eCommerce refers to any form of business transaction conducted online. The most popular example of eCommerce is online shopping, which is defined as buying and selling of goods via the internet on any device. However, eCommerce can also entail other types of activities, such as online auctions, payment gateways, online ticketing, and internet banking.
eCommerce is the fastest growing retail market projected to hit $4.135 trillion in sales in 2020. Mobile commerce, or mCommerce, is a rapidly growing new avenue of eCommerce that’s mostly driven by the expanding market and influence of smartphones and millennials’ comfort with shopping online. In 2018, the mCommerce sector enjoyed a 39.1% increase in sales compared to the previous year.
How Do eCommerce websites work?
- A potential customer navigates to an eCommerce website, whether via search engines, paid advertisements, referral traffic, etc.
- The eCommerce website connects to its database, which contains tons of data about the website’s categories, products, product dimensions and weight, articles and content, images, etc. The website requests this data to dynamically render any requested web pages.
- After browsing the eCommerce website, a potential customer adds a product or service to their virtual shopping cart and decides to check out.
- The shopper completes the checkout process and finalizes the transaction.
- The shopper’s credit card information is encrypted and sent to a Payment Gateway(Paypal, for example) to handle the credit card processing securely and remotely.
- Once the order is complete, and the payment has gone through, the website typically provides an estimated shipping time, a unique transaction number, postal tracking number, etc. Most of these processes are automated and part of a good eCommerce website’s core functionality.
- As transactions take place, orders are stored in the website admin and sent to an order fulfillment team. Order fulfillment can be done in-house or by a third-party company/drop shipper.
eCommerce Business Models
eCommerce is typically classified into three different models based on the type of participants involved in the transaction. Broadly speaking these business models are:
- Business to business (B2B): B2B is when businesses sell to other businesses. This is typical of stationery stores who sell office equipment in bulk to businesses. Normally B2B companies provide a discounted rate per unit if customers buy in bulk which is a great motivation for offices to avail of.
- Business to consumer (B2C): B2C is the most commonly thought of business model where merchants sell to consumers who buy a small amount of produce. A familiar example of the B2C model would be supermarkets where consumers buy their shopping weekly but they wouldn’t normally bulk buy anything.
- Consumer to consumer (C2C): C2C is a relatively new business model where consumers who previously bought something seek to resell this item to another consumer. Through marketplaces like eBay and Craigslist, this can be easy and quite lucrative for selling items that you no longer have a use for.
The Benefits of eCommerce
There is a reason why eCommerce has demonstrated such explosive growth in the past couple of years. Indeed, with the internet becoming an essential requirement of everyday life, businesses are learning to take advantage of the numerous benefits of eCommerce, the most notable of which include:
- Global market. A physical store will always be limited by a geographical area it can serve. An online store, or any other type of eCommerce business for that matter, has the whole world as its market. Going from a local customer base to a global market at no additional cost is really one of the greatest advantages of trading online.
- Around-the-clock availability. Another great benefit of running an online business is that it is always open. For a merchant, it’s a dramatic increase in sales opportunities; for a customer, it’s a convenient and immediately available option.
- Reduced costs. eCommerce businesses benefit from significantly lower running costs. As there’s no need to hire sales staff or maintain a physical storefront, the major eCommerce costs go to warehousing and product storage. And those running a dropshipping business enjoy even lower upfront investment requirements.
- Inventory management. eCommerce businesses can automate their inventory management by using electronic tools to accelerate ordering, delivery and payment procedures. It’s saving businesses billions in operational and inventory costs.
- Targeted marketing. With access to such a wealth of customer data and an opportunity to keep an eye on customer buying habits as well as the emerging industry trends, eCommerce businesses can stay agile and shape their marketing efforts to provide a better-tailored experience and find more new customers.
- Serving niche markets. Running a niche brick-and-mortar business is extremely difficult. By tapping into a global market, on the other hand, eCommerce retailers can build a highly profitable niche business without any further investment. Using online search capabilities, customers from any corner of the world can find and purchase your products.
- Working from anywhere. Often, running an eCommerce business means that you don’t need to sit in an office from 9 to 5 or suffer through a commute day-in and day-out. A laptop and a good internet connection are all it takes to manage your business from anywhere in the world.
How To Promote eCommerce Websites
If you already have an eCommerce website or plan to soon, you should have a plan to drive traffic to the website.
- SEO: Search engine optimization is the process of improving your website’s ability to rank in search engines for keywords related to your business.
- PPC / Paid Advertising: Paid traffic is another excellent method to drive traffic to your site. Paid traffic can be purchased from search engines, other websites, social media outlets, etc. The most popular paid traffic source is Google Ads (formerly Adwords), which follows an algorithmically-influenced auction model.
- Social Media: You can build brand awareness and leverage social media as an additional source of the traffic to your website. The big ones to consider are Facebook, Twitter, Linkedin, Pinterest, Instagram, & Google My Business.
- Referral: Referral traffic, whether organic or paid, is an additional means of driving traffic. Submitting coupon codes to the coupon aggregators can be a quick and easy way to drive some referral traffic to your site, but it may not be super-qualified.
- Sales / Promotions: Online shoppers love taking advantage of special sales, promotions, coupon codes, etc. If you’re a standard eCommerce retailer, your shoppers will expect some special discount or the illusion of some added-value.
If you’re interested in adding eCommerce to your already existing website, enhancing the eCommerce you already have in place, or just designing a new website…. Cosmick Technologies is the BEST! We are ready, willing and happy to assist.