E-commerce Business Models and Advantages

Differences Between E-commerce and Traditional Commerce

Ubiquitous Nature:
- E-commerce is accessible almost anywhere on the planet.
- Technology works the same internationally across different markets simultaneously.
- Small organizations can establish a presence in many countries and offer e-commerce services to many customers at the same time.
Standardization:
- Many platforms run on standardized software across multiple retailers, reducing costs for organizations.
- E-commerce is relatively cheap and fast to establish compared to bricks and mortar retailers, which have high setup costs.
Rich Data and Interaction:
- E-commerce technology allows for rich data collection and diverse customer interactions.
Social Interaction:
- E-commerce involves social technology and networking.
- Customers are often asked to share their experiences and rate products, creating a more engaging experience.

Advertising:
- Websites generate revenue by displaying adverts.
- Organizations receive a small fee for each advert shown, with a higher fee if the customer clicks through.
- Example: Google makes most of its money through advertising revenue.
- A website with millions of customers can generate significant revenue through small advertising fees.
Selling Products:
- Firms can advertise and sell products, collect orders, and distribute products cost-effectively over the Internet.
- Reaches a wide number of potential customers.
Subscription Services:
- Customers pay a regular fee to access services.
- Example: Netflix.
Freemium Services:
- Part of the service is free, and part is paid for (premium).
- Basic level of information is free, while real-time or pushed information requires a premium fee.
- Captures new customers through free services and generates revenue through premium fees.
Transactional Fees:
- Platforms earn money through transactional fees.
- Example: PayPal takes a small percentage of each transaction, funding operations and generating profits.