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E-commerce is a money term you need to understand. Here’s what it means.

What is e-commerce?

E-commerce, shorthand for electronic commerce, is any transaction conducted over the internet, with the consumer paying for items online with a credit card or debit card.

Deeper definition

With the development of an online marketplace to sell goods, e-commerce has changed the way many in the world make purchases. In the past, consumers bought their goods at physical stores or through mail-order catalogs.

But with the innovation of the internet, consumers are now able to purchase almost anything via credit card or debit card, without leaving the comfort of their own homes.

To make everything come together as needed, e-commerce platforms use a variety of technologies, including electronic fund transfers, supply-chain management and data collection systems.

E-commerce platforms offer advantages and disadvantages for consumers. Some of the more prominent advantages include a wider selection of goods from which to choose and the convenience of being able to buy at any time.

Some of the disadvantages of using an e-commerce platform include the inability to physically look at and see the condition of an item you want to buy, having to wait for the item to ship to you and limited customer service.

E-commerce examples

E-commerce includes four major market segments. Each segment interacts with e-commerce platforms differently:

  • Business to business — B2B includes websites that facilitate exchanges between businesses through the internet and lead to the development of partnerships between companies.
  • Business to consumer — B2C sites perform direct sales to consumers via the internet. B2C websites are helpful in that they remove the middleman for many online exchanges, making a company’s goods more accessible to consumers.
  • Consumer to consumer — C2C websites include those that make it easier for consumers to sell directly to other consumers. Online auction sites are an example of C2C sites.
  • Consumer to business — A C2B website allows consumers to set the prices for the goods they purchase. A C2B site acts as a mediator between a consumer and a business.

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