The romance of in-store shopping is a thing of the past. The definition of shopping has changed, and ecommerce has transformed how businesses and customers interact. But, what does ecommerce mean to today’s consumers? In this article, you will learn about the definition of ecommerce, its advantages and disadvantages, and the various types of e-commerce.
Electronic commerce or ecommerce is the process of buying and selling goods on the internet. Any type of business that can be transacted online can be classified as ecommerce. The most relevant example of ecommerce is online shopping. Ecommerce also covers online banking, internet auctions, online ticketing, and payment gateways.
Types of ecommerce with definitions
The most widely held perception about ecommerce is that of a transaction between a business and a client. However, ecommerce goes beyond the standard business-to-consumer transactions. There are six types of ecommerce models:
Business-to-business (B2B) – A transaction that takes place between two businesses is classified as B2B ecommerce.
Business-to-consumer (B2C) – When a business sells a product or service to an individual consumer, it classifies as B2C ecommerce. Online retail is the best example of a B2C model.
Consumer-to-consumer (C2C) – A C2C ecommerce transaction takes place between two consumers. Online marketplaces such as OLX and Quickr are prominent examples of C2C ecommerce.
Consumer-to-business (C2B) – A C2B ecommerce transaction happens when a consumer sells to a business or contributes monetary value to a business. E.g., an individual photographer selling his photographs to a stock image company.
Business-to-government (B2G) – B2G ecommerce happens when a government entity uses the internet to purchase goods or services from a business.
Government-to-business (G2B) – A G2B transaction takes place when a government entity sells its products or services to a private entity. E.g., the United States Geological Survey selling geological data to a private enterprise.
Besides these various ecommerce types, you must also study the different ecommerce delivery methods. These include Direct to Consumer (D2C), dropshipping, wholesaling, and subscription.
Advantages of Ecommerce
There are many advantages of ecommerce. Some of these include:
Low startup cost: Starting an ecommerce store is easy and cost-effective. In many cases, startup costs for ecommerce businesses can be minimal, depending on the project or service being sold. You don’t have the added expense of a storefront or office space, which minimizes your startup costs.
Always open: With an ecommerce business, you can keep your store open 24 hours a day. A lot of people are online at odd hours, and they won’t be subject to the constraints of operating hours of more conventional shopping arrangements.
Wide reach: An ecommerce business gives you access to a global audience. Ecommerce businesses can sell their products and services across the world, unlike brick-and-mortar stores.
Zero travel costs: With the ease of internet shopping, a growing number of consumers prefer online shopping to traditional storefront shopping. Ecommerce stores have access to those who might be physically limited and can only do their shopping from home.
Easy to scale: It is easier to expand an ecommerce business than a traditional brick-and-mortar business.
More product information: Ecommerce enables customers to search for product information, compare the prices, and evaluate its value before making a purchase.
It is much easier to build a website than it is to build a store. You can start an ecommerce business much more quickly than a traditional storefront. That doesn’t mean that you don’t need to do your research and be prepared. You still need to know exactly what products or services that you want to sell on your site.
You can further grow your business through the use of mobile applications. Mobile applications allow your customers to order from their smartphone or tablet.
Disadvantages of ecommerce
Even though modern ecommerce is increasingly convenient and flexible, it has its share of disadvantages. Here are some downsides to ecommerce:
Lack of personal touch: Ecommerce doesn’t provide brands the opportunity to be face-to-face with customers, making it difficult for them to understand the needs and concerns of customers.
Technology: Technology breakdowns can cripple any ecommerce business and damage customer relationships
Zero instant gratification: Customers must wait for the item to ship and arrive, and this results in the absence of the instant gratification experience.
Long waiting periods: Customers have become impatient. Even with overnight shipping, the customer has to wait far longer for their order than they do with a more conventional visit to a brick and mortar store.
No tangible experience: Customers cannot physically examine a product or check out how it works before they buy it. Many times, what they see on the web is not the product that they are really looking for.
Ecommerce platforms help you build and maintain your website, track your transactions, process your point of sale credit card transactions, and graphics depicting your products.
A good platform puts, at your fingertips, the ability to process transactions, communicate with your customers, handle your accounting, plan your inventory, and track your shipping.
Ecommerce platforms are available for an affordable monthly fee. Some sites even offer free services to small startup businesses. The fees you pay for an ecommerce platform are far less than you would pay for operating a conventional business. If your business is small, there are even some platforms without fees to help you get started.
Some of the top ecommerce platforms include:
Shopify ranks among the most popular ecommerce platforms in the world. Known for its simplicity and unmatched ease in launching a new store, Shopify continues to be a top choice for ecommerce brands worldwide.
BigCommerce offers industry-leading uptime and a wide range of built-in integrations with leading ecommerce apps. It appeals to both enterprise-level ecommerce merchants as well as startups.
Magento is an open-source ecommerce platform. It provides several advantages over other ecommerce platforms. Some of these include unlimited product listings, support for recurring payments, the ability to offer discounts, and much more.
WooCommerce is an open-source platform, popular with smaller brands with WordPress development resources on-hand. It is one of the most popular ecommerce platforms in the world and includes its own secure payment processor and shopping cart.
Wix is a free cloud-based website building platform. It offers over 72 free themes and a super simple setup. It does not require advanced technical coding skills, which allows any person with basic computer knowledge to build a website. Even though it’s not feature-packed, Wix provides just enough features for small sellers to get started.
Big Cartel allows artists, authors, and independent professionals to set up an online store in just a few minutes, giving them what they need to manage inventory, sales, and more on desktop or mobile. It allows merchants to customize Big Cartel’s free themes or code their own design. It provides features such as real-time sales stats, inventory tracking, and the option to add promos and discounts.
Weebly is widely known as one of the largest site builders in the world. It is known to make constant improvements to its platform’s technology. Weebly is among the most user-friendly ecommerce platforms and offers all the basic tools needed for a functional store.
Salesforce Commerce Cloud
Salesforce Commerce Cloud is a part of the Salesforce product suite. It integrates with a range of CRM and marketing services and is regarded as the ideal choice for enterprise-level businesses already using Salesforce’s product suite.
Volusion is primarily aimed at new ecommerce sellers. It provides features such as in-site blogging, discount code creation, and a variety of free themes are some key features. However, it scores relatively low on integrations and app options. Volusion is one of the first ecommerce website builders in the market.
Squarespace is a drag and drop, visual website builder known for its sleek drag-and-drop templates that make it easy to build beautiful websites. It allows you to build a website without coding or setting up a web host. It is known to have the best themes of any website builder, with strong features and a highly intuitive interface.
Businesses of all sizes have used ecommerce to grow and succeed. Here are 5 ecommerce examples to inspire you:
American Flags Express
American Flags Express specializes in commercial quality large American flags.
In 2001, the company witnessed a huge surge in orders. That’s when the company realized that their shopping cart could no longer handle the large volume of orders. After detailed research, American Flags Express signed up with Volusion.
Using an ecommerce platform helped American Flag Express focus more on manufacturing and customer service. The company is currently growing at a rapid pace and continually adding information on new products.
Read the full story here.
Dollar Shave Club
Dollar Shave Club delivers male grooming products like razors to customers by mail on a monthly basis.
A smart ecommerce strategy backed by an appealing brand personality propelled Dollar Shave Club to massive ecommerce success. With its online direct-to-consumer business model, Dollar Shave Club had the freedom to offer razor blades at a much lower price.
By using ecommerce to eliminate the middleman, Dollar Shave Club became a business with a highly efficient supply chain not limited to traditional retailers.
Coopers is one of Australia’s oldest family-owned breweries. The company needed a custom ecommerce platform to solve its shipping challenges.
Coopers had previously migrated from Magento Commerce Open Source 1 to Magento Commerce Open Source 2 and implemented Magento Shipping to manage their fulfillment requirements. To stay competitive, Coopers DIY needed to provide benefits such as flat rate shipping and free shipping to its online customers. The company was able to achieve this with the Magento platform.
DIYBeer.com successfully resolved its shipping challenges and provided great offers to its customers with its ecommerce model.
Read the full story here
Raw Generation is a raw juice company that was started with the mission of providing natural, healthy, and convenient foods to busy people.
In its initial days, Raw Generation used social media to market its products. However, after a few months, the sales hit a lull and the company decided to focus its attention on increasing its sales through other marketing avenues.
Today the biggest chunk of Raw Generation’s sales comes from deal sites such as Groupon and Gilt. Recently, the company also invested in an ecommerce platform. Raw Generation believes in innovating on the go and will figure out its next best option to increase sales once its sales on deals sites plateaus.
Read the full story here
US Patriot Tactical
US Patriot Tactical is a tactical goods retailer focused on building lifelong relationships with its customers.
The company already had an established ecommerce business and was facing problems due to its platform limitations. The US Patriot Tactical team decided to move to a cloud-based ecommerce platform and chose BigCommerce.
One of the key problems that the website was facing was that it was slowing down during traffic spikes. In addition, the conversion rate was extremely low and their mobile channel was crippling potential earnings. Moving to BigCommerce provided several benefits. The responsive design allowed their mobile shoppers to easily browse, add to cart and check out.
The US Patriot Tactical saw a significant increase in revenue, transactions, and overall conversions. Improvements to the company’s mobile shopping experience have also paid major dividends.
Read the full story here
Frequently Asked Questions (FAQs)
Ecommerce can be classified into various categories, based on the parties involved and the nature of the dealing. There are six types of ecommerce models ─ Business-to-consumer (B2C), Consumer-to-consumer (C2C), Consumer-to-business (C2B), Business-to-government (B2G), Government-to-business (G2B), and Government-to-consumer (G2C).
2. What is the difference between B2B and B2C ecommerce?
A B2B ecommerce business always has other businesses as their customers. A B2C ecommerce operation is always a business that sells to consumers as their customers. Both B2B and B2C are the most common types of ecommerce operations.
3. What are the advantages of m-commerce?
M-commerce is the use of mobile apps to buy and sell products or services online. It gives businesses access to a larger customer base who can easily order products or services from their phones instead of their computers.
4. What is B2B ecommerce?
B2B ecommerce refers to any transaction that takes place between two businesses. In a B2B ecommerce transaction, both the seller as well as the buyer are businesses. An example of a B2B ecommerce transaction might be a manufacturer who builds components that are used in the manufacture of other products.
5. What is the role of m-commerce in business?
Due to a large number of consumers who prefer to do their business on their mobile devices, m-commerce is rapidly becoming a requirement for successful ecommerce. Adapting your website to a smaller screen and mobile application can be key to more rapid growth.
6. What are the risks of ecommerce?
The risks of ecommerce can include system reliability of both the ecommerce site as well as the customer’s computer. Online security in the form of malware, and hackers can be who can steal your identity are also an issue. It is easier for someone to commit credit card fraud with online shopping than it is in a physical storefront. These are all risks that every consumer needs to be aware of before buying things online.
7. Is ecommerce secure?
Yes, ecommerce is secure. Due to potential security risks, most ecommerce companies have online security in place to protect their customers from being violated by hackers or identity thieves.
8. Why do you need an ecommerce platform?
An ecommerce platform helps manage and run all aspects of your online business, from building your website to processing transactions and communicating with your customers.
9. What is B2C ecommerce?
B2C ecommerce is an ecommerce transaction that takes place between a business and a customer.
In a B2C transaction, the seller is a business, whereas the buyer is a customer. An excellent example of a B2C ecommerce operation would be companies like Amazon. They can be offering any type of product, but their customer is always a consumer.
10. What are the types of ecommerce platforms?
There are three types of ecommerce platforms. These are:
On-premise: An on-premise model is installed and managed on-site by developers.
SaaS: This is a cloud-based delivery model, in which the applications are hosted and managed in a third-party datacenter.
Open source: An open-source model allows users to install, maintain, and configure the software on their own servers. It is free of charge and comes with a wide variety to boost its functionality.
11. What are the biggest ecommerce companies?
The biggest ecommerce companies are Amazon, eBay, Groupon, Zappos, and Home Depot for those in the United States. There are millions of ecommerce companies throughout the world.
12. What is ecommerce, and how does it work?
Ecommerce is the buying and selling of goods and services using the internet. An ecommerce business works just like any other business without the added complications experienced by brick-and-mortar companies.
13. What is an ecommerce business?
A business that is conducted using the internet (as opposed to a traditional storefront facility) is an ecommerce business. An ecommerce business can be set up with minimal cost in comparison to a traditional business that requires a storefront.
14. What is an ecommerce website?
A website that is used to buy or sell products or services is an ecommerce website. Some popular examples of ecommerce websites include Amazon, Alibaba, and eBay.
15. What is an ecommerce marketplace?
An ecommerce marketplace is a central site where ecommerce businesses can sell their products or services as third party suppliers. Alibaba, Fiverr, Upwork, and Etsy are some of the popular online marketplaces.
16. What is an ecommerce platform?
An ecommerce platform can be defined as a set of software applications that takes care of different steps in the purchase process, from order management to customer service, and inventory management. Shopify, BigCommerce, and Magento are popular ecommerce platforms.
17. What is the difference between ecommerce and e-business?
The term ecommerce is broadly used to define any commercial transaction over the internet. In contrast, e-business is an umbrella term used for any business that’s conducted online. E-business includes all aspects of operating an online business, including the buying and selling of goods and services online.
18. Why is ecommerce important?
Ecommerce is important because it offers several advantages over traditional commerce. Ecommerce allows businesses to run 24 hours a day with low overhead and without hands-on personnel present at all times.
19. Is Amazon an ecommerce platform?
Ecommerce is only a small component of the Amazon corporate entity. Amazon also offers services for companies selling both new and used items as well as helping authors self-publish their books in e-reader format.
The internet is not going anywhere. It will continue to grow and evolve, and with it, so will the various businesses based online. Ecommerce offers brands the opportunity to sell to a global customer base at a low cost. However, like traditional businesses, there are successes and failures in every market. Ecommerce is no different.