Electronic commerce, or ecommerce, is a term that describes a digital platform and a business strategy that allows you to buy or sell goods online. Every time you make an online purchase, you contribute to the e-commerce industry.
The phrase is fairly fluid and inclusive, as it also covers online banking, software services, remote service providers, and platforms for online courses in addition to Amazon and eBay (basically, any transaction made online).
However, the term "ecommerce" is frequently used to describe the usual online store that sells shirts to end users, depending on the context.
Examples:
"Ecommerce enterprises are expanding and becoming more prevalent than ever throughout the years."
"I had planned to create a SaaS first, but I believe I'm going to launch an online store to sell pizza ingredients."
Ecommerce Definitions
E-commerce is a broad and nebulous phrase, as was previously stated. This indicates that there is no agreement on what exactly it signifies or what qualifies as a "ecommerce business" or not.
So let's begin by looking at several definitions. First, the definition that appears when you search "what is ecommerce," which only refers to any online transaction:
Next, Investopedia's description appears to relate to a "business strategy" that enables online transactions to take place on any device. Therefore, it is a form of business as well as a type of transaction:
According to Amazon, ecommerce is the conversion of physical stores into online storefronts for the purpose of conducting business via the internet. According to its approach, it states that it can either be a business model or a distribution channel. Since it is what enables companies to contact customers around the world.
But is specificity in definition important? In their book on e-commerce, Alexander Graf and Holger Schneider claim that the term's definition has been rather ambiguous, noting that:
What happens (with e-commerce) is that people struggle to pinpoint exactly what has changed compared to the situation ten years ago when they try to adapt a description to their function, their organization, or their general professional environment. E-commerce appears to be present in every procedure, distribution method, and instrument.
However, it appears that the phrase is being used frequently and has become a buzzword. Explicitly stating:
Words like "multichannel ecommerce" and "omnichannel commerce" have evolved during the past ten years to support dubious tactics(...) The outcome is essentially new jargon for failing strategies. But even as e-commerce authorities, we struggle to come up with a precise explanation of this phrase.
What should you settle for, therefore, if e-commerce specialists can't come up with an exact definition? Perhaps you should stick with this article's first phrase as your official definition to keep things straightforward.
E-business and E-commerce have different purposes.
By definition, it might seem that every commercial transaction conducted online falls under the umbrella of ecommerce, but that's not always the case.
E-business includes e-commerce as a subcategory. While e-business refers to any online business activity, including sales calls, the purchase of goods, the signing of contracts, and other similar activities, it focuses specifically on the sales and purchases conducted on the internet.
To operate, an e-commerce company merely needs a website as its platform. In contrast, an e-business may need Enterprise Resource Planning (ERP), a digital workspace, and Customer Relationship Management (CRM) to function.
For instance, "ecommerce" is more appropriate to use when referring to an online business that sells tangible goods to internet users because there is no physical contact during the entire sales process and between you and the consumer.
occurs online.
On the other hand, a B2B consultation firm that receives queries from potential clients is frequently referred to as an e-business. In order to function, the sales process there needs to involve introductions, sales calls, a proposal, and an onboarding procedure. As a result, the actual "transaction" is just one aspect of how business is conducted.
Why Ecommerce is So Important and Talked About: The Stats
Our lives have been permanently changed by the straightforward convenience of online shopping. And even though its meanings are ambiguous, e-commerce is here to stay.
More e-commerce companies are starting up, the e-commerce market is increasing at an exponential rate, and the digital economy is now present anywhere there is internet access.
Here are some statistics if you're still not convinced about how the e-commerce sector is affecting society:
- By January of 2022, there were around 4.95 billion internet users worldwide, which is 62.5% of the global population (while the urbanization rate is 57%).
- In 2021, retail ecommerce sales amounted to 4.9 Trillion U.S dollars worldwide. And it’s forecast to grow over 50% within the next four years. People are buying products online, and they’ll only buy more.
- Google reports that more than 80% of customers conduct their research online before making a purchase decision. Which means most of Google searches are made with a purchase intention.
- In 2021, $3.56 Trillion in retail sales were made from mobile devices. Ecommerce businesses have been optimizing for mobile commerce for several years.
- More ecommerce statistics.
We now live in a time when more people own smartphones than live in cities, and where the internet has become deeply ingrained in everyday life.
This indicates that e-commerce is a sector of the economy that reaches practically everyone in the world who has access to the internet, providing both chances to establish a business and conveniences for purchasing goods.
The Origin of Ecommerce and Its Evolution
In 1994, the first online purchase was made. Phil Brandenberger paid $12.48 using his Mastercard to purchase Sting's Ten Summoners' Tales online. This specific transaction made history and let everyone know that e-commerce could now take place on the "internet."
Why? due to the fact that it was the first time encryption technology had been employed to facilitate an online purchase.
E-commerce has expanded rapidly since that time.
The retail business underwent a transformation in the mid-1990s with the emergence of ecommerce behemoths like Amazon and Alibaba. They essentially profited from the financial system's digitalization and global internet penetration, both of which were factors in many brick-and-mortar stores' loss in retail sales.
After that, Google's expansion and its high volume of users made it conceivable.
In order to have their websites rank for highly valued keywords, it is necessary for business owners to spend money on advertisements, do performance-based marketing with more data than before, and draw customers organically.
Additionally, the growth of social media attracted the attention of business owners by duplicating the Google phenomena but adding a social layer that made the online experience more focused and participatory.
The retail workforce has also been influenced by e-commerce. According to the U.S. Bureau of Labor Statistics (BLS), employment in the ecommerce sector expanded by 80% between 1997 and 2016. And as of right now, in 2022, there are 787,104 American workers employed in the e-commerce industry.
Using systems like Shopify or BigCommerce, anyone can now launch an online store from scratch without knowing any coding.
or possessing any kind of technological knowledge. Additionally, there are many open-source platforms that you may utilize to establish any kind of business if you know how to code.
When buying groceries for your home is done only online in the future, physical shopping may cease to exist as a distinct experience and simply be a choice.
Types of Ecommerce Businesses
Ecommerce companies can be grouped based on the goods or services they offer, the parties with whom they do business, or even the platforms on which they operate.
To offer you a clear image of the various sorts of ecommerce sites available, we'll examine all three factors.
Classifying Ecommerce According to “Who” is Selling
E-commerce websites can also be categorized by taking a look at the parties involved in the transaction. Typically, these include
1. Business to consumer (B2C)
The B2C model, as its name implies, represents a company that offers goods or services to lone customers. Due of the greater potential client base and greater scalability, B2C ecommerce is the most popular business model among both traditional and online businesses.
Cocokind is a prime instance of a B2C company. a business-to-consumer e-commerce company that markets skincare goods directly to consumers. In order to encourage their target demographic to buy their items for personal use, you can see them improving their customer experience with quizzes, routine builders, and blogs.
2. Direct to consumer (D2C)
Popular direct-to-consumer (D2C) brands are those that create products as well as sell them to customers, taking away middlemen between the brand and the final buyer.
The important thing is that these companies can communicate with and form bonds with the consumers who use their products, get feedback, grow an audience, and improve deliveries.
Since JOI provides a "unique" solution for producing plant-based milk that isn't 98 percent water, they serve as a great illustration.
In order to sell their goods directly to the customers they were originally seeking to assist, JOI establishes its brand and controls its distribution rather than relying on intermediaries or Amazon.
Additionally, if you visit their website, you'll see that they've created a prettya certain brand to which an intermediary could never have done justice.
3. Business to business (B2B)
Both sides are businesses in the B2B model. Here, a product or service is exchanged between two businesses.
B2B businesses are frequently service- or software-based firms (sometimes known as "agencies" or "SaaS," respectively). Product-selling B2B companies do exist, and depending on where they are in the value chain, they are frequently suppliers or producers selling to wholesalers or retailers.
An easy illustration is the Avery Dennison store. It provides labelers and attachers to corporate clients who frequently package goods. Its catalog is comprehensive enough to include everything a busy merchant could require.
4. Consumer to business (C2B)
The C2B business model exemplifies a transaction in which people add value for corporations. Consumers supply businesses with goods or services, collaborate on projects, and eventually aid businesses in increasing their profits, in contrast to the conventional business-to-consumer approach.
One excellent C2B example that springs to mind is Shutterstock. Professional photographers are able to sell images without a watermark that companies may utilize in their marketing campaigns.
With the aid of high-quality media that could boost productivity, this strategy enables average people to make money.
5. Consumer to consumer (C2C)
When two parties engage in C2C ecommerce, they are consumers who transact with one another. Typically, they serve as online forums for commerce where parties can negotiate and communicate.
The most simple examples are eBay and Craiglist, whose systems enable anyone to sell or buy anything to anyone in the globe in one location without having to do it from a company.
Classifying Ecommerce Businesses According to “What” They Sell
Let's now discuss "what" and "how" e-commerce companies can offer products online. And these consist of:
1. Retailers selling physical goods
These are your normal online shops that sell tools, accessories, apparel, and furniture. By visiting the online retailers' websites, adding products to their shopping carts, and checking out, customers can purchase tangible goods.
The majority of these are B2C or D2C brands that sell goods. However, they might also be B2B suppliers.
H&M's online store and the clothing they offer are an excellent example. Their sole goal is to draw clients who will add items to their shopping carts and complete transactions.
H&M has numerous physical stores throughout the globe, yet anyone may shop on their online without any issues.
2. Service-based businesses
Online service purchases are also possible. Additionally, they can consist of individuals who provide specialized services to firms, including consultants, agencies, and freelancers.
The purchasing process for services is determined by the merchant because services might differ. Depending on the service, you might be able to buy it right away from the website or you might need to contact them first (i.e., schedule a consultation) to figure out what you need.
The majority of service-based companies are B2B, providing specialized marketing, coding, or design services for other brands. An example of this is Contently, which provides content marketing for your company and has a separate platform for payments, onboarding, and other functions.
B2C digital services are still available. People can be found on Fiverr if you go there.offering a variety of services, ranging from the most expert, like relationship counselling, to the most ordinary, like League of Legends coaching.
3. Digital products
All items with a digital format are referred to as "digital products," including ebooks, online courses, graphics, and virtual goods. This group includes companies that sell these products.
One type of company that sells digital goods is a marketplace for courses. Another type sells data products on niche websites or through premium newsletters. They provide a product that doesn't need to be shipped, and they can scale without being constrained by stock.
For instance, Skillshare is a marketplace for courses. Additionally, it provides a huge selection of educational programs to help you develop any skill you like, including cooking, woodworking, and even public speaking.
Like Netflix for courses, Skillshare is geared toward the general public (B2C), hence its pricing and platform are open to all users.
4. Wholesale vendors
These companies deal in wholesale product sales. frequently to merchants who then sell them to final customers. Since they sell goods to businesses, you may classify them as B2B e-commerce; nevertheless, their primary function is to serve as suppliers to the companies who manufacture the goods they sell.
For instance, Alibaba is a well-known wholesaler in e-commerce. They simply require orders from their website to supply products from Chinese vendors to thousands of e-commerce companies using drop-shipping.
5. Dropshipping
Dropshipping is a type of online sales where the supplier handles the shipping while the retailer sells a product. A dropshipping company is thus an online store where you only need to worry about the online sales and not about logistics or inventory management.
Given how simple it is to establish an ecommerce business using this technique, it is not surprise that it is popular. Applications for dropshipping like Oberlo and AliExpress make it as simple as downloading an app.
Numerous internet retailers engage in dropshipping. For instance, Warmly merely sells home furnishings.
Its website is a rather well-organized catalog of domestic things you can purchase, and as it is a dropshipping business, it only sells these items, not manufactures them.
6. Crowdfunding
To assist get a product on the market, potential customers might donate money through crowdfunding. They are frequently companies that help other companies raise money for their projects.
What makes crowdfunding intriguing is that the upfront cash enables the business owners to develop the product under precise guidelines provided by their audience, forging a connection without even conducting the first sale.
Kickstarter is a well-known platform for crowdfunding where you can either share your ideas publicly or contribute to the creation of other things. This website has helped many businesses grow because it makes it simple to donate or publish ideas.
7. Subscription-based businesses
These companies charge customers a monthly fee to "rent" online services.
These are typically software-as-a-service (SaaS) companies that provide access to software products in exchange for recurring payments, frequently with a range of subscription plans and prices.
The business strategy for the SaaS sector is considerably different from that of an online retailer of t-shirts because it has its own world and best practices, including freemium plans, free trials, and onboarding procedures.
The classic illustration of a subscription-based company is Hubspot. Its main offering is a CRM for sales teams, but it also has a ton of marketing tools for blogging, SEO, email marketing, and other strategies.
For those that only require a basic CRM, they provide a free basic package. However, as soon as you begin expanding and needing
In order to fully utilize the software, you will need to upgrade your plan and begin paying a subscription.
Not all subscription-based businesses are SaaS-based. This category can also include other companies that provide premium newsletters, access to premium communities, or courses.
The Platforms Where Ecommerce is Taking Place
Now that you are aware of the various e-commerce companies now available. Let's review the platforms on which these businesses operate.
1. Online Store Websites
On their own websites, firms conduct their transactions first. Retailers create online stores to display their goods and services using shopping carts and ecommerce platforms.
Thankfully, there are several ecommerce systems available today that allow you to create a website without the need for technical knowledge or the hiring of a web developer.
The most pertinent ecommerce solutions available right now are described below.
Shopify
Shopify controls over 3,766,071 websites worldwide and has more than 32% of the market for ecommerce platforms.
Since Shopify enables you to establish successful online stores over the weekend, it is particularly well-liked by new users and small enterprises. This platform has variable shipping prices, automatic taxes, and more than 100 payment channels. It also has a user-friendly and straightforward design and a ton of themes.
Additionally, Shopify supports social media connectors, has a ton of SEO tools built right in, and is fully hosted. You can also download a ton of third-party apps from their app store to enhance your business.
Small businesses seeking an all-in-one ecommerce solution are best served by Shopify. You may always try another Shopify option if you decide it's not the perfect platform for you.
Magento
Over 772,000 websites worldwide are currently powered by Magento.
Magento is a highly adaptable e-commerce platform utilized by large and medium-sized companies with growth potential. This platform provides powerful customization options for your online store's entire design, including unique templates, modules, and automation rules.
You may always use one of the 5,900 extensions offered in the extension store to realize your vision if you need to further expand the capabilities of your Magento store.
Magento, a sophisticated e-commerce platform, also aids you by keeping a vibrant community of programmers and industry professionals that are prepared to assist you whether you use the enterprise plan or the open-source version.
Medium-sized businesses are what Magento works best for.
that need a fully customized website, as well as businesses that wish to scale.
WooCommerce
Over 5,102.506 live websites are powered by our platform. And on CodeCanyon, you may purchase one of the 1,773 plugins made specifically for WooCommerce integration.
The reason WooCommerce is so well-known is that it's one of the most well-known open-source ecommerce platforms and was created with WordPress integration in mind.
You may create a distinctive online store with the help of WooCommerce's many layouts. You'll receive all necessary capabilities, such as limitless items, unlimited customization, order administration, and free delivery. Additionally, because the platforms are open-source, you can always modify them to your preferences if you know how to code.
Small businesses with WordPress websites and people who are accustomed to it are the greatest candidates for WooCommerce.
Carrd
Carrd is a platform designed for simplicity and to build one-page websites; it was not created to establish an e-commerce website.
The most affordable option to offer handmade goods or freelancer portfolios is through this platform. It is designed for people who desire a quick, simple way to run a business. Additionally, it is relevant since it touches on a sector of the digital industry that currently powers over 800,000 websites.
The greatest candidates for Carrd are lone entrepreneurs or freelancers offering a single service or a limited number of goods.
2. Product Marketplaces
Online marketplaces make it easier for buyers and sellers to transact, giving sellers a platform to market their goods and expand their customer base. These platforms are well-liked by users because to the huge variety of goods and services they offer from numerous vendors and suppliers throughout the world.
You no longer make purchases via the brand's website when using an online marketplace. Instead, you're making a purchase from a business that is merely reselling goods online. These are a few of the marketplaces:
Amazon
Amazon, a corporation that need no introduction, will be the biggest American online retailer in 2021 with sales of $469.8 billion. Around 200 million of the e-commerce behemoth's global Amazon prime members are located in the US and spend, on average, $1,400 a year on online shopping.
One of the largest online marketplaces in the world is Amazon. Customers can choose from a variety of products from international shops on its platform, which also gives businesses access to a sizable client base.
eBay
In 2021, eBay will have 1.5 billion products listed on their site and 147 million active users, having a substantial impact on the ecommerce sector.
eBay is an online marketplace that links merchants and customers from all over the world. It may assist small and medium-sized enterprises build a worldwide clientele.
Since eBay is easy to use, straightforward, and provides a variety of payment methods, practically anyone may buy or sell on its marketplace. Additionally, it features a special function that enables vendors to run online auctions and enhance the market's interaction.
Etsy
In 2020, Etsy had 60 million goods available for sale, 2.7 million active sellers, and 45.7 million active online shoppers.
For artists searching for an online marketplace to display their distinctive handmade goods, Etsy is the ideal platform.
Independent artists and those seeking out uncommon, unique, and expensive goods are its main demographics.
Here, artisans and creatives sell their one-of-a-kind creations. Due to the ease with which these things may be sold and purchased on Etsy's marketplace, a surprising number of people are willing to pay high prices for them.
Alibaba
In 2021, Alibaba had 1.24 billion customers and generated $109.48 billion in sales. It serves as a marketplace where suppliers can sell goods to merchants.
One of the largest online marketplaces in the world is Alibaba. This portal is very useful for connecting with major manufacturers and making large purchases, as was previously noted. With an estimated 960 million active users, Alibaba also controlled the Chinese market.
3. Social Media Marketplaces
Social media sites, in particular Facebook, Instagram, and Pinterest, have started to make it simpler for businesses to reach and attract clients in recent years.
Despite the fact that social media networks make it more difficult to drive customers there, they instead let brands sell goods directly from their platforms.
For instance, businesses who display their products on Instagram can use the checkout feature to let customers buy the items they want without ever leaving the platform.
Additionally, e-commerce enterprises can use Instagram Shoppable Stories, which enables them to include product stickers on a story. Customers can thus start the checkout process by clicking on a sticker when they see a product they want.
Facebook is also riding this wave, as it offers a well-known marketplace where people can sell their goods.
and make purchases for a number of years. Additionally, you may now open a Facebook Shop that connects to your Instagram profile.
Another social marketplace is Pinterest, where you may use Pinterest Shopping to sell goods, make your catalog accessible, post product pins, and promote your online store.
Social media networks are quickly adapting to serve the ecommerce sector due to the volume they handle. As a result, they aid in driving sales as well as brand awareness and marketing campaign promotion.
4. Unique Digital Platforms
On other, less centralized platforms, e-commerce is also practiced. And they're crucial because these are the companies that let people create their own audiences in original ways, from any location in the world.
Several instances include:
- Course platforms such as Gumroad or Podia, where you can quickly put your own courses on sale, build a landing page, and promote it on your sales channels such as Twitter or Facebook.
- Premium newsletter platforms like Substack, where you can create your personal newsletter and charge subscribers a monthly fee to receive your email content.
- No code tools like Bubble.io, where you can build a software product without being a software developer and launch a SaaS. There is no need to code or have any technical skills to create a minimum-viable product.
Furthermore, this is only the top of the iceberg. There are a ton of places on the Internet where you can sell goods or services (and make a living).
5. Decentralized Commerce
There has been a lot of talk about the "web3," a decentralized internet where users govern the platforms they use, as a result of the advancement of blockchain technology and cryptocurrencies.
There are a few platforms being developed in the ecommerce sector that may have an impact on how people buy and sell things online in the future. Two of them are as follows:
- DAOs. Standing as a Decentralized Autonomous Organization, they’re organizations run by code and where the stakeholders make decisions with votes using unique tokens. Currently, there’s a DAO called “The DAO” that offers “borderless commerce” to enable worldwide payments without regulatory hassles and integrate it with your store.
- NFTs marketplaces. Non-fungible tokens are individual currencies often tied to a specific document such as an image, video, audio, certificate, or any type of file. As of now, there’re NFT marketplaces where people can publish and trade their own NFTs, the most popular being OpenSea.
It's a good idea to be aware of blockchain technologies today while they're still in their infancy since soon enough they will be powerful enough to change the ecommerce sector into a more decentralized environment.
You Can Participate in The Ecommerce Industry Too
Because you have access to the internet, you are reading this. Additionally, you can surely join this industry if you have access to the internet.
There is only one thing left to do, which is to act.
There is always something you need to do next, no matter where you are in your ecommerce journey right now.
Getting started? Learn how to create an online store and try it out.
Trying to attract clients? Do the work and learn how to market your internet store.
Trying to climb? Get advice from us.
We have skilled ecommerce specialists who can assist you in putting the best plan into practice in this quickly expanding sector. Our experts at EcommerceGuide will be pleased to assist your ecommerce enterprises in growing, whether you require guidance on search engine optimization, product marketing, progress monitoring, or branding.
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