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With low entry barriers, ecommerce offers great potential for businesses. Whether it is their own online shop or an online marketplace – companies benefit from a wide range of possibilities to sell their products and services to potential customers. This article shows how ecommerce is defined and what advantages as well as disadvantages, and opportunities it brings.
Table of contents
What is ecommerce?
Ecommerce (also known as electronic commerce) stands for the electronic trade process. Whether advertising, buying or selling goods or services on the World Wide Web – all these processes count as online shopping and are thus included in ecommerce.
The many options of digital commerce
Ecommerce is extremely multifaceted. It unites all purchasing processes and procedures – from the initiation to the processing of an order. An online shop serves as a central sales platform and attracts potential buyers. The integrated payment system ensures that orders can be placed and paid for. In addition, electronic merchandise management systems create clarity in the database: Stock levels are updated after each purchase. With the help of RFID chips, shipping routes can be monitored and with a CRM system, customer data remains collected in one place.
Ecommerce is a sub-area of e-business through which a company's productivity and turnover can be increased with the help of highly automated processes. The options for starting a successful online shop or selling on an online marketplace (such as Amazon) are almost endless. For businesses, the benefits are obvious:
Generate more turnover
Increase efficiency: optimize sales processes
Reduce costs
Improve brand image and increase awareness
Whether it's their own online shop, items on marketplaces like Amazon and Co. or auction platforms like eBay – depending on the industry and their goal, companies are often spoilt for choice as to which new sales channels to use. Moreover, online traders do not have to decide whether they prefer the stationery shop or an online shop: all thanks to multi- and cross-channel marketing! It makes sense to manage a social media platform in addition to the shop or to use an online showroom. Trying on glasses or displaying furniture in different colours directly in your own living room – possible with digital commerce!
Social Commerce
Social commerce is about offering and selling products and services through social media. The marketing strategies are endless and require a level of interaction from the target group. But not only social media platforms like Instagram and Co. fall into the social media category, reviews in the Amazon shop or on eBay are also part of it. For consumers, the shopping experience is better than ever as they can buy from several platforms.
Headless commerce
With headless commerce, the front- and backends of an online shop are separated from each other. Accordingly, shop operators no longer have to use only one platform, but select the elements that suit them best from a variety of options. Whether it's the search function, the display of products, the database, or the check-out after the purchase – everything is connected via API interfaces and frontend technology. Via the webshop platform, a functioning online shop is set up that gives the operators freedom in visual design. Consequently, they don't have to worry about compatibility with the backend.
Dropshipping
As an online retailer, there is a way not to stock products yourself, but to obtain them from a manufacturer or wholesaler. The solution is dropshipping. This means that products are outsourced and shipped by an external retailer – the workload for the online retailer is reduced, while maintaining the same service. Often there is no physical contact from the retailer to the product, which makes this strategy a contrast to classic retail.
Types of ecommerce
Whether web shops, service portals or barter exchanges – ecommerce is as diverse as advertisements on Google. B2B, B2C or D2C denote the three main types of ecommerce and are characterised by a respective clientele and source of income.
B2C
In traditional commerce, the business-to-consumer or business-to-customer (B2C) model is primarily active. Companies offer their products and services while customers purchase these offers via a website. Either the company owns a retail shop in addition to the online shop or uses it solely for sales. The goal: a larger clientele, a better image and a higher turnover.
In addition to standard B2C sites, there is the subcategory of "private sale" sites. These sites regularly post discounts for a limited period of time and users must register as a member to purchase the offers.
B2B
Business-to-business (B2B) is about electronic business transactions between companies. Examples are business relationships between companies and suppliers or traders. The source of revenue is the sale of goods or services to companies.
D2C
The third form of ecommerce is direct-to-consumer (D2C). Here, B2B companies sell directly to the end consumer via their own ecommerce website. An example are farmers who sell fresh produce directly to their customers without any detours. The producer has full control over his products and services at all times.
Which is the right shop system?
The market is filled with a choice of platforms for creating an online shop: But which is the right one for one's ecommerce purpose? A distinction is made between the following solutions:
SaaS solutions (shop systems for rent): Shopware, Salesforce Cloud, Shopify, Plentymarkets, and many more.
Complete ecommerce solutions (individual licences): Magento 2, EVO Payments, etc.
Open source shop systems (flexible): Wix, WooCommerce, Drupal, and many more.
Open-Source & SaaS/On-Premise (All-in-One): Shopware, Magento 2, PrestaShop, and many more.
CMS extensions (plug-ins): WooCommerce, WordPress, etc.
When choosing the right platform, every company should decide according to its interests and keep the following aspects in mind:
Design and personalization
Personal domain name
Support
Flexible payment options
Multilingualism
Creating an own online shop
Setting up a shop involves a lot of work. Only with good preparation and a plan will problems be identified early on and eliminated before implementation. The following guide serves as an orientation aid for creating an online presence:
Analyse target group & product demand
Investigate competitors
Evaluate business models and sales strategies
Design branding and logo
Initiate product manufacturing
Calculate manufacturing costs and processes
Buy domain & build website
Create marketing plan
Use social networks
Launching an online shop
Current trends in ecommerce
In the last few years alone (since 2019), ecommerce has developed into an industry worth billions. Not only on an international level, but also in the USA online trade is booming more than stationary trade. Due to the pandemic (since March 2020), the focus shifted even more to online purchases.
The clothing and electronics sectors are recording the highest turnover. Furthermore, the food sector has been rising rapidly since 2019. Whether young or old – internet affinity is no longer a foreign word even for over 65-year-olds. This makes it possible to address a broad target group online and promote their individual shopping experience. IKEA shows the way to go: Immersive showrooms are a trend made possible by augmented reality (AR). Many other companies also offer apps or integrated AR elements, with which anyone can place a virtual sofa in their own living room – colour selection included. Click & Collect is also a concept that is becoming more and more popular both in supermarkets and in stationary retail in the clothing shop around the corner.
Best practices in ecommerce
To achieve better conversions, generate brand awareness and increase sales, an online shop needs that certain something. After the successful set-up, it is now important to optimally adapt the homepage to the site visitor in order to offer them the best possible user experience. Some of the best practices for an online shop are:
Mobile pages
More and more consumers shop mobile on their smartphone or tablet. Therefore, an optimized web design for mobile pages is a must-have in this day and age. This way, all content is displayed according to the corresponding medium. This is also a critical factor for search engine optimization, as Google acts according to the 'mobile first' principle.
Appealing content
In addition to the mobile view, one thing is most essential: Content that offers added value. Pixelated images and graphics look just as unprofessional as low-quality product descriptions. Content is just as important for sales as it is for blog posts – many platforms already offer integrated design templates.
Follow the trend!
Not every trend is worth chasing. But when it comes to content, online merchants should prick up their ears. The customer is king and is the focus – that's why seasonal, up-to-date content is a priority for a successful shop.
Improve customer experience
How do you build a bond with customers? FAQ sections are a good start to satisfy user needs on your own site and to clarify initial questions. To improve loading times, an adapted image size is advantageous.
Ratings for the image
Actively asking for reviews is a no-go for many. However, customer reviews are of great value for the image of a company. Content in the form of guest contributions also benefits your own platform.
Marketing measures
With marketing measures, companies increase their external impact and attract the attention of potential customers. Whether on social media, Google or Amazon – advertisements on various platforms bring in sales. With the right approach, leads are converted into happy customers:
Gather email addresses to contact customers (only with correct privacy policies).
Email marketing (discounts and promotions)
Personalization: Tailored offers for customers → personalized product suggestions
Advantages and disadvantages of ecommerce
For many companies, ecommerce is a promising growth market from an economic point of view. However, it brings not only advantages, but also disadvantages:
Advantages (+) | Disadvantages (-) |
No more spatial distances (sell regardless of location) | Elaborate implementation |
Time-efficient sales (around the clock, conveniently from anywhere) | Effort and expert knowledge for advertising |
Transaction costs lower (for small/medium businesses: Cooperation with online service providers, instead of own shop) | Competition and price pressure increase due to comparison portals and more competitors |
More touchpoints: omnichannel and multichannel marketing | No personal advice |
High reach with advertising (smart commerce) | Shop death in the city centre |
Customer proximity: collect personal data via social media, with tracking and analysis tools | Payment and data security: difficult with some site visitors and DSGVO |
Better customer satisfaction |
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FAQ
What is ecommerce?
The term ecommerce stands for all buying and selling transactions via internet platforms.
What types of ecommerce are there?
B2C: The sale of products or services from a company to private customers
B2B: The electronic business transaction between two companies (supplier & company or dealer & company)
C2C: The private sale of items, such as on eBay
What shop systems are there in ecommerce?
There is a variety of shop systems in ecommerce for setting up your own shop. These include Shopware, Shopify, WooCommerce, Wix, Magento, etc.
