What is Ecommerce?

According to Statistica 41% of global internet users, over 1 billion in total, have purchased products online in 2013. As of 2015, China was the country where most internet users had bought a product online within the previous month with other countries including Germany, India, Brazil and United Kingdom showing strong growth in online shopping.

Global eretail sales amounted to $839.8 billion in 2013 and projections indicate a growth of up to $1.5 trillion by 2018. With sales worth $126 billion in North Amercia alone in 2013, this makes it the largest regional market for online shopping which had more than doubled from the amount in 2008.

With China’s economic boom the Asia and Oceania regions are also becoming strong contenders, with a 8 fold increase predicted between 2008 and 2018. The United Kingdom is by far the largest market for B2C ecommerce in Europe, achieving €107 billion in 2013 more than twice the amount of France.

A worldwide study showed that as of 2014, the most popular product categories included electronics, fashion and apparel and home appliances. Groceries were bought online by 90 percent of Chinese internet users, but only 26 percent of Americans, while sports and outdoor purchases are more popular in Germany than Japan.

Ecommerce is not a new concept. In fact, it is far older than you might think. While most people think of ecommerce as being something that was invented in the mid 1990s, the basic idea of trading via electronic data interchange has actually existed since the 1960s, when Value Added Networks (VANs) were used to pass information between shipping providers. It's true though that consumer use of ecommerce did not become widespread until the late 1990s, when companies such as Amazon and eBay made it into mainstream culture, but as a whole the ecommerce industry is quite mature.

Electronic commerce allows consumers to exchange goods and services electronically immediately over any distance. As more and more businesses move elements of their operations online, the boundaries between conventional and electronic commerce are becoming increasingly blurred.

Ecommerce operates in many different ways. The most well-known ecommerce formats are B2B (between businesses) and B2C (business to consumer), which operate as you would expect traditional businesses to work, but the internet has empowered consumers too, making C2C and C2B businesses viable.

An example of a C2C business would be eBay — consumers list goods that they have purchased or even made themselves and sell those goods to other consumers, with the website taking a small percentage of the sale price in commission. C2B businesses operate in a similar fashion — iStock and Shutterstock and other similar photo sites allow photographers to post images, and then businesses can buy those images to use.

Different main models of ecommerce:

• B2B (Business to Business): This is where companies do business with other companies, this could be wholesalers selling to retailers or manufacturers selling to distributors.
• B2C (Business to Consumer): Where businesses sell directly to the general public through a shopping cart enabled website without any human interaction. Amazon is a prime example of B2C ecommerce and is the model that most people associate with the term ecommerce.
• C2B (Consumer to Business): Upwork (previously Elane and oDesk) is a good example of a C2B ecommerce business. People post a project online, companies will then bid on the project. The consumer reviews the bids and then selects a provider.
• C2C (Consumer to Consumer): This is when individuals sell directly to other individuals. A good example of this is eBay.

During the early days of ecommerce, consumers were naturally reluctant to share their credit or debit card details online, and companies had to overcome the general concerns about returns, shipping, delivery and other issues relating to purchasing online. Today, ordering products online is second nature for most consumers, so the main barrier that businesses have to overcome is simply standing out against the competition.

As with bricks and mortar businesses, ecommerce providers should perform a classic SWOT (strengths, weaknesses, opportunities and threats) analysis. The SWOT analysis will help you work out how to best position your company in the market. Are you selling speed and convenience, trying to compete on price, or differentiating yourself by offering the best customer service? Do you want your brand to be known for quality, reliability or value? How many competitors do you have and are they going head to head against you or are you aiming for different audiences?

In addition to general positioning, you must carefully consider legal issues, including the Data Protection Act and the DMCA (Digital Millennium Copyright Act). Your customers place a lot of faith in you when they hand over their personal data and credit card information, so you must take every precaution to ensure that the data remains safe and secure at all times. Sharing or selling that data without the consent of your customers is against the law.

However, as all of the figures are set to continue to grow as both mobile and internet usage expands around the world. It is probably worth investigating the viability of deploying an ecommerce channel if you are not already active in the space.