Classroom Companion: Business

 
Chapter 17 · Digital Markets

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17
of the convenience of using a smartphone for this purpose rather than personal 
computers (Popovic, 
2019
).
In the USA, about 10% of all retail is performed using e-commerce (E- commerce 
in the United States, Statistics and Facts, 
2020
). In China, which is the largest 
e-commerce market in the world, about 20% of all retail sales are e-commerce 
(Long, 
2017
). These numbers are from 2017, and they are expected to escalate in 
the near future. Similar trends are seen in most parts of the world—the share of 
e-commerce is increasing and is replacing traditional retail. Ecommerce News 
Europe reports that e-commerce increased dramatically during the COVID-19 
lockdown (The impact of Covid-19 on ecommerce, 
2021
). According to the survey, 
90% of the major companies involved in e-commerce increased their sales during 
this period. For 50% of them, the sales more than doubled.
Important milestones in the evolution of e-commerce were the launch of eBay 
and Amazon in 1995, PayPal in 1998, and Alibaba in 1999. Amazon is now among 
the five largest companies worldwide according to market cap. PayPal was one of 
the pioneers of online payment systems. Other important services and companies 
in the e-commerce market include Groupon (launched in 2010), Apple Pay 
(launched in 2014), and Google Pay (launched in 2015 as Android Pay).
There are two important requirements for successful e-commerce markets.
5
To become an efficient marketplace, e-commerce requires websites or apps where 
vendors can present their items for sale and buyers can choose among products 
and fill their shopping trollies. The search algorithms must be simple and based 
not only on product names but also keywords and product categories.
5
Simple and effective online payment systems are crucial to the success of 
e- commerce. There are several different types of online payment systems; for 
example, credit cards (e.g., VISA and MasterCard), e-wallet (e.g., PayPal), 
invoice installments (e.g., Klarna), and cryptocurrencies (e.g., Bitcoin, Ethe-
reum, and Ripple).
E-commerce market can be divided into four categories depending on whether the 
buyer or the seller is a professional business (denoted as “B”) or a private consumer 
(denoted as “C”). These four types of e-commerce markets are as follows (see 
.
Fig. 
17.5
):
5
Business-to-Consumer (B2C) e-commerce is the traditional market in which 
goods or services are sold online by professional companies to private consum-
ers. Examples are buying books from Amazon, films from Netflix, flight tickets 
from Expedia, computers from Dell, and broadband subscriptions from a net-
work operator.
5
Business-to-Business (B2B) e-commerce is the online trading between two pro-
fessional companies. B2C e-commerce and B2B e-commerce have experienced 
huge growth during the last decades. The main difference between B2B and 
B2C e-commerce is that, in B2C, small quantities of goods and services are sold 
to many private consumers, while in B2B, large quantities of goods and services 
are sold to a small number of professional businesses.
5
Consumer-to-Consumer (C2C) e-commerce is the online trading between two 
private consumers. Examples of C2C e-commerce companies include eBay,