2. What Is E-commerce?
As this e-commerce trend is slowly taking over, changing the habits and the mindset of online users, increasing the number of digital buyers, there comes the time to explore this segment of the digital world and explore the opportunities it provides.
Regardless if you are simply starting your business and you want to focus on e-commerce, or if you already have an established business you want to transfer to the digital realm, you will need to understand the essence of the process and practices that can help with taking the most out of it.
What is e-commerce?
The term e-commerce stands for electronic commerce. It is usually abbreviated as e-commerce, but it is sometimes used as ecommerce, eCommerce or simply as EC. The terms e-business or e-tailing are sometimes used as synonyms. The term mCommerce is gradually taking its place as a part of e-commerce that is focused on transactions via mobile devices.
Image: https://unsplash.com/photos/67l-QujB14w
E-commerce is the process of buying and selling online. It is a business transaction where the funds and data are transferred through an electronic network. This way, the sales of all kinds of products, both physical and digital, and services are arranged between two participants in the transaction. Depending on those participants, e-commerce includes several types of transactions:
- Business to business (B2B)
- Business to customer (B2C)
- Customer to customer (C2C)
E-commerce has enabled companies and individuals to join this vast marketplace and develop their business using a sales model that brings significant advantages for both parties. The main benefit of this business model is convenience. E-commerce is up and running all the time, 24 hours a day, seven days a week. This means that buyers can obtain products whenever they find it convenient, without thinking about office hours, how to get to the location and similar things they would otherwise need to consider. Another edge that e-commerce has over brick-and-mortar stores is the selection. As opposed to physical shops, e-commerce offers a much greater diversity of products. The fact that you can always order products from different cities or even countries means that the selection is huge. For business, these benefits significantly increase their reach because they are open to customers at any moment, accepting orders with no geographical limitations.
Despite these benefits, e-commerce also has a couple of disadvantages for customers. Firstly, they are unable to see and touch the product. Although the images are quite helpful, you simply cannot get the whole picture as you would when you see the product in person. This can sometimes lead to customers feeling disappointed when they receive the product that does not fulfill the expectations. Buying online also deprives customers of instant gratification. When you buy a product in a physical store, you can instantly use it, test it and see the benefits of that particular product. On the other hand, with e-commerce, you have to wait for the product to be shipped and delivered to you, which can take anywhere from a couple of hours to a couple of weeks.
E-commerce store is an online shop. From a business perspective, e-commerce is the place to advertise products and services, and this is most commonly done through a website.
If you design your website, you will have your own webshop. You will have to take care of site maintenance and management of the store, which requires a more significant investment. On the other hand, there is always an option to join the online retailers and sell your products directly through their website, without even having your own. While this is an easier solution regarding management and having in mind the fact that these sites offer a large community base which can find your products more easily, it still is a more competitive surrounding, as opposed to having your own online store.
Anyone can join the world of e-commerce because the limitations typical for running a traditional store are simply non-existent. There are no costs of building lease, employees, or comprehensive administration. Instead, all you need is a website and instructions on how to start. This means that an online store is easier and cheaper to set up than a traditional store, which is the main reason why a lot of people are turning to this activity as their way to earn their living.
Besides the actual presentation of products on your website, you will also need to understand the fundamental processes involved in e-commerce, such as payment processing, shipping, buying process, etc.
The history of e-commerce
The first origin of e-commerce is the process of sharing electronic documents and arranging sales, which can be traced back to 1970s. A couple of commercial sales websites were founded in the early 1990s, but the beginnings of what we now know as e-commerce started with the introduction of Amazon and eBay in 1995. These websites completely revolutionized the e-commerce industry and connected buyers and sellers worldwide. Interestingly, Amazon, which now takes up a large percentage of the e-commerce market share, first reported the annual profit in 2003, eight years after its creation.
Over the years, the development of other marketplaces was initiated globally. The ways of e-commerce evolved as the internet itself did. The first obstacle for the safe online transaction was resolved with the introduction of security protocol in 1997.
The first company that recorded a million dollars in online sales was Dell.com in 1997. The success of their business was mainly attributed to the fact that the company enables customers to browse the website and assemble PCs by choosing pieces. The company did not use intermediaries but directly sold to the customers, while providing them with full control over the buying process, which is what made this business model so successful.
PayPal was introduced in 1998, and it was acquired by eBay in 2002. The company is now one of the most popular methods for online payments, with over 200 million users worldwide.
After the 2000s, we have witnessed a massive expansion of the internet usage on the global level, which has also led to the further development of e-commerce. As online security was a burning issue, the Payment Card Industry Security Standards Council (PCI) was formed in 2004, to regulate business compliances regarding security requirements.
E-commerce slowly became more available to the online users as a mean of setting up and running a business, which eventually led to the new e-commerce solutions and software, such as Shopify (introduced in 2004), WooCommerce (introduced in 2011), BigCommerce (introduced in 2015). Once a place for big players with their huge investments, e-commerce is now available to anyone anywhere in the world. Other online marketplaces were introduced, following the example of Amazon and eBay. Some of those are Etsy, Bonanza, and Craigslist.
Finally, as the mobile is in full swing, mobile e-commerce is gaining more and more importance for businesses. It is the perfect place to reach digital buyers who will most likely turn to the internet not only to buy but to get recommendations, suggestions, and reviews about the products and services they are interested in.
How to get started?
If you have decided that e-commerce is an area you would like to explore as an opportunity to earn the profit, you will need to start with developing this plan in details.
Firstly, start by deciding which platform you are going to use. The choice is basically between having your shop on your website or selling on marketplaces. And this choice depends on your business. For example, if you are a small-sized company, with limited resources for web development, starting with marketplaces is perhaps the better alternative. In case you have enough resources, having your own shop is recommended. However, even if you do decide to have your online store, nothing is stopping you from joining the marketplaces as well. In fact, it is advisable to use everything that is available to you to start making the profit through e-commerce.
You will also need to think about the strategy you are going to use, which will include a set of actions you will use to present and promote the products and services to the online users. The next step in getting started is choosing the online channels you will use. Have in mind that social aspect has a major role in online marketing in general, which means that your e-commerce website will also find this approach profitable and worthy of exploring.
Besides the presentation and promotion of products, you will also need to think about the legal aspect, how to handle shipping and payments, and finally about customer care. Since all of these aspects directly influence the performance of your e-commerce, you should consider this a serious business endeavor.
We are all witnessing the extraordinary growth of electronic commerce market and sales realized in the digital world, but if you want to become a part of that world, you will have to get acquainted with rules that are sometimes different from running a traditional commerce business. If you have an idea about what and how to sell, you are to a good start. But to shape this idea into a concrete strategy, a strategy that will yield good results, you should start working on a business plan.