E-commerce: meaning and benefits

What e-commerce means

E-commerce is a firm's dealing with its customers and its suppliers over the internet. It is part of the wider idea of e-business, which also covers functions carried on electronically inside the firm, such as production, inventory, accounts and human resource management. The term first referred to the exchange of commercial documents such as orders and invoices between businesses by electronic data interchange.

E-commerce is usually classed by who deals with whom: business with business (B2B), as when a car maker orders components from many vendors through a computer network; and business with customers (B2C), as in online selling and after-sales contact. A Surat saree weaver who sells through its own website and a shopping app, and pays its yarn suppliers online, is doing both.

Benefits of e-commerce

To the business

• Easy to start. Setting up an online business involves far fewer procedures and less investment than setting up an industry, and big and small firms alike can use the technology.
• A market without borders. E-commerce carries a firm's goods beyond its own town to buyers across the country and abroad.
• Contact at all hours. A firm can stay in touch with its customers round the clock and run online surveys to learn who buys what and how satisfied they are; the business is open twenty-four hours a day, every day of the year.
• Lower costs. The cost of operations falls over time, and marketing work done online costs much less and moves much faster.
• Faster cycles. Information moves at the click of a mouse, and the time from demand to delivery shrinks because business processes run side by side rather than one after another.
• Less paperwork. Use of the internet has greatly reduced dependence on paper.
• Room for small firms. Small firms can operate alongside big ones to the benefit of both.

To consumers and society

Buyers get keener prices and discounts, fast delivery of digital goods, a wider choice that includes customised products, and the freedom to shop when they please. Beyond the individual buyer, e-commerce creates jobs, reaches people far from shops, brings firms and consumers into closer contact and opens the way to online auctions and tenders. A student in a small town in Odisha can compare prices across sellers and buy an e-book that reaches her within minutes.

Conclusion

E-commerce widens markets, cuts costs and serves customers at any hour, which is why both large firms and small traders in India have taken to it. For buyers it means wider choice and convenience; for the economy it means new jobs and a wider reach for trade.