What is the eCommerce Business

What is e-commerce?

E-commerce ( also known as electronic commerce, e-commerce ) is nothing else than a trade carried out via the Internet. What is the eCommerce business in sales? It is a process in which commercial transactions are concluded via the Internet. Regardless of what tools buyers and sellers use. Importantly, products and services are ordered online, but payment and delivery of goods/services can be made both online and offline. Internet sales ( e-commerce) are performed by various market players – entrepreneurs, government institutions, other private or public organizations, as well as individuals. Among the most popular forms of e-commerce, it is worth mentioning: online stores, auction portals, and classifieds websites.

A brief history of e-commerce

Online shopping was first made in 1979 in England. The “inventor” of this form of commerce is Michael Aldrich. As early as 1980, e-commerce was used by car manufacturers such as General Motors, Nissan, and Ford. Since 2000, e-commerce has been growing in strength. It becomes common among European and American companies that offer their products and services via the Internet. The first e-commerce store in Poland was established in 1997.

How do we divide e-commerce?

There are several main categories of e-commerce breakdown. The first one is the division according to the entities of trade on the Internet, in which we distinguish the following division into a trade:

physical goods,
digital goods,
services.

What is the eCommerce business between companies? In the case of the division into trade entities, we distinguish between:

B2B – when companies trade with each other;
B2C – when companies sell products to individual customers;
C2B – when individual customers offer their services or products to companies;
C2C – when transactions take place between customers and not companies.

We can also divide e-commerce into three basic forms:

Direct or comprehensive form – when the entire purchasing process is carried out on the Internet (from the moment of placing an order, through payment, to delivery of goods).
Indirect form – when customers are looking for products, services, new contractors, or send documents and make payments on the Internet, but the delivery of the purchased goods or services takes place in the traditional way, i.e. directly.
Hybrid form – this form is used when both sellers and buyers are struggling with the deficiencies of the development of the Internet network or telecommunications and logistics services. In this case, various forms of distribution are used – both direct and indirect.

What is the eCommerce business benefits?

I think that each of us – Internet users is well aware of the many benefits that online trading brings. We felt it especially nowadays, when, due to the lockdown, we were forced to stay at home and retail chains were closed. Virtually all trade, along with the trade-in food products, went to the Internet. Of course, these actions have been taken before, but I am sure that thanks to the COVID-19 pandemic, the trend of moving customers to the Internet has strengthened. Everything just happens faster. Customers were forced to switch to the Internet, even if they had defended themselves against it before. Let’s take a closer look at the other benefits that come with the use of e-commerce.

Lower operating costs – sure every entrepreneur will agree with me that moving your business to the Internet has significantly reduced the operating costs of the company, offices, equipment, and rental. The number of sales personnel is also decreasing, and the distribution channels are shortened – for example by simplifying the circulation of documents.
Better personalization – modern technology with which we are currently dealing, digital marketing, as well as numerous marketing tools aimed at improving communication with the client, also allow for great personalization of both products and messages. E-commerce platforms that are integrated with marketing automation tools show the customer only the content that may be of interest to him. Thanks to automation and artificial intelligence, buyers will only receive the e-mails that interest them, and also see only the products that are to their taste.
The lower entry barrier for new sellers – to open their business on the Internet, new sellers do not need to have such large budgets as, for example, sellers in shopping malls. Online sales do not require investing in premises, staff, and e-commerce platforms are often available at very good prices. Of course, according to research, many companies fail in the first year of operating on the Internet. However, this is due to many issues, such as under-financing of marketing, lack of advertising, ineffective logistics, or poor quality of the products offered. Not to mention the fact that the competition is getting bigger.
Time Savings – Customers save time that would normally be spent traveling to the mall. Currently, it is enough for them to enter the Internet and purchase a product, which will take them a significantly shorter time than in the case of traditional forms.
Access to information – the Internet network is a huge database of all products and services. Buyers in e-commerce stores do not have to go to an Offline store to talk to a consultant or seller about the product. All they need to do is read reviews, and articles about the product or contact an online consultant.
Unlimited development opportunities – What is the eCommerce business to the world? e-commerce stores, thanks to the fact that they operate on the Internet, can develop not only in the United States (locally) but also around the world. Even a small family business from Tulsa, Oklahoma can offer its products to a family from Sri Lanka. The Internet does not limit us, it gives us more possibilities. The most important thing is that we know how to use them.
Access to more products – online stores usually have a much wider range of products than brick-and-mortar stores, which often have shortages or all products do not fit on the shelves.
More effective e-marketing – by selling their products in e-commerce stores, companies can use a number of internet marketing tools, which are much cheaper, more efficient, and more flexible than traditional marketing. In addition, it gives great personalization opportunities that we cannot use in the case of traditional sales.

E-commerce is not only about benefits – a few words about limitations

It should be remembered that there is still a large group of people who do not like online shopping and prefer to buy products in Offline stores. Many people, especially from the Baby Boomers and X generations, prefer shopping in a local store, contact with a living person, a traditional form of service, and collection of goods. They are not as open to new technologies as younger customers for whom shopping in the online store is an everyday reality. The most common e-commerce restrictions include:

It is not possible to touch or test the goods.
No direct contact with the seller.
Fear of online transactions and new technology.
Security threats related to the protection of personal data, as well as the implementation of financial transactions.
Delays in the delivery of goods.
Inability to sell all items via the Internet (due to their specificity and size).

Single-channel, cross channel, omnichannel, multichannel

Each of you has heard a lot about the evolution of sales – single-channel, cross channel, omnichannel. Today I would like to remind you what these basic concepts are and what is behind them, as well as to point out the factors for which omnichannel is becoming a priority for commercial companies.

Unfortunately, even in large e-commerce stores and among well-known brands, the sales model is not perfect and is far from the omnichannel capabilities – the model to which I will encourage you today. Recently, I received a gift voucher to use during the purchase, but I can only use it in brick-and-mortar stores, which for me is quite a problem. I must admit that it arouses my aversion to the brand, and the gift becomes a problem, not a pleasure. In many stores that conduct traditional sales, combining it with online sales, and also running telephone or catalog sales channels, there is no consistent, modern sales model. And if there is no unified policy and a consistent database of customers and products, it will be very difficult to provide the customer with the highest level of service.

Today, the purchasing process is not uniform. It is not entirely implemented in one channel – online or offline. The customer‘s shopping path is much more complex. There are many points of contact in different channels. In order to provide the customer with the highest quality of service, it should be possible for him to order products in any communication channel and to receive the purchased order in any sales channel.

And that’s actually the definition of omnichannel.

Omnichannel

Omnichannel is now an extremely popular concept among e-commerce stores. There are many online tools to ensure a consistent customer shopping experience, whether in-store or online. Omnichannel is an idea that was created in response to changing trends, customer needs, as well as new technology. New sales channels are also being created, as well as new contact points, which simply did not exist at the time when traditional sales dominated.

We have at our disposal, for example, social media, online meetings, webinars, and live chats. These are just a few points of contact that have emerged in recent years. The goal of sellers and e-commerce stores should be to participate in all or at least key points of contact with the customer. After all, our brand should be where our client is.

Until recently, the customer used only one channel when making a purchase. This means, for example, that when buying a passenger car, he was going to a car dealership. It was there that he obtained information about the product from the consultant’s mouth, where he made a test drive and also made a purchase. In addition, he often took the car back there as part of the after-sales service.

Everything looks completely different these days. When deciding to buy a passenger car, first we look for information about a given brand on the Internet. We are looking for articles of comparisons and rankings. Nevertheless, our decision is also influenced by the post on Instagram or Facebook. When we go to a car showroom, we have already made a decision, and often we, as customers, are better prepared to buy a product and have more knowledge about it than the sellers themselves.

Also, before a purchase is made, the customer journey is much more complex and is not limited to one channel. It is especially important for the customer to have the same positive impressions in contact with the brand in all channels. Regardless of whether he acquires knowledge about the product from a website, from a PDF folder, or visits a brick-and-mortar showroom. He should feel the same ‘cared for’ and should also get the same handful of information or the same quality of customer service. The client should not experience differences in the level of sales, product presentation, or price, regardless of the channel in which he is currently located.

Of course, I realize that from the perspective of a trading company, creating such a customer-friendly environment is a really tough challenge, which is to combining data from different channels to get Single Custom View. In other words, it is a customer’s purchasing profile, in which various information is specified, such as his preferences, history of communication with the brand, information about his previous purchases, and many other data.

Currently, the simplest form of obtaining customer data are loyalty cards. Each loyalty cardholder has his own profile, thanks to which the company can better profile messages to him and offer products from the appropriate price range. Of course, many customers defend themselves against loyalty cards, believing that such knowledge interferes with their private lives. However, according to research, over 60% of customers are able to provide their data and set up loyalty cards in exchange for amenities and discounts.

Why is the omnichannel strategy so important? I believe that companies that do not implement the omnichannel strategy in a short time will lose customers to those stores that personally treat the customer as an individual, individuality and offer their dedicated products based on their purchasing experience and history.

Along with the development of technology and digital transformation, more and more is said about omnichannel. On a daily basis, companies have huge databases about their clients, but they are not connected, which means that analysts are not able to adequately describe the client, learn about his needs, or offer him the most suitable products and services.

In addition, customers are becoming more aware and therefore more and more expectations. I am probably not the only customer who is dissatisfied with having a gift card that can only be used in a brick-and-mortar store. This is an additional obstacle in these times when COVID-19 has, firstly, changed customer purchasing patterns and habits, and secondly, it causes fear of leaving the house, especially to the store, where there is an additional risk of contracting the virus.

The term Customer Experience is of great importance, as well as the idea behind it is to maintain the highest care for customer experience at all possible points of contact with the company or brand. Omnichannel is the best reflection of the Customer Experience policy, which is implemented in the sales process of a given trading company. Of course, it should be remembered that Customer Experience is a much broader term than the purchasing process itself, but this is a topic for a separate article.

Single-channel

Another shopping model worth mentioning is the single channel. We deal with it when there is only one purchasing channel. Imagine a bakery that allows you to buy its products only in an Offline store. It is also the only place where the buyer can talk to the seller and learn about the entire range.

In the case of e-commerce, companies in the single-channel model offer the option of purchasing, for example, only in an online store. This sales model, of course, still exists, but on a limited scale. Most often it concerns small local businesses, such as small shops and local hairdressers.

Multichannel

Multichannel is also called multi-channel sales. The customer has the opportunity to contact the company through various communication channels and also has the option of purchasing products in several ways. Both online and offline.

But how is it different from multichannel from omnichannel?

The main difference is that in the case of multi-channel sales, all channels that a company has at its disposal are independent of each other. They don’t connect. This means that if the customer asks the consultant via the hotline, the employee of the online store will not know the situation and will have to read the customer’s question again. Likewise for purchase. If the customer makes a purchase in an online store, he will not be able to return the goods in an Offline store.

Multichannel brings with it a lot of limitations that make the purchasing process for the customer more complicated and can turn out to be irritating. The goal of every company should be to react quickly to the client’s needs, regardless of which channel it is in. Unfortunately, the multichannel model does not provide for integration between channels.

Cross channel

Recently, the strategy I will mention is a cross channel. Also, in this case, customers have various contact points at their disposal, such as an online store or an offline store. They decide where they want to buy, but there are differences between different sales and communication channels. These may be price differences depending on where the customer makes the purchase. There may also be differences in the form of customer service.

Personally, I believe that a customer should have exactly the same prices and terms of purchase, regardless of whether they are buying in an online store or in a brick-and-mortar store.

Another example from everyday life. A month ago, I was in a furniture store, where a “- 20%” discount was valid for all products available “on-site”. As shopping for interior furnishings usually weighs a lot, I decided to go home and do online shopping, where, unfortunately, this promotion was not there anymore. In this way, the store lost a client, because I did not decide to buy online, because, on the one hand, I felt it was an attempt of manipulation and fraud, and on the other hand, I had no time and no desire to return to the shopping mall. Keep in mind that the development of digital technologies, the Internet, and digital channels through which we can make a purchase makes customers like me prefer to buy products on the Internet as it gives a lot of freedom and time savings.

Bricks and Clicks or Click and Collect?

This year we are witnessing many changes in the models of operation of offline stores and e-commerce. Off-line stores had to quickly adapt to the new conditions when some of them were completely closed, and some stores operated only partially, having to respect restrictions such as the number of buyers in the store, hours for seniors, etc.

Even though concepts such as Bricks and Clicks or Click and Collect are nothing new and by no means did they arise with the onset of the pandemic, it was during this period that they gained particular importance. Bricks and Clicks is a form of sales in which the company decides to integrate online and offline channels. In practice, this simply means being able to order products online and then pick them up in an offline store. Pizza Hut was the precursor of this form of sale, but in the long run, it was implemented in offline stores. In the era of a pandemic, the ability to order and pack a product, and then pick it up in an offline store, has become so necessary and at the same time common that we can notice it in grocery stores such as Aldi, Winn-Dixie, Bi-Lo, Publix, and Kroger.

Similarly, Click and Collect is a service that consists in ordering goods online and then collecting them in an offline store. It is difficult to clearly define the differences between the two concepts, but from the point of view of the entrepreneur and the customer, it is important that they provide the opportunity to connect the worlds – the internet and offline.

In the near future, the possibilities of ordering online and safely collecting in-store purchases will certainly develop faster and faster, which saves a huge amount of time, is convenient for people who do not like to spend hours in stores, carrying heavy shopping and standing in queues to the cash register.

Options such as “Buy online, conveniently pick up“. Regardless of whether the customer decides to pick up at an offline store (with pickup at a designated stand in the store), pick up from the parking lot (where the customer drives to the store and waits in the car while the employees put the items in the trunk) or another way of the collection make sure that your customers can pick up the products quickly, safely and conveniently.

The most popular communication channels with the client

Returning to the omnichannel concept, I reviewed the Zendesk Customer Experience Trend Report 2020, which presents the most popular customer service channels. Currently, the most popular channel of communication with the client is the telephone, which is used by over 66% of respondents, and what is important, most of them are people from the Baby Boom generation (50+). Almost half of them choose e-mail as the most convenient form, despite accepting the possibility of waiting longer for a reply this way.

28% of consumers use the contact form on the website or in the online store. And 26% of respondents use communicators on social media such as Facebook, Instagram – and here we are dealing with the millennial generation, i.e. now 20 and 30 years old. Chat on the website is popular with a quarter of consumers who use it because of the real-time chat with the staff. Providing customers with access to help and service is fundamental to the reception of our store. Easy access to consultants can become a decisive factor in choosing our online store.

For today I am finishing the topic of e-commerce, although I have the impression that it is a topic I will definitely come back to more than once.

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