What Is eCommerce? 1

What Is eCommerce?

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eCommerce, also known as electronic commerce, Refers to commercial transactions that are done online. If you buy or sell a product online, you are conducting eCommerce.


However, eCommerce isn't limited to only buying and selling products online. It involves other activities such as online storefronts, online auctioning, and payment gateway services.

What Is An Online Storefront?

Think of online storefronts as an online version of a brick and mortar store. However, with online storefronts, you are not limited by time or location.

Someone can buy something from your online storefront just as quickly at 1:00 AM in the US as they can 2:00 PM in China, with an online storefront your doors are open 24 hours a day.

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Do I Need A Brick & Mortar Store To Start An Online Store?

No, there is no requirement to have a physical store in order to have an online storefront. Amazon was started back in 1994 as an online bookstore.

While it has branched out to sell more than just books, it continues to run its operations online.

How Do You Start An Online Store Front?

There are two trains of thought when it comes to starting an online store. On the one hand, you can build your store from scratch.

This involves setting up your website and handling all the orders, processing, and the day to day operations of the business.

There are software programs to help you with this such as Shopify and Bigcommerce. (To see our comparison review of both of these companies) Click Here.

On the other hand, you can run a mostly hands-off business such as Amazon FBA (Fulfilled By Amazon).

In this type of store, you send your product into Amazon, and they handle pretty much everything from order fulfillment to customer service. (To learn more about Amazon FBA and read our getting started guide ) Click Here.

No matter which technique you choose to build your storefront, your goal is to get your products in front of the most eyes, and having an online store is the best way to do this.

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What Are Online Auctions?

Many people can make a full-time income from selling on online auction sites.

Online auctions include business to business (B2B), consumer to consumer (C2C), and business to consumer (B2C) auctions. eBay, one of the biggest that uses all three forms.

What Are Payment Gateway Services?

Payment Gateways are service providers that allow eCommerce companies the ability to authorize credit cards and direct payments. Some of the better know payment gateway companies are PaypalStripe, and Authorize.net, just to name a few.

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What Is An Online Storefront?

More and more people are embracing eCommerce because it eliminates time and geographical limitations. It started back in 1991 when the internet was opened for commercial use. Now we have thousands of businesses participating in eCommerce.

eCommerce is growing at approximately 21% per year, and by the end of this decade (2020), it will become a 27 trillion dollar industry.

In 2018 alone, mCommerce (mobile commerce), which is another avenue of eCommerce, enjoyed a 39.1% increase in sales.

The increase in sales was due to the expanding market and the influence of smartphones. The number of smartphone users will continue rising as more people are now embracing mobile technology.

 

Types of eCommerce

We can classify electronic commerce into four different models based on the type of participants involved in the transactions. These models are:

Business to Consumer (B2C)

Business to Business (B2B)

Consumer to Business (C2B)

Consumer to Consumer (C2C)

Business to Consumer (B2C)

It is a business to a consumer transaction. A company sells its products and services to an individual consumer. An example of a business to consumer is when you buy an electronic device from Amazon or any other online retailer. In this model, the consumer browses the retailer's website looking at the pictures, price, and reviews of the available products.

Consumer to Business (C2B)

It is a consumer to business transaction. It is the reverse of business to consumer. A consumer provides goods and services to a company. An example of the consumer to a business model is when a freelancer software developer sells his software to a company.

Business to Business (B2B)

It is a business to business transaction. In this case, a company sells its products and services to another company that is not the final consumer. It involves manufacturers, wholesalers, and retailers. Both the buyer and the seller are businesses. An example of a business to business transaction is a retailer buying goods in bulk and selling them in small quantities to consumers.

Consumer to Consumer (C2C)

It is a consumer to another consumer transaction. Consumer selling goods and services are in direct contact with another consumer who wants to buy the products. Both the seller and the buyer are consumers of the products they are transacting. An example of a consumer to consumer transaction is when you want to sell your old furniture to another consumer on eBay. You and your buyer are end consumers of the furniture.

Benefits of eCommerce

There are many reasons why eCommerce has manifested an explosive growth in the last two decades. The most notable benefits that are making many people embrace eCommerce include:

1. Global Market

If you have a physical store, you can only service a limited geographical area. eCommerce makes the whole world your playground.

It grows your small firm into a global business allowing you to reach all your potential customers. It expands your business territories at no additional cost.

2. Around-The-Clock Visibility

With eCommerce, your business is ever open. Having your business operation 24/7 will dramatically increase your sales.

Buyers can make orders at any time on any day. An eCommerce serves customers 24/7/365.

3. New Customers With Search Engine Visibility

An eCommerce also gets traffic from search engines. Many people research before buying products. When you integrate search engine optimization with eCommerce, your business will be getting new traffic every day.

4. Inventory Management

eCommerce automates your inventory management activities. It keeps track of all transactions (product orders, payments, and returns).

5. Low Costs

Many people think eCommerce is an unworthy expense. That is not the case. eCommerce will lower your business operations costs.

It eliminates the need to hire a sales staff. Marketing an eCommerce business is also cheaper. Social media traffic, organic search engine optimization, and pay-per-click are cost-effective.


Another great benefit of eCommerce is the fact that you don't need a prominent physical location that may be too expensive. With eCommerce, you can operate from a store located anywhere in the world, not necessarily big cities.

6. Finding Products 

No one likes pushing a cart all over the supermarket looking for products. eCommerce has made it easier for consumers to locate products.

7. Showcasing Sellers

A consumer can visit the retailer's website and search for the product at any time. It has moved window shopping to another level.

You can now see the pictures and price of the products you want to buy using your phone. Consumers are no longer spending days moving from one mall to another, looking for retailers with the best prices.

8. Working From Anywhere

eCommerce makes it possible for you to operate your business from anywhere. All you need is a laptop with an internet connection.

Whether you are out for vacations or business reasons, your business is still operational.

9. Targeted Marketing

eCommerce gives companies access to their customers' data. A company can stay ahead of its competitors by predicting future market trends by keeping an eye on their consumer buying habits.

eCommerce has also made it possible for companies to advertise their products to potential customers only.

10. Ability To Handle A High Number Of Orders

eCommerce makes it easy for retailers to handle a high number of orders. Most of the activities are automated. eCommerce is making the long queues in retail stores a past story.

You can operate from a small store because you are not physically dealing with your customers. eCommerce saves customers' time because they can make an order at their own time.

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