What is Ecommerce?

One out of every four people you meet is an online buyer. Due to this increased online presence, global eCommerce sales amounted to $4.9 trillion in 2021 and is expected to grow by 50% over the next four years. Looking to follow the money? We’re here to help. Let’s understand how eCommerce can help you gain an edge over other retail businesses.

Sell Anytime and Anywhere

Ecommerce frees you from the limitations of physical stores and in-person staff. Business hours, location and staffing concerns can no longer restrict you. Keep your stores open and accessible to customers 24/7 without enormous operational costs of utility bills, staff payrolls and property rent. Your customers can visit and shop irrespective of the traditional constraints of a brick-and-mortar store.

Expand Audience Base

The Internet has made the world smaller, making us feel closer to each other. You can connect with someone on the opposite end of the earth with a few screen taps on your web-browsing device.

Ecommerce leverages the boundaryless nature of the internet to help local businesses acquire international customers. A small t-shirt store in your neighborhood can sell its merchandise to people across the globe — that’s precisely the primary selling point of eCommerce.

Control Costs

Launching an online storefront is comparatively cheaper than building and running a brick-and-mortar store. A few factors adding to the cost of physical stores that you can avoid in eCommerce are property taxes, rent, insurance, maintenance costs and staff payroll.

You need a one-time investment to purchase the domain and website designing kits for an online store. After which, your only expenditure will include other features you want to add to your store and fulfillment cycles.

However, you must understand that opening an online store is cheaper, not simpler. You have to consider your audience location and set up appropriate warehousing and fulfillment cycles. Your customers make purchases online without interacting with the goods. So any discrepancy in delivery time, product quality and customer support can lead to negative experiences and loss of goodwill.

Scale Easily

Traditionally, scaling a retail business meant identifying a thriving location for the new store, renting land, building a store, hiring employees, setting up insurance and a slew of miscellaneous tasks before you start selling products.

With eCommerce, scaling is more about strategizing than performing physical tasks. To broaden your reach and customer base, you need to establish a marketing strategy and outsource a fulfillment provider in the target location, and you’re good to go.

Personalize Customer Experiences

Let’s face it, one of the most harrowing experiences of visiting a store is a sales executive who doesn’t get the cue when they are unwanted. In a physical store, your sales heavily depend on how good sales reps are at their job. Plus, you have limited chances of collecting customer data and improving their individual experiences.

Today, personalized customer experiences make all the difference in making or breaking a sale. 72% of consumers said they only engage with marketing messages tailored to their interests, and 77% expect a personalized experience when visiting online stores.

With eCommerce software, you can automatically log traffic and create a repository of customer data. Create individual customer cards that track their interests, clicks, time spent on a product, shopping carts and more. You can personalize customer journeys for specific segments, offer discounts and upsell options to the right people.

FAQs

What Are the Types of Ecommerce Models?

Depending on who your customers are and what kind of products you sell, there are different types of eCommerce models you can consider before launching an online store. Here are four of the most prevalent models:

• Business to Consumer (B2C): It’s the most common model where B2C companies sell their products to individual customers. Companies send products to retailers, wholesalers or marketplaces, who ship them to end users when an order arrives. A few examples are packaged food, clothing items and home decor businesses.
• Business to Business (B2B): In this model, businesses sell their goods and services to other businesses, not individual customers. Think of heavy factory machinery, distribution, financial services, third-party fulfillment services and more. B2B companies typically operate at large scales with high order volumes and frequent reorders.
• Direct to Consumers (D2C): The manufacturer sells goods directly to the end user, bypassing distributors and retailers. It benefits bigger brands that want absolute control over marketing, packaging and delivery. As the brand deals directly with its users, it helps them gather primary customer data to improve product designs, marketing campaigns and brand goodwill.
• Consumer to Consumer (C2C): Established businesses aren’t the only entities that can sell things on the internet. A few eCommerce marketplaces like Etsy, eBay and Craigslist offer a platform to connect customers and allow them to sell and buy products without companies acting as middlemen.

What Are the Different Revenue Models in Ecommerce?

After choosing the eCommerce model, you must also determine how you want to make money. Due to the flexibility of eCommerce, there are quite a few unique ways to store, process and ship orders that affect your revenue models.

• Dropshipping: This is the most flexible revenue model where you take charge of running the online storefront and taking orders only. The supplier or manufacturer is responsible for storing, packing and shipping products. You operate with zero inventory and need no hefty investments in warehousing and shipping.
• White Labeling: White label companies outsource the manufacturing process to external suppliers and put their logo and brand on the finished product. For example, in Walmart, every item under the “Great Value” aisle has great value branding and logo. But this doesn’t mean Walmart produced all these products. A few companies manufacture these goods and put Walmart’s branding on the packaging.
• Private Labeling: Businesses hire a third-party manufacturer to produce goods based on their specifications. It’s similar to white labeling, but the only difference is that private labels control product design and specifications while white labels only control product packaging. This method best suits companies that receive large orders with short turnarounds and have limited capital to set up factory spaces.
• Subscription: This model helps build a loyal customer base and a steady source of revenue. The consumer pays a subscription fee at a fixed cadence, and the business sends the same bundle of products periodically or a different bunch of curated products every time. Examples include meal prep boxes, fashion boxes, perfume sets, grooming products and more.

What Are the Drawbacks of Ecommerce?

Just like every rose has its thorns, eCommerce has certain drawbacks associated with it. Some of them include:.

• Lack of personal touch: Many customers prefer the personal touch they receive from a physical store’s sales executives. It’s common for specialized products like electric guitars, drumkits and home appliances, where customers seek expert advice before purchasing. Find software that either offers customer experience management (CXM) or can connect with third-party solutions.
• Pricing competition: It’s easy for customers to compare brands online and find the lowest price. This factor can force you to compete with other merchants and lower your profit margin. AI helps analyze competitor pricing structures and get optimum rate suggestions for your products.
• Security issues: False chargebacks, credit card frauds, hackers, malware and customer data theft are a few of the major security threats to an online store. You must proactively create a secure environment for your customers. The only way to do that is to get PCI-compliant eCommerce platforms that offer secure HTTPS hosting and can connect with external endpoint security solutions.
• Legal complications: The whole point of eCommerce is to sell to a global audience. But you’ll need to adhere to taxes, regulations and laws of every state/country your customer belongs to, adding to the legal complexity of running an online business. Your only ally is reliable software that can identify compliances and regulations, auto-populate forms and send alerts for upcoming dates and events.

Which Software Do I Need for Ecommerce?

There are many eCommerce tools out there, each with specific features. Depending on your requirements, you can use them together or deploy modules that meet your needs. Let’s look at each and see how they can aid eCommerce:

• Shopping Cart: It lets you add eCommerce functionalities to an existing site. Allow customers to add products to their shopping carts and create a safe payment environment. You can connect the cart with your preferred payment gateway and offer customers flexible options like credit cards, ACH transfers and digital wallets.
• Product Information Management (PIM): You can collect and organize product information like attributes, descriptions, taxonomies, pictures and more. It benefits businesses selling an extensive catalog of products on multiple channels and social media. Create a repository of all your product data and distribute channel-specific information from a centralized dashboard.
• Ecommerce Order Management: This module is all about orders moving through various sales channels and fulfillment points. Collect orders from multiple channels and route them to fulfillment points or third-party logistics providers based on user-defined rules. It tracks the entire process from accepting orders to shipping and delivery.
• Ecommerce Platforms: These all-encompassing platforms help you make the batter and put the icing on the cake. They offer website designing kits, branding tools, omnichannel marketing, PWA studios, customer experience management, payment processing, multiple fulfillment options and analytics.

How Do I Select an Ecommerce System?

The first step in choosing an eCommerce solution is determining the type of software you need. Determine if you’re satisfied with your existing website or want a new one. You can either connect your site with eCommerce add-ons or choose an all-in-one system that can help you start from scratch.

Beyond that, every business is unique, and you need to carefully determine your business-specific eCommerce requirements. You can go through our top eCommerce system requirements guide to narrow down your search.

SelectHub has prepared a nine-step process called lean selection that ensures you identify every requirement and select platforms with the correct features that align with your operations and growth plans.

You can also use our eCommerce platform comparison matrix to get a sense of who the industry leaders are and how they compare against each other based on features and integrations.

For a more personalized recommendation, don’t hesitate to reach out to our team of experts and analysts at support@selecthub.com or call at 855-850-3850. We are SelectHub, and we’re here to help you select!