E-commerce: online trading
E-commerce, also known as electronic commerce, refers to electronic trade on the internet. It encompasses business processes between companies as well as commercial business relationships between companies and consumers. E-commerce is a subfield of e-business.
E-commerce is characterized above all by the fact that customers can obtain information independently. No sales staff are needed. In addition to product information, customers can also find out about the services (delivery times, warranties, discounts) offered by the provider. If a product is liked, there are different ways to process a purchase, depending on the provider. For the provider, this means working in a highly effective and cost-efficient manner; for the customer, however, it means that they are obliged to obtain more detailed information about the respective product (test reports, product data sheets, price comparisons). See also the point Right of withdrawal, which is regulated by the distance selling contract.
However, providers are investing in e-commerce and even increasing their staff. Some large online retailers offer personal advice via chat; social media such as Twitter and Facebook are also included in the online strategy.
E-commerce from the supplier’s point of view
Online retailing offers many opportunities for customer commitment, to bind the customer to the company in the long term; even outside of opening hours and city limits: premium access, a wide range of products, fast delivery and the global integration of retailers – including retailer integration at the local level – are the most important success factors.
E-commerce refers to electronic transactions (completed sales contracts) between suppliers and customers. In principle, goods are exchanged for payment. Customers can make purchases on their desktop or on the go using a tablet or smartphone, regardless of their location when they place the order. E-commerce can therefore also be defined as distance trade.
The customer can navigate through an electronic product catalog (online shop) and submit their online orders electronically using a form. In most cases, the user can also pay online immediately via linked financial service providers (credit card, PayPal, instant transfer). Selecting the right distribution channel (omni-channel, cross-channel or multi-channel) is crucial for the retailer from an economic point of view; for the customer, it is possibly a selection criterion.
Premium services
Some retailers offer premium services (fast delivery times). For a surcharge, the ordered inventory is delivered within 24 hours, for example. Standard delivery for e-commerce normally takes two to three working days. Amazon, for example, offers same-day delivery. However, the necessary logistics are “still” limited to city centers. This type of delivery only works to a limited extent across the country or internationally.
E-commerce via the marketplace
A so-called digital marketplace enables many retailers to get started in online retail quickly and easily; others use the digital marketplace to expand their existing sales channels. A marketplace is a ready-made portal where the provider can present themselves and sell their products. Amazon Marketplace or eBay Marketplace are currently the largest providers of such online platforms. These types of platforms are usually involved in every transaction and receive a commission based on a percentage of the purchase price.
E-commerce risks and challenges for the provider:
Online retailers are exposed to many risks in their daily business operations. On the one hand, there are the legal risks, and on the other hand, the financial risks in particular are an obstacle to relying on online trading. Not to mention the challenges in terms of IT and product liability.
Possible risks/challenges are:
- Transparency creates competitive and price pressure
- Cheaper providers are just a click away
- Inconsistent and sporadic operation of the online shop
- The legal framework must be adhered to
- Logistics effort – returns and shipping arrangements (packaging) must be processed
- Maintenance of the web shop – product descriptions, product images must be maintained
- Web shop software – which software? Updateability, security (SSL), data protection
- Marketing – how high should possible investments be?
- Social networks – do I use social media for marketing? What are the consequences, what are the challenges?
- Rating portals – how are these handled? How do I deal with criticism? Staff training?
Right of withdrawal, right of return only online
Many people in this country are unaware that the so-called exchange of goods is purely a goodwill gesture on the part of local stores. They are not legally obliged to take back purchased goods. Although the customer has no right to exchange goods in e-commerce either, they do have a so-called right of withdrawal under the Distance Selling Act § 312g BGB. Reason: the consumer does not see the ordered goods; only photos are available to him. Therefore, the legislator grants the online customer a cooling-off period of 14 days. After this time, the warranty period of at least two years begins automatically. During this time, the retailer must guarantee that the goods purchased on the Internet remain free of defects. Prerequisite: any defects that arise are not caused by the customer.
For more information on the topic of trading forms, see Collaborative Commerce (C-Commerce).
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