E-commerce facts for kids

E-commerce (short for electronic commerce) is all about buying and selling things online. It's how you shop for clothes, games, or even order food using websites or apps on the internet. Think of it as a huge online marketplace where you can find almost anything!

E-commerce uses lots of cool technologies. This includes shopping on your phone (called mobile commerce), sending money electronically, managing products, and even online advertising. It's a big part of the electronics industry and keeps growing thanks to new tech.

What is E-commerce?

E-commerce usually uses the internet, especially the World Wide Web, for most of a transaction. But it can also use other tools like email. A typical e-commerce activity is buying a book from Amazon or downloading music from a store like iTunes Store.

There are three main types of e-commerce:

• Online stores (like when you buy a new video game)
• Online marketplaces (like eBay or Amazon, where many sellers offer products)
• Online auctions (where you bid on items)

E-commerce makes it super easy for people to shop and pay online. This saves time and makes shopping much more convenient, especially for busy people.

E-commerce businesses can do many things, like:

• Selling directly to customers through websites and mobile apps.
• Using chatbots or voice assistants to help customers.
• Running or being part of online marketplaces where different businesses or even people sell to each other.
• Buying and selling between businesses (called B2B).
• Collecting information about what customers like to help them shop better.
• Sending emails about new products or sales.

There are five main types of e-commerce based on who is buying and selling:

• Business to Business (B2B): Businesses selling to other businesses.
• Business to Consumer (B2C): Businesses selling directly to you.
• Business to Government (B2G): Businesses selling to government organizations.
• Consumer to Business (C2B): You selling a service or product to a business.
• Consumer to Consumer (C2C): You selling to another person (like on eBay).

Types of E-commerce

E-commerce can be grouped in two ways. One way is by what's being sold, like digital content (music, movies) or physical goods (clothes, electronics). The second way is by who is involved, such as:

• Business-to-Business (B2B)
• Business-to-Consumer (B2C)
• Consumer-to-Business (C2B)
• Consumer-to-Consumer (C2C)

Big companies and banks use the internet to share financial information for business around the world. Keeping this information safe and secure is very important for e-commerce.

Besides regular e-commerce, there's also mobile commerce (m-Commerce), which means shopping on your phone or tablet.

Rules for E-commerce

Governments around the world have rules for e-commerce to protect shoppers and businesses. For example, in the United States, the Federal Trade Commission (FTC) makes sure online advertising is honest and that companies protect your personal information. They also have rules about sending marketing emails.

Many countries have adopted a special law called the UNCITRAL Model Law on Electronic Commerce. This helps make e-commerce rules similar everywhere, which is good for international online shopping.

There are also international groups like the International Consumer Protection and Enforcement Network (ICPEN). They help countries work together to solve problems with online shopping across borders.

In places like the European Union, Australia, India, and China, there are specific laws and groups that oversee e-commerce. These rules help ensure fair competition and protect consumers.

Global E-commerce Trends

E-commerce is growing super fast all over the world!

In 2010, the United Kingdom had the highest amount of e-commerce spending per person. By 2013, the Czech Republic was a European country where online sales made up a big part of businesses' total money earned.

China's online shopping has grown a lot. In 2015, Chinese shoppers spent $253 billion online in just six months! This shows how comfortable people in China have become with online shopping. China is now the biggest e-commerce market in the world.

The Middle East, especially the GCC countries, also has a fast-growing e-commerce market. More people there are getting wealthier and using smartphones, leading to more online purchases. Many retailers are even creating websites in Arabic to reach these customers.

In Brazil, e-commerce has been growing quickly, and in India, many people use cash on delivery for online purchases.

The way people shop is changing everywhere. More and more people are using their smartphones to buy things. This means businesses need to make sure their websites and apps work well on phones. Governments are also working to create rules that protect shoppers and help e-commerce grow in a safe way.

Cross-border e-commerce, which is buying and selling between different countries, is also becoming very important. It helps businesses reach new customers and markets around the world. It's especially helpful for small and medium-sized businesses (SMEs) to grow and connect with customers globally.

In 2012, online sales reached over $1 trillion for the first time ever! Mobile shopping (m-commerce) is a huge part of this growth. By 2017, about 25% of all online purchases were made on mobile devices.

New technologies like Facebook 3D Posts and augmented reality are also changing e-commerce. Imagine seeing a 3D version of furniture in your own room before you buy it! This helps you make better choices.

How Products Get to You (Logistics)

Logistics in e-commerce is all about getting your online order from the seller to your doorstep. Online stores and retailers need to figure out the best way to pack and deliver products.

Small companies often handle their own shipping. But larger companies usually hire special services called "fulfillment services." These companies take care of everything, from storing products to packaging and shipping them to customers.

How E-commerce Changes Things

Impact on Stores and Shoppers

Store closing flags outside a Toys R Us store. Many traditional stores have struggled as online shopping has grown.

Online shopping is growing much faster than traditional stores. In 2017, online retail sales worldwide were $2.3 trillion, and they are expected to keep growing a lot! Traditional stores, often called "brick and mortar" stores, sometimes struggle because online stores can offer lower prices and are very efficient.

E-commerce lets you shop from anywhere, at any time. Online stores can offer a huge variety of products because they don't need physical shelf space. They might even send your order directly from the manufacturer! Online prices can be lower because they have fewer costs than physical stores.

However, online shopping doesn't offer the same experience as going to a physical store. You can't touch or try on products, which can make it hard to judge quality. Also, some people worry about the safety of their information when shopping online. That's why many people stick to well-known online stores.

Keeping online shopping safe is a big deal. E-commerce websites use tools like firewalls, encryption software, and passwords to protect your information from hackers and other threats.

Impact on Supply Chains

E-commerce has made big changes to how products move from factories to customers, which is called the supply chain. It helps connect all parts of the business, from suppliers to customers. This means products can move faster, information can be shared more easily, and payments can be made more efficiently.

New software and systems, like SAP ERP, help companies manage their operations better with both customers and suppliers. E-commerce also helps businesses work together more effectively within the supply chain.

Impact on Jobs

E-commerce creates new jobs, especially in areas like software development, digital products, and customer service. However, it can also lead to job losses in traditional retail stores or postal services.

The new jobs often need people with good tech skills to handle lots of information and manage production. Warehouses, where online orders are stored and packed, also need many staff, so the working conditions in these places are important.

Impact on Customers

E-commerce offers great convenience! You don't have to leave your home to shop, and you can find a wider range of products than in local shops. It saves time and often offers sales or discounts.

Online shopping also gives customers more power. You can easily research products, compare prices, and read reviews from other shoppers on sites like Trustpilot or Yelp. This helps you decide if a product is right for you.

However, e-commerce lacks face-to-face interaction, which some people prefer. There are also concerns about online security. If you buy something and want to return it, the process of packing and mailing it back can be inconvenient.

Impact on the Environment

E-commerce uses a lot of cardboard for packaging. In North America, e-commerce created 1.3 million tons of cardboard in 2018! Companies like Amazon are trying to reduce packaging and use more recycled materials.

Moving so many packages around the world also means that sometimes unwanted things, like weeds or pests, can travel in packages, which can be a problem for the environment.

Impact on Traditional Stores

E-commerce has caused many traditional stores to struggle. This is sometimes called a "retail apocalypse." Online stores like Amazon make it harder for physical stores to attract customers. Many traditional retailers have had to change their strategies, offering more sales or improving their online presence, while some have had to close their physical stores.

E-commerce During COVID-19

During the COVID-19 lockdowns in 2020, online shopping grew incredibly fast. Global retail website traffic jumped to 14.3 billion visits! Online sales increased by 25%, and online grocery shopping more than doubled in the United States. Many people who started shopping online during the pandemic say they plan to continue doing so even after the lockdowns end. This shows that the pandemic had a big impact on how people shop and helped e-commerce grow even more.

How E-commerce is Used

Here are some common ways e-commerce is used:

• Business-to-business (B2B) sales
• Business-to-consumer (B2C) sales
• Shopping by chatting with a bot (Conversational commerce)
• Using digital wallets to pay
• Automating documents for shipping
• Buying electronic tickets
• Managing company content online
• Group buying (many people buying together for a discount)
• Using Instant messaging for customer service
• Keeping online transactions secure (Internet security)
• Online auctions
• Online banking
• Using online office tools
• Online shopping and tracking your orders
• Processing payments online
• Pretail (selling products before they are made)
• Print on demand (printing items only when ordered)
• Using Shopping cart software
• Shopping through social media
• Online meetings
• Using virtual assistants
• Making payments both locally and internationally

E-commerce Timeline

• 1979: Michael Aldrich shows the first online shopping system.
• 1981: Thomson Holidays UK sets up the first online shopping system for businesses (B2B).
• 1982: Minitel is launched in France, used for online ordering.
• 1984: California passes its Electronic Commerce Act. CompuServe launches the Electronic Mall, a big online shopping service.
• 1989: Sequoia Data Corp. introduces Compumarket, an early internet-based e-commerce system.
• 1990: Tim Berners-Lee creates the first web browser, WorldWideWeb.
• 1992: Book Stacks Unlimited opens one of the first commercial websites to sell books online.
• 1994: Netscape releases its Navigator browser with secure (SSL) transactions. The first secure online purchase is made through NetMarket.
• 1995: The internet is opened up for commercial use. W H Smith makes the UK's first national secure online shopping transaction. Amazon is launched by Jeff Bezos. eBay is founded as AuctionWeb, the first online auction site for people to sell to each other.
• 1998: Electronic postal stamps can be bought and printed from the web.
• 1999: Alibaba Group is started in China. Global e-commerce reaches $150 billion.
• 2000: The "dot-com bust" happens, where many internet companies fail.
• 2001: eBay becomes the largest e-commerce site by users. Alibaba.com becomes profitable.
• 2002: eBay buys PayPal.
• 2003: Amazon makes its first yearly profit.
• 2004: DHgate.com, China's first online B2B transaction platform, is created.
• 2014: US online retail sales reach $294 billion. Alibaba Group has the largest stock market launch ever.
• 2015: Amazon accounts for more than half of all e-commerce growth in the US.
• 2017: Worldwide retail e-commerce sales hit $2.304 trillion. Global e-commerce transactions reach $29.267 trillion.
• 2020: India's BHIM UPI digital payment system handles 2 billion transactions.

Images for kids

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  A robot representing technology in e-commerce.

See also

A robot representing technology in e-commerce.

In Spanish: Comercio electrónico para niños