E-Commerce

“E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals” (Bakshi et al, 2009).

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Infographic produced by Invesp

E-commerce has become a very important tool for businesses all over the world, not only to sell to their customers but also to get them to participate as a part of a community (Eisingerich & Kretschmer, 2008). An example of that is eBay, a very successful online auction company that was conceived as a community, using "network society” characteristics. Its owner, Pierre M. Omidyar, didn’t want eBay to be just for shopping, but rather a community. Consequently, that is what eBay has become, and its success very much depends on its community to manage administration part of the business, such as overseeing members and questions, which allows paid employees to focus on maintaining and building eBay’s important asset: its website interface and auction software. "The majority of eBayers do not consider their labor to be for eBay; instead, they believe that they work for themselves" (Hillis et al, 2006).

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Infographic produced by Invesp

E-commerce enables product information to be readily available and accessible, as well as the market as a whole. It also increases price transparency, which gives customers an ability to make educated purchasing decisions. eBay’s website, as well as their Apple and Android app, are available 24/7, which means that a buyer could shop at any time it suits them, even if it’s 3am (Gregg & Walczak, 2003). For a seller it means that there is an automated back-end where orders can be processed at any point in time without much interaction from people.

“The Internet has specifically promoted a form of “digital capitalism”, creating a “global market system” through its ”networking” that has ultimately linked all nations and people of the world into this system”. (Chesebro, 2003)

Types of E-Commerce

There are few major types of e-commerce but for the purpose of this project we will look at two types that are connected to eBay. The types of e-commerce are:

  • Consumer-to-consumer (C2C) and
  • Mobile commerce (m-commerce).

Consumer-to-consumer e-commerce or C2C is basically commerce between individuals or consumers. This type of e-commerce is has the biggest potential for emerging markets. It is categorized by the expansion of the Internet marketplaces and online auction sites, especially in industries where business can bid on what they want with several sellers. This type of e-commerce comes in many forms but we are only concerned on auctions facilitated at a portal, such as eBay, where you bid on items in real-time.

There is little evidence to suggest how big is the relative size of global C2C e-commerce, but if the measurement is the popularity of sites such as eBay and Napster we could conclude that it is quite large. Just those two companies make millions of dollars in sales every day.

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M-commerce or better known as Mobile Commerce, is buying or selling goods and services through handheld devices such as mobile phones and personal digital assistants (PDAs). Once the content delivery over mobile networks becomes faster, and more importantly secure, it is believed that m-commerce will surpass standard online e-commerce as the method of choice for digital commerce transactions. This is undoubtedly accurate for Asia-Pacific where there are more mobile phones than there are Internet users. As of this writing, Japan is considered a global leader in m-commerce.

There are several industries that are affected by m-commerce, more than others and those are financial services (mobile banking, access account or pay bills through handheld devices), telecommunication (service charges, bill payment or account reviews, using handheld devices), service/retail (having an ability to place orders and even pay for them, while on the move) and information services (news, traffic updates and entertainment).

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Infographic produced by Invesp

Global trends

As discussed by Robinson (2010) the biggest e-commerce market in the world, if measured according to the amount each person spends, is in fact UK, and not USA. Accordingly, UK also has the largest online advertising market, outside the US. It is expected that UK Internet economy could grow by 10%, between 2010 and 2015. (Robinson, 2010) One of the up and coming economies is China’s e-commerce, which continues to grow for a simple reason that China has 384 million internet users, which in 2009 resulted in $36.6 billion online shopping sales. (Olsen, 2010) Such a huge growth was a result of improved trust level shoppers felt.

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Infographic produced by Invesp

e-Marketplace

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An online marketplace is an e-commerce site that offers a space for many individual businesses to present their items for sale online and transaction processing for these items is done via the operator of the marketplace.

Pros of online marketplaces:

  • There is no need to spend time and money on setting up a website and generating the required traffic - simply create an account and list your items.
  • Transaction processing is a built in mechanism
  • Ability to list multiple items all in one place
  • Access an existing customer base

Cons of online marketplaces:

  • Fees are generally involved when selling through the platform - in the form of either initial listing fees or transaction fees
  • Limited customisation ability for product listings
eBay’s marketplace offers sellers the opportunity to sell products in two main ways to an international audience:
  • Online auction functionality
  • Fixed price, buy now functionality

eBay is the oldest online Marketplace, founded in 1995 (Miller, 2012). eBay’s positioning statement is that they are ‘the World’s Online Marketplaces’ (Reedy & Tilenius, 2003).

The online auction is the most successful type of electronic marketplace where business and consumers buy and sell anything to anyone anywhere in the world. An example of a successful online auction is most definitely eBay. eBay is by far the largest online auction site that sells millions of items on any given day. The success of online auctions lays in a great choice of products at lower prices and access to global reach. eBay’s global network allows people to purchase items that might not be able for purchase in their local area (Gregg & Walczak, 2003).

Because of eBay, the wonderful world of e-commerce has opened up many opportunities for people who had access to the Internet, all around the world, to buy items that previously were not available in their local marketplace, and most importantly it gave an opportunity to people to earn money on eBay.

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Advantages of selling through eBay Marketplace:

  • Available to all - Allows both individual people and businesses to sell items
  • Reach new customer base – People and businesses can sell to more than their own customer base.
  • Sell internationally – Allows for selling products beyond your geographic marketplace.
  • Dispose of old/returned stock - Using the online auction is a great way of offloading unwanted stock or items.
  • Business Brand Promotions – eBay allows sellers to brand their list items and so therefore business’ brands can be promoted (Vendlab, 2012).

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