E-commerce

What is ecommerce? Types, examples & key features

Ecommerce is a huge field and in the digital age, the term ecommerce can mean different things in different industries. So, what is ecommerce? Ecommerce refers to any business that takes place on the internet, whether that be the buying and selling of goods or services, or the transfer of money and data to complete transactions.

In this article, we explain the key types, benefits and features of ecommerce as a buying and selling method for online traders. And it’s more important today than you might think. Get to know the basics of ecommerce and you’ll be well on your way to launching a successful brand. Here we’ll guide you through:

The different types of ecommerce and how they work
Examples of ecommerce in action
The benefits of ecommerce for brands and businesses
The key features for succeeding as an ecommerce businesses
The future of ecommerce

illustrative answer to what is ecommerceHappy shopping. Illustration by OrangeCrush

1. Types of ecommerce

The different types of ecommerce are usually acronymized and tend to focus on the buyer and seller. So it’s likely that you’ve heard many of these phrases before but might have wondered what they meant and how they related to you and your business.

As a relatively new arrival to the retail scene (electronic data transaction have been taking place since the late 1960s, but the first online retail purchase didn’t happen until 1994), ecommerce is an ever-evolving industry, but the most common ecommerce models remain firm.

B2B: Business to business

Business to business trading is just what it sounds like: it’s when a company’s products or services are aimed at other businesses. This is usually supportive services that help companies to operate or scale, like software or consulting but could also include product retail such as IT hardware.

B2C: Business to consumer

Business to consumer is probably the most common ecommerce model. It’s when a business trades directly to the consumer, like online stores where you buy clothing or food and services such as Netflix. Anyone who has bought something online for their own personal purposes has engaged in B2C ecommerce.

D2C: Direct to consumer

Direct to consumer trading bypasses the middle man, like third party selling sites and wholesalers, and allows a designer, producer or manufacturer to sell directly to its customers. This is a type of selling that’s been boosted by ecommerce, as it allows people to sell their product to a much wider audience than they might otherwise have reached.

For example, a furniture maker that set up their own website, rather than selling through a larger furniture website, would be selling directly to the consumer instead of selling to another business that could manage the sale for them for a percentage of the cost (B2C trading).

website for botanme, curated bunches of flowersAn example of an ecommerce website by DSKYC2C: Consumer to consumer

Consumers selling straight to other consumers cut out the middle man by selling their items directly between one another. This is a rising channel in the modern world, especially as global headlines focus more on reuse and sustainability.

Platforms like eBay and Depop are the best example of C2C ecommerce, allowing users to sell on their old or unwanted clothing, gadgets and other products directly to someone else. Similar platforms, like TaskRabbit, allow people to sell their services directly to other people who need them without the use of an agent or recruiter.

C2B: Consumer to business

More of a niche in the ecommerce world is consumer to business selling, whereby individuals sell their own goods and services directly to businesses. This could be a creative service, like photography or freelance writing, or a tangible purchase like a freelance chef providing staff meals. Freelancers, consultants and even paid reviewers as consumers, can spot market niches and sell them back to businesses; this is with the aim to help them understand and engage with their audiences more effectively.

2. Examples of ecommerce

pink squarespace advert showing an ecommerce websiteSell goods, like clothing, and services, like squarespace online using ecommerce by irdesign

Understanding the types of ecommerce is just half of what you need to know before launching an ecommerce business. Once you know what kind of trading you’ll be doing, you’ll need to know the different avenues ecommerce can take.

Most of us have bought something tangible, like clothing or electronics, online. But there is a much wider variety of options available to ecommerce traders that might not be so obvious to the casual buyer.

Retail

Selling goods to consumers is the most popular—and most obvious—form of ecommerce. Most people who have engaged in ecommerce have participated in the retail side of ecommerce trading.

ASOS, for example, were ahead of the curve as one of the first clothing brands to launch exclusively as an ecommerce retail platforms. The brand still dominates the market with 14.2 million active customers in 2019, so it’s no surprise that many brick and mortar stores followed ASOS’s lead and have migrated online.

The overhead cost of ecommerce retail is lower than brick and mortar stores, and ecommerce now claims 21.8% of global retail, so many brands have opted for this instead of—or alongside—their original physical store. that have launched an ecommerce branch have come to favour online retail over the overhead costs of brick and mortar retail.

Digital products

Items that can be sold and downloaded without a tangible product, like documents, media and software are almost exclusively possible due to ecommerce.

Educational products like Future Learn online courses and creative design tools like Adobe Suite are prominent examples of this type of ecommerce. It’s a rising market, thanks to a huge increase in the amount of digital products available from music, movies and books to new softwares and app developments. And since digital items don’t require warehouses, stock inventories, or high rent costs it can be an even more cost-effective form of ecommerce than retail.

Services

Similar to digital products, skilled workers are able to sell writing, marketing and coaching services that are paid for online but might be delivered in person. This can help freelancers, agencies and self-employed professionals find much wider audiences for their work than they could without an ecommerce services site.

illustration of freelancer at workIllustration by Natalia MacaWholesale

Wholesale products are usually bought in bulk for a lower price than one-off pieces. Wholesale ecommerce works by connecting retailers with wholesalers who will sell large quantities of their products B2B for the retail to then sell on individually to consumers (B2C).

This is an effective form of retail because the B2C retailer can buy a large amount of product for a relatively low price and sell it on for a profit, while the B2B wholesaler can keep their costs low by guaranteeing bulk sales without the cost and expertise required to market the product on to a wider base of consumers.

Dropshipping

Dropshipping is similar to wholesale, but rather than buying the product in bulk, a retailer will market a product for sale, but will only order it from their supplier once an order has been placed by a consumer. This is cheaper for the retailer, as they don’t need the space to hold bulk wholesale stock and they don’t need to worry about shifting all the stock they’ve purchased wholesale.

However, it does mean the retailer won’t benefit from the discounted prices of wholesale stock and are unable to offer quick shipping times as they don’t yet have the order in their inventory. Amazon is the most successful example of this type of ecommerce.

Subscriptions

Recurring purchases, like apps and TV streaming, are paid for on a regular basis rather than a one-off payment. This subscription method of ecommerce allows the consumer to cancel their access to the service when it’s no longer needed.

laptop with ecommerce website on the screenYou can launch an ecommerce business from your kitchen by EngageTaste

3. The benefits of ecommerce

A major benefit of ecommerce trading is that now, with globalisation increasing and the internet allowing us access to much wider audiences, retailers and businesses are able to grow their customer base significantly.

Not only are retailers able to sell to consumers outside of their local area or the town where their brick and mortar store is based, but businesses can trade internationally within minutes. All thanks to ecommerce. In fact, it’s predicted that the global pandemic saw ecommerce accelerate its growth by 4 to 6 years in 2020. In May 2020, online retail was up 77% year on year with total spend hitting $82.5 billion—and it’s not set to slow down.

Convenience

Buying and selling online is easier, faster and takes far less time than setting up a store. A website is up and running 24/7, meaning buyers can access products whenever they like and trading occurs at all hours. A brick and mortar store, in comparison, probably only trades for 10-12 hours per day.

To reap the benefits of this convenience, ecommerce retailers often need to employ as many workers as a brick and mortar store, just in less customer-facing roles. For example, while you will need someone to handle customer relations, ecommerce also requires employees to process and pack orders and create your digital brand, SEO and digital advertising that will help you reach more customers.

Where brick and mortar stores allow customers to interact with the goods and services before purchase, ecommerce can lead to a higher rate of returns so assurance of high-quality products and services supported by customer reviews is the best way to guarantee to new customers that your ecommerce business is reliable.

Customer experience

Ecommerce platforms allow customers to create profiles on their sites before checkout. This allows the trader to understand the selling patterns and habits and offer relevant suggestions for different products they might like.

While many shoppers still enjoy the in-person experience of visiting physical stores, ecommerce allows you to recommend items, prioritise the marketing of new stock and tailor top items to customers. All of this extra personalization is done so using digital algorithms that understand individual’s shopping and ordering habits. This can feel less intrusive as up-selling in stores and creates a seamless experience as buyers will feel understood but not hassled and are therefore more likely to return.

For digital natives who have always shopped online and might feel less attached to in-store shopping experiences, digital marketing and social media engagements can replicate the brick and mortar experience. For retailers with both a physical and online presence, offering useful services like click and collect and even home drop-offs for customers can combine the benefits of both brick and mortar and ecommerce shopping.

Global reach

As we already mentioned, ecommerce means sellers can reach customers from around the world, rather than the local neighbourhood their brick and mortar store might be limited to. Great design, an understanding of SEO and catchy branding are the best ways to secure a global customer base, as they help you to reach new customers and then secure brand recognition.

pastel colored global tshirt design Global illustration by LOGStudio

Search Engine Optimisation, or SEO, is one of the most important factors. It’s the use of key words and phrases that link your brand and what you sell to the things people are searching for online. So for example if you sell used car parts, your website should use that phrase and more specific phrases about the parts and what model of car they’re for, so anyone searching to buy that part will come across your website.

The benefit of a strong and recognisable design is that it gives the customer a feel for who you are and once that’s recognisable to them it will be the first brand they think of when they need that product or service again. How many times have you seen a billboard or bus advert and thought back to it at a time that you needed the product that was advertised?

Fewer expenses

Shops can be expensive to run, but digital sellers are able to launch their business with minimal operating costs. As ecommerce businesses expand, one of the biggest financial benefits is that the cost of overheads is more easily absorbed by sales. But they also require different staff roles.

So, while in-store staff could spend all day manning the shopping and dealing with face-to-face customer service roles, an ecommerce team can design and develop a website, buy and upload stock, manage orders and run the digital marketing and social media pages to reach audiences outside of the location of a physical store.

website analytics reporting on a tabletFeatures like analytics help you understand and improve your ecommerce business by Adrian Hufsa

4. Features of ecommerce

The growing world of ecommerce means systems and services are always evolving. It might sound daunting, but it’s easy to stay on top of the latest updates from your service provider. Making a fresh impression can be as simple as a great design that you keep strongly branded and cohesive from your website to your packaging, to your ads and emails.

As technology and design continues to advance, as does ecommerce and the things you can do to stay ahead of the curve and offering your customers the most seamless online experiences possible. It’s all market-led, so if your competitors adapt to the latest features and upgrades, your audience will expect you to, too.

There’s no sitting back and getting used to the way things are in the world of digital: something new is always on its way and ecommerce retailers should be primed and ready to tackle them head on. Here are some of the top features you can utilise to make the most of your ecommerce site right now.

Content Management Systems (CMS)

Content Management Systems are hosted in the back end of your website and allow you to build blogs, website pages and media banks of photos and videos. Blogs and editorial content are a great way to drive traffic to your website.

You can write about new products, relevant news and anything that will help draw relevant customers to your site. Simply using phrases that you know people will be searching and including links to relevant pages in your site will help boost your audience and help more people find you. For example, if you ran a digital marketing business, as well as selling your expert services to clients you can share tid bits in blogs that highlight your knowledge and expertise and help convert new readers into paying customers.

Blogs attract people seeking information who might then be interested in purchasing your product or service, so consider the existing needs of your customers and then write regular articles on how your business understands and approaches these challenges. Some websites see as much as a 5% conversion to sales from blog posts.

Search Engine Optimisation (SEO)

As with content management systems, making the most of SEO features is the best way to rank higher on search engines and therefore be discovered by a new, wider audience. SEO includes key phrases that people are likely to search, meta tags in the back end of your web pages, alt text on images and including links to other pages within your website as well as external websites that will help increase the authority of your domain.

For example, if you have a customer or business partner that is well-respected, including a link to their website at a relevant point will link your ecommerce site to the authority of their business.

Quick, secure checkouts

Easy-to-use payment systems, like GooglePay and PayPal, mean customers are more likely to return. Not everyone likes to store their card details on their computer so you’ll still need the regular check out process, but those who have adapted to advancements in financial security will appreciate the instant payment options and remember the easy experience. This is also an opportunity for you to add as many payment options as possible: the easier it is to buy from you, the more likely a customer is to return.

However, depending on the country your business is based in, you will need to be on top of the most up to date data protection, consumer protection and online commerce regulations to ensure that all payments are legal and protected.

Email integration

Email marketing is the easiest way to stay in contact with your customers. One of the disadvantages of ecommerce is that you lose the face to face interactions that many people love about in-store shopping and digital marketing can help with that. Sending emails and newsletters at regular intervals will keep you in your customer’s mind and is a great way to keep them updated about your new stock, services, or seasonal collection—just don’t send too many, or recipients will feel spammed and unsubscribe.

It’s great to see new subscribers sign up to your digital marketing emails, so strategise the content you send them and when to send it. Your subscribers are genuinely invested in your brand and interested in your news and promotions, so making them feel part of your community, rather than using email marketing to sell, sell, sell is the best way to keep your subscribers interested and more likely to recommend your brand to their friends.

Promos and discount codes

A benefit of ecommerce over in-store shopping is that you can offer discount codes and promotions to anyone and bring new customers to your site. It’s a great way to attract customers who might otherwise have shopped with a competitor and can also be used to reward loyal customers with private promotions and discount codes.

Ecommerce product page design for handbagsEcommerce product page design by design by AbdooElhamdaoui

Of course, stores can also run promotions and sales, but the benefit of online discount codes is that they’re often sent around groups of friends and networks meaning that someone who might never heard of your business before could make their first purchase from you thanks to a friends’ promotional code or sharing the news of your discount sale.

Website reporting

It’s all very well updating the design and layout of your website to increase ecommerce sales, but without reporting you won’t know what you’re doing right and what isn’t working so well.

In-built reporting systems like Google Analytics or external programmes that you can purchase, like SEMrush, will help you analyse the traffic that visits your website, where they come from, where they go within your site and where they are most likely to drop off. These tools can help you compare traffic and sales year on year, month on month and even week on week to understand patterns, dips and spikes in your engagement.

This can help you understand where to advertise to new customers and what improvements you can make on your site to retain visitors. For example, if you know your traffic and sales drop off over summer while people are likely to be on holiday, you can consider ways to better target the audiences that do still visit your website during these times, or if you saw a spike in traffic around a particular event you can be prepared to maximise on this boost next time around.

Ever-evolving updates

Ecommerce makes it easier to scale your company and its branding and add new features to your site. Staying on top of the latest features that consumers are looking for—like quick checkout options, easy-to-navigate web designs, chatbots to automatically answer queries—will make the experience as easy and enjoyable as possible. Most website providers and ecommerce software tools offer notifications and tutorials on new features and updates so you can be one of the first to adapt.

Recent examples of features that help businesses grow by boosting sales include website pop ups that offer discounts for newsletter subscriptions, algorithms that show a user similar items they might like at the bottom of each product page they visit, and Instagram Shopping that allows retailers to link their Instagram posts to shoppable products on their website. It sounds small, but these simple features help your customer find and move around your site more easily and inform them of offers and benefits they might not know about.

a computer with ecommerce website on the screen at a desk with a sea viewThe future of ecommerce means you don’t need to work from a shop to make sales by EngageTaste

5. The future of ecommerce…

It’s expected that ecommerce revenue in the US alone will reach $479 billion by 2022. The industry verticals with largest growth are predicted to be hobbies, toys and DIY—three strands that will certainly have seen a boom throughout 2020 and the first half of 2021.

In short, this tells us that ecommerce is no drop in the water—and it’s not a passing trend. The internet is here to stay, which means online trading is staying with it. In fact, some believe ecommerce retail will meet and possibly even surpass the sales of brick and mortar stores. It’s not hard to believe, since many retailers are already practicing an omni-channel approach.

Right now, omni-channel retail is the true future of ecommerce. Like it sounds, omni-channel means retailing over multiple platforms. For example a seller with a brick and mortar store may also have an ecommerce site, social media channels with shopping features and use marketplaces such as Etsy or eBay. As we mentioned previously in this article, the easier it is for a customer to find you and shop with you, the more likely they are to remember the experience and return: omni-channel retail is a big part of this.

…and where you fit in

The good news is, as ecommerce grows, so does the market, which means there’s plenty of business to go around the whole internet. The main thing to bear in mind when growing your ecommerce platform is that shoppers have the ability to research, browse and shop with multiple platforms, so easy access, memorable branding and a responsive design should be top of your list when it comes to building an A-class customer experience in ecommerce.

And with ecommerce predicted to make up 95% of all global retail by 2040, there’s no reason for anyone with a product or service to sell not to get involved.

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