If you want to know what eCommerce is let’s take a look at an agenda for a typical day.
Your to-do list might include transacting with a bank, shopping for groceries, collaborating with your team, meeting with prospective clients, and giving your parents some love.
It used to be the stuff of science fiction but thanks to eCommerce, all of these activities can be conducted over a desktop computer or your mobile phone.
Welcome to the world of eCommerce.
What Is E-commerce?
You’d be forgiven to think that “to shop online” is the definition of eCommerce. After all, 27% of the global population prefers to shop online.
But eCommerce caters to more than just online sellers of products. You can pay for professional services, sell merchandise and assets, and carry out transactions with financial institutions online.
So what is eCommerce?
ECommerce is an Internet-based platform that allows companies and individuals to facilitate the buying and selling of goods and services.
A Brief History Of eCommerce
ECommerce has its origins as far back as the 1960s when companies used a platform called the Electronic Data Interchange to transmit documents. However, the first commercial transaction occurred in 1994 when a CD was sold on a website called NetMarket.
Innovations in digital technology helped the Internet become accessible to more countries.
In 1995, only 16 million people, or 0.4% of the global population had access to the Internet. 10 years later, 888 million people, or 12.7% of the global population had Internet access.
Today, there are 5.16 billion people on the Internet every day. That’s 66% of the world’s population! Likewise, there’s a positive correlation between the growth of the Internet and the growth of eCommerce.
In nearly a decade, the eCommerce global industry has grown from US$1.3 trillion in 2014 to US$5.7 trillion in 2022. It’s expected to earn US$6.23 trillion in 2023 and US$8.15 trillion in 2026.
The 2020 Pandemic: The Booster Shot To eCommerce
One of the most significant jump-off points in the history of eCommerce was in 2020 – the year of the pandemic.
With people confined to their homes because of the enforced lockdowns, eCommerce websites became the go-to destination sites for consumers looking for food, medicines, exercise equipment, and groceries.
COVID-19 transformed work and life as we knew it. Consumers migrated online out of necessity. They discovered how easy and convenient it was to transact with eCommerce businesses.
People preferred to work from home. Employees requested telecommuting assignments. Companies had a hard time finding warm bodies to occupy workstations in their offices, an event called “The Great Resignation”.
All areas of the buying process were covered – product selection, customer service, payment, checkout, and delivery – from the comforts of their respective homes.
No traffic. No need for parking. No hour-long queues. No fear of getting infected.
So while global economies opened for business, consumers continued to patronize eCommerce businesses. The pandemic led to a 3% surge in the growth of eCommerce – and based on its current numbers and the aftermath, there’s no way to go but up.
6 Types Of ECommerce
Since you’ve gotten this far, you might already be thinking of what kind of eCommerce business to start. You might be surprised to know that there are 6 types of eCommerce businesses.
1. Business-to-Business (B2B)
Business-to-Business (B2B) is a type of eCommerce whereby the transaction is between 2 businesses.
The seller is a business that manufactures products or provides professional services and the buyer is another business that uses the products as raw materials, components of finished goods, or for resale while the professional services are acquired to provide specialized technical skills.
Examples of a B2B eCommerce would be a business that imports meat for local food refineries or a textile manufacturer that offers its products to department stores that have their line of fashion wear.
2. Business-to-Consumer (B2C)
When people hear the word “eCommerce”, the Business-to-Consumer (B2C) business model is what they have in mind. The online transaction in a Business-to-Consumer (B2C) eCommerce is between the retailer and the individual consumer.
The seller is a retailer or reseller of products and directly sells them to an interested customer. There’s no middleman involved as the transaction is carried out between the buyer and the seller on the eCommerce website.
For example, a reseller of pest control and home care products could have a Shopify developer in the Philippines set up an eCommerce website to showcase his line of insecticide sprays, cockroach bait traps, and cleaning supplies.
The reseller can promote his eCommerce website directly to potential end-users such as homeowners, office workers, healthcare workers, and students.
3. Consumer-to-Consumer (C2C)
If you’ve transacted in Facebook Marketplace, then you’re already familiar with Consumer-to-Consumer (C2C) eCommerce.
With the C2C business model, the online transaction is between 2 consumers but it’s carried out on a third-party platform. In this eCommerce type, the C2C website functions as the intermediary or marketplace that connects the buyer to the seller.
C2C platforms such as Facebook Marketplace, Amazon, and eBay offer the advantage of having large communities of prospective buyers to these sellers. There are also safeguards and policies in place that protects each party from fraudulent transactions.
4. Consumer-to-Business (C2B)
The Consumer-to-Business (C2B) model is a type of eCommerce whereby the consumer offers products or services to companies that may have use for them in their line of business. A good example is Shutterstock.
This C2B eCommerce site gives talented photographers a platform to showcase their amazing work. Businesses that need captivating images for their websites or marketing materials can go to Shutterstock and negotiate for the images with the photographer.
Another example of C2B eCommerce is freelancer websites such as UpWork, Toptal, and People Per Hour.
Companies that want to outsource specific tasks can post the job description and project cost on these websites. Freelancers who are interested in the job can submit bids to the company.
5. Business-to-Administration (B2A)
If you have access to products and services that can be useful to the government, you might want to consider starting a Business-to-Administration (B2A) eCommerce website.
For example, if your company designs and develops software programs that can be used by a government agency to automate its processes, a B2A website designed by a Shopify developer in the Philippines can get you started.
Your B2A website can have separate web pages for programs that handle different organizational functions such as accounting, hiring and recruitment, and document processing.
6. Consumer-to-Administration (C2A)
If you have the expertise to create an online-based service that helps the public complete payments to government agencies in a fast, effective, and convenient manner, then you should put up a Consumer-to-Administration (C2A) eCommerce website.
Good examples are C2A eCommerce websites that facilitate payments for taxes, license renewals, and business registration.
The Main Characteristics Of eCommerce
You might be asking yourself, “Does eCommerce mean the same thing as eBusiness?”
These terms are commonly interchanged by people who think they’re the same thing. There are similarities but eCommerce and eBusiness are 2 different things.
An eBusiness is a business that runs most, if not all, of its processes online. These types of businesses have systems and workflows that run through a network of apps and software programs some of which are proprietary.
ECommerce can be considered a subset of eBusiness because it is a business. However, what differentiates eCommerce from eBusiness are the following characteristics:
1. Online Transactions
Regardless of the type of eCommerce business you choose, the transactions are completed online.
You can run the transaction through your eCommerce website or a third-party eCommerce website.
2. Use of Digital Devices
Because the transactions are coursed through the Internet, you need to use a digital device to do eCommerce.
The best and most reputable eCommerce platforms are mobile responsive and can accommodate laptops, notebooks, tablets, and mobile phones.
3. Electronic Payment Systems
With an eCommerce business, the customer goes through the entire buying process.
- Product selection
- Placing products in a virtual shopping cart
- Lining up the shopping cart at the checkout counter
- Paying for the products via an electronic payment system
eCommerce websites offer multiple payment systems including debit cards, credit cards, bank transfers, and a payment processing app like Paypal.
4. Instant Access to Information and Products
An eCommerce website is like a virtual shopping mall. Everything that you need to learn about the product can be found on a specific page on the website.
In addition to the ePortal and “Products” page, some eCommerce websites have blogs that share information on the benefits of these types of products and the best ways to use them.
The website is an important digital asset for an eCommerce business to succeed. If you decide on starting either a B2B, a B2C, or a B2A eCommerce business, make sure you invest in a website that has the following qualities:
- Mobile responsive
- Fast download speed
- Optimized for search engines
- Highly navigable web pages
- Beautiful design that’s not distracting
You must also incorporate features that make it more convenient for customers to ask questions and relay concerns. These features include chat support and contact forms.
Examples Of E-commerce
To inspire you, we’ve listed 4 popular eCommerce sites with a brief history of how they started and how they achieved success.
1. Amazon
Every billionaire had to start somewhere and Amazon founder, Jeff Bezos, had his from his garage. Bezos left his job as the Vice-President of a Wall Street firm to pursue his entrepreneurial dream of starting an Internet-based business.
Amazon was originally an online seller of books. After learning more about the possibilities on the Internet, Bezos expanded Amazon’s offerings to 20 items that included compact discs, computer hardware, computer software, and videos.
Initially, Amazon was only accessible in the US. Limited accessibility made it possible for Bezos to assure customers of the availability of stocks. Bezos grew Amazon at a pace that could be accommodated by logistics because he wanted customers to be happy with their service.
Today, Amazon is valued at US$1.01 trillion and founder Jeff Bezos’ net worth is estimated at US$171 billion.
2. Etsy
Etsy started as iospace and was founded by Robert Kalin, Chris Maguire, and Haim Schoppik in 2005.
Similar to Jeff Bezos and Amazon, Etsy started by selling a few items – handmade jewelry and vintage items – to make sure they can handle the demand. As sales improved, Etsy added new categories such as craft supplies, bags, clothing, home decor, toys, and art pieces.
The idea behind Etsy was to provide online shoppers the feel and experience of shopping at a community marketplace or state fair. The concept carried over to sellers who were given virtual storefronts on the site to showcase their merchandise.
Etsy is worth US$17.29 billion. In 2021, Etsy generated an income of US$2.33 billion.
3. Lazada
Maximilian Bittner was inspired by Jeff Bezos and wanted to create an eCommerce platform that would be the equivalent of Amazon in Southeast Asia. For Bittner, the timing was perfect because Amazon wasn’t open to SEA and the market for online shopping was still growing in the region.
Bittner founded Lazada in 2012 and set up the company’s principal office in Singapore. Lazada had a difficult startup phase because Asians still preferred to do their shopping at brick-and-mortar malls.
To get more people to shop online, Lazada focused on its convenience aspect. The eCommerce site introduced more payment methods, accepted COD payments, and improved the delivery system.
Lazada presently services the Philippines, Singapore, Malaysia, Thailand, Indonesia, and Vietnam. In 2021, Lazada earned US$21 billion in sales.
4. Shopee
Shopee was founded by Forrest Li in 2015. Unlike Amazon, Etsy, and Lazada, Li had experience running a technology company, Sea Limited.
Thus, when Shopee was launched, the site was promoted as a mobile-friendly, social-first virtual marketplace where users can buy and sell merchandise. Shopee already had built-in logistical and payment support systems.
Li wanted Shopee to compete against the eCommerce market leaders in Asia namely Coupang, Lazada, AliExpress, and Tokopedia. As its unique proposition, Shopee introduced Shopee Guarantee.
Shopee Guarantee is an escrow service that protected buyers by withholding payments to sellers until the merchandise was received.
To further improve its delivery service, Shopee has partnered with more than 70 courier service providers including Ninja Van, Pos Malaysia, Pos Indonesia, Delhivery, and ECom Express.
Conclusion
Even if science found a solution to end the coronavirus for good, consumers have already embraced the eCommerce lifestyle. In Asia where eCommerce had sluggish growth in the second decade of the new millennium, the market has continued on an uptrend since 2017.
There was a slight dip in 2022 but that was because of the Ukraine-Russia war. But eCommerce in Asia is expected to resume its growth trajectory in 2023 as the industry is expected to earn US$2.138 billion.
The good news is that it’s not too late to join the race. ECommerce remains a viable business model but you have to learn from the lessons of the market leaders.
These lessons include:
- Start small; sell a product you’re familiar with.
- Scale according to your capacity to meet demand with supply.
- Prioritize customer experience.
- Streamline expenses.
- Invest in a well-designed, mobile-responsive, optimized, and top-performing eCommerce website.
Despite its rising popularity, success in running an eCommerce business isn’t guaranteed. You have to put in time, money, and effort to grow your eCommerce platform.
With persistence, dedication, and an unwavering commitment to giving customers a fun and memorable shopping experience, your eCommerce business will become a success.