E-Commerce, Definition, Benefits, and Benefits

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Understanding E-Commerce

E-Commerce is: Trading (selling / buying) through an electronic network where computers as a means are used to facilitate all company operations


Electronic commerce or E-commerce is a system in which includes the activities of selling, purchasing, and distributing goods and services that utilize electronic systems such as television, internet, or other computer networks. E-commerce in the digital era is transformed into one business that is quite promising to produce a fairly large profit.


The development of information technology, especially the internet, is a driving factor in the development of e-commerce. The internet is a global network that unites computer networks around the world, making communication and interaction possible with one another throughout the world. Until now the internet is an ideal infrastructure for running e-commerce, so that e-commerce has become synonymous in doing business on the internet.


By using information technology, e-commerce can be used as a solution to assist companies in developing companies and facing business pressures. The high business pressure that arises due to the high level of competition requires companies to be able to respond. E commerce can improve cost efficiency and productivity of the company, so that it can increase the company's ability to be consistent.


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E-Commerce History

The development of Information Technology has succeeded in creating a new information infrastructure. The internet has several attractions and advantages for consumers and organizations, for example, in terms of comfort, data speed, access 24 hours a day, efficiency, alternative space and unlimited choices, personalization, potential sources of information and technology and others.


In the business context, the internet has a transformational impact that creates a new paradigm in the business world in the form of 'Digital Marketing'. In the early days of the application of electronic commerce which began in the early 1970s with innovations such as Electronic Funds Transfer (EFT). At that time the implementation of this system was still very limited to large-scale companies, government financial institutions and some daring middle-low companies, then developed to emerge called EDI (Electronic Data Interchange). Starting from financial transactions to processing other transactions that make other companies participate, ranging from financial institutions to manufacturing, retail, services and others. Then continue to develop other applications that have the range from stock trading to the travel reservation system. At that time the system was known as a telecommunications application.


Beginning in the 1990s commercialization on the internet began to develop rapidly reaching millions of customers, then came the new term electronic commerce or better known as e-Commerce. E-Commerce research center at Texas University analyzed 2000 companies online on the internet, the fastest growing sector was e-Commerce, up 72% from $ 99.8 billion to $ 171.5 billion. In 2006 income on the Internet had reached trillions of dollars, truly an amazing number.
One of the reasons for the rapid development of online business is the development of protocol and software networks and of course the most basic is the increase in competition and various business pressures.


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E-Commerce Theory According to Experts

1. According to Baum said
that "E-commerce is a dynamic set of technologies, applications, and business processes that link enterprises, consumers, and communities through electronic transactions and the electronic exchange of goods, services, and information". E-commerce is a dynamic set of technology, applications, and business processes that connect companies, consumers, and certain communities through electronic transactions and trade in goods, services, and information conducted electronically (Baum in Purbo, 2001). A similar opinion regarding e-commerce was conveyed by Fuady who said that e-commerce is a business process using electronic technology that connects companies, consumers, and the public in the form of electronic transactions and the exchange / sale of goods, services, and information electronically (Fuady ,


2. According to Sukarmi (2008),
a transaction can be said as e-commerce if it has the following components:

  1. There is a trade contract.
  2. The contract is run on electronic media (digital).
  3. The physical presence of goods or service providers and consumers is not required.
  4. Contract of sale and purchase agreement takes place in the public domain.
  5. Open transaction operation system, which uses the internet or the world wide web
  6. The contract is out of bounds, national jurisdiction.

3. According to Laudon & Laudon. 1998
E-Commerce is a process of buying and selling products electronically by consumers and from company to company with computers as intermediaries for business transactions.


4. According to Wahana Komputer Semarang, 2002.
E-Commerce or commonly referred to as Ecom or Emmerce or EC is a routine business exchange using Electronic Data Interchange (EDI) transmissions, e-mails, electronic bulletin boards, facsimile machines, and Electronics Funds Transfers relating to shopping transactions on Internet shopping, online stock and bonds, downloading and selling software, documents, graphics, music, etc., as well as Business to Business (B2B) transactions.


5. According to David Baum. 1999
Ecommerce is a dynamic set of technologies, applications, and business processes that link enterprises, consumers, and communities through electronic transactions and the electronic exchange of goods, services, and information.


6. According to Onno. W. Purbo
E-Commerce is a dynamic set of technology, applications, and business processes that connect companies, consumers and certain communities through electronic transactions and trade in goods, services, and information conducted electronically.


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Types of E-commerce

In its journey in the online business world, e-commerce is divided into two types, namely:

a) Business to Business (B2B)

B2B is a form of buying and selling products or services involving two or several companies and is carried out electronically. In this case, both the buyer and seller are a company and not individuals. Usually this transaction is done because they already know each other and the sale and purchase transaction is carried out to establish cooperation between the companies.


The characteristics of e-commerce B2B types are as follows:

  • Trading partners that are known and generally have a long relationship. This information should be exchanged only with the partner. Because you already know the opponent of communication, the type of information sent can be arranged according to your needs and trust (trust).

  • Data exchange takes place repeatedly and regularly, for example every day, in a mutually agreed upon data format. In other words, certain services that are used already. This makes it easy to exchange data for two entities that use the same standard.


  • One of the actors can take the initiative to send data, not having to wait for the parter.


  • The commonly used model is peer to peer, where processing intelligence can be distributed to both business people.


The advantages of B2B e-commerce are as follows

  • Achievement of real competitive opportunities:
    Large and potential work productivity.
    Time savings in making transactions.
    Reduced costs (Fast, transparent, and lower price)
  • Cost or expense reduction:
    Cisco System ($ 3.5 billion in cost reduction in 1998)
    DELL Computer Corporation (over $ 1.7 million / day)

b) Business to Consumer (B2C)

Type of E-Commerce Business to Consumer (B2C) is a business that is carried out between business people and consumers. For example, producers carry out activities of buying and selling products to consumers through online marketing. Manufacturers will do business by marketing their products to consumers without any feedback from consumers to do business again. In other words, producers only market products in the form of goods or services, while consumers only act as users or buyers


B2C is a form of buying and selling products involving electronic sales and consumer companies.

The characteristics of e-commerce types of B2C are as follows:

  1. Open to the public, where information is shared with the public.
  2. The services provided are general (generic) with mechanisms that can be used by the general public. For example, because Web systems are commonly used, services are provided using a Web base.
  3. Service is provided on request. Consumers make initiatives and service providers or goods must be ready to respond in accordance with the request.
  4. The client / server approach is often used where the assumption of the client (consumer) uses a minimal system (Web-based) and processing (business procedure) placed on the server side.

The advantages of B2C e-commerce are as follows

  • Direct access to global markets
  • Time and place savings
  • Very significant cost reduction
  • Full availability: 24 hours per day and 7 days per week
  • Shopping on-line is not as difficult as what is usually obtained at traditional markets
  • Easy to use, does not require special intelligence
  • Many choices are easily obtained coupled with confidentiality guaranteed
  • Product-on-demand (what you need you will get)

c) Consumer to Consumer (C2C)

C2C is a type of e-commerce where the perpetrators are both customers or consumers. Here the customer will sell goods or services from certain producers to other customers. You could say here the seller is a kind of intermediary.

Types of consumer to consumer e-commerce are businesses run between consumers and consumers. For example, consumers will resell goods obtained from producers to other consumers.


d) Consumer to Business (C2B) E-Commerce

Consumer to Business (C2B) e-commerce types are business activities that occur between producers and consumers. This business is done by consumers towards producers who provide products (goods or services). For example, consumers will tell details of products (goods or services) of interest through online marketing to producers. Furthermore, producers who are aware of the demand will then offer products that are of interest to consumers.


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E-commerce Structure and Classification

E-commerce Structure and Classification

  • Business-to-Consumer (B2C): online transactions occur between companies and individual consumers.
  • Business-to-Employee (B2E): a service provided by a company to its employees to facilitate employee relations with the company.
  • Government-to-Citizen (G2C): State Services to Citizens.
  • Business-to-Business (B2B): companies make online transactions with other companies.
  • Business-to-Business-to-Consumer (B2B2C): EC model in which a company is an intermediary (broker) between other companies and their customers.
  • Consumer-to-Business (C2B): EC model where individuals use Internet portals to sell products or services to a company, or to find sellers for the products or services they need.
  • Consumer-to-Consumer (C2C): EC model where consumers sell (trade) directly to other consumers.
  • Mobile Commerce (M-commerce): E-Commerce is implemented using wireless facilities. For example: the use of mobile phones to shop via the internet

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Concept Factors in E-commerce

E-commerce is a trading procedure or mechanism of buying and selling on the internet where buyers and sellers are brought together in cyberspace. E-commerce can also be defined as a way of shopping or trading online or direct selling that utilizes internet facilities where there are websites that can provide " get and deliver " services.


The key factors for success in e-commerce in a company are not just relying on product strength, but with a reliable management team, timely delivery, good service, good business organizational structure, network infrastructure and security, good website design, several other factors include:


  1. Providing competitive prices
  2. Providing purchasing services that are responsive, fast, and friendly
  3. Provide the complete and clear information about product and service
  4. Provide many bonuses such as coupons, special offers, and discounts
  5. Give special attention to the proposed purchase
  6. Provide a sense of community for discussion, input from customers
  7. Simplify trading activities

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The Purpose and Benefits of E-Commerce

The objectives of E-Commerce are as follows:

  1. So that people who want to buy goods or transactions via the internet only need internet access and its interface using a web browser
  2. Making an e-commerce portal / e-shop not just a shopping portal, but a gathering place for communities by building a community base, building market concepts not just a place to buy and sell as information centers (releases, product reviews, consultations, etc.)
  3. Service-oriented management, a combination of conventional and virtual service conceptions: responsive (fast and friendly responses), dynamic, informative and communicative
  4. Up-to-date information, dynamic multi-directional communication
  5. Payment model: credit card or transfer.
  6. Understand more deeply about the internet, e-business and e-commerce
  7. Developing the writer's insight;
  8. Applying knowledge gained from Bina Sarana Informatika.

The benefits of E-Commerce are as follows:

  • Makes it easy to communicate between consumers and producers
  • Providing convenience in the business of marketing and promotion of goods or services
  • Expanding the reach of potential customers with broader market segmentation
  • Provides ease in the process of buying and selling
  • Provides convenience in making payments because it can be done online
  • Providing ease in disseminating information

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Advantages and Disadvantages of E-commerce

  • Advantages of e-commerce:

In general, the benefits of E-Commerce are

  1. Better customer service.
  2. Relationships with suppliers and the financial community have improved.
  3. Returns on shareholder and owner investment are increasing.
  4. New revenue streams that might be more promising that cannot be found in traditional transaction systems.
  5. Can increase market share.
  6. Reducing operating costs (operating costs).
  7. Widen the reach (global reach).
  8. Increase customer loyalty.
  9. Increase supplier management.

Benefits for the Company

  • Can reach a large number of potential buyers on a global count,
  • Advertising costs are cheaper than TV, newspaper or radio advertising media with the latest display updates with minimal costs,
  • Can use social media for communication with suppliers, factories, distributors and customers online,
  • The level of marketing can be developed in accordance with the wishes of the buyer,
  • Not subject to sales tax.

Benefits for Consumers

  1. Electronic commerce allows customers to shop or make other transactions 24 hours a day throughout the year from almost every location.
  2. Electronic commerce gives customers more choices; they can choose various products from many vendors.
  3. Electronic commerce provides inexpensive products and services to customers by visiting many places and making comparisons quickly.
  4. In some cases, especially on digitized products, EC makes shipping very fast.
  5. Customers can receive relevant information in detail in seconds, no longer days or days.
  6. Electronic commerce allows participation in virtual auctions.
  7. Electronic commerce provides a place for customers to interact with other customers in the electronic community and exchange ideas and experiences.
  8. Electronic commerce facilitates competition, which in turn will generate substantial discounts.

Benefits for the Community

  • Electronic commerce allows people to work inside the house and not go out to shop a lot, consequently this will reduce the flow of traffic on the road and reduce air pollution.
  • Electronic commerce allows a number of merchandise to be sold at lower prices, so that people who are less able can buy more and improve their standard of living.
  • Electronic commerce allows people in third world countries and rural areas to enjoy a variety of products and services that would be difficult for them to get without EC. This also includes opportunities to study professionally and obtain an academic degree.
  • Electronic commerce facilitates public services, such as health care, education, and equitable social services implemented by the government at lower costs, and with better quality. Health care services, for example, can reach patients in rural areas.

  • Losses for e-commerce:

  1. Direct financial loss because there is fraud.
  2. Theft of valuable confidential information.
  3. Lost business opportunity due to service disruption. This error is a non-technical error such as electricity that suddenly goes out.
  4. Loss of trust from consumers.
  5. Unexpected loss.
  6. Hacking or hacking on a site.
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