In entrepreneurship, everything related to online is defined by the general word e-commerce. In this article, we describe what it is, highlight its pros/cons, and recommend how to launch your business in e-commerce.
E-commerce refers to the field of electronic commerce. It is an activity that involves buying/selling goods and services online. It also includes trading on marketplaces, promoting products, services, social, and business projects, etc.
In other words, we can say that E-commerce is online commerce, e-commerce, when all transactions, operations, business processes, and communications take place online - on a website, in social networks, or in an application. When people talk about e-commerce, first of all, they mean online shops.
E-commerce simplifies the shopping journey - to purchase a product, a user does not need to go to a shop, but simply open a website on a computer or smartphone and place an order.
In a broader sense, e-commerce brings together companies that conduct online transactions. Thus e-commerce includes large online services, companies that deal with electronic funds transfers, automated information gathering systems, and other business areas.
Advantages and disadvantages of e-commerce
Among the advantages:
Low cost of doing business. Anyone with an original idea and a vision of how to implement that idea online can start an e-commerce business. A low entry threshold is also ensured by minimal financial costs - a novice entrepreneur does not need to rent an office or production facilities, hire employees, or set up complex technological processes. Specialized computer programs and services help to solve most everyday tasks.
Expanding the target audience. You can enter markets in any country with your product or service, scaling the project to meet the specific needs of people. When promoting, this will require setting up geotargeting, but, as a rule, all advertising costs will pay for themselves over time.
Reduced costs for intermediaries. The possibilities of e-commerce allow entrepreneurs to work directly with manufacturers without intermediaries. Logistics costs are also reduced if the businessman works in the field of intellectual labor or provides IT services.
Access to spot analytics. As entrepreneurs in e-commerce use various software and CRM services to simplify routine work, they get access to detailed analytics. Digital services collect data on traffic, number of sales, effectiveness of advertising campaigns and other important metrics into online reports.
Development opportunities. Programs for sales accounting, electronic payments, and mailings allow for the reduction of the costs of trade organizations, increasing the profitability of business.
Disadvantages of e-commerce noted by marketers:
High competition. Depending on the segment of trade or service, the level of competition may be lower or higher. For example, it is quite difficult to compete in sales of consumer goods, catering, and courier delivery.
Dependence on services and information communication systems. The use of various services and CRM cannot guarantee the absolute security of confidential information transfer. Often there are problems with unjustified expectations of customers who receive goods selected solely based on a picture in a catalogue or online storefront.
Types of e-commerce
The sphere of e-commerce is usually divided into several areas by target audience.
- B2B (Business-to-Business).
This is a commercial relationship built between business representatives. In the B2B sphere, entrepreneurs make deals with each other and formalize partnerships for the development of their businesses. For example, IT companies sell software to optimize business processes or CRM to industrial companies or service providers.
- B2C (Business-to-Consumer).
In this niche, businesses sell goods or provide services to ordinary people through their own online shops or marketplaces. This is the most extensive segment of e-commerce, dealing with a wide variety of mass-market products and services.
- B2G (Business-to-Government).
Commercial activities built between representatives of business and the government, as a rule, work in the network in the sphere of development of specialized software and maintenance services. For example, officials launch a contest or tender for the creation and implementation of platforms to simplify work with specific agencies, tax payment services, etc.
- C2C (consumer-to-consumer).
In this niche of e-commerce, consumers themselves interact with other consumers via the Internet. This includes a fairly extensive segment of people's marketplaces, noticeboards, services for financial and legal transactions, etc.
- G2C (Government-to-Citizens).
Another popular type of e-commerce covers the interaction between the government and ordinary people. In this area, the development of online services and social platforms is aimed at providing government services to citizens, including payment of fines and taxes, simplified registration of companies, obtaining various state documents, etc.
How e-commerce works
In the most popular B2C niche, the approximate scheme of e-commerce is the same.
Consumers go to the website of an online shop and choose a product. After receiving a request from the site, a manager checks stock availability or contacts the manufacturer to fulfill the customer's request. After confirming that the order can be fulfilled, the customer's request is confirmed and they receive a notification.
Then the customer pays for the selected goods remotely (the financial processing service implemented on the site is responsible for payment processing). From the moment the payment is approved, the order is processed: the goods arrive at the warehouse and are sent to the address specified by the customer. Customers learn about the movement of the goods through notifications from the tracking system by sms or email.
When electronic goods are sold, they are accessed online after the customer has paid for the order.
Since various types of e-commerce involve interaction between entrepreneurs and consumers not only with each other but also with the state, the scheme of e-commerce in building relationships with officials is somewhat different. Here, commercial partnerships are built based on government tenders and incoming bids from entrepreneurs. Payment schemes are also different: they are based on a financial contractual system, with settlements made through banks.
How to increase the effectiveness of e-commerce on the Internet
- Improving the effectiveness of e-commerce on the internet requires a comprehensive approach that includes:
- Website optimization, which includes everything possible to improve the site, from creating an attractive design to implementing easy navigation, to more complex technical points.
- Optimizing the checkout process to make it quick and easy for customers.
- Digital marketing, such as content marketing, social media, and email advertising, to drive more potential customers to your website.
- Personalized marketing campaigns, take into account the preferences and interests of your target audience. This way you automate marketing processes including sending emails, and social media management, questions, and customer inquiries via email, chats, or phone calls. This means responding to customer feedback and comments to improve the quality of communications.
- Develop return and exchange policies to increase customer satisfaction.
- Manage inventory and logistics to avoid overstocking or shortages.
- Develop strategies to optimize delivery costs, including packaging and logistics.
- Conduct regular data analyses to evaluate the performance of your business and identify areas for improvement.
- The above strategies will help improve your e-commerce business performance, and ensure customer satisfaction and sales growth.
Wilma's team can help you develop an online shop from scratch or help you improve the efficiency of an existing site. Wilma specialists have extensive knowledge and experience in the field of e-commerce. We will find optimal solutions to promote your business online. We have dozens of successful business projects under our belt. We code, you grow.