What is E-Commerce?
A literal definition of e-commerce is a business that involves buying and selling products and/or services on the internet. This can be via traditional companies or on very niche websites. The “e” stands for “electronic” and when added to commerce it simply means trade done online for goods and services. Many years ago buying items online was seen as unusual and strange or only for those who could navigate the internet with ease. Today it’s unusual for someone not to buy products and services online.
Despite people relying on online trade heavily these days it’s hard to imagine that e-commerce has only been around since the 1990s. Back in 1991 the World Wide Web was invented and soon after ISPs were created to enable the public to get online. People would browse the internet and these developments laid way to a new way of shopping. In 1994 the first online shops started to appear. This same year Amazon was founded, whilst it only sold books at the beginning it managed to sell products to 46 different countries in its first month alone. Not too long after eBay and Alibaba were set up. All three remain as retail giants to this day.
Due to how we use the internet electronic commerce has only ever grown larger and larger. Social networks flourished around the same time and retailers were able to advertise and interact directly with potential customers. This also gave companies insight into what their customers thought. Reviews, discussions and ratings could be watched and used as free market research and for analysis for new products and services. Even during economic struggles and the pandemic e-commerce continued to grow, unaffected.
How it Works
There are various models and markets when it comes to online retailers. Indirect e-commerce sees a business selling a customer a physical item, this selected and paid for by the customer and then sent out by the retailer to be delivered. On the flip side there is Direct e-commerce where an intangible item is purchased. No phyiscal item is involved here, examples include software, games, advice, e-tickets and more. Then there are different markets: B2C (business to customer) a shop sells to a customer, B2B (business to business) for example, a wholesaler sells to a retailer and C2C (customer to customer) sites such as eBay and Poshmark are examples of this.
Looking at the most popular or more frequently referenced B2C the customer will open the site and find many options. Sites will provide a way to categorise and filter so the customer can find what they’re looking for quickly. There they will go to a product page, this page should contain information such as a photo, content describing the item, the price etc. A simple click to add to basket and payment follows and the company then sends out the item. It’s vital for the company to ensure they have a well functioning site for this process to work well, otherwise the customer will look elsewhere.
When a company is getting started one of the first decisions they will make is whether or not to create their own website or use an e-commerce platform. These platforms (such as WooCommerce or Shopify) are great for those who may have a smaller budget. They are relatively easy and quick to set up with templates to choose from if needed. However for some it may still be complex and there is less leeway when it comes to customisation.
Alternatively, a proprietary site means the company can have the site exactly how they want it. When hiring a professional to make the site, they can design almost anything the company wants. The downside to this is that it takes longer and obviously it costs more.
We offer several solutions around the issue of e-commerce!
Advantages and Disadvantages
Sales can take place 24/7 meaning an increase in potential profits
Advertising reach online and analysis to help performance based on consumer trends
No bills to pay on a physical shop such as utilities, insurance, rent etc
Large customer base due to being able to reach customers globally
Customers can buy anytime they wish – helpful for shift workers
Product comparison becomes simple for consumers
Customers who are not technically literate won’t use such sites
Mistrust of online payments or preferring to use cash
Not being able to see or hold the item or try it on in the case of clothing
Customers not being able to get the “retail therapy” feeling
Businesses aren’t always on hand 24/7 to help with queries
Other Types of e-Commerce
Whilst our main focus here has been retailers and B2C there are more examples where e-commerce is used. Internet banking is a good example as people don’t simply use their accounts online but are offered several products. Banks these days don’t just offer accounts but savings products, mortgages, business loans, credit cards and more. Many banks will allow customers and non-customers alike to apply for these online. Electronic payments such as PayPal is seen as an excellent alternative to bank transfers or checks. Electronic tickets are more popular than ever, these can be for concerts, transport, movies and more. No longer do customers have to visit a box office and queue up.