A beginner’s guide to ecommerce
You’re planning to move your brick-and-mortar business online but feel overwhelmed when thinking about starting an e-commerce business. The good news is that it’s not as daunting as it seems and, with today’s technology and tools, you’ll see how quickly you’ll be able to set up an e-commerce store and start selling online.
Consider this fact: Industry experts predict that consumers will conduct 95% of all transactions online by 2040. Without question, moving into e-commerce now can set your business up for a prosperous future.
Yes, we know and you might still ask yourself: Is it really convenient to have an online store? and if yes, how do I get started?
No worries about this guide, we’ll walk you through everything you need to know about e-commerce.
What is Ecommerce? Definition, Types, Examples
- What is Ecommerce?
- How does e-commerce work?
- Types of e-commerce models
- Examples of e-commerce
- Why is B2C e-commerce convenient
- 10 Stats showing the importance of e-commerce for your business
- How to start an e-commerce business
1. What is Ecommerce?
E-commerce is short for “electronic commerce”, it is the buying and selling of products and services online. You can conduct transactions through a computer, tablet, or mobile device.
While the concept of e-commerce includes buying tangible products online, there are other forms that include digital downloads, online banking, auctions, online ticketing, and other transactions made over the internet.
Although you may hear the term business-to-consumer e-commerce (or B2C e-commerce) used interchangeably with e-commerce, the two have slightly different meanings. Business-to-consumer e-commerce refers to all of the online activities involved in running a business and includes businesses that offer products or services online.
B2C e-commerce may include using online systems for email marketing, inventory management, human resources, or other functions. Imagine that you run a brick-and-mortar business that provides makeup consultations to customers. You may only see clients in person but deploy an online booking and appointment reminder system. By using online tools to run your company, you’re engaged in B2C e-commerce business, even if you don’t conduct transactions digitally.
By contrast, e-commerce specifically involves transactions involving the exchange of goods and services online. e-commerce can include every part of a sale from ordering, packaging, or delivery — or it may consist of only one of those processes.
2. How does eCommerce work?
If you’ve ever bought anything online, you’ve participated in e-commerce. Likewise, if you’ve purchased a digital subscription or a service. Although those transactions may have seemed seamless and straightforward, there are many processes involved in every order. Submitting an order is only one piece of the puzzle. Other actions are necessary to process payments, manage orders, and deliver goods or services.
To understand the necessary steps of how e-commerce works, you can think about what happens when you buy something in a store. Imagine you’re buying a new teapot. You’ll visit a shop and browse in the kitchen goods section. Once you select the teapot model you prefer, you’ll head to a register to pay for your purchase. The associate will put your transaction in a bag so you can easily take it with you.
E-commerce involves the same basic steps: browsing for and selecting a product, completing a purchase, and receiving your packaged product.
Here is a quick summary of the steps that occur whenever you buy something from an e-commerce business:
- Order submission: You want to order a new lamp from a favourite retail web store. During your visit, your browser will communicate with the server that manages the vendor’s website.
- Order management: The web server sends your order to the company’s order management solution, a system that tracks your order, from submission through shipment. To determine if the item you want is in stock, the order management system sends a query to the company’s stock database.
- Stock management: If the lamp you desire is in stock, the stock database system will send your order to the merchant system for processing. However, if the item is not in stock, that database can order a new supply, assess when those items will be available and suggest an estimated restocking date.
- Payment processing: Once stock availability is confirmed, the stock database transmits your order to the merchant system, run by a credit card processing firm or bank. As part of this process, the merchant system may communicate with your bank computer to verify that funds are available for the purchase. After confirming funding, the merchant system will authorize your transaction.
- Order confirmation: After the vendor’s internal systems confirm the purchase, you’ll receive an order confirmation notice via the company’s web server. That message will let you know that the company has processed your order and completed your transaction. You may also receive email and/or text confirmations about your order, along with updates about order processing or shipping.
- Order packaging: The order management system sends details about your order to the retailer’s warehouse. This information lets the warehouse team pull and package your item and prepare it for shipment.
- Order dispatch: The warehouse ships your order. Often, vendors rely on a third-party delivery company that delivers the item to you.
As you can see, effective e-commerce depends on multiple technology solutions working in concert to manage every step from ordering to delivery. Although technology plays a vital role in e-commerce, many steps require hands-on attention from people, such as warehouse and delivery professionals.
E-commerce may feel convenient, but significant behind-the-scenes processing is necessary to fulfil every transaction. However, you don’t need to handle every step on your own. Retaining a consultant or support professional can help you set up your e-commerce operation or manage critical processes.
3. Types of eCommerce models
No matter the focus of your business, you can find a niche. In fact, there is an opportunity in all of the four primary types of Ecommerce models:
- Business-to-consumer (B2C): A business-to-consumer e-commerce transaction is one where a business sells goods or services to an individual consumer. For example, when you buy a new pair of jeans from a retailer, that is a B2C e-commerce transaction.
- Business-to-business (B2B): B2B e-commerce includes all transactions between two businesses. It can involve selling products — such as a new printer — to business customers. Also, companies can sell B2B services, such as network maintenance, to organizations.
- Consumer-to-consumer (C2C): C2C e-commerce occurs when a person sells something to another person. For example, you can place an ad for your vehicle and sell it directly to someone else through Craigslist or Facebook Marketplace.
- Consumer-to-business (C2B): C2B e-commerce transactions when a person sells products or services to a business. One type of C2B transaction occurs when social media influencers receive a fee to promote a company to their following.
Even if you don’t operate an online business today, you can see that many possibilities exist. You can even get started by selling a few personal items online, learning the fundamentals, and growing from there.
Keep your eye out for new opportunities to sell products or services online. For example, if you have a restaurant that takes online orders and delivers them to customers, think about whether marketing yourself to businesses via the internet makes sense. Can you do bulk orders for teams or catering for events? In this scenario, the core business of selling meals doesn’t change, but the internet provides options to reach new audiences and add new revenue streams.
4. Examples of eCommerce
Many people think of e-commerce as shopping for products online and having them shipped to a home or business, but that’s not the only business model. Some types involve the exchange of products, but others do not. Here are examples of e-commerce opportunities:
- Retail: selling goods to a consumer directly without an intermediary
- Wholesale: selling goods in bulk to a person or company
- Dropshipping: the sale of a product that includes shipping to the end customer via a third party
- Crowdfunding: the collection of money to fund product development before its release to the marketplace
- Subscription: the recurring purchase of a product or service until cancellation
- Service: a specific skillset provided for a fee or compensation
You can also exchange both physical and digital products via e-commerce. What’s the difference? A physical product is something tangible, such as an item of clothing or cookware. By contrast, a digital product isn’t something you can touch. Digital products include things like subscriptions to access digital content or video courses that you access online.
In addition, while shipping is part of many e-commerce transactions, you can use other methods — buy online, pick-up in-store (BOPIS), or purchase online, pick-up curbside (BOPC) — to get products to customers. With BOPIS, customers visit a store and head inside to pick up purchases at a customer service counter or other designated location. Curbside pickup lets customers stay in their vehicles and have team members deliver products to them. These options can allow customers to get their purchases quickly while saving on shipping time and costs.
5. Why is B2C ecommerce convenient
Why should you consider a business-to-consumer e-commerce business model? As the COVID-19 pandemic taught us, having more than one channel to market is a smart move for every company. When people needed to restrict outings due to public health mandates, many businesses that only had an in-person location lost revenue.
In truth, the pandemic changed how we live, work, and shop. During widespread stay-at-home orders, many people turned to online shopping for goods and necessities. People started to learn the convenience and value of online shopping and explored options from retailers they’d never considered before.
Now that more people are accustomed to buying online, you should consider supplementing your physical business with an e-commerce store.
There are other reasons why B2C e-commerce is convenient. Here are a few to keep in mind:
- It’s easy to get started: You can find many technology tools that can help you get your e-commerce business up and running right away. For example, you can create a presence on online platforms or marketplaces, such as Amazon or Etsy. Also, you can rely on marketing automation, social media scheduling, and search engine optimization (SEO) tools to promote and grow your business.
- You can bring a unique skill or product to the marketplace: Many people who found businesses have particular talents or passions that they want to express through their work. Starting an online business lets, you do what you love and create a schedule that works for you.
- You can generate passive income: You can earn certain types of income without much effort beyond the initial setup, and many passive income opportunities exist online. For example, you can explore affiliate marketing, display advertising, ebook or course options, and digital product sales. Options like these can keep money flowing into your business routinely, with minimal extra work from you.
- You can work from anywhere: If you only have a brick-and-mortar location, you’ll often need to be physically present at your site, especially if your business is small. However, with an online business, you can work from anywhere. That means you can move to another city or state while still maintaining your business presence or revenues. Also, you can travel and keep your business operational. This flexibility helps you achieve personal goals and attend to family obligations without disrupting your business.
- High growth potential: Even before COVID-19 drove shoppers online, ecommerce was on the rise. Industry-watchers predict that 91% of the US population will have made an online purchase by 2023. Think about what that percentage is of the world population! Plus, the estimated US ecommerce market stands at over two trillion.
Although brick-and-mortar operations have a strong presence today, signs point to B2C ecommerce being the primary mode of buying and selling soon.
6. 10 Stats showing the importance of e-commerce for your business
Given all the steps involved in setting up an e-commerce business, you may wonder if it is right for your company. The truth is, that e-commerce has steadily been gaining steam in recent years and is expected to continue its strong growth trajectory.
It’s essential to stay up-to-speed on the latest trends and projections to make smart decisions for your business. These statistics make a compelling case for any company interested in exploring online sales:
- Ecommerce accounts for more than 14% of retail sales worldwide and is likely to reach 22% of sales by 2023
- By 2040, a projected 95% of all transactions will occur via e-commerce
- The estimated 2020 e-commerce market is more than $4 trillion
- By 2021, mobile commerce will account for 72.9% of the total e-commerce market
- More than 2 billion people around the world purchase via e-commerce
- Over half of all mobile users complete purchases via their smartphones
- Free shipping is the #1 consideration for consumers when selecting an online retailer
- China is currently the biggest e-commerce market with more than $1.9 trillion in sales in 2019
- In the US, approximately 80% of all internet users have made at least one online purchase
- The #1 reason why people decide to shop online is that they can purchase products 24/7
Clearly, e-commerce is an integral part of our lives and is on track to be the dominant mode of purchasing within the next few decades. Now is the perfect time to build an online business so that you’ll be prepared to reap the rewards of the ongoing expansion of the e-commerce market.
7. How to start an e-commerce business
Without question, starting an e-commerce business is hard work, but having an online store can bring you many rewards today and in the years to come. When considering, you may feel overwhelmed by the new concepts and technologies you need to learn. But don’t let those concerns deter you.
The good news is that you can follow proven step-by-step processes to start your own e-commerce business. In fact, many of the fundamental tasks are the same as those for establishing any type of online business. Building an e-commerce business can require a mindset shift, but once you understand the steps involved, you can repeat them to expand your digital presence or launch new online companies.
Step 1. Choose your offerings
The first step in starting an e-commerce business is determining the types of products or services you want to sell. In some instances, if you already have specific skills or products that you sell in a brick-and-mortar setting, you may focus on shifting your existing offerings online. However, you can also seek to sell high-value products with strong sales potential.
Where can you source product ideas? You can review current online marketplaces, industry trend publications, or review consumer and lifestyle data. Look at what leaders in e-commerce niches are selling to determine if you can replicate their success. Visit product and trend discovery sites to get curated information on top-selling products daily to stay abreast of the latest in your areas.
After you determine any products you want to sell, you’ll need to know how you’ll obtain them. Will you make them yourself? Will you need to source potential wholesalers or vendors? Be sure to explore all the options to determine the right blend of product quality and value.
Step 2. Research your target audiences and competition
Once you know what you want to sell, it’s important to understand the audience for your offerings. Consider their demographics, budget, pain points, and how your offerings can meet their needs.
Also, seek information about your competition. Who else sells similar products? What are their assets and vulnerabilities, and how do you measure them? You need to know who they are, understand their messaging, and determine how you will differentiate your business and stand out.
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Step 3. Write a business plan
Your next step is one of the most critical aspects of launching your e-commerce business: creating a business plan. With a business plan, you define your mission and goals, along with detailed steps about how you’ll meet your objectives. You’ll clarify your financials and confirm your marketing strategy. In addition, you’ll define key management, logistics, and operational plans.
Why is a business plan so important? Your business plan provides a clear roadmap from where you are to where you want to be. Also, if you need to seek funding, having a solid business plan will help banks and investors see that your business is a sound investment.
Step 4. Find a business name
Choosing a business name is another key step for any e-commerce company. You can start by brainstorming potential names and making a list of ones that appeal to you. However, you can’t just choose your favourite and move on. Check with the local Small Business Administration (SBA) to be sure the name hasn’t been registered, and begin the steps to register yours.
After you have a list of potential company names, use domain research tools to evaluate ideas and find available domains. You must-have digital assets — including a website and social media presence — to function as an e-commerce business. Also, when researching, check various social media sites to see if you can secure appropriate handles that align with your domain.
Since your online business needs a website, you must buy a domain name. This step is extremely simple and takes just minutes. Visit an online domain name registrar— such as Google Domains or GoDaddy — search for and select the domain you want, and pay a small fee. Although you’ll need to renew the domain each year, the cost is nominal.
Step 5. Create a logo and establish your brand identity
Your logo, visual identity, and messaging are essential for creating a unique and memorable business brand. While you may make a logo yourself, hiring an expert logo designer can bring a creative and professional touch to this critical element of your identity. Designers can also help you select colour palettes, photography, and iconography to make your brand stand out visually.
You’ll also need to create messaging that conveys your business’s purpose and lets people know why they should buy from you. While a memorable tagline can have appeal, you need focused messages to weave into your content to share your unique business story. A brand strategist can support you with this crucial task.
Step 6. Build your online presence
After you understand SEO fundamentals, you can start building your online presence. When making your e-commerce site, you’ll need to have skills in copywriting, design, and photography. No matter which product or service you choose, it’s important to create compelling product descriptions and use photos and videos to make your products come to life.
Step 7. SEO optimize your online store
As an online business, generating organic traffic to your site or store is essential for revenue growth. You’ll need to know some basic SEO principles to properly optimize your online store to draw the right audiences to you. Every page of your website must be SEO optimized starting from the title, headings, and images to some special HTML markups you can place in the code to help search engines better understand what your pages are all about.
You can learn SEO fundamentals on your own or turn this responsibility over to a professional SEO expert. With the right SEO structure in place, your business can gain visibility on Google and other search engines and bring in new customers.
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Step 8. Determine your distribution channels
Many online businesses gain customers through established distribution channels where customers already shop. Amazon holds stature as the top e-commerce sales marketplace, but retailers like Walmart and Target let merchants sell through their sites. Also, eBay allows vendors to create shops, with Etsy having significant appeal to artisans, crafters, and creatives.
Thousands of shoppers flock to sites like these every day, so you’ll want to create a presence on relevant marketplaces and platforms. It’s usually better to focus on one to start and establish a solid reputation before you expand your reach.
Step 9. Prepare to launch
Time to launch is fast approaching, however before you take the giant step you’ll need clarity on your pricing strategy, order fulfilment models, and customer service strategies. Also, know the metrics you’ll use to gauge success.
Step 10. Market your business
Once your business is operational, marketing is crucial for sustained business success. Fortunately, online companies can rely on several proven digital marketing approaches to gain customers. Here are top eCommerce marketing tactics that you should consider for your marketing strategy, along with some metrics that demonstrate their value:
- Social media: More than just a way for people to stay in touch, social media can drive revenues for your business. Statistics show that around 40% of retailers generate revenue via social media, with one in four companies selling items through Facebook. Plus, research proves that companies with at least one active social account generate one-third more sales than those who aren’t present on social.
- Email marketing: Email marketing is one of the most affordable and easy-to-use marketing options for digital businesses. Just how effective is email marketing? One study found that email marketing generates up to 24% of revenues for businesses, although it accounts for less than 20% of marketing spending.
- Pay-per-click (PPC) advertising: You can execute PPC campaigns on Google and eCommerce marketplaces. One advantage of PPC ads is that they’re easy to measure and scale, so you can adapt your approach as you gain campaign performance data. And they can be highly effective at attracting people to your site or store. According to one study, 88% of respondents affirmed that they saw an uptick in website traffic from PPC ads.
- Content marketing: You can explore many ways to create content that helps people understand why to buy from you. Blog posts, ebooks, guides, podcasts, interactive content, and videos are examples of the types of content eCommerce businesses use. Nearly two-thirds of participants in a research study recommended content marketing as a critical strategy for online stores.
- SEO: You should optimize every page on your site so that search engines are likely to find you. Effective SEO requires specific treatment of on-page elements, like meta titles and descriptions, along with effective copywriting.
In addition, you can embrace other key trends in the digital marketing world to improve your ability to attract and convert customers:
- Live chat: Offering visitors an opportunity to engage via live chat can have a positive impact on their buying experiences. Many digital shoppers can feel overwhelmed by the vast array of online choices available, diminishing their confidence in making a purchase. They may also have questions about shipping, return policies, or discounts. With a live chat option, you can present an opportunity for shoppers to engage in a conversation with a customer service specialist who can answer questions and support buying decisions.
- User-generated content: Online shoppers appreciate seeing information about products from real people who have experience using the products they are considering. You can encourage customers to submit user-generated content, such as reviews or photos of products in use.
- Optimize for mobile: Soon, industry watchers expect at least half of all eCommerce transactions to be conducted via mobile. You’ll want to ensure your store is mobile-ready to capture this audience. To optimize for mobile, think about the end-to-end mobile shopping journey and apply responsive design principles. Be sure your photos scale for smaller screens and load quickly, and consider larger buttons for easy navigation.
Your e-commerce marketing strategy should include a mix of approaches to gain visitors and motivate them to become customers. The market continued to build a strong pipeline and have a steady influx of new business.
While you may take on some marketing tasks yourself, getting strategic advice from a digital marketing consultant is an excellent idea. An experienced strategist can help you select marketing tactics to meet your sales and revenue goals and take on the day-to-day operational tasks to keep your marketing engine at peak performance.
Even if you are an experienced entrepreneur or business leader, you may have to learn some new skills to run a high-performing e-commerce operation. As a start, you’ll need to know the key steps behind every e-commerce business and understand how technology and people work together to make your e-business successful.
There are several e-commerce models, so you can choose the one that works best for your business. Both B2C and B2B business models work well. But you can always start with a consumer-to-consumer approach to learn the fundamentals and grow from there.
One advantage of e-commerce is that you can continue your business even if you can’t operate at your physical location. The benefits of having active e-commerce became apparent during the COVID-19 pandemic. However, having an online presence lets you make sales outside of your normal business hours. That means you can offer 24/7 shopping options to your customers, even if you are closed in the evenings or on select days of the week.
Ecommerce has grown steadily in the past few decades and will become the dominant mode of buying and selling over the next decades. If you start building your online business today, you can be ahead of the curve. With smart strategies and hard work, a high-potential e-commerce business and financial success are in your reach. If you need expert advice, you can find consultants to support you with every step from product and audience analysis to business planning, logo design, and marketing.