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What is Ecommerce? A Comprehensive Guide to Ecommerce Strategy

By Joseph Brannon 14 min read

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Electronic commerce or ecommerce is the practice of buying and selling of goods or services on the internet.

Ecommerce includes technologies such as electronic funds transfer, mobile commerce, internet marketing, online transaction processing, supply chain management, inventory management systems, electronic data interchange, and automated data collection systems. Most businesses use an ecommerce store or an ecommerce platform to conduct online marketing and sales activities.

Ecommerce is often written with different spelling variation, such as E-Commerce, eCommerce, Ecommerce, e-commerce, or e commerce.

It is estimated that there will be 1.92 billion global digital buyers in 2019.

Frequently Asked Questions (FAQs): What is Ecommerce?

What is the difference between ecommerce and e-business?

Ecommerce or e-commerce is the practice of buying and selling of goods online, while e-business is an umbrella term used for any business that’s conducted online. While e-business encapsulates all aspects of operating an online business, ecommerce refers to the transaction of goods and services. The terms ‘e-business’ and ‘e-commerce’ are sometimes used interchangeably. However, they’re not synonymous.

What is an ecommerce website?

An ecommerce website is a website that is built for the purpose of buying and selling of goods. You can think of it as an exchange of goods over the internet or you can say online transaction of goods. Some popular examples of ecommerce websites include eBay and Alibaba.

Is ecommerce safe?

Yes, ecommerce is safe. Ecommerce stores offer shoppers a 100% secure environment with the help of multi-layered ecommerce security, monitored transactions, and SSL certification. Secure socket layer (SSL) is the most consistent security model used and developed for ecommerce business, with the aim of securing payment channels by transmitting encrypted data.

Ecommerce can be defined as trading in products or services, and making transactions using computer networks or any electronic means. It includes technologies, such as e-payments, mobile commerce, electronic data interchange, supply chain management, and inventory management systems. Ecommerce is an advanced medium of transacting and almost every product or service can make use of electronic commerce as their form of trading, from financial services and tickets selling to online products selling.

In 2019, ecommerce sales are expected to account for 13.7 percent of retail sales worldwide

Frequently Asked Questions (FAQs): What does ecommerce mean?

What is the definition of ecommerce?

Ecommerce or e-commerce is the sale and purchase of services and goods using the internet. The term ecommerce also includes electronically transferring data and funds between two or more parties.

What are the main features of an ecommerce website?

There are certain elements that every ecommerce site should have to stay relevant and competitive.

Here is a list of features that attract online shoppers:

  1. User-friendly interface: Seamless navigation, easy check-in and quick checkout
  2. Payment gateway integrations: Diverse payment gateways provide more flexibility in payments
  3. Mobile compatibility: The website should be responsive, and the content should intuitively adapt to different devices
  4. High resolution photos and videos: Shoppers like to see products from multiple angles, in different environments, and want to be able to zoom in.
  5. Secure transactions: Information transmitted should be encrypted and secured
  6. Special offers and promotions: Shoppers always like getting a special deal
  7. Honest, user-generated reviews: 95% of shoppers read reviews and 57% of consumers will only use a business if it has 4 or more stars.

What is an ecommerce marketplace?

An ecommerce marketplace is a website where products or services are sold and then processed by the marketplace operator. Some of the most prominent ecommerce marketplaces include Amazon, Etsy, and eBay.

What is an ecommerce platform?

An ecommerce platform is a combination of software solutions that helps businesses create relevant, engaging, and personalized experiences. An ecommerce platform takes care of multiple steps in the purchase process, such as order management, accounting, customer service, and inventory management. BigCommerce is an example of an ecommerce platform.

What is a hosted ecommerce platform?

A hosted ecommerce platform is one where a third-party handles all website hosting responsibilities. This removes the costs and complexities involved in a self-hosted solution. In hosted ecommerce platforms, the platform handles updates, security, and other related tasks for the store owner, who is essentially renting the software from them.

80% of Americans are online shoppers. More than half of them have made purchases on mobile devices.

Among the top advantages for starting an e-commerce business are eliminating geographical limitations, gaining new customers with search engine visibility, lower costs for maintenance and rent, and higher capacity for goods and deliveries while the core disadvantages of starting an e-commerce business include losing the personal touch of physical retailers, delaying goods or services deliveries, and limiting availability of merchandise as some goods cannot be sold online.

Advantages of ecommerce for retailers

  1. Always open: Store timings are now 24/7/365 as online stores never shut down. This is also beneficial for customers as they can purchase products whenever they want no matter whether it is early morning or mid-night.
  2. Sell beyond geographical barriers: An ecommerce website allows you to sell your products and services across the world, unlike brick-and-mortar stores, which are limited to their physical presence.
  3. Use SEO to improve brand visibility: Unlike physical retail, online retail gives you the advantage of attracting customers by improving search engine rankings.
  4. Analyze customer behavior: Retailers can use analytics to keep a constantly monitor consumers’ buying habits tailor their offers to suit the consumers’ requirements.
  5. Boost brand awareness: As like ecommerce business can help B2B organizations to get new customers, so it will be helpful for ecommerce businesses to boost their brand awareness in the market.
  6. Reduce operational costs: A web-based management system allows you to automate inventory management and decrease the associated costs. Also, running an ecommerce store doesn’t come with the same overhead costs as a physical store.
What is Ecommerce? A Comprehensive Guide to Ecommerce infographic

On average, only 2.86 percent of ecommerce website visits convert into a purchase

Advantages of ecommerce for customers

  1. Reduced travel time and cost: Customers are forced to travel long distances to reach their preferred physical store. Ecommerce provides the convenience to visit the same store virtually, with just a few mouse clicks.
  2. Locate the product quicker: Ecommerce sites are designed to help customers narrow down their search and find their products in the shortest possible time. Some websites are designed to remember customer preferences and shopping lists to expedite repeat purchase.
  3. Comparison shopping: Ecommerce provides the advantage of comparison shopping. Customers can browse products across multiple e-commerce merchants and find the best prices.
  4. More product information: Ecommerce provides customers access to huge amount of information about a product or service. Customers can search for product information, compare the prices and benefits and finally evaluate its value before committing purchase.
  5. Improved tracking and updates: Customers can track their delivery status and get regular shipping updates. The can also reach out to service representatives if any doubts arise.

Frequently Asked Questions (FAQs): Advantages of ecommerce

What are the advantages of ecommerce over traditional commerce?

  1. Better reach: Ecommerce can operate from any corner of the world and is not restricted by geographical limitations unlike traditional commerce
  2. Targeted communication: Brands can use customer analytics to recommend products, send relevant messages, and deliver targeted offers.
  3. More payment options: Ecommerce offers several payment modes such as online transfers, digital wallets, and cash on delivery unlike traditional commerce.
  4. Wide product range: Ecommerce provides more variety of products whereas traditional commerce has limited product options due to space constraints.
  5. Flexible delivery options: Ecommerce allows you to choose the time and place of delivery depending on your availability whereas traditional commerce the delivery of goods is instant.
  6. Flexible return policies: Ecommerce stores accept the return of the products without any hassles whereas traditional commerce does not provide such return policy.

Mobile ecommerce is expected to account for 67.2 percent of digital sales in 2019.

What are the disadvantages of commerce?

Although modern ecommerce is increasingly convenient and flexible, it still has its share of disadvantages. Here are some downsides to ecommerce:

  1. Lack of personal touch: Without being face-to-face, it is difficult to understand the needs and concerns of your ecommerce customers
  2. Over-dependence on technology: Technology breakdowns can cripple the business and damage customer relationships
  3. No tangible pre-purchase experience: For shoppers who want to get hands-on with a product, the ecommerce experience can be limiting.
  4. Absence of instant gratification: Customers must wait for item to ship and arrive, and this results in absence of the instant gratification experience.

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The most common perception of ecommerce is that of an online commercial transaction between a business and a client. However, ecommerce can be classified into various categories, based on the stakeholders involved and the nature of the dealing.

There are six types of ecommerce models:

  1. Business-to-consumer (B2C)
  2. Business-to-business (B2B)
  3. Consumer-to-consumer (C2C)
  4. Consumer-to-business (C2B)
  5. Business-to-government (B2G)
  6. Government-to-business (G2B)
  7. Government-to-consumer (G2C)

Business-to-consumer (B2C) – This refers to a business selling a good or service to an individual consumer. The best example of a B2C model is online retail. Retailers with online stores are all examples of businesses that engage in B2C ecommerce.

Business-to-business (B2B) – Any transaction that takes place between two businesses qualifies as B2B ecommerce.

On average, 52 percent of online stores have omnichannel capabilities.

Consumer-to-consumer (C2C) – C2C ecommerce takes place when a transaction takes place between two consumers. The best example of C2C would be online marketplaces such as OLX, where which one individual sells a product or service to another.

Consumer-to-business (C2B) – Consumer to business ecommerce happens when a consumer sells to a business or contributes monetary value to a business. This category primarily includes crowdsourcing campaigns. It also includes cases where individuals sell their items or services to companies e.g., royalty free photographs, etc.

Business-to-government (B2G) – A B2G transaction takes place when a government entity uses the internet to purchases goods or services from a business.

Government-to-business (G2B) – G2B transactions take place when a company pays for government goods, services, or fees online. E.g., a business paying for taxes using the internet.

Government-to-consumer (G2C) – People paying for traffic tickets or paying for their car registration renewals online may fall under this category.

 

69 percent of shopping carts are abandoned

Frequently Asked Questions (FAQs): Types of ecommerce

What are the different types of ecommerce software?

Ecommerce software can be segmented into 3 categories. These are:

On-premise: An on-premise model is one which is installed and managed on-site by developers who facilitate manual updates, fix problems and do general troubleshooting.

SaaS: SaaS is a cloud-based delivery model, where the applications are hosted and managed in a third-party datacenter. It provides the option of paying on a subscription basis.

Open source: Open source ecommerce is a free platform allowing users to install, maintain, secure and configure the software on their own servers. It is free of charge and there is a wide variety of different addons available to boost its functionality.

What are some of the popular online marketplaces?

There are many popular online marketplaces. The top ranked marketplaces are:

  1. Alibaba
  2. Fiverr
  3. Upwork
  4. Amazon
  5. eBay
  6. Etsy

Every discussion about ecommerce usually starts and ends with Amazon.com and with good reason. It is one of the best examples of a thriving ecommerce business and the poster boy for ecommerce website success stories. It is no surprise that Amazon is often been called ‘the cornerstone of ecommerce as we know it’.

However, there are many other ecommerce businesses across the world that are doing great and can serve as examples for the industry. Let’s look at some real-world examples of ecommerce success beyond Amazon.

Check them out below and see what you can apply in your business:

Raw Generation

Raw Generation is a raw juice company that makes unprocessed juice from fresh fruits and vegetables. The company is on a mission to boost health and vitality by providing the right nutrition to busy people.

Raw Generation’s ecommerce journey started when the company first promoted its products through social media. After tasting limited success, they decided to start selling through a prominent deals site. Today the majority of Raw Generation’s sales came from deal sites like Groupon and Gilt. Recently, the company invested in a prominent ecommerce platform and finds it easy and convenient to use. They believe the ecommerce platform has significantly made the website better and improved ecommerce sales. Read the full story here.

Pixie Faire

Pixie Faire is the largest online marketplace for doll clothing patterns, featuring more than 50 indie designers. It also provides online training courses on sewing, pattern making, and crafts. Apart from its main brand, the company also sells doll clothing and patterns under a separate brand, named Liberty Jane Clothing.

Pixie Faire’s ecommerce journey began when it started selling through an eBay store in early 2008. Eighteen months later, the company began publishing its doll clothing patterns. The demand for clothing patterns in downloadable PDFs was high and last month, the company clocked over 43,000 downloads. So far, well over 700,000 patterns have been downloaded.

Pixie Faire has been extensively using digital channels for brand building and promotion activities. The company has a fast-growing YouTube channel and publishes regular videos. Email marketing is another channel that the company has focused on and the company currently has a list of almost 50,000. Facebook, Pinterest, and Instagram are the other platforms where Pixie Faire has a presence. Recently Pixie Faire also upgraded its website and moved from WordPress to Shopify, a more feature-rich and comprehensive ecommerce platform. Due to the high volume of transactions, over 43,000 transactions in a month, Pixie Faire opted to improve bandwidth, the reliability of the hosting, and shopping cart functionality. As a result, they left the WordPress platform and moved to Shopify and SendOwl. Read the full story here.

Abandoned cart follow-up emails have an average open rate of 45 percent.

Birchbox

Birchbox is an online subscription service that sends its subscribers a box of selected samples of beauty related products. These products may range from perfumes and skincare items to organic products and cosmetics.

Birchbox has two revenue drivers: It offers a $10 monthly subscription where the members receive a personalized mix of makeup, skincare, haircare, and fragrance samples. Secondly, Birchbox has an online store that allows customers to purchase full-sized products.

Birchbox has been hugely successful in its ecommerce business and there are many reasons for the company’s popularity. One of the most important factors that has contributed to its success is data. Birchbox regularly asks its subscribers to share their feedback/review on each item and uses that information to match customers with the best products. Birchbox also shares the data with their partners so they can determine what works and what doesn’t. Unlike their competitors, Birchbox is more than just a box subscription service. To differentiate itself, the company also encourages its members to buy full-size products.

Dollar Shave Club

The Dollar Shave Club is an American company located in Venice, California. It delivers male grooming products like razors to customers by mail on a monthly basis. The Dollar Shave Club commenced its operations in January 2011. The company website went live with their website in April 2011.

Smart ecommerce backed by brand personality is the secret to Dollar Shave Club’s massive ecommerce success. However, it’s also the brand’s online direct-to-consumer business model, which gave them the freedom to offer razor blades at a much lower price. They successfully eliminated the traditional barriers to subscription trials with their low-cost model and anytime cancellation policy with no additional charges. Ecommerce was the biggest competitive advantage for Dollar Shave Club in a market that existed primarily in physical stores. By eliminating the middleman, the founders of the company built a business with a highly efficient supply chain not limited to traditional retailers.

Choosing an ecommerce platform is not easy. There are plenty of highly capable ecommerce platform available in the market, all with their unique benefits. As you go about selecting a platform for your business, make sure you consider factors such as your business needs, sales volume, and potential future growth. Some of the top ecommerce platforms include:

  1. Magento
  2. Shopify
  3. BigCommerce
  4. Squarespace
  5. Salesforce Commerce Cloud
  6. WooCommerce
  7. Volusion
  8. Wix
  9. Big Cartel
  10. Weebly

Magento

Magento is an open-source ecommerce platform tailored mainly to enterprise-level ecommerce businesses. It provides a wide range of features such as the ability to offer discounts, unlimited product listings, support for recurring payments, and much more.

Shopify

Shopify is among the most popular ecommerce platforms in the world, thanks to its simplicity and unmatched ease in launching a new store. It continues to be a top choice for ecommerce brands with relatively lower order volumes.

BigCommerce

BigCommerce offers the industry-leading uptime, in addition to features such as payment and order fulfillment partnerships and a wide range of built-in integrations with leading ecommerce apps. BigCommerce appeals to both enterprise-level ecommerce merchants as well as those who are just starting out.

Squarespace

Squarespace is known for its sleek drag-and-drop templates that make it easy to build beautiful websites. While Squarespace is popular with smaller businesses with smaller product catalogs, they offer unlimited product listings.

53% of mobile users abandon sites that take over 3 seconds to load

Salesforce Commerce Cloud

Salesforce Commerce Cloud is a cloud-based platform for B2C retailers. It is a part of the Salesforce product suite and integrates with a range of CRM and marketing services. It’s a great choice for enterprise-level businesses that rely on Salesforce’s product suite.

WooCommerce

WooCommerce is one of the most popular ecommerce platforms in the world. It includes its own secure payment processor and shopping cart. It is an open source platform and can be a great option for smaller brands with WordPress development resources on-hand.

Volusion

Volusion is an ecommerce platform aimed at new ecommerce sellers. It offers a variety of pricing tiers. In-site blogging capabilities, discount code creation, and a variety of free themes are some key features. It scores low on integrations and app options thus making it more of a standalone tool.

Wix

Wix is a basic ecommerce platforms and great for new online stores. It offers 72 free themes and a super simple setup. Though not feature-rich, it provides just enough features for small sellers to get started. However, it can’t necessarily scale alongside fast-growing stores.

Big Cartel

Big Cartel is a great tool for artists looking to sell their work. It allows merchants to customize one of Big Cartel’s free themes or code their own design. Real-time sales stats, inventory tracking, and the option to add promos and discounts to certain items are some its key features.

Weebly

Weebly is among the easiest to use ecommerce platforms and offers the basic tools you need for a functional store without flashy extras. It allows you to upload products in bulk, provides you a simple dashboard and also provides a mobile app that allows you to manage your business.

  1. The Complete E-Commerce Book: Design, Build & Maintain a Successful Web-based Business
  2. The Everything Store: Jeff Bezos and the Age of Amazon
  3. Launch: An Internet Millionaire’s Secret Formula To Sell Almost Anything Online, Build A Business You Love, And Live The Life Of Your Dreams
  4. Ecommerce Evolved: The Essential Playbook To Build, Grow & Scale A Successful Ecommerce Business
  5. You Should Test That: Conversion Optimization for More Leads, Sales and Profit Or The Art and Science of Optimized Marketing
  6. The New Rules of Marketing and PR: How to Use News Releases, Blogs, Podcasting, Viral Marketing and Online Media to Reach Buyers Directly
  7. DotCom Secrets: The Underground Playbook for Growing Your Company Online
  8. Get Rich Click: The Ultimate Guide to Making Money on the Internet
  9. E-Business and E-Commerce Management
  10. One Click: Jeff Bezos and the Rise of Amazon.com

The next wave of the ecommerce explosion is on the horizon. By 2021, over 2.14 billion people worldwide are expected to buy goods and services online. CMOs must be prepared to address the imminent challenges of this fast-evolving ecommerce market. Here are five things CMOs must remember as they prepare to take on the next wave of the ecommerce explosion:

1. Embrace a data-driven approach

CMOs have more data at their fingertips than ever, and online shopper behavior is no longer a mystery. Brands must do their best to bring all the information together to form a meaningful picture of the consumer.

2. Build a personal connection

Recent studies have shown that emotions play a key role in driving big purchase decisions. CMOs must apply their storytelling powers, analytical skills, and business acumen to appeal customers’ latent sensibilities and build deeper customer connections.

3. Make the most of marketing technology

CMOs need to effectively use marketing technology to drive customer segmentation, positioning and targeting. They must use marketing technology, automation, and media channels to deliver personalized, omnichannel experiences that stand out in the market.

4. Balance data and creativity

CMOs must wear multiple hats to strike a balance between a data-driven mindset and an artistic approach.  They need to focus equally on a data-driven consumer understanding as well as innovative communication to build personalized engagement at scale.

5. Be ROI driven

CMOs must ask themselves — How effective am I at turning ad dollars into sales? They must first optimize their spending across media channels and then justify the value of every marketing dollar invested.

If a CMO can orchestrate the actions above, they will be setting themselves up for success in this exciting new phase of ecommerce.

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