What is eCommerce?
eCommerce refers to any form of business transaction conducted online. The most popular example of eCommerce is online shopping, which is defined as buying and selling of goods via the internet on any device. However, eCommerce can also entail other types of activities, such as online auctions, payment gateways, online ticketing, and internet banking.
eCommerce is typically classified into three different types based on the type of participants involved in the transaction: business to business (B2B), business to consumer (B2C) and consumer to consumer (C2C).
eCommerce is the fastest growing retail market projected to hit $4.058 trillion in sales in 2020. Mobile commerce, or mcommerce, is a rapidly growing new avenue of eCommerce that’s mostly driven by the expanding market and influence of smartphones and millennials’ comfort with shopping online. In 2016, the mcommerce sector enjoyed a 39.1% increase in sales compared to the previous year.
The Benefits of eCommerce
There is a reason why eCommerce has demonstrated such explosive growth in the past couple of years. Indeed, with the internet becoming an essential requirement of everyday life, businesses are learning to take advantage of the numerous benefits of eCommerce, the most notable of which include:
- Global market. A physical store will always be limited by a geographical area it can serve. An online store, or any other type of eCommerce business for that matter, has the whole world as its market. Going from a local customer base to a global market at no additional cost is really one of the greatest advantages of trading online.
- Around-the-clock availability. Another great benefit of running an online business is that it is always open. For a merchant, it’s a dramatic increase in sales opportunities; for a customer, it’s a convenient and immediately available option. Unrestricted by the working hours, eCommerce businesses can serve customers 24/7/365.
- Reduced costs. eCommerce businesses benefit from significantly lower running costs. As there’s no need to hire sales staff or maintain a physical storefront, the major eCommerce costs go to warehousing and product storage. And those running a dropshipping business enjoy even lower upfront investment requirements. As merchants are able to save on operational costs, they can offer better deals and discounts to their customers.
- Inventory management. eCommerce businesses can automate their inventory management by using electronic tools to accelerate ordering, delivery and payment procedures. It’s saving businesses billions in operational and inventory costs.
Targeted marketing. With access to such a wealth of customer data and an opportunity to keep an eye on customer buying habits as well as the emerging industry trends, eCommerce businesses can stay agile and shape their marketing efforts to provide a better-tailored experience and find more new customers. Just consider for a moment that you have a chance to address thousands of your customers by their first name; that is something already.
Serving niche markets. Running a niche brick-and-mortar business is extremely difficult. There’s almost no chance of scaling it unless a niche product becomes mainstream. By tapping into a global market, on the other hand, eCommerce retailers can build a highly profitable niche business without any further investment. Using online search capabilities, customers from any corner of the world can find and purchase your products.
Working from anywhere. Often, running an eCommerce business means that you don’t need to sit in an office from 9 to 5 or suffer through a commute day-in and day-out. A laptop and a good internet connection is all it takes to manage your business from anywhere in the world.
How to start an eCommerce business
There is a logical order in how you would go about building an eCommerce business. Although setting up an actual online store would probably take less than a day, researching, building, launching and growing a profitable eCommerce business is a multi-layered process involving a number of steps and decisions.
- Choosing and sourcing a product.
The first step to starting an eCommerce business is deciding what products you’re going to sell. Finding a profitable idea can be hard work, so be prepared to do some serious digging and thinking. It’s essential that you choose products with healthy margins that will allow you to turn a profit and scale the business in the future. Once you know what you want to sell, you’ll need to decide how and where you’re going to source the products. The four main methods of sourcing products and inventory are making, manufacturing, wholesale and dropshipping.
- Conducting research and planning ahead.
Your product idea will dictate which aspects of the market you need to research, but some of the most important areas to look into will be your competition, pricing strategy, and your unique value proposition. At this point, it is also a good idea to draft a business plan that will help you visualize your growth strategy and identify any potential threats or obstacles.
- Getting your brand right.
Now that you have a promising product idea and a clear overview of the market, it’s time to start thinking about the key elements of your store, such as your brand name, domain name, brand guidelines, and your logo. Getting your brand right from the start can help accelerate the growth and conquer the hearts of potential customers. Before turning your attention to building the store, you should spend some time studying the basics of SEO, so that your business gets off to a good start.
- Deciding how you will sell. The actual setting up of your online shop can be achieved in two ways:
- You can build an eCommerce store from scratch – this means either developing it yourself, or hiring a freelancer/agency to do it for you. It can take longer and cost more, but building a custom online store will guarantee 100% customization and give you the power to make all the decisions.
- You can use an off-the-shelf eCommerce solution like Shopify, which makes building an online store a quick and easy process. However, it will also mean less customization, as you will need to choose from an existing pool of themes and tools provided by the platform. If you opt to run a dropshipping business, eCommerce solutions like Oberlo will allow you to get the store off the ground and start selling in as little as few hours.
- Before launching.
At this stage, you’ll be itching to get the store out into the World Wide Web. However, make sure you’re well prepared to measure the success of your launch – defining your key performance indicators upfront will help you track your progress and performance and fix any issues as they emerge. Other important things to take care of include setting up your social media profiles, getting the email marketing ready, installing Google Analytics, doing keyword research, defining your shipping strategy and finalizing the launch promotion plan. Yes, that’s a lot of work, but a good start is half the job done. When you complete the checklist, try running your store through the Shopify store grader to catch errors if there are any.
- After launching.
Welcome to the grind! This is where the real work begins. Having launched your online store, you should immediately move on to the promotion phase. Marketing your store and optimizing conversions will be your daily bread and butter from now on. You should also experiment with regularly expanding or refreshing your inventory. It is a particularly easy thing to do for dropshippers, as they can import new dropshipping products in minutes, but it should remain a priority even if you’re manufacturing or making the products yourself. Staying ahead of the curve will take some testing.