Definition of E-commerce:
Electronic commerce otherwise known as e-commerce can be defined as the “Economic activity of buying, selling, marketing, directing and paying for products and services over the medium of the internet.”
It entails mainly online buying and selling of certain products and services over electronic systems such as the internet and other computer networks. The experience of globalization and technological advancement made the way for the existence of e-commerce.
E-Commerce was originally birthed to describe the process of conducting business transactions online. It was in the late 1970s that Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) were introduced as technologies for business transactions.
The EDI and EFT played a very important role in the exchange of information on electronic transactions between businesses, especially in the area of electronic purchase orders. It is therefore the Electronic Data interchange and electronic Funds Transfer that formed the groundwork for what we know today as e-commerce.
A Substantial number of businesses in Western Europe and the United States built their First rudimentary e-commerce website between the years 1998 and 2000. In recent times, a result of an increase in technological advancement has made e-commerce extend its importance to various areas of business transactions – distribution and exchange, for instance, retail shopping, banking, provision of domestic services, and so on.
Functions of E-Commerce:
The following are some of the roles e-commerce performs in the economic development of a country. They can as well be referred to as the importance or significance of e-commerce.
1. It Provides Cost-effective Business: It brings down the cost of operation which can be passed to customers in the form of discounted prices thereby reducing the market prices of the products.
2. Absence of Geographical Limitation: A businessman that has a shop is limited by the geographical area where the shop is located, but in the case of e-commerce the whole world is a playground. Thereby dissolving all limitations.
3. Quick Location of Product: On the e-commerce website, customers can locate their desired product by using a search box to narrow down their product search instantly. Customer preferences and shopping lists are repeated on some websites to facilitate continuous purchases.
4. It Eliminates Travel time: Instead of customers travelling long distances to reach their preferred stores physically, it takes them a few clicks on the internet.
5. It Allows for Comparison Shopping: It provides comparison shopping opportunities due to the fact that there are several online services, that enable customers to browse many e-commerce merchants, to determine the best prices which can be afforded.
6. It Provides Access to Information: Information about all products is made available to customers which may not be easily obtained from physical stores. E-commerce websites can make additional information easily available to customers through the vendors over the Internet.
7. Provision of all time Services: Services are provided at all times which is impossible for physical stores to do. This encourages buyers and potential ones to place orders for goods at any time on the vendor’s website.
8. It makes for Efficiency: The various transaction in business are more efficient with the introduction of e-commerce. For example, the transfer of funds between the buyers and sellers becomes easier.
9. Improved Customer Services: There are efficient and improved customer services in which customers’ enquiries are promptly attended to. Customers also receive better services in the area of documentation. For instance, the vendor can prepare bills and receipts and send them to customers through electronic mediums.
10. It helps in Advancing Good Relationships in Business: E-Commerce provides good opportunities on the internet for trade to thrive between two or more countries. This brings about a cordial diplomatic relationship and therefore promotes world peace.