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E-Commerce: Meaning, Types, Advantages and Disadvantages

what is e-commerce

E-Commerce: Meaning, Types, Advantages and Disadvantages

What is Commerce?

Commerce is the formation of a large-scale interchange and trading of goods and services into money or monetary value between economic agents, i.e. producers and consumers. It includes all activities that directly or indirectly affect the exchange procedure. It works on the standard that whatever is produced must be consumed. Commerce is important because it assists satisfy the demands and requirements of people.

What is E-commerce?

E-commerce means Electronic Commerce. It has developed rapidly in the last few years. It is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. It as a dynamic set of technologies, applications and business processes.
  • It is the process of buying and selling of goods or services using an electronic medium such as Internet.
  • It is referred as a paperless exchange of business information using EDI, E-mail, Electronic fund transfer etc.
  • An efficient mechanism for advertising and distributing product information.
  • It covers almost all the aspects of a business, from advertising and marketing to sales, ordering, manufacturing and distributing.
  • It refers to companies and individuals who buy and sell goods and services over the Internet.
  • It is operated in different types of market segments and can be efficiently conducted over computers, tablets, smartphones, and other smart devices.
  • It has given the facility of making online transactions.
  • Producers and customers are not required to talk face to face or customers are not required to go to shops for buying products or services.
  • They may get their required products or services staying in their houses. 
Difference between Traditional Commerce and E-commerce

Traditional Commerce E-commerce
Business hours are limited, mostly done during the daytime Business hours are 24X7, can be done anytime day and night
Provides face to face interaction Provides screen to face interaction
Focuses on personal interactions, so it is manual Online via internet, so it can be considered automatic
High overhead cost Less overhead cost
Limited to a local or particular geographical location No physical limitation, globally and widely circulated
Payment modes are cash, cheques and credit cards Payment modes are bank transfer, credit card, e-wallet, mobile payment etc.
Instant delivery of goods and services Delivery of goods or services takes some time
No better connectivity Better connectivity
Takes time in analysing the customer feedback Immediate analysis of customer feedback
Types of E-commerce

The most common participants in E-Commerce are the people associated with administration, government and consumers. When we think of e-commerce, we think of an online commercial transaction between a supplier and a client. The following are the different types of E-commerce platforms:

Business-to-Consumer (B2C)

  • Business sells their products directly to a customer.
  • A customer can view the products shown on the website.
  • The customer can choose a product and order the same.
  • The website will then send a notification to the business organization via emai.
  • The organization will dispatch the product/ goods to the customer.
  • These B2C businesses are online retailers, e.g. Amazon, Flipkart etc.
  • It is distinguished by the establishment of electronic business relationships between businesses and final consumers.
  • It corresponds to the retail section of e-commerce, where traditional retail trade normally operates.

Business-to-Business (B2B)

Consumer-to-Consumer (C2C)

  • Consumer helps consumer to sell their assets like residential property, cars, bikes etc.
  • Consumer helps consumer to rent a room by publishing their information on the websites.
  • Website may or may not charge the consumer for its services, e.g. OLX, Quikr,
    online auction etc.
  • It covers all electronic transactions of goods or services conducted ​​between consumers.
  • These transactions are conducted through a third party, which provides the online platform where the transactions are actually carried out.
  • It is leveraged by a consumer for selling used goods or services to other consumers through the digital platform.

Consumer-to-Business (C2B)

  • Consumers have products or services of value that can be consumed by businesses, e.g. the comparison of interest rates of various loan types provided by different banks via websites.
  • A business organization who fulfills the consumer’s requirement within the specified budget, approaches the customer and provides its services, e.g. A blog can be written by an author for a business to improve sale of products. IT freelancer who demos and sells his software to a company.
  • C2B model is the exact reversal of a B2C model.
  • It provides the end consumers with an opportunity to sell their products/services to companies.
  • The method is popular in crowdsourcing based projects.
  • Businesses are buying from solo consumers, although more often than not those consumers are operating a business of their own.

Advantages of E-commerce

  • We can look at all of the product choices all at once.
  • Reduces the paper work and significantly lower the transaction cost.
  • Enables the use of credit cards, debit cards, smart cards, electronic fund transfer via bank’s website and other modes of electronic payment.
  • Provides the sellers with a global reach. Now sellers and buyers can meet in the virtual world, without barrier of place (geography).
  • Provides users with more options to compare and select the cheaper and better option.
  • It helps in reducing the cost of searching a product.
  • We can take a look at reviews from previous customers, check out similar products on other websites.
  • Enabled rural areas to access services and products, which are otherwise not available to them.
  • A customer can shop 24×7.
  • Helps businesses by allowing them to collect customer data.
  • The website is functional at all times, it does not have working hours like a shop.
  • Aallows the customer and the business to be in touch directly, without any intermediaries.
  • Allows for quick communication and transactions.
  • Helps the government to deliver public services such as healthcare, education, social services at a reduced cost and in an improved manner.


Disadvantages of E-commerce

  • The setup of the hardware and the software, the training cost of employees, the constant maintenance and upkeep are all quite expensive.
  • This lack of a personal touch can be a disadvantage for many types of services and products like interior designing or the jewellery business.
  • Security is another area of concern. Credit card theft, identity theft etc. remain big concerns with the customers.
  • There may arrive some problem with fulfilment of order. Even after the order is placed there can be problems with shipping, delivery, mix-ups etc.
  • A business could lose a potential customer if the website is slow, or if a customer is having internet connectivity problems. 


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