What Is Ecommerce? Everything You Need to Know

What is Ecommerce?

Ecommerce, also known as electronic commerce, is a business model which involves transactions taking place on the internet. Stores that sell their products online are called ecommerce stores or businesses. For example, Amazon.com is one of the most popular online stores in the ecommerce industry. In this article you’ll learn the history of ecommerce, ecommerce statistics, platforms, popular ecommerce sites, and more.

History of Ecommerce

The foundation for ecommerce was created in 1979 by Michael Aldrich. He connected his television to a computer using his telephone line. While it was unlike ecommerce as we know it today, his idea sparked the idea for shopping without having to go to a physical store. At the time, most people didn’t own computers. Bill Gates and Steve Jobs popularized computers for the average person. Bill Gates even said that his goal was to put “a computer on every desk and in every home.” Without computers, ecommerce would be remarkably different.

In 1994, Jeff Bezos founded Amazon as an online store selling over one million different books at launch. Amazon would eventually go on to become the most popular online store for consumers to buy any type of products.

By the mid-1990s and early 2000’s, people were adding computers to their home and paving the way for the growth of ecommerce. Companies were accepting checks in the early to mid-1990s as there wasn’t an online payment gateway to transfer funds from customers to businesses. When PayPal was founded in December 1998, it simplified the shopping experience for customers as credit cards were easily accepted.

By 2008, ecommerce sales made up 3.4% of all sales which shows industry growth. In 2014, it was estimated that there was around 12-24 million online stores worldwide.

Ecommerce Statistics

• By 2020, it is estimated that global ecommerce sales will reach $4.058 trillion, which makes ecommerce a growing and profitable industry to be in.
• By 2019, the US expects to have 224 million online shoppers, making the US a large audience base to market your online store to.
• By 2019, the US is estimated to have 162.8 million mobile shoppers. As a result, store owners need to ensure that their websites and ads are mobile-optimized to reach their target audience. According to Business Insider, men (22%) are also considered more likely to buy a product via a mobile device than women (18%).
• Women tend to shop online more frequently than men. For every $10 spent online, women are spending $6 while men spend $4.
• Millennials, ages 18-34, tend to spend approximately $2000 online each year making it the generation that does the most online shopping.

Common Types of Ecommerce Business Models

• B2B: The B2B model, business to business, is when a business is selling to other businesses. Alibaba is an example of a B2B business, as their suppliers sells to other businesses. Alibaba prices are extremely low as they’re wholesale prices to allow businesses to make a profit off of their products.
• B2C: The B2C model, business to consumer, involves businesses selling to consumers. If you decide to open your own online store, you’ll likely be selling to customers instead of businesses. Amazon, Walmart, and Apple are examples of B2C businesses.
• C2C: The C2C model, consumer to consumer, is when consumers are selling to other consumers. Examples of a C2C business model are eBay, Craigslist, Facebook groups and Kijiji. Many of the sellers on those sites aren’t businesses but average consumers selling products they own whether second-hand or new
• C2B: The C2B model, consumer to business, is when a consumer sells their own products or services to a business or organization. This could be a photographer selling their photography to a business.

Common Types of Ecommerce Business

• Physical Goods Ecommerce Business: Retailers who have brick and mortar stores can host their store online to sell to a broader audience. This option is great for retailers who want to increase sales but not physical stores.
• Service-based Ecommerce Business: Freelancing, and pure online service providers have become a huge trend recently with website created as the link between a freelance and their potential clients.  
• Digital Products Ecommerce Business: Companies that sell digital products like software or video games don’t need physical stores to sell their products as it only involves the customer downloading the product. This type of ecommerce business thrives as remaining solely online drives down costs making it easier to be profitable.
• Dropshipping Ecommerce Business: Slightly different to physical goods stores, dropshipping is where merchants sell goods to customers on their online store but they don’t hold any inventory. Instead they find a supplier to sell goods from, wait for customers to buy these products, and the supplier fulfills the order for them.

What Is an Ecommerce Platform?

An ecommerce platform is a software solution that allows businesses to create online stores.

Shopify was founded in 2004 by Tobias Lutke, Daniel Weinand and Scott Lake. In 2016, Shopify had 377,500 merchants using their platform who made a total of $15.4 billion in gross revenue. Their platform allows store owners to install apps ranging from Oberlo’s dropshipping app to Hurrify’s Countdown Timer app. Shopify’s platform is considered the best ecommerce platform with a 10/10 rating.

Popular Ecommerce Business Examples

• Amazon: Amazon was founded by Jeff Bezos. According to Alexa, Amazon is currently ranked the 9th most popular website worldwide, and 4th in the United States.
• Taobao: Taobao was founded by Jack Ma. Globally, it’s ranked 11. In China, it’s ranked 5th.
• Tmall: Tmall was also founded by Jack Ma. It has a global ranking of 15 and a rank of 4 in China.
• AliExpress: AliExpress was founded by Jack Ma. It’s currently ranked 40th in the world and 9th in Russia according to Alexa.
• eBay: eBay was founded by Pierre Omidyar. On Alexa, the ecommerce site is ranked 33 globally, and 9th in the US.
• Flipkart: Flipkart was founded by Binny Bansal and Sachin Bansal. Alexa has it ranked 147 globally and 9th in India.

What Makes an Ecommerce Store Successful?

Running an ecommerce store is not easy. Just having a store and some stock to sell does not mean that people will flock in and buy your products. But there are things you can do to try to ensure your store will be a success.

1. Focus on the User: With ecommerce, you can sell anything to anyone but you must be careful to know what you need to do to make website visitors trust you enough to buy a product from you. Pick the right website theme, choose the right branding and tone of voice for your copy, and keep your focus on only one or two target audiences so you don’t get overwhelmed.
2. Test with Friends: Use your friends as your test subjects and have them run through the purchase steps to make sure everything flows perfectly. You don’t want the checkout process to be too long that people leave before they have placed an order.
3. Be Mobile Optimized: Make sure that users can purchase on mobile and desktop devices. More and more mobile is growing in every industry so keeping on top of this trend is paramount to being successful in your ecommerce store.
4. Invest in SEO and PPC: SEO and PPC drive traffic to your store so missing out on them will slow down your success. Find a good consultant or agency if you have the budget and watch as, even with a small budget, sales can come in easily.
5. Research and Develop: Never be content with what you do, research new products and ways to sell them. You don’t need to restock your ecommerce store every month, but you can try to attract attention through innovative ways to grow your store more.

What Is Ecommerce Marketing?

Ecommerce marketing is a process that helps to drive sales for online stores, using platforms that are mostly online. This can include brand awareness campaigns, display advertising, discount QR codes, etc. Most ecommerce marketing tactics are derived from traditional marketing strategies but applied online.

The beauty of ecommerce marketing for dropshippers is that you can learn almost anything online through webinars, blogs, and ebooks. This means that everyone has the ability become successful through this type of marketing no matter your budget.

For example, the magazine classified section now encompasses Search Engines like Google and Bing, advertising can be done through Google Ads, and social platforms like Facebook, etc., and email has taken over from flyers and paper brochures. Other ecommerce marketing examples include affiliate marketing, social media marketing, video marketing, and influencer marketing.

Future of Ecommerce

The ecommerce industry is expected to continue growing. According to N Channel, in the US, brick and mortar retailers generate $3.9 trillion in sales while ecommerce generates $294 billion. Over time, ecommerce will continue to take away market share from brick and mortar retailers as it has been doing over the past few years. This is good news for those looking to start online stores as sales will only continue to go up, though competition will also increase in the space.

Ecommerce will also likely evolve over the years creating a more virtual or augmented reality experience for shoppers. Stores may eventually include features to help customers ‘virtually’ try on clothing to ensure it fits their shape while allowing them to see what it would look like on. Shoppers may be able to ‘try’ on makeup using their laptop or phone’s camera.

Want to Learn More?

• Ecommerce Roadmap: How to Start Ecommerce Business That Will Succeed
• [VIDEO] Ecommerce Advantages and Disadvantages You Need to Know
• 50 Ecommerce Tips for New Entrepreneurs
• How Much Money Can You Make With an Ecommerce Store?

Is there anything else you’d like to know more about and wish was included in this article? Let us know in the comments below!

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