Ecommerce stands for electronic commerce, which refers to the buying and selling of products via electronic means or online without the need for paper transactions.
Ecommerce is divided into a few subcategories:
- B2B: Business-to-business, where companies sell to other companies.
- B2C: Business-to-consumer, where companies sell to consumers. For instance, brands like Amazon, Wayfair, Wish, etc.
- B2G: Business-to-government, where businesses sell products to government entities.
- C2C: Consumers selling to consumers, sites like eBay are an excellent example of this.
Why Ecommerce is Important
Ecommerce provides businesses with a broader market as it enables them to sell internationally or outside of their local community.
For consumers, ecommerce has brought a new level of convenience to their shopping experience. They can browse items online without visiting local stores, it’s far easier to find the cheapest and best-suited products online because comparing products is a breeze on the internet, plus, since many ecommerce stores offer global shipping, the selection of products for consumers to choose from has massively increased.
The Disadvantages of Ecommerce
But, despite all the perks associated with ecommerce, there are a few drawbacks for both consumers and their local communities:
- There’s a disconnect between customers and merchants. Online shoppers don’t interact with anyone or anything other than the product listing and maybe the customer support team if they have questions, feedback, or problems. This lack of facetime can mean that customers don’t develop a relationship with online brands as easily.
- The product isn’t instantly received by the customer so ecommerce isn’t a solution for emergency or last-minute purchases. However, larger companies such as Amazon have enabled one-day deliveries, so this might not be as much of an issue as it once was.
- Online products can’t physically be touched, so consumers can’t thoroughly test or try the product before purchasing it. Clothes can’t be tried on until they’re sent to the customer’s home, and sizes of products and textures are harder to imagine. While ecommerce merchants often offer generous return policies, customers sometimes purchase products by mistake and then have the hassle of organizing an exchange or refund.
- For small local businesses, ecommerce is often an unbeatable competitor. Small brick and mortar retailers can rarely match the lower wholesale prices and wide selection offered by ecommerce stores.
How Ecommerce Works
Let’s look at the different types of products ecommerce stores can sell to their customers:
- Physical Products: These are tangible items delivered to a customer’s door. For instance, clothes, furniture, or even groceries from a supermarket chain.
- Services: This can be further broken down into another two subcategories. Firstly, you can pay and schedule a service to be performed at a physical location such as your home. But, secondly, there are also digital services that can be purchased online and are performed remotely such as online courses, mentorship programs, one-on-one advice, web design and development, etc.
- Digital Goods: Digital products are items such as music or film downloads, PDFs, ebooks, audiobooks, courses, videos, online games, etc.
Another growing trend in ecommerce is offering customers a subscription model to pay for goods and services. Typically, this gives the consumer access to either physical and/or digital products (or services) when they pay you a monthly or yearly fee. Companies like FabFitFun, Spotify, and Netflix are all great examples of these kinds of subscriptions.
Overall, ecommerce stores make shopping fast and easy. Plus, it allows customers to shop around and save orders for later—what’s not to love about that?!