Are You Also Planning To Open An E-Commerce Platform? Here Is What You Need To Know

E-Commerce is the process of buying and selling goods and services online with just a click on your smart gadget devices. The E-commerce industry draws the attention of the customers to various services such as digital fund transfers, mobile commerce, electronic data transfers, shopping, inventory management systems, etc. E-commerce today is one of the largest and fastest-growing industries in the world, competing with global service providers.

As a system of the market, e-commerce started around the 1960s when companies used an electronic system called Electronic Data Interchange. This facilitated transfer of documents. But the market saw no boom initially; it was only in 1994 that the very first transaction took place. The e-commerce market has gone through several changes since then, resulting in the ease of doing business and plenty of solutions to the market stresses.

There are three areas of e-commerce: online retailing, electronic markets and online auctions. E-commerce business is supported by a huge network of internet assessed services. This, in turn, creates a big market for a global web of transactions for goods and services in demand.

Significance Of E-Commerce In the Global Market

1. E-commerce markets promote ease of doing business. It reduces the intermediaries and middlemen, which significantly reduces the amount of money spent in commuting a good to the end customer. This reduces the overall cost of the product or service.
2. E-commerce can operate in all the five major market segments, i.e. Business to Business, (B2B), Business to Consumer (B2C), Consumer to Consumer (C2C), Consumer to Business (C2B), and Direct to the Customer (D2C).
3. Anyone can start their business from any corner of the world and sell their products and services to another corner of the world. This has resulted in the emergence of numerous start-ups all around the world.
4. It has created more opportunities for innovation.
5. E-commerce can be available 24 hours a day, seven days a week.
6. Various start-ups get a common platform to sell their goods and hence the competition is increased. In turn, this offers the customers the best prices for a particular good or service.
7. Many stores that only exist online can provide the consumers with unique and exclusive collections from their inventory, which is unavailable anywhere else.
8. Easy exchange and return policy.

Some Examples Of Various Types Of E-commerce

1. Retail: The sale of the product is direct to the consumers without any intermediary or middle-persons involved.
2. Wholesale: Products are sold in bulk. These products are usually sold to the retailer who then sells them to the consumers.
3. Drop-shipping: The sale of goods and products that are manufactured and shipped to the consumers via a third party.
4. Digital products: Items like templates, courses, e-books, software or media that can be downloadable or purchased for use. Purchase of software tools, cloud-based products or digital assets represents a large percentage of e-commerce transactions.
5. Subscription: These are recurring purchases and paid for online services on a regular basis. This is a popular D2C model.
6. Services: These are skills like coaching, writing and influencer marketing, etc. that can be purchased and paid for online.
7. Crowd-funding: This allows sellers to raise start-up capital to bring their products into the market. Once enough consumers have purchased the item, it is then created and shipped.

But there are certain constraints in the functioning of the E-commerce market:

1. Limited on-time customer services: If you shop for a smartphone or a laptop online, you do not have an option to ask them for a demonstration of a particular model’s features in person. There are some sites that have the option of online chatting with the staff members, but this is not a mandatory practice.
2. Inability to touch the product: Anyone who is used to the conventional method of buying would want to touch and feel the product before buying them. But e-commerce platforms would not provide this option.
3. Increased waiting period: If you’re shopping through e-commerce, the product will take to get delivered. However, platforms like Amazon have made this waiting period less painful as they provide an option of instant delivery through their premium plans. During the Covid-19 pandemic, the waiting period had substantially increased because of the shortage of supply and instant rise in demand.

How Can You Start An E-commerce Business?

1. Complete basic research before starting any business has to go on in this part as well.
2. Figure out the products and services that you want to offer to the consumers.
3. Do some research on target audience, expected costs competition and market availability.
4. Choose an attractive name for the business, have a basic structure prepared, get the necessary documentation done (i.e. licenses, permits, etc)
5. Design a website so that the audience for your business will have an idea of how reliable your products and services are.
6. Use various channels to expand the business.

There is a subtle difference between e-commerce and e-business — E-commerce involves the sale and purchase of goods online and is just a part of the wider aspect of e-business, whereas an e-business would involve the entire process of running a company online. E-business involves all the activity that takes place in an online business.

Some Top E-commerce Companies

Alibaba

Launched in 1999, it is a Chinese company. It is one of the most successful e-commerce companies and retailers that carries B2B (Alibaba.com), C2C (Taobao.com) and B2C (Tmall) across the globe. Their online profits have surpassed all the US retailer companies like Walmart and Amazon, which combined in 2015.

Amazon

It is the largest e-commerce retailer in the US. It has changed the whole functioning of a conventional retail business, so much so that most of the retailers worry about the growth of Amazon.

Walmart

One of the top retailers in the US, it focuses on online business and offers traditional retail sales as well as grocery delivery and subscription services.

eBay

One of the first e-commerce sites, eBay still dominated the market space, allowing for businesses and individuals to sell their products and services online.

The major concern of nations across the world is the procedure of taxation of these companies. These companies make use of tax haven countries and register a lesser amount of profit than they have really earned in the country of origin. They establish their headquarters in tax haven countries and pay taxes in these tax haven countries, which offer them a lesser marginal rate of tax than their home country.

Several subsidiaries get established in various countries. Base erosion and profit sharing is the concern of the day for these e-commerce companies. Countries will have to find an alternative to these as e-commerce is the future of the world market and will only keep growing.