Electronic Commerce

Electronic commerce, or e-commerce, is the business of buying and selling products online using the Internet for financial transactions, including digital cash and the electronic transfer of funds. E-commerce businesses may not operate solely online. For example, they may have physical warehouses to store product. Amazon.com and eBay are examples of electronic commerce businesses.

Products

Some products seem to work well online; others do not. Merchandise like CDs, DVDs, and books are good online products to sell. This may be partly due to the fact that they are small enough to be shipped easily and relatively inexpensively compared with their purchasing prices. Embarrassing products, such as pornography, can also be sold successfully though electronic commerce.

E-Commerce Practices

The business practices that make an electronic commerce company are successful are very similar to if identical to traditional business practices. E-commerce businesses must provide value, service, and performance at a competitive price. Websites, like physical sites, should appeal to customers. They should use attractive colors, interesting photos or animation, and be easy to read. Because customers like to have reasons to return, whether to a retail outlet or to a website, successful electronic commerce businesses offer sales promotions such as special offers or discounts and occasional sales.

Since there is no human interaction on websites, successful e-commerce businesses are easy to use, easy to search, and should have adequate information available to enable the customer to make an informed purchasing decision. Customers also want to be assured that any private information, such as credit card numbers and mailing addresses, are kept confidential. Many successful companies offer chat rooms or discussion boards that allow customers to interact with each other and compensate for the fact that people cannot actually see each other when they are online. People like to feel a sense of involvement with each other and having something like a chat room can take care of this.

Problems with Electronic Commerce

Compared to traditional business, electronic commerce is the new kid on the block. Many of the problems encountered by electronic commerce businesses may be due to the lack of traditional business practices like marketing research. E-commerce businesses must also have a solid business plan to which they can adhere, as well as sufficient capital to operate until they begin to yield profits.