E-commerce: What is it and what is it for?

E-commerce (whose translation into Spanish is "electronic commerce") is an activity that frames commercial transactions in which electronic and digital media are involved.

Currently, e-commerce defines all buying and selling practices that are carried out through the Internet .

This type of commerce has found its peak in online stores, that is, in sales platforms designed by brands and companies that make products and services available to users.

E-commerce has a trend that is constantly rising depending on the economic and social outlook, as it was during the COVID-19 pandemic.

According to data from the United Nations Conference on Trade and Development (UNCTAD), global electronic commerce was boosted by up to 19% in 2020, which translates into a profit boost of up to 26.7 trillions of dollars, according to UNCTAD figures.

Types of e-commerce

To differentiate the types of e-commerce that prevail in the digital market, the nature of the actors that intervene in them is taken into account.

As part of the actors, the companies themselves, public administrations and consumers can be highlighted. Likewise, six e-commerce models have been recognized.

  • Business-to-Consumer (B2C)

As its name indicates, this type of e-commerce frames the transactions that are carried out between consumers and companies.

It is the most popular model that can be found, since a company or brand offers products and services to customers, and they purchase them through their web platform.

This e-commerce model is designed and structured for a specific audience. It stands out for presenting promotions, offers and experiences indicated for its type of consumer.

  • Business-to-Business (B2B)

In this model, transactions between companies predominate, whose purpose is to improve relations between businesses, brands and organizations in order to provide greater agility to e-commerce.

In the same way, another of the purposes of B2B is to achieve the efficiency and competitiveness of companies in the face of customer orders.

  • Business-to-Administration (B2A)

The essence of this model is that companies can make sales to the various public administrations.

In this sense, public administrations can take advantage of the opportunities and advantages that e-commerce makes available to them.

Usually this type of electronic commerce is dedicated to the sale of furniture and services for government agencies or any other public administration company.

  • Administration-to-Business (A2B)

Like the previous one, in this type of e-commerce only two structures with particular characteristics are involved.

Here companies become direct customers of public administrations. In order to exemplify the type of movements and transactions that can be carried out in this model, the online processing of taxes or taxes can be highlighted, as well as any procedure that allows the operation of any company to be carried out in order.

  • Administration-to-Consumer (A2C)

In this model, the participation of citizens stands out, since through web platforms they can carry out all kinds of transactions; from paying taxes to requesting legal proceedings. The A2C depends on the government of each country, as well as the web platform that is being consulted.

  • Consumer-to-Consumer (C2C)

Just as B2C is a popular e-commerce model, C2C has also gained relevance in recent years thanks to platforms that allow people to be sellers and buyers at the same time.

There are platforms where the sale is direct, as well as sites that are managed under an auction model.

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Advantages of e-commerce

E-commerce, being a change in the way of buying and selling, entails various advantages that have turned this business model into a trend that has increased in recent years.

From the point of view of the company or private seller, the following advantages can be highlighted:

  • Time barriers are eliminated: in other words, sales are not limited by opening and closing hours, so it is possible to have the store, as well as its products, 365 days a year.
  • Savings in some costs: thanks to e-commerce it is possible to save in some aspects, such as the placement of a physical store, as well as everything that its maintenance entails. And although an e-commerce also requires a monetary investment, the costs are much lower than those generated by a physical space.
  • Market expansion: an e-commerce has the possibility of expanding the proposal of each company to internationalization. Due to the reach of the internet, any company can make its way into the world market.
  • A new sales channel: if a business has a physical space, e-commerce can function as an additional sales channel, optimizing the brand's ability to carry out its sales and marketing strategies.

Disadvantages of e-commerce

There are also disadvantages that should be considered before embarking on a journey through any e-commerce model. Among the main drawbacks that remain visible, the following can be highlighted:

  • Security: although the platforms have their own security system, e-commerce is always subject to some network limitations. Likewise, there are situations that can put the security of the data at risk, especially those that are susceptible, such as bank details.
  • Product distribution: it is not exactly a disadvantage, since it is the main characteristic of most e-commerce, however, it is important to take into account that each electronic business must have a distribution network.
  • E-commerce is not an option for all consumers: there are still large sectors of the population that do not consider purchasing products or services through electronic commerce. To prevent e-commerce from representing a disadvantage in a business, it is important to study consumers and investigate their willingness to use electronic commerce.

Difference between e-commerce and e-business

As previously discussed, e-commerce refers to the activity that frames commercial transactions in which digital and electronic media are involved, with buying and selling being the most popular.

Therefore, it is common that it can be confused with the e-business concept, however, both terms reflect different practices.

According to the Interactive Advertising Bureau (IAB), e-business is understood as "carrying out any type of business over the Internet, regardless of whether it involves sending information, email requests, or exchanging money." by products”, so it is inferred that e-commerce is only a practice that belongs to e-business, since it encompasses all digital opportunities for commercial purposes.

Tips to open an e-commerce successfully

For any e-commerce to be successful, it must be taken into account that it is an activity that encompasses several commercial processes, so there will be various elements that can create variations within the commercial structure.

However, there are some recommendations and tips that should be taken into account to have the success of an e-commerce.

  • It is important to take into account the use of a Content Management System (CMS) or Content Management System, since this allows for the management of products, services, users and content. Likewise, the CMS offers the opportunity to add elements to customize the e-commerce domain.
  • The organization and customization of products in e-commerce is essential. It is important to work on the design of the products and the way they sell to customers. Originality and creativity are essential elements for the growth of an e-commerce.
  • The provision of information to users is a key point for any business. The more access to information there is in e-commerce (such as frequently asked questions, privacy policies, contact information or shipping methods), customers will feel more secure consuming products and services from a business.
  • The means of payment are one of the most important elements in the structuring of an e-commerce. It is essential, as far as possible, to diversify the means of payment; from bank transfers or digital card payments to payments with QR codes or PayPal. It is also important to note that not all people have a debit or credit card, so it will be much more convenient for them to make cash payments at a payment center.

Successful examples of e-commerce in Mexico

In Mexico there is a wide variety of electronic stores, some 100% Mexican and others of foreign origin that bet on Mexican consumers. Likewise, it is possible to find more than one common denominator in these e-commerce, which are success stories in Mexico.

  • amazon mexico

The e-commerce, par excellence, not only in Mexico but also in the rest of the world, is Amazon. Since it entered Mexico in 2013, the US company marked a before and after in the electronic commerce of products and services in Mexico. Although it is one of the leading e-commerce in the electronic market, it is not the only one of its kind and with a history of success in Mexico.

  • Walmart Mexico

Walmart is the perfect example of an e-commerce that has physical spaces. It is possible to appreciate the performance and optimization of strategies that Walmart stores have based on the integration between physical and electronic commerce.

  • Cinépolis

The Mexican company dedicated to the exhibition of films is also a benchmark for the most successful e-commerce in the country. With 6,416 movie theaters operating in Mexico and 16 countries, the movie theater chain has innovated the experience of acquiring its services and products through its e-commerce.

  • Andrea

In Mexico, the name of the company Andrea is associated, mainly, with the sale of footwear through physical catalogs. Currently, Andrea has incorporated a wide variety of products, as well as an e-commerce that has made catalog sales "almost" a thing of the past. Andrea not only opted for e-commerce, but also reinforced the trend of continuing to purchase her products through physical catalogs.

Written by Moises Hamui Abadi : I am an entrepreneur, founding partner of Viceversa and SoyMacho. After being in charge of several digital businesses and advising several other businesses; I decided to form MHA Consulting, a digital marketing consultancy dedicated to growing and empowering digital businesses in more than 7 countries and generating more than 1,500 million pesos.

Schedule a call with MHA and let us advise you so you can achieve your sales goals.

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