Electronic commerce or internet commerce, or eCommerce, refers to the commercial transaction of goods and services using the internet. The term eCommerce refers to the sale of physical products online that includes data and money transfers to facilitate transactions. It has slowly made a mark in the global retail landscape.
Rise of eCommerce
Every day, millions of customers buy billions of items online, which are delivered to them by a complex system of distribution and storage facilities. Books, electronics, food, and fashion merchandise have become a staple. Between 2013 to 2020, eCommerce, as a percentage of total retail sales, has increased from 5% to 10%.
In the U.S., eCommerce sales were 11.3% of total retail sales at the end of 2019. But this year, it has already reached the 16.1% mark by the end of the second quarter. By 2021, researchers and market watchers predict a staggering figure of USD 5trilling global retail sales through online channels.
Cumulative data indicate that there will be a 276.9% increase in eCommerce sales globally.
The first-ever online sale on a retail platform occurred on August 11, 1994, when a man sold a CD to his friend through his website, NetMarket. Ecommerce has changed progressively over the years to make products easier to discover and purchase through online marketplaces and retailers.
Freelancers, small and large businesses have all benefited from eCommerce, which enables them to sell their goods and services at a much larger scale than traditional offline retail. Irrespective of their market and size, most retail businesses are increasingly relying on eCommerce stores. They are playing a vital role in our daily lives and are redefining commercial activities around the world.
Ecommerce provides a platform for customers to buy whatever they want from wherever they want. One in five consumers has reported that they are buying mostly online, and this figure is going to increase in the coming years.
Reasons for the popularity of eCommerce
Ecommerce has exploded worldwide, particularly in the developed and developing economies. If we study the reasons for this growth, the following factors are responsible:
The New Normal
The pandemic has changed people’s lives worldwide. They are spending most of their time at home, whether it is relaxing, socialising, or working. Whether it is attending a webinar, birthday parties, fitness class, or a Zoom meeting - almost every aspect of our lives is being done online this year.
In just five months, Netflix gained 16 million subscribers, and Zoom users grew by 190 million in three months! Hello Fresh grew by over 40 percent compared to the previous year and added one million new customers in the first quarter of this year. Online retail in the U.S grew in just three months, defying the industry forecast that it would take ten years.
Due to the coronavirus pandemic, thousands of businesses have closed down worldwide; many people have lost their jobs, many have gone into furlough. So, there is an increase in interest among budding entrepreneurs on how to start an online or ecommerce business.
Traditional brick-and-mortar companies are looking at the online route to try and gain new customers. Those businesses which have closed down are now looking to join ecommerce websites.
1. Widespread usage of mobile phones
The rise in the use of mobiles coupled with good internet connectivity has given an impetus to the growth of eCommerce. People are using their phones to buy and sell anytime, anywhere. Also, the payment systems through mobile have become more streamlined. The fintech companies have made eCommerce transactions very simple and secure. All these are well integrated into the mobile systems making it convenient for the customers to pay just by pushing their fingers.
2. Big Data
Ecommerce companies shift through gigabytes of data to know more about customer preferences. They use it to improve the retail experience of the customers. Suppose you are searching on Google for furniture. So the next time you open Facebook, you might see an ad for that product posted by Amazon on your page.
3. Types of ecommerce models
Based on the type of transactions that take place between businesses and consumers, there are four categorisations of the eCommerce models. They are:
- Business to Business (B2B): A business sells a good or service to another business through these platforms. For example, when a business sells Software as a Service (SAAS) to another company, it is considered as a B2B dealing.
- Business to Consumer (B2C): This is when an online business outfit sells a good or service to an individual customer. When an online retailer sells you a shirt, it is B2C.
- Consumer to Business (C2B): Here, a consumer can sell their own product or services to a business or a company. An example of this can be when a popular social media influencer shares her followers to an organisation in exchange for a fee. Or when a football player agrees to his image to be used by a business online for commercial purposes.
- Consumer to Consumer (C2C): These are platforms where a consumer sells a good or service to another customer. A good example will be when you sell your old car on OLX to another consumer.
How to launch an ecommerce business?
In these uncertain times, many budding entrepreneurs are thinking of starting an online business. But they need not worry! You won’t need a big area or lots of money to start one. Many giants that you see today, from Amazon to Google, were launched from small spaces, like garages. Here we will briefly describe how to launch a commercial website venture from the comfort of your home:
1. Find a business that fills a need
You can sell several things on ecommerce-it can be a physical product or a service like an app or software. But first, explore whether there is a market for it or not. For market research, we are sharing with you a trick! There are lots of forums on the internet where people ask questions. Visit them and find out what the people are asking? What do they want?
2. Product Delivery
One option in eCommerce is that you can manufacture the product and sell it yourself. For this, you have to set-up your own factory. If you want to manage the distribution of your inventory, you have to invest in warehouse management systems.
Another option is the drop-shipping route. Here, you only market and distribute the product, taking care of logistics like shipping, returns, etc. Upon receiving an order, you pass it on to a manufacturer or vendor.
3. Build and design your ecommerce site
Once your market and product are ready, you have to prepare for the selling process. For this, you have to make a great website. Remember that you have got less than 5 seconds to grab eyeballs. So, keep the design simple. Some important tips are:
- Make the navigation clear, simple, and consistent on every page.
- Choose one or two plain fonts on a white background to make a better visual impact.
- You can make the message more forceful by using audio or graphics.
Then your site is good to go!
Challenges for ecommerce
1. It is harming the environment
It has been a concern among environmentalists that the cumulative growth in online business has led to an increase in computations, causing a massive use of electricity. It indirectly will lead to global warming. Ecommerce and other technology companies have heeded this warning and now routinely source clean energy for their data centers and warehouses. It will help to reduce the carbon footprint.
2. Design Shortcomings
More than 60% of web searches for products and services happen on mobile devices. Since people use different types of mobile operating systems like Android and iOS on various devices, the design requirements vary. The user experience and user interface of many eCommerce sites are not compatible with the several device screens.
One example of this is that many eCommerce sites look great on small screens of mobile phones but not so good on the desktop. Hence, web designers should take this into account while designing the website.
3. Complex check-out process
Surveys show that many websites have a complex check-out process, which is very frustrating for customers. Ideally, it should be complete in just 2-3 steps. Also, they should display details about taxes and shipping details very clearly, on the billing page itself.
The eCommerce sales in India have touched 8.3 billion $ during the festive season. And the growth trajectory is still strong. So, riding the online bandwagon will be a good idea to increase your bottom-line.
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