How can e-commerce transform your business?
Electronic Commerce (E-commerce) is now a big driver of modern commerce. According to the United Nations Conference on Trade and Development (UNCTAD) ( http://bit.ly/2abR71W), the global e-commerce market is worth over 22.1 trillion United States (US) Dollars, with China being the largest business to consumer (B2C) e-commerce market, followed by the US and Japan. Although Africa is not part of the global leaders, e-commerce is slowly rising on the continent.
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E-commerce emerged in the 1990s when internet became a facilitator of business transactions online. E-commerce can simply be defined as the buying and selling of goods and services using new digital technologies. E-commerce systems are made up of an electronic market place, buyers and sellers, supported by payment mechanisms and delivery options that allow goods to get to the doorstep of buyers.
Types of e-commerce
E-commerce can be based on the parties involved in a given transaction; business to business (B2B) refers to a situation where all the parties are businesses, business to consumer (B2C) describes businesses selling to mass consumers whereas consumer to consumer (C2C) is premised on the early form of commerce driven by barter, where a consumer does transactions with another consumer without the involvement of a third party. There are other specialised types of e-commerce such as M-commerce (mobile commerce) which is a growth area in Africa as a whole, and Ghana in particular, because of the high penetration of mobile telephony on the continent. Another form is F-commerce (Facebook commerce). This refers to the growing popularity of Facebook as a marketplace.
E-commerce at play
Online shopping remains the most popular type of e-commerce. Sellers create online or mobile stores which are similar to face-to-face retail shops. Buyers visit these stores, browse through items available, and if they like the items’ quality and price, they will select it, make payments online and the goods or services will be delivered to them. Currently, the global leader in this space is www.amazon.com, which does not only serve as a seller but also creates opportunity for others to use its platform to sell their goods and services.
The power of any e-electronic store is the ability of previous buyers to rank items they have purchased, therefore, items or sellers with poor rankings will not have a lot of sales in comparison with sellers with high rankings. Rankings and recommendations are an important part of the online buying experience since the buyer cannot touch and feel items as happens in a physical shop. Though there are options of using virtual reality to mimic real life experience, this option has a long way to go; hence, personal experience is still key.
A very important component of any e-commerce system is its payments mechanism, without this, transactions cannot be completed online, since the buyer may have to pay for the goods on delivery, which means the full benefits of e-commerce is not derived. Some e-commerce businesses in Ghana rely on this option. The payments mechanism is made up of two components, payment processors and payment gateways. Payment processors are usually a company appointed by a seller (merchant) to process payments from multiple channels such as credit cards, debit cards, online forms such as PayPal and mobile money through an acquiring bank. On the other hand, payment gateways are merchant services for authorisation of electronic payments. In Ghana, various e-commerce platforms exist and enjoy varied successes as online businesses. http://www.eshopafrica.com/, established out of Ghana in 2001, is not only one of the oldest surviving e-commerce websites in Ghana, but the first in Africa. It basically markets products from the non-traditional sector. Though the popular e-commerce platform, www.tonaton.com, only provides information to connect buyers and sellers, offline it does not support actual online shopping.
Advantages and disadvantages of e-commerce
The advantages of e-commerce are numerous, including not standing in queues to shop, ease of comparing prices at the touch of a button, access to any store irrespective of geographic location, cheaper or low prices due to lack of physical stores whose overhead costs are passed on to the buyer, reduced costs of operations, lots of choices and 24/7 access to merchandise without the restriction of store opening hours. However, e-commerce comes with challenges such as a high initial cost of setting up infrastructure, lower quality products due to inability to verify quality from online pictures, security challenges, frauds, scams and the lack of personal touch.
Conclusion
The growth of any business, especially one in the goods and services marketplace, depends on the ability to leverage the power of e-commerce, since it provides numerous opportunities to overcome challenges of time and geographic distance, lowers costs and produces an efficient operational setup.
The writer is the Executive Director of Penplusbytes.org - you can reach him at [email protected] Whatassp : 0241995737
