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Unless you have been living under a rock for the last few years, you have probably heard about e-commerce. And you have heard about it from several different angles. Still, you may feel like you don't understand e-commerce at all. What is all the hype about? Why the huge valuations? And most importantly, is there a way for you to participate? If you have an e-commerce idea, how might you get started implementing it? If you have had questions like these, then this article will help out by exposing you to the entire e-commerce space. Before we get into a complete discussion of e-commerce, it is helpful to have a good mental image of plain old commerce first. MF, fr. L commercium, fr. We tend to be interested in the second definition, but that third one is interesting and unexpected -- maybe that's what all of the hype is about? So commerce is, quite simply, the exchange of goods and services, usually for money.
We see commerce all around us in in millions of different forms. When you buy something at a grocery store you are participating in commerce. In the same way, if you cart half of your possessions onto your front lawn for a yard sale, you are participating in commerce from a different angle. If you go to work each day for a company that produces a product, that is yet another link in the chain of commerce. Buyers - these are people with money who want to purchase a good or service. Sellers - these are the people who offer goods and services to buyers. Sellers are generally recognized in two different forms: retailers who sell directly to consumers and wholesalers or distributors who sell to retailers and other businesses. Producers - these are the people who create the products and services that sellers offer to buyers. A producer is always, by necessity, a seller as well. The producer sells the products produced to wholesalers, retailers or directly to the consumer.
You can see that at this high level, commerce is a fairly simple concept. Whether it is something as simple as a person making and selling popcorn on a street corner or as complex as a contractor delivering a space shuttle to NASA, all of commerce at its simplest level relies on buyers, sellers and producers. However, these details boil down to a finite number of steps. The following list highlights all of the elements of a typical commerce activity. If you would like to sell something to a customer, at the very core of the matter is the something itself. You must have a product or service to offer. The product can be anything from ball bearings to back rubs. You may get your products directly from a producer, or you might go through a distributor to get them, or you may produce the products yourself. You must also have a place from which to sell your products. Place can sometimes be very ephemeral -- for example a phone number might be the place.
If you are a customer in need of a massage, if you call "Judy's Massages, Inc." on the telephone to order a massage, and if Judy shows up at your office to give you a massage, then the phone number is the place where you purchased this service. For most physical products we tend to think of the place as a store or shop of some sort. But if you think about it a bit more you realize that the place for any traditional mail order company is the combination of an ad or a catalog and a phone number or a mail box. You need to figure out a way to get people to come to your place. This process is known as marketing. If no one knows that your place exists, you will never sell anything. Locating your place in a busy shopping center is one way to get traffic.
Sending out a mail order catalog is another. There is also advertising, word of mouth and even the guy in a chicken suit who stands by the road waving at passing cars. You need a way to accept orders. At Wal-Mart this is handled by the check out line. In a mail order company the orders come in by mail or phone and are processed by employees of the company. You also need a way to accept money. If you are at Wal-Mart you know that you can use cash, check or credit cards to pay for products. Business-to-business transactions often use purchase orders. Many businesses do not require you to pay for the product or service at the time of delivery, and some products and services are delivered continuously (water, power, phone and pagers are like this). That gets into the whole area of billing and collections. You need a way to deliver the product or service, often known as fulfillment.
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