Essay on Electronic Commerce [E–Commerce] – Meaning, Advantages, Disadvantages

Meaning of Electronic Commerce


Electronic Commerce also known as E-commerce is the new way of doing business online. When you buy or sell goods or services online, the process is called E-commerce.


The commercial transactions happen via online payment gateways like PayPal, bank transfers, etc. The physical product is then shipped to the buyer. Alternatively, it is possible to pay cash on delivery.

Simple to Complex

With E-commerce many other commercial and financial activities have been transferred online for e.g. from household utility bills, shopping, salaries to more complex investments, financial trading, etc.

Local to Global

With the development of E-commerce, individuals and small businesses can now have access to local and global trade and finance via the internet.

Banking and Currency

E-commerce has led to a plenty of innovative payment options apart from traditional banking. Virtual currencies are also being created as a part of this revolutionary phenomenon. 0….

Advantages of Electronic Commerce


  1. From simple grocery to complex electronics, shopping can easily be done online from home.
  2. You have a wider choice only by switching from one website to another. Often the same website may feature multiple brands too.
  3. It is possible to buy goods from any corner of the world as long as the seller has an online shop and the shipping / delivery facilities.
  4. Even consulting services legal, medical, business, etc. are available online and delivered globally.


  1. As against setting up a shop with the local customers, the online shop has a much larger target customer base: basically anyone with access to the internet.
  2. The establishment and maintenance costs of a traditional office or shop become redundant and go down significantly.
  3. Cost of hiring staff is also reduced.
  4. If the online store has an outlet on a platform like Amazon, then the cost of advertising can be cut down too.
  5. Since E-commerce makes the flow of currency easily possible between countries the sellers have access to the global market and clientele.
  6. It is possible for a seller to put their products and supply outlets on more than one platform, thereby creating multiple ‘virtual shops’.

Investment, Banking

  1. You can access and employ global investments and financial instruments, through their online portals.
  2. Online banking facilities have made all aspects of banking easier, faster and more convenient.


  1. Emerging markets with low labour costs can offer their services at low rates e.g. call-centres, IT back offices, transcription services, etc.
  2. Developed markets can sell their intellectual know-how to individuals and businesses in emerging markets, via the internet at an affordable price.
  3. E- commerce has benefited the global economy. It has bridged the economic divide between the developed and emerging economies.

Disadvantages of Electronic Commerce


  1. The actual goods may be different from your online perception of their visuals.
  2. Return or exchange of the goods may be a cumbersome process.
  3. The delivery time for goods from foreign countries can be quite long.
  4. In case of goods lost during delivery; the tracking, recovery and replacement can be challenging.
  5. Online payment account details can be hacked and misused.
  6. The entire charm of ‘going shopping’ is lost because of virtual stores.


  1. Shipping costs or transport facilities may be prohibitive for some online businesses. This can limit their actual sales area.
  2. Online piracy is a big nuisance. E.g. preventing piracy of E-books, movies, etc. can be expensive and painfully difficult.
  3. Sometimes the online customers reject goods after opening resulting in loss of revenue.
  4. Bigger players can often use large discounts putting smaller sellers at a disadvantage.
  5. Dealing with international taxation and legal implications can be challenging.


  1. Weaker, local sellers can sometimes fall prey to competition from powerful, global brands.
  2. As the divide between the developed and emerging markets narrows, businesses that profited from the divide are adversely affected.

Investment and Banking

  1. The transition phase of shifting from office-based to online banking is quite challenging for many traditional banks.
  2. Investment and finance houses are exposed to a high level of cyber-crime, hacking and fraud, as they open their business to the online global world.


A large part of commerce has shifted onto the virtual world: simple shopping to complex finance. Though E-commerce is undergoing rapid improvements, it is still in a state of flux. It is important to update yourself with the latest developments to benefit from the obvious advantages. Simultaneously also be aware of the challenges.

By: Janhavi