This is the first in a three part series where we seek to provide some basic groundwork and understanding for the basics of ecommerce; what drives ecommerce (people and technology); and a little bit about the ecommerce platforms that underpin B2B and B2C digital commerce.
Part 1 – The Basics
Sale of goods and services
At a very basic level, electronic commerce (ecommerce) or digital commerce is a transaction of goods or services between two parties (buyer and seller) over a digital channel generally using digital payment, i.e. credit cards, Apple Pay, Google Wallet, PayPal, Venmo, and bank cards, to name just a few types of payment. I say generally because as we’ve been seeing in the last 5 years or so, the lines are blurring between online and offline – which we’ll talk about more in subsequent sections. The end to end experience which includes ecommerce is called the digital customer experience and it encompasses more than just a transaction but also the initial communications and the post-sale interactions between the business and the buyer.
The exchange can occur between a business and a consumer such as a purchase from a retailer’s website – a B2C transaction. The exchange can be between businesses such as an auto parts manufacturer selling to a local garage – a B2B transaction. It can even be a direct sale from one consumer or individual to another such as through sites like eBay or Craigslist, this is called C2C. There are variations on this too, where you could swap a business for a government entity in any of these scenarios.
Why is it successful
ECommerce has been an incredibly successful channel for selling goods and services. It is growing faster than traditional retail – 3x faster in 2018 and in a growing number of organizations it has become the primary sales channel. The reason behind this fast growth lies in the many attributes of online commerce.
1. Always on/always available – the ability for an individual or organization to simply pick up their phone or open up their computer to search and buy, regardless of the time of day creates opportunity for a sale. Facilitating immediacy for a buyer’s need, whether it be due to an urgent need or a burst of inspiration, opens up the chance to capture sales that may not have happened once a moment is allowed to pass. No longer does a buyer have to create and maintain a list to get ready for the next day’s purchases, they just get it done in the moment and move on.
2. Adding to the convenience of wherever/whenever shopping, the digital channel removes the need to actually go to a store to make a purchase and/or pick up the items. The buyer doesn’t have to plan out a shopping day and take time out of their schedule (from work or otherwise) to acquire their purchased product or service. And guided by Amazon, the trend is now to offer free shipping combined with expedited shipping to address one of the few gripes of ecommerce, which is the delay in gratification caused by having to wait for the purchase to be delivered.
3. Lower prices/easy price comparison – one big change that ecommerce has brought is an easy way to compare prices of products quickly across a much larger set of data than was feasible in a purely physical retail world. Buyers can scan multiple websites and make informed, price based decisions. This also created price pressure on sellers to the benefit of the buyers leading to frequently lower prices online.
What does the ecommerce market look like?
As I referenced earlier, the ecommerce market is growing fast, consistently outpacing traditional retail sales growth by a significant amount – 3x faster growth in 2018 as an example.
Look for part 2 of the three-part blog series coming soon and covering some of the people and intricacies of ecommerce.