E-Commerce: the online marketplace

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E-commerce, or electronic commerce, is the term for electronic commerce on the Internet. The business processes between companies as well as the commercial business relations between companies and consumers are mapped. E-commerce is a sub-sector of e-business.

E-commerce is characterized above all by the fact that customers can inform themselves independently. No sales staff is required. In addition to product information, customers can also inform themselves about the services (delivery times, warranty, discounts) of the provider. If you like a product, there are different ways to make a purchase, depending on the supplier. For the supplier, this means working highly efficient and cost-effective; for the customer, however, it also means a voluntary commitment to obtain more detailed information about the respective product (test reports, data sheets on the product, price comparisons). See also the point right of withdrawal, which is regulated by the distance selling contract.

However, providers are investing in e-commerce and even increasing their staff. For example, some large online retailers offer personal advice via chat; social media such as Twitter and Facebook are also included in the online strategy.

E-Commerce from the perspective of the provider

Especially in terms of customer commitment, online retailing offers many opportunities to bind customers to the company in the long term; even outside opening hours and city limits: premium access, a wide range of products, fast delivery and the global integration of retailers – including retailer integration at the local level – are the key success factors.

Via e-commerce, transactions (concluded sales contracts) take place electronically between supplier and customer. The exchange of goods is generally carried out in return for payment. Customers are able to make purchases on their desktop or mobile with tablet and smartphone – regardless of their location during the ordering process. E-commerce can therefore also be defined as distance selling.

The customer can navigate through an electronic product catalog (online store) and submit his online orders electronically using a form. As a rule, the user can also pay online via linked financial service providers (credit card, PayPal, instant bank transfer). Choosing the right distribution channel (OmniChannel, CrossChannelor MultiChannel) is crucial for the retailer from a business perspective; for the customer, it may be a selection criterion.

Premium services

Some retailers offer premium services (fast delivery times). For an additional charge, for example, the ordered goods are delivered within 24 hours. The standard delivery for e-commerce normally takes two to three working days. The provider Amazon offers same-day delivery. However, the necessary logisticsare “still” limited to a city center. Nationwide or internationally, this type of goods delivery only works to a limited extent.

E-commerce via the marketplace

For many retailers, a so-called digital marketplace provides an easy and quick entry into online trading; others use the digital marketplace to expand their existing distribution channels. A market place is a finished portal, on which the offerer can present itself additionally and sell. Amazon Marketplace or eBay Marketplace are currently the largest providers of such online platforms. These types of platforms are usually involved in every transaction and receive a percentage commission on the purchase price.

E-Commerce risks and challenges for the provider:

Online retailers are exposed to many risks in their daily business operations. On the one hand, there are legal risks, and on the other hand, the financial risks in particular are an obstacle to focusing on online trading. Not to mention the challenges regarding IT and product liability.

Possible risks/challenges are:

  • Transparency creates competition and price pressure
  • Cheaper providers are one click away
  • Inconsistent and sporadic operation of the online store
  • The legal framework must be respected
  • Logistics effort – returns& shipping modalities (packaging) must be processed
  • Maintenance of the webshop – product descriptions, product images must be maintained
  • Webshop software – which software? Update ability, security (SSL), data protection
  • Marketing – how high should potential investments be?
  • Social networks – Do I use social media for marketing? What are the consequences, what are the challenges?
  • Rating portals – how are they handled? How do I deal with criticism? Staff training?

Right of withdrawal, right of return only online

Many citizens in this country are not aware that a so-called exchange of goods is purely goodwill of the local stores. They are not obliged by law to take back purchased goods. The customer does not have a right to exchange, even in the case of e-commerce, but according to the law of distance selling § 312g BGB, a so-called right of withdrawal. Reason: The consumer does not see the ordered goods; only photos are available to him or her. Therefore the legislator grants online customers a 14-day timespan for consideration. After this period, the warranty period of at least two years begins automatically. During this period, the retailer must guarantee that the goods purchased on the Internet remain free of defects. Prerequisite: Occurring defects are not the fault of the customer.

For more information about forms of commerce, see Collaborative Commerce (C-Commerce).

Image rights: Tech in Asia; License: CC BY 2.0

About gaxsys GmbH

gaxsys GmbH

gaxsys GmbH was founded in Karlsruhe in 2008. The "channel conflict" resulting from the displacement of stationary trade by conventional online activities of brands gives the up-and-coming Karlsruhe-based company tailwind. With the e-commerce solution from gaxsys, products can be sold online, directly via the brand website. Via the gax article exchange, customer orders from the online store are offered to the nearest point of sale (POS), e.g. retailers, franchisees or branches, for order fulfillment.

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