What is e-commerce? The future of the global economy

What is e-commerce? A term that seems familiar but has the power to turn the national economy around and shape consumer shopping behavior. Research details about e-commerce here.

1. Overview of e-commerce

Online shopping has become a familiar activity in today's life. Being on the rise, this field still holds a lot of business potential for businesses that want to exploit.

1.1. What is e-commerce?

Electronic commerce (or E-Commerce) is the activity of buying, selling, and exchanging goods and services on electronic systems such as the Internet or computer networks. This process includes exchanging purchasing information via electronic systems, but payment and shipping of products and services can be done online or in person.

E-commerce transactions are often divided into 3 types:

• B2B - Business to business

• B2C - Business to consumer

• C2C - Consumer to consumer

More than a product of globalization, e-commerce is an inevitable result of scientific and technological progress. With unlimited connectivity, e-commerce has been and will grow strongly in the future.

Learn more: Learn to sell on Amazon and top courses that should not be missed

1.2. Characteristics of e-commerce

The following are the characteristics of e-commerce that you need to understand when participating in this attractive market:

Online transactions: Information exchange, transactions or payments can all be done online instead of direct communication.

Remove limits: Boundaries of time, space, language,... are removed. Buyers and sellers can make transactions anytime, anywhere, in any language,...

Increase access speed: Put products in the cart and pay for them quickly in a few clicks, without being hindered by crowded stores like traditional ones.

Diversity of participating entities: While traditional commerce only has two participating entities: buyers and sellers, online commerce welcomes many more intermediaries: freight transport units and other entities. other (payment gateway service providers, network providers & authentication agencies,...).

Easy access: Publicize products, prices, and other buyers' feedback, allowing buyers to have more information to enhance their shopping experience; Easily search for products by filter but at the same time create great competitive pressure among business competitors.

Many options: No longer limited by space or storage space, online business allows sellers to sell more items, helping customers shop more conveniently.

2. What are the main types of e-commerce?

Currently there are 9 online business models, including: B2B, B2C, B2G, G2B, C2C, C2B, B2E, G2G, G2C. Among them, the 3 most popular forms are:

You need to research carefully before choosing the right model to do business effectively and optimize resources

2.1. Business - Consumer (B2C)

B2C is a business model in which businesses sell products and services directly to end consumers. This is the most popular type of e-commerce.

Businesses implementing this model will often be retailers or business households. This form helps them easily receive directly from actual customers, thereby researching and upgrading product/service quality promptly.

In the process of learning what e-commerce is, we see that B2C (Business-to-Consumer) is an important component of the economy, affecting not only Vietnam but also the whole world. According to Statista, in 2020, 84% of US consumers purchased online from leading retail sites such as Amazon, Walmart and Target.

2.2. Business - Business (B2B)

Business-to-Business (B2B) refers to buying and selling transactions between businesses. Unlike B2C, with this model, businesses/organizations are the final customers of the business.

B2B types often use long-term contracts (minimum 1 year) during the transaction process. To better understand the characteristics of B2B e-commerce, we can rely on:

• Customers: businesses, organizations

• Scale: large scale, high value orders, long-term contracts

• Partnership: establishing strategic relationships between businesses

• Professionalism: high, requires detailed transaction information about products/services, production processes, inspection standards,...

• Distribution: through many different channels (directly, through agents,...)

According to a report by Forrester Research, businesses applying B2B e-commerce can increase revenue by up to 56%. In addition, McKinsey&Company and Accenture said that not only do they increase sales, B2B businesses can also reduce sales costs by up to 90% and save order processing time by up to 30%.

2.3. Consumer to Consumer (C2C)

The activity of exchanging products and services between individuals without the participation of large entities (such as businesses and governments) is called C2C - Consumer To Consumer. Some typical e-commerce platforms for this type:

• Taobao e-commerce platform

• Online trading platforms such as Sendo, Cho Tot,...

According to eMarketer, up to 63% of consumers in the US trust reviews when shopping online on the C2C platform. Polaris Market Research says the global online C2C market size is valued at USD 1670.9 billion by 2023 and is expected to grow to USD 11.216 trillion by 2032 at a whopping CAGR of 23 .6%.

3. Leading e-commerce platforms today

With an initial understanding of what e-commerce is, we can predict its global development trend. Below are the leading e-commerce platforms that are dominating market share and shaping the "face" of the online retail industry.

3.1. Amazon - The world's largest e-commerce giant

Amazon was founded in 1994 by Jeff Bezos in Washington, with its starting point as an online book distributor. After more than 2 decades of development efforts, Amazon has risen to the top of the e-commerce field with more than 310 million users.

According to investing.com, more than 89% of US shoppers agree that they prefer to buy products from Amazon rather than other e-commerce sites. Amazon has nearly 50% of the U.S. e-commerce market share, more than triple the combined market share of its main competitors including eBay, Apple and Walmart.

Amazon is the most popular online shopping site in 2024, according to Jungle Scout

3.2. Alibaba - Global e-commerce empire

Alibaba is a precious "brainchild" launched by Jack Ma and 17 associates in 1999. By 2010, this website had expanded its scale and global coverage, directly becoming Alibaba's strongest competitor. Amazon.

For more than 20 years, Alibaba has always been the "leader" dominating the Chinese e-commerce field. In its home country - the world's largest online shopping market, Alibaba accounts for 80% of online sales revenue. Possessing a huge ecosystem with diverse fields, Alibaba is the perfect choice for sellers who want to penetrate this billion-people market.

3.3. Shopee - Vietnam's hottest e-commerce platform

Shopee was founded in 2009 by Bruce Lee in Singapore. As of 2021, it has become the largest online business platform in Southeast Asia, including Vietnam. In addition to the main Southeast Asian market, this trading platform also develops in many East Asian and Latin American countries.

According to YouNet ECI, in the first quarter of 2024, Shopee's revenue reached 53.74 trillion VND, accounting for 67.9% of the total sales of Vietnamese e-commerce platforms and far surpassing other competitors.

Shopee leads the online shopping market in Vietnam

Learn more: TikTok Shop and 6 tips to help your business run effectively

4. Business potential of e-commerce 2024

Understanding what e-commerce is, we can see its brilliant potential. The development of the Internet has created favorable conditions for the development of e-commerce. According to statista, the world records the participation of more than 5 billion Internet users globally, creating a more vibrant trading space than ever.

Precedence Research said that the global e-commerce market size will reach a value of 16.29 trillion USD in 2023. The study estimates that this number will increase to 67.05 trillion USD in 2033 at a CAGR rate extremely impressive 15.2%. Positive figures indicate favorable future business prospects in this field.

The urbanization process and increased investment in network infrastructure are the main factors creating this increase. Furthermore, the increase in the number of smart mobile devices and the development of advanced technologies (AI, AR, VR) also contribute equally to the promotion.

According to YouNet ECI, in the first quarter of 2024, Vietnamese people spent a lot of money on online shopping, far exceeding the expectations of commercial floors. The total revenue of the 5 largest platforms in Vietnam (Shopee, TikTok Shop, Lazada, Tiki, Sendo) has reached VND 71.2 trillion, growing up to 78.69% over the same period last year.

In addition, the domestic market is estimated to reach a value of 60 billion USD by 2030, ranking second in Southeast Asia. These positive forecasts are the basis of solid expectations that create development prospects for domestic online sellers in the coming time.

5. What is e-commerce? Conclude

Learning about "what is e-commerce", we see that it is not simply a trading platform for buying and selling. E-commerce is an important economic component with the power to change the development capacity of the entire society. With unlimited potential, this is a market worth investing in.

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