. eBay and PayPal.

There are other variations on those four themes such as d-commerce which involves the sale of all types of digital information over the Internet; examples could include subscriptions, documents, software and games.  The d-commerce company is responsible for arranging all necessary payment processes and sending the digital information.

Another area showing big growth trends is m-commerce.  This is classified as carrying out an e-commerce transaction via a mobile device like a smartphone or PDA.  M-commerce is based on using the WAP protocol to access the Internet which also ensures transactions are secure.

E-commerce principles can be used to create a business that operates purely online or to extend the reach of an existing land-based one, which is known colloquially as ‘brick and click’.  Either way, specialist software designed to provide a complete e-commerce solution is the best way to set up a web-based business, using server-based technologies which handle stock inventories and transactions securely.

The last link for some businesses will be the addition of a Shopping Cart, which vary from standalone versions through to fully integrated systems built around the Shopping Cart.  Usability, from the user’s point of view is the key issue in the process of choosing as, abandoned carts are frequent when over-complicated software is used and this can result in permanently lost clients.

The future of e-commerce is looking very positive as more and more businesses move on to using the Internet for sales and marketing.  E-commerce is already generating a significant amount of revenue very quickly and if current trends continue, online business could overtake traditional business in the not too distant future.


Recommended Reading:

‘Internet Technology and E-Commerce’ by Alison Cawsey and Rick Dewar

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Category: Articles & Advice, Marketing Essay Examples

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