E–Commerce – History, Working Mechanism, Benefits, & Disadvantages of E-Commerce

What is Ecommerce?

Ecommerce, also called electronic commerce or internet commerce, describes the trading of products or services using the internet, and the transfer of cash and data to carry out these transactions. Ecommerce is frequently utilized to describe the sale of physical items online; however, it can likewise explain any kind of industrial transaction that is facilitated through the internet.

Whereas e-business refers to all aspects of running an online organization, e-commerce refers particularly to the deal of items and services.

History of Ecommerce

The first e-commerce deal was made in 1994. A man named Phil Branden Berger used his Mastercard to buy Sting’s 10 Summoners’ Tales by means of the internet for $12.48. This particular deal made history and signaled to the world that the “internet is open” for e-commerce transactions. It was the very first time that file encryption technology was utilized to make it possible for internet purchase.

Unnecessary to say, e-commerce has actually grown by leaps and bounds since. The increase of e-commerce giants like Amazon and Alibaba in the mid -1990 s changed the face of the retail market. They largely took advantage of the international internet penetration and digitalization of the financial system which added to the decline in sales for numerous brick-and-mortar organizations.

The growth of e-commerce has actually also shifted the retail labor force. The U.S Bureau of Labour Stats (BLS) has revealed that from 1997 to 2016, work in the e-commerce sector increased by 80%. Taking this into account, it’s clear that the highly competitive nature of e-commerce will keep on changing the retail industry and impact clients’ behavior. Starting an online business nowadays seems like an appealing concept for many smart entrepreneurs, but before anyone dives into this vibrant business sector, they first require to find out the ropes of the e-commerce industry.

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Working Mechanism of Ecommerce


E-commerce is powered by the internet, where customers can access an online store to check out, and place orders for products or services via their own gadgets.

As the order is placed, the customer’s internet browser will interact back and forth with the server hosting the online store site. Information relating to the order will then be relayed to a central computer known as the order manager– then forwarded to databases that manage stock levels, a merchant system that manages payment info (using applications such as PayPal, Stripe), and a bank computer– prior to circling back to the order supervisor.

This is to make sure that shop inventory and consumer funds suffice for the order to be processed. After the order is confirmed, the order supervisor will notify the shop’s internet server, which will then display a message alerting the consumer that their order has been successfully processed. The order manager will then send out order information to the warehouse or consummation department, in order for the services or product to be effectively dispatched to the consumer. At this point tangible and/or digital products may be shipped to a consumer, or access to a service may be granted.

Platforms that host e-commerce transactions may consist of online marketplaces that sellers simply sign up for, such as Amazon.com; software application as a service (SaaS) tools that allow customers to ‘lease’ online shop facilities; or open-source tools for business to use in-house advancement to manage.

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Benefits of Ecommerce
  • E-commerce provides the sellers with a global reach. They get rid of the barrier of place (location). Now sellers and buyers can meet in the virtual world, without the obstacle of location.
  • Electronic commerce will considerably decrease the deal expense. It gets rid of numerous fixed expenses of keeping physical shops. This allows the business to delight in a much greater margin of profit.
  • It provides quick shipment of items with minimal effort on part of the customer. Customer grievances are also addressed quickly. It likewise conserves time, energy, and effort for both the customers and the company.
  • Another fantastic advantage is the benefit it uses. A customer can go shopping 24 × 7. The site is functional at all times, it does not have working hours like a shop.
  • Electronic commerce also permits the consumer and business to be in touch directly, with no intermediaries. This permits quick communication and transactions. It likewise offers a valuable individual touch.
Disadvantages of E-Commerce
  • The start-up costs of the e-commerce portal are very high. The setup of the hardware and the software, the training cost of staff members, the continuous maintenance and upkeep are all rather costly.
  • Although it might look like a safe bet, the e-commerce industry has a high danger of failure. Many businesses riding the dot-com wave of the 2000s have failed miserably. The high risk of failure remains even today.
  • At times, e-commerce can feel impersonal. So, it does not have the warmth of an interpersonal relationship which is important for many brand names and items. This absence of a personal touch can be a downside for numerous kinds of products and services like interior designing or the precious jewelry business.
  • Security is another area of concern. Just recently, we have witnessed numerous security breaches where the info of the consumers was stolen. Credit card theft, identity theft, and so on stay big interest in the consumers.
  • Then there are likewise satisfaction problems. Even after the order is positioned there can be issued with shipping, shipment, mix-ups, and so on. This leaves the clients dissatisfied and discontented.
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