COVID lockdowns and the fear of infection when going to public places have led many people to shift their shopping online. And every indication is that this is a permanent shift in the general paradigm of retail commerce. People who previously had long developed habits of getting into their cars and driving to the nearest mall now pick up their phone, computer, or tablet and browse through an online catalog. Courier and freight companies are rushed off their feet with the increase in the volume of parcels to deliver, almost matching the decline in letters sent in recent years.
eCommerce 101: The Essentials of eCommerce:
What Counts as eCommerce?
If you understand that eCommerce is simply a contraction of the term “electronic commerce,” it becomes easy to understand just how massive the activity is. Technically, eCommerce encompasses all business activities carried out via the internet. If you buy or sell something online, then that is included in the eCommerce statistics.
Models of eCommerce
There are many different types of eCommerce business you can create. However, we can look at eCommerce from at least three perspectives:
By types of customer By the ways you make money By how you sell
If you group eCommerce businesses by type of customer, you could sell in the following ways:
B2C – Business to Consumer, i.e., you predominantly sell to end-users B2B – Business to Business, i.e., you predominantly sell products/services / raw materials to other businesses B2G – Business to Government, i.e., you predominantly sell to government departments and agencies
However, there are a few eCommerce markets where the seller is the consumer, i.e.
C2B – Consumer to Business, i.e., where people market their services to businesses, like with freelancing C2C – Consumer to Consumer, for example, when you sell items (as an ordinary person, not a business) to other people on a site like Craigslist, Facebook Marketplace, or eBay.
The most typical models for making money with eCommerce are:
Selling your products to customers Selling “white label” products Wholesaling Dropshipping Selling by subscriptions Using a freemium model
The three most common ways that eCommerce businesses make their sales are:
Marketing via social media On an online marketplace Via your own eCommerce store or business website
Most established eCommerce businesses operate their own eCommerce store but often use the other methods as additional marketing opportunities.
How Has eCommerce Changed Shopping?
Arguably the birth of eCommerce occurred as far back as 1969, with the establishment of CompuServe. This was obviously extremely primitive at first, relying on a dial-up connection. But it was here that some of the early features that later became essential to the internet first appeared. Over the next few decades, CompuServe introduced primitive forms of email and internet connectivity. Michael Aldrich invented an early form of electronic shopping in 1979, using a modified TV and a transaction-processing computer connected by a telephone line. The first eCommerce company, Boston Computer Exchange, was created in 1982 to facilitate people selling used computers. Online eCommerce expanded relatively slowly over the late 1990s, and by 1999 the Chinese online marketplace, Alibaba launched. It is now a major online sales company, supplying predominantly bulk quantities of items to others wanting to sell retail amounts online. A significant advance that made eCommerce simpler was the launch of Square in 2009. This made it easier for retailers to accept debit and credit cards anywhere. As a result of the growth of eCommerce, traditional retailers have had to change their operating models. You will find few large bricks and mortar retailers who don’t have a strong online presence now. The recent COVID crisis hastened this process, with people opting to shop online to keep away from in-store crowds. One negative side effect is that traditional retailers are often shutting stores and making shop assistants redundant. Many well-known businesses have had to change their business models to survive. The combination of COVID and the increased popularity of eCommerce has led to massive change. Retailers, like Macy’s, Nordstrom, and others, are facing a cash crunch like never before. Sure, much of this is due to the effects of Coronavirus lockdowns, but firms without a high-quality online sales platform have suffered considerably worse than their online competitors. Consumers are clearly favoring businesses engaging in online commerce and digital touchless methods, such as QR codes, contactless cards, and digital wallets, over traditional payment methods.
Why do People Use eCommerce?
One of the reasons consumers like eCommerce is that it lets them shop when they have the time and energy, rather than when a particular shop is open. It also widens their shopping options to purchase products not commonly available in their physical proximity. You can shop from millions of small businesses online, most of which you would never have heard of before eCommerce. Of course, if you are a small business owner, eCommerce greatly expands your pool of possible customers. In earlier days, there was a reluctance to buy goods sight unseen. Indeed, there were many concerns about the safety of online payment systems. However, over time these have become less of an issue. Many consumers were concerned about buying clothing online without first trying it for size. As a response, apparel retailers have found ways to describe their sizing better, making it safer for people to risk making a purchase. Whereas once you might have had to go to a specialist shoe store to buy your Size 10 trainers, you now can determine that you actually need a Size 10 Wide, and buy a pair with the confidence that you will fit them when their parcel arrives at your door. A natural evolution of eCommerce was the opening of easy-access online marketplaces. You can easily sell unwanted items online now, rather than using old-style classified ads in the newspaper. This has again expanded the range of people who will see what you have available.
Downsides to eCommerce
The most obvious disadvantage of eCommerce for firms that haven’t changed their operating models quickly enough is the enforced closure of existing stores with the accompanying redundancy of many retail workers. Some of these people may have moved into another function for online businesses, working in an online warehouse, for instance, but there will be clear losers here. Retailers and other online sellers are now more distant from their customers than previously. You don’t have the opportunities to talk to your customer daily like you can in a store. This means that you need to find other ways to gather data, for example, surveying your existing customers. You are also very reliant on technology throughout the entire process. Every time something breaks down, your store can come to a rapid halt. This can be caused by something beyond your control, like your web host going offline for a few crucial hours, or a payment processor having security issues. And as much as online retailers have improved the way you can view products and found better descriptions for things like sizing, consumers still can’t easily pick up, feel and try out potential online purchases.
Steps to Setting up an eCommerce Business
While we won’t go through how to set up an eCommerce business in detail here, we have covered some of the essential factors in our Introductory Guide to eCommerce. The key questions you need to ask yourself as part of your planning are:
What types of products do you intend to sell? How will you source products? To whom do you intend to sell? How do you plan to sell your goods? How will you build your eCommerce store or other sales method? How much money will you need up-front?
Once you can answer these questions, you can go about building your eCommerce business. The main steps to go through when setting up your eCommerce business are:
Choose your business model and products Choose your platform Build your eCommerce website Choose your payment solution Optimize your site for conversion
