On August 11, 1994, the digital marketplace took its first breath with the sale of a compact disc featuring Sting's "Ten Summoner's Tales." This momentous transaction not only marked the dawn of e-commerce but also heralded a revolutionary shift in how we shop and conduct business globally.Fast forward to today, e-commerce has blossomed into a dynamic realm where buying and selling goods online is seamlessly integrated into our daily lives. This thriving ecosystem is bolstered by an array of technologies and digital platforms, including website builders, payment gateways, and social media sales channels. As we look ahead, global e-commerce sales are on track to soar to $8 trillion, capturing 23.6% of all retail activity by 2026. With such staggering growth, innovative technologies continue to reshape the landscape of online commerce.
In 2023, retail ecommerce sales accounted for over 19% of overall retail sales worldwide, and Statista predicts that, by 2027, ecommerce will make up nearly a quarter of total global retail sales. Needless to say, ecommerce is on the rise.
What is ecommerce?
E-commerce (electronic commerce) is the activity of electronically buying or selling products on online services or over the Internet.
Short for “electronic commerce,” ecommerce encompasses all buying and selling that’s done on any digital device or platform, such as an online store, smartphone, online marketplace, or social media platform.
WORKING
Ecommerce works by connecting sellers with customers and allowing exchanges to take place online. It can work in many different ways and take many forms. Here’s a general overview of how the process can look:
The seller chooses online selling channels, like a website or social media, and promotes products or services for sale.
Customers find the products or services and place orders.
A payment processor enables the exchange of the goods or services electronically via payment options like credit cards or digital currencies.
The customer receives a confirmation email or SMS along with a printable receipt.
If the transaction is for goods, the seller ships the products and sends the customer a tracking number via email or SMS. If the transaction is for a service, the service provider can reach out to schedule and complete the service.
E-commerce manifests in various forms, reflecting the diverse ways buyers and sellers interact within online channels. Here are the primary types of e-commerce models:
Common E-Commerce Models
- B2C (Business-to-Consumer): This model involves businesses selling directly to individual consumers, often referred to as the "end customer." It encompasses a wide range of products and services, from retail goods to digital offerings.
- B2B (Business-to-Business): In this model, transactions occur between businesses. Typically, one business sells products or services to another, which may then resell them to consumers. This model often involves larger order quantities and longer sales cycles.
- C2B (Consumer-to-Business): Consumers offer products or services to businesses in this model. For example, freelancers may provide their skills to companies, or individuals might sell images or content that businesses can use.
- C2C (Consumer-to-Consumer): This model facilitates transactions between consumers, often through online platforms that act as intermediaries. Examples include eBay and Craigslist, where individuals can buy and sell items directly to each other.
- B2G (Business-to-Government): Businesses provide goods or services to government agencies. This often involves a bidding process and can include a wide range of products, from office supplies to specialized services.
- C2G (Consumer-to-Government): In this model, consumers interact with government entities, such as filing taxes or making payments for public services.
- G2B (Government-to-business): Governments sell products or services to businesses, which can include various procurement processes.
- G2C (Government-to-Consumer): Governments provide services directly to consumers, such as public health information or social services.
Revenue Models in E-Commerce
E-commerce businesses can also adopt various revenue models based on their operational strategies:
- Direct Sales: Selling products directly to consumers without intermediaries.
- Subscription Services: Offering recurring deliveries of products or access to services for a regular fee.
- Affiliate Marketing: Earning commissions by promoting other companies' products through referral links.
- Dropshipping: Selling products without holding inventory; instead, orders are fulfilled by third-party suppliers who ship directly to customers.
- Wholesale: Purchasing goods in bulk at discounted rates for resale at higher prices.
Payment gateways
A payment gateway is an essential functionality for completing online transactions, as it allows your ecommerce site to securely process payments.
Today, many customers expect businesses to offer flexible payment options at checkout. In fact, 13% of customers will abandon their carts if they don’t see enough payment methods available. such as credit cards, digital wallets like Apple Pay or PayPal, Buy Now, Pay Later (BNPL), and even cryptocurrency
Point-of-sale (POS)
With a point-of-sale (POS) system, businesses can easily manage in-person transactions and seamlessly integrate orders and inventory between their ecommerce platforms and brick-and-mortar stores, allowing them to provide the unified shopping experience that customers expect.
A POS system is a collection of different software and hardware, which, when combined, allow businesses to process their customer-facing transactions. The setup depends on the payment methods that your business accepts. Every company will use their POS system in their own way, based on their business needs.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) refers to software that automates business processes, from supply chain to customer relationship management (CRM) to — most often — financial systems. ERPs enable organizations to create a single source of truth for their data and connect unrelated APIs to each other for a larger, more cohesive enterprise system.
Merits of E-Commerce
- Convenience: E-commerce operates 24/7, allowing consumers to shop whenever they want without the constraints of traditional store hours. This flexibility enhances the shopping experience, enabling purchases from the comfort of home or on-the-go.
- Wider Selection: Online stores often provide a broader array of products than physical retailers can offer. Many e-commerce platforms feature exclusive items that are not available in brick-and-mortar stores, giving consumers more choices.
- Lower Operating Costs: Starting an online business typically incurs lower costs compared to a physical storefront. There’s no need for expensive leases, extensive staffing, or high overhead expenses, allowing businesses to allocate resources more effectively.
- Global Reach: E-commerce breaks down geographical barriers, enabling businesses to reach customers worldwide. This expanded market access allows companies to tap into previously untapped demographics and niche markets.
- Direct Customer Relationships: E-commerce facilitates direct interactions between businesses and consumers, fostering customer loyalty and enabling personalized marketing strategies based on consumer data and preferences.
- Speed and Efficiency: The online purchasing process is generally faster than traditional shopping methods. Consumers can quickly find products, compare prices, and complete transactions with just a few clicks.
- Data Insights: E-commerce platforms provide valuable analytics that help businesses understand customer behavior, preferences, and trends. This data can inform marketing strategies and product offerings.
- Scalability: Online businesses can scale operations more easily than physical stores. As demand grows, e-commerce businesses can expand their product lines or enhance their marketing efforts without the constraints of physical space.
- Enhanced Marketing Opportunities: Digital marketing strategies such as SEO, social media advertising, and email campaigns allow businesses to reach targeted audiences effectively and affordably.
- Safety and Accessibility: E-commerce provides a safe shopping environment, especially during times like the COVID-19 pandemic when many consumers prefer to avoid crowded spaces. Additionally, online shopping is accessible to individuals with mobility challenges who may find it difficult to navigate physical stores.
LAUNCHING
If you’ve decided to start a business, congratulations, you’ve already completed the first step! Once you have an idea and the desire to get started, you’re well on your way to launching your own ecommerce store. Then, after you’ve decided on the details, you can sign up with an ecommerce platform like Shopify to help you execute your vision. Here's how you begin:
1. Find an idea: Look for product opportunities, untapped audiences, or a gap in the market.
2. Do market research: Thoroughly research your competition.
3 Write a business plan: If you plan to seek funding, this will come in handy.
4. Develop a brand: Choose a logo and business name and create a set of brand guidelines including mission, values, and brand voice.
5. Set up your online store: Choose an ecommerce platform and a plan that fits your business size. Customize your ecommerce site with your branding and add products.
6. Choose your shipping strategy.
7. Develop a marketing plan: Set sales and marketing goals and prioritize advertising channels
8. Launch your ecommerce business!
If you’ve decided to start a business, congratulations, you’ve already completed the first step! Once you have an idea and the desire to get started, you’re well on your way to launching your own ecommerce store. Then, after you’ve decided on the details, you can sign up with an ecommerce platform like Shopify to help you execute your vision. Here's how you begin:
1. Find an idea: Look for product opportunities, untapped audiences, or a gap in the market.
2. Do market research: Thoroughly research your competition.
3 Write a business plan: If you plan to seek funding, this will come in handy.
4. Develop a brand: Choose a logo and business name and create a set of brand guidelines including mission, values, and brand voice.
5. Set up your online store: Choose an ecommerce platform and a plan that fits your business size. Customize your ecommerce site with your branding and add products.
6. Choose your shipping strategy.
7. Develop a marketing plan: Set sales and marketing goals and prioritize advertising channels
8. Launch your ecommerce business!