Are you thinking about starting a business where you sell your products online? If so, then you'll be joining the millions of entrepreneurs who have carved out a niche in the world of e-commerce.
At its core, e-commerce refers to the purchase and sale of goods and/or services via electronic channels such as the Internet. E-commerce was first introduced in the 1960s via an electronic data interchange (EDI) on value-added networks (VANs). The medium grew with the increased availability of Internet access and the advent of popular online sellers in the 1990s and early 2000s. Amazon began operating as a book-shipping business in Jeff Bezos' garage in 1995. EBay, which enables consumers to sell to each other online, introduced online auctions in 1995 and exploded with the 1997 Beanie Babies frenzy.
Like any digital technology or consumer-based purchasing market, e-commerce has evolved over the years. As mobile devices became more popular, mobile commerce has become its own market. With the rise of sites like Facebook and Pinterest, social media has become an important driver of e-commerce. As of 2014, Facebook drove 85 percent of social media-originating sales on e-commerce platform Shopify, according to Paymill.
The changing market represents a vast opportunity for businesses to improve their relevance and expand their market in the online world. By 2013, worldwide e-commerce sales reached $1.2 trillion, and U.S. mobile sales reached $38 billion, according to Statista. More than 40 percent of Internet users — 1 billion in total — have purchased goods online. These figures will continue to climb as mobile and Internet use expand both in the U.S. and in developing markets around the world.
Categories of e-commerce
As with traditional commerce, there are four principal categories of e-commerce: B2B, B2C, C2B and C2C.
- B2B (Business to Business) — This involves companies doing business with each other. One example is manufacturers selling to distributors and wholesalers selling to retailers.
- B2C (Business to Consumer) — B2C consists of businesses selling to the general public through shopping cart software, without needing any human interaction. This is what most people think of when they hear "e-commerce." An example of this would be Amazon.
- C2B (Consumer to Business) — In C2B e-commerce, consumers post a project with a set budget online, and companies bid on the project. The consumer reviews the bids and selects the company. Elance is an example of this.
- C2C (Consumer to Consumer) — This takes place within online classified ads, forums or marketplaces where individuals can buy and sell their goods. Examples of this include Craigslist, eBay and Etsy.
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