An introduction to ecommerce
Ecommerce, short for electronic commerce or internet commerce, is the buying and selling of goods or services on the internet, and the transfer of money and data to execute those transactions.
As is well-known, ecommerce soared during the pandemic – accelerating its adoption by five years according to experts. No longer the future, ecommerce is huge business today with online sales accounting for more than a fifth of global retail transactions and quickly expanding. Customers, particularly millennials, have come to expect the choice, speed and convenience of ecommerce. Businesses both small and large face a decision: either join the ecommerce revolution by offering an online option or risk losing potential customers to those who do.
Ecommerce sales are expected to total £4.56 trillion worldwide in 2022 and reach £6.14 trillion by 2025, accounting for 23.6 percent of the retail market, according to a report by eMarketer. Accelerated by the pandemic, widespread adoption of technology and advancements in technology which make it easier to buy and sell online, the global trend to online sales has produced from 12-24 million ecommerce sites globally, with new sites opening daily.
The number of people shopping online grew ten percent in 2022 to reach 3.78 billion. Sixty percent of those people bought on mobile devices, making mobile-friendly an online business imperative.
But there are downsides to that explosive growth – namely, more competition online and higher costs for digital advertising.
Types of Ecommerce
There are four main types of ecommerce models.
1. Business to business (B2B)
B2B ecommerce is online sales made between businesses, such as a manufacturer and a wholesaler or retailer (e.g. The Bransford Webb Plant Company sells plants online to retailers). B2B is not consumer-facing.
B2B transactions generally have a longer sales cycle, higher order value and more recurring purchases. Close to half of B2B buyers are millennials (b. 1981-1996) and as younger generations enter business management roles, online B2B selling is becoming more prevalent and necessary.
Nearly 65% of B2B companies across industries are fully transacting sales online in 2022, according to a McKinsey & Company report. B2B sellers are now “more likely to offer ecommerce channels than in-person selling”.
In 2021, ecommerce tied with in-person sales as the highest revenue sales channels, with each producing 18 percent of revenue – higher than phone, email and video conferencing.
A note of warning: 52% of B2B buyers report that they are frustrated with the online buying experience and 90% of B2B buyers understandably say they would turn to a competitor if a supplier’s digital channel couldn’t keep up with their needs.
2. Business to consumer (B2C)
B2C businesses sell directly to an individual consumer. B2C is the most common business model, covering a myriad of products and services from toilet paper and dog food to plants, furniture and cars.
B2C purchases often are made through a third-party online retailer, such as Amazon. However, increasingly businesses new and old are cutting out the middleman and setting up their own online stores to sell direct to consumers, creating a new subset of B2C, Direct to Consumer (D2C). For instance, while Nike sells its products online through retailers such as JD Sports (B2C), it also created its own online store selling direct to consumers (D2C).
3. Consumer to consumer (C2C)
C2C is when an individual consumer sells their products or services to another individual. For instance, when you sell your old furniture to someone on eBay or buy a handmade lampshade on Etsy.
These transactions are mostly done through online marketplaces that charge a transaction or listing fee.
4. Consumer to business (C2B)
C2B is when a consumer sells their own products and services to a business or organization. A few examples of C2B businesses are a graphic designer or photographer who offers their services and product to businesses, or an influence marketer who offers brands exposure to their online audience.
Ecommerce Software Platforms
The first step in creating an ecommerce site is selecting a software platform on which to build and host your business. There are a mind-numbing 120 or more platforms to choose from which can easily overwhelm someone new to this space. Features of ecommerce platforms vary but they usually include product information, customer account management, the shopping cart and checkout processes, product search capabilities and order management.
While Shopify is the giant in the field and offers a compelling product at a competitive price, other ecommerce platforms do as well. Start off by determining exactly what your business priorities are now, and what you think it will need in the short, medium, and long term.
When you are researching ecommerce platform sites, beware of comparison sites because they are often sponsored and make money from click-throughs and therefore lose impartiality. We like the Ecommerce Platforms site because although it too maintains affiliate relationships and makes money on sales generated by click-throughs, the information provided is detailed and appears to be impartial. Here they offer a side-by-side comparison of features of the top seven platforms, including price, features, design templates, add-ons, and customer support.
Not surprisingly they rate Shopify as number one: “Shopify is the most flexible, feature-rich and the most complete ecommerce platform of the bunch. Out of the box, it already offers everything you might need to run an effective store, and lets you customise your design and add various feature extensions.”
But that doesn’t mean Shopify is the one for your business. Fortunately, you are spoiled for choice.