It’s never too late to know about eCommerce
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If you are a company or an individual who is planning to sell their products or services online, then read on. This is the first part of a multipart series on eCommerce. In this part, we will cover the basic concepts of Commerce, the different eCommerce models, and have a look at some of the popular eCommerce platforms around the world.
What is eCommerce?
Ecommerce, also referred to as electronic commerce, is the process of selling and buying products or services over the internet. The eCommerce process typically involves sellers who advertise their products or services through virtual shops and buyers who purchase these products or services by paying online.
Various eCommerce models have evolved over the years based on different buyer and seller groups. These groups may include large business houses (brands), distributors, retailers, suppliers, smaller businesses, or individuals. Let us have a look at some of the popular eCommerce models that are currently available.
Business to Customer (B2C) – B2C eCommerce is the most popular eCommerce model where the sale happens between a business and a consumer. A typical example is that of a consumer buying a garment or mobile phone online from a retailer. Several eCommerce marketplaces facilitate the B2C eCommerce model. As a seller, it is easy to register your business with these marketplaces and start selling products or services quickly. Some B2C marketplaces can be generic, and facilitate the sale of all kinds of products. Examples of such marketplaces include Amazon, Alibaba, or Flipkart. We also find B2C marketplaces that cater to a particular industry segment, for instance, food and beverage, or travel.
Business to Business (B2B) – B2B eCommerce refers to the online selling of goods and services between different business entities. Business entities may include a manufacturer, wholesaler, retailer, or supplier. For instance, a manufacturer may source raw materials from suppliers. They may also sell finished products downstream to their distributors and retailers. These operations are often automated through bespoke eCommerce platforms that are created by the manufacturers. B2C eCommerce is therefore typically not available for retail consumers.
Consumer to Consumer (C2C) – C2C eCommerce refers to the sale of products or services between consumers. Typical products may include images, music, videos, paintings, or handicrafts. Services may include carpentry, electrical work, design service, etc. Popular C2C platforms include eBay, Fivver, Quikr, OLX
Direct to Consumer (D2C) – D2C is an eCommerce model where large businesses sell directly to consumers bypassing their traditional supply chain. D2C is the newest model and has become popular only in the past few years. Organizations perceive immense benefits from directly liaising with the consumers. Typical businesses that adopt the D2C model include large garment manufacturers, grocery chains, or even SAAS software companies that sell subscriptions. D2C eCommerce model started as a low-cost supplementary sales channel for a lot of large businesses but is gaining popularity rapidly.
Consumer to Business (C2B) – C2B refers to sales of products or services from a consumer to a business. Often consumers can sell their creative work including handicrafts, photographs, digital content, consulting services, design, or software development service to large businesses through C2B portals. Some of the popular C2B portals include Freelancer, Upwork, ImageBazar.
Why should you think about eCommerce too?
We will discuss the advantages and disadvantages of eCommerce models in the later parts of this eCommerce series. Let us now have a look at some of the numbers and trends related to the eCommerce industry that will explain why we are excited about the prospects.
The Covid-19 pandemic has albeit temporarily, changed the way we live our lives. To stem the spread of the virus, there are widespread restrictions on free movement or socialising. As a consequence, a visit to the next door grocer may not be as easy as it was earlier. People are locked down in their homes. Manufacturing has been hit because factories cannot be opened for production. Even high-street shops are closing due to low footfalls. People’s buying patterns are changing drastically as everyone is focussing on essential items like food and grocery, rather than good-to-have items like electronic gadgets or garments. More and more people are turning to the internet and online transactions to fulfill their daily needs.
While people’s shopping preferences had been steadily shifting towards digital commerce over the past decade, it has now been accelerated manyfold due to the ongoing restriction on retail shopping. Consequently, the online marketplace has become highly competitive, and businesses are striving for more and more excellence to stay resilient. Here are some of the current eCommerce trends that may interest you.
Growth of online shopping: Global retail eCommerce sales have grown by 27% during FY 2020. The Americas have seen the highest growth of around 35% while the middle-east has grown by 20%. Online grocery, pharma, and social eCommerce have seen a sharp upsurge.
Worldwide retail eCommerce sales are projected to grow from 2.3 trillion during 2017 to about 6.5 trillion USD by 2023.
One of the key factors that have facilitated the growth of eCommerce is the easy accessibility of the internet and mobile phones across most developing countries. For instance, the internet penetration in India stood at 45% in January 2021 and has grown by 8% (47 million) in the previous year. Over 53% of all internet purchases are through mobile devices.
Shopping preferences: Over 85% of millennials in the US shop online. Home delivery is the preferred option for most online customers. Half of the customers are buying products online that they have not purchased before. Half of the customers would pay more the have a better online shopping experience.
Global trends: China is the world’s leader in eCommerce at approx USD 700 billion while the USA is the second-largest market at USD 350 billion. Ecommerce penetration in Singapore is over 80%. India’s eCommerce market is set to grow to USD 200 billion by 2026.
What can you sell through eCommerce?
The sales paradigm is changing rapidly and businesses are fearful of being left behind in the race to capture market share. Ecommerce has become a critical tool that will help sustain and grow your business in the next decade. Most businesses are scrambling to establish a digital presence.
The first step towards a successful eCommerce business is to have a sellable product or service. However, the success of an eCommerce portal requires careful planning and execution of the online strategy. We will review this in more detail in later parts of this series.
The next step is the figure out the eCommerce model perfectly suits your needs. If you are a business owner that manufactures some commodity, you can directly reach out to your consumers by launching a D2C portal. If you are a distributor you can use a B2C portal and also take advantage of dropshipping, so you don’t have to manage an inventory. Individuals can sell digital content, or training service through a C2C portal.
Some of the popular global eCommerce platforms
The past decade has seen a phenomenal rise in eCommerce platforms around the world. Some of the biggest global platforms including Alibaba, Amazon cater to the B2C space.
We have seen business brands launch successful eCommerce channels to supplement their brick-and-mortar retail channels. Walmart has grown steadily in the D2C space. Some large D2C eCommerce portals like BigBasket do not even have retail outlets.
eCommerce portals like Freelancers, Upwork, and ImageBazar have helped millions of individuals sell their services and products to larger businesses in the C2B space.
Fivver, Quikr, Olx, or eBay play a vital role in the C2C space where customers can easily buy products or services from other individuals.
Advantages of an eCommerce portal to a business
Some of the big benefits of eCommerce for a business include lower cost of sales, greater reach, personalised attention to customers, and availability of customer data. We will look into the benefits and drawbacks of an eCommerce business in more detail in the next part.
Part II: Advantages of eCommerce for your business
At Pentechs, we create bespoke eCommerce solutions. If you are a startup or an enterprise looking to launch your eCommerce portal to grow your business, feel free to contact us. We can help. We also automate business processes through our automation platform called FLOW. No coding is required.