What is Ecommerce? E commerce Definition, Benefits & Examples

What does ecommerce mean? In a nutshell e-commerce is the process of buying and selling of produce and products by electronic means such as by mobile applications and the Internet. Ecommerce refers to both online retail as well as electronic transactions. Ecommerce has increased in popularity enormously in the last decades, and in ways, it is replacing traditional brick and mortar stores.

Ecommerce allows you to buy and sell products on a global scale, twenty-four hours a day without having the same overheads as you would with a brick and mortar store. For the best marketing mix and the best conversion rate, an Ecommerce venture will also have a physical presence, this business is known as a click and mortar store.

While most people think of ecommerce as the retail business to consumer (B2C) ecommerce, there are many other types of ecommerce. These include online auction sites, internet banking, online ticketing and reservations, and business to business (B2B) transactions. Recently, the growth of ecommerce has expanded to sales from mobile devices, which is known as mcommerce, and is simply a subset of ecommerce.

Ecommerce has seen explosive growth over the past decade, and there are very good reasons to see why this has been the case. As the internet becomes ingrained in our daily lives and routines, acceptance of ecommerce continues to grow, and businesses are taking advantage of this.

Whereas in the early 2000’s many people would feel quite skeptical about handing their card details over online, ecommerce transaction have become second nature now. SSL certificates, encryption and trustworthy external payment systems such Paypal, Worldpay and Skrill have helped improve people’s confidence and trust in e commerce.

What Are the Benefits of E commerce?

ecommerce

Starting an E commerce business has never been easier. Solutions such as Shopify and WooCommerce allow even the least tech-savvy individuals to set up a store.

Gone are the days where you would need to hire a designer and a web developer to get your ecommerce company off the ground.

Nowadays design templates and WYSIWYG systems allow people to put a store together in a matter of minutes.

As a result of this people are reaping all the benefits that an ecommerce stores has to offer.

Below are seven reasons that is ecommerce such an attractive to entrepreneurs:

Global Reach – With a physical brick and mortar store you are limited geographically to reaching only the nearby markets. If you have a store in New York and want to also sell in New Jersey you’ll need to open more physical locations.

Ecommerce doesn’t have this limitation. In fact, you can sell to anyone, anywhere in the world via an online ecommerce business.

Always Open – Physical businesses usually have limited hours, but an online ecommerce shop remains “open” 24 hours a day, seven days a week, 365 days a year. This is extremely convenient for customer and a great opportunity for merchants.

Cost Savings – Ecommerce business have significantly lower operating costs compared with physical shops. There is no rent, no staff to hire and pay, and very little in the way of fixed operating costs. This makes a ecommerce business extremely competitive on price, which can increase market share dramatically.

Automated Inventory Management – It’s far easier to automate inventory management through the use of electronic online tools and third party vendors. This has been saving ecommerce businesses billions of dollars in inventory and operating costs.

Inventory management has become very sophisticated to effectively manage your stock effectively across multiple channels. This could be your own store as well as marketplaces such as eBay, Amazon and your own physical store.

Laser Targeted Marketing – Online merchants have the ability to collect an amazing amount of consumer data to ensure they are targeting the right people for their products.

This lowers the cost of customer acquisition, and allows online business to remain extremely agile. Imagine being able to target just males between 18-24 years old who live in urban areas. That’s laser targeted marketing which you couldn’t get with just having a physical store.

Niche Market Dominance – Because of the lower operating costs, the ability to target your exact type of customer as well as the benefit of global reach that an ecommerce website brings, this ensures that your company could be very profitable.

Location Independence – An ecommerce business owner is not tied to any one location when running their business. As long as you have a laptop and an internet connection you are able to run your business.

What are the challenges of E-commerce?

In theory everything that we mentioned above sounds great, however there inevitably will be some challenges when you decide to enter the world of e-commerce on your own.

So in the interest of balance we thought we would present the potential pitfalls that you may encounter during the infancy of your ecommerce journey.

Trust: Trust is a big word in ecommerce and can come in many different forms.

  • Can your potential customers trust you as a company?
  • Can they trust that your chosen payment gateway won’t fail them?
  • Can they trust that your products are of a good quality?

A trusted payment solution such as Paypal can help instill confidence in people visiting your website. Using a review system such as Trustpilot or registering your website as a Google trust store are many ways to stop those potential barriers.

Technical issues: If you aren’t technologically minded and let’s be honest, you don’t have to be in order to start a store, you may run into some issues.

  • What happens if your payment solution stops working?
  • Do you have a knowledge of HTML, CSS or Javascript to fix coding issues?
  • If you wanted to design a banner or adjust a graphic on your webstore, do you have web design experience?

If you can’t fix these issues yourself then you may need to outsource. Fortunately ecommerce solutions such as Shopify, WooCommerce and BigCommerce have dedicated services available to you to help if these issues arise.

Competitors: As the initial set up costs to start a ecommerce business are so small this is making it a saturated market. Therefore it’s vitally important that you do your research beforehand and find your niche.

No physical presence: Although this is improving with time, the fact that visitors cannot see or feel any of your products can be a downfall.

The way to get around this would be to:

  • Offer free returns
  • Add high resolution images
  • Show customers using your products
  • Include videos your products been used
  • Include very detailed description of your products
  • Put a FAQ section on each product page

Initial spend: The biggest challenge with ecommerce is getting started and achieving that all important first sale.

In order to do that you may need to spend some money in order to make some. Some great and cost effective ways to get you started would be

  • Google Shopping campaign
  • Website pop-ups for data collection
  • Abandoned cart emails
  • Upsell/upgrade bar on your website
  • Give products away to influencers for publicity (you can identify these with a tool such as Buzzsumo)

What are some Examples of E commerce Stores?

Ecommerce websites are popping up all around us. Are all of them successful? No. Most fail. But why?

As well as the above reasons, another common reason is that the business owner doesn’t put the needs of the user before business idea.

User Experience is vital for Ecommerce

Good user experience is one of the key features of any successful ecommerce store and without taking care of this one aspect, you're in an uphill battle to drive sales.

So how do you provide great user experience? Primarily this comes down to your website design.

If you’re looking for inspiration, then check out this post on great ecommerce website design The 50 Top Ecommerce Websites – 2018 Edition.

These examples of good ecommerce website design should give you an idea of what elements you should be focusing on. They should also give you some pointers on how you can provide rich user experience through additional website features and good themes.

What makes an e commerce store successful?

What secret formula do you have to follow to increase your sales?

We teamed up with Ecommerce Design and selected 60 example e commerce sites for their flawless design, great customer service and unique ideas. The majority of these stores deliver an unforgettable experience to their visitors.

Check out the post on the Top 60 Best Online Shops and Key Marketing Tactics to Learn from Each One.

Making a good first impression is vital – how many poorly designed websites did you revisit after landing on them the first time?

Take this example from gatesnfences.com, would you visit this website again? I certainly wouldn’t.

Take a look at our list above and learn from these examples. Even if it's just a logo concept or an idea for your own manifesto, apply these to your own store.

Ecommerce Success Stories

Myprotein

When Oliver Cookson used his £500 overdraft to establish Myprotein back in 2004 I bet he had no idea that 7 years later he would sell it to the Hut Group for £58 million.

Armed with just his skills in web development and a love of all things fitness and web development, Cookson’s rise is meteoric.

How did Myprotein become a successful ecommerce store?

A lot of Myprotein’s success came to their social media output, in particular Instagram. With Myprotein you are investing in to a lifestyle and not just purchasing a product.

ecommerce - my protein

When you are starting up it can seem very appetizing to start plastering your social media feeds with offers and discounts. However consumers are very smart to this sort of tactic and they don’t like companies who overly promote.

In the long term this aspirational model will pay dividends and will turn your customers into fans and supporters.

How you can make your e commerce store feel like a club

What Myprotein do very well is that their customers are so committed to the brand due to this aspiration content.

They feed on this and use certain words in their marketing to make their customers feel that they are part of an exclusive club.

See the example below where they use terms such as ‘members’ and ‘V.I.P’ this works so well psychology on customers.

ecommerce - my protein vip

Black Milk Clothing

ecommerce - black milk

A huge Shopify success story, Black Milk Clothing have built up a reputation that has seen them go from the underground to the mainstream in Women’s leggings.

Black Milk are now a multi-million pound company with sells more than 2000 pairs of leggings every day.

What made Black Milk a success in the E commerce World?

Black Milk certainly didn’t go about things the traditional way. In fact the Australian ecommerce company didn’t spend a penny on adwords, social media, television, radio, you name it.

Black Milk spent all their money on community events. Granted that Black Milk started travelling the world throwing parties and arranging photoshoots but they started in their own back garden of Australia.

Start by using a website such as Meet Up to see what events are running locally to you which you could attend. Or if you’re feeling particularly brave, create your own!

How to use user generated content to build your ecommerce brand

Black Milk Clothing are outstanding at user generated content.

They assign a specific hashtag to every piece of clothing on their website and encourage their customers to use them. When they do, the image is featured on the product page and possibly on their Instagram channel which has over a million followers.

What is so brilliant about this is that it displays all different types of women that customers feel that they can relate to more than the usual models you see on clothing websites.

If like Black Milk you are looking to use Shopify then there are some great Instagram integrations that can help you pull through your feed to the website such as InstaShow and Code Canyon.

Warby Parker

ecommerce - warby parker

Warby Parker’s rise to popularity was much more instantaneous than the two companies just mentioned.

Within a year of their modest beginnings at the University of Pennsylvania in 2010, Warby Parker was being described as “the Netflix of eyewear”.

How did Warby Parker master E commerce?

So how did a company get to become one that is worth $1.2 billion?

Again it may seem a bit far-fetched but Warby Parker weren’t overly promotional. They originally focussed on their blog content which offered content on the daily.

Their blog was a mixture of insights into photography, interviews with models as well as the odd book recommendation.

What Warby did very well to subtly promote their products was to look into the craze of oddly celebrated days.

When celebrating National Sunscreen Day (yes, really) they wrote an article about it and pushed it out to their channels using the relevant hashtags.

ecommerce - warby parker - sunscreen day

This ensured that every time there was a random celebratory day that related to their product, they were always on the ball and involved with the virality of it.

What are the Major Types of Ecommerce?

The example i’ve used above are all what we call Business-to-Consumer (B2C), however there are varying forms of ecommerce that may match your idea more fittingly.

There are 6 types of e commerce. Below we have listed them and briefly explained what they all mean.

Try-Shopify

1. Business-to-Business (B2B)

Quite self explanatory, B2B ecommerce occurs when a transaction is made between two businesses.

Successful B2B businesses include companies such as HubSpot who offer inbound marketing and sales software and Xero who offer accounting software for small to medium businesses.

2. Business-to-Consumer (B2C)

The success story companies above are all B2C companies. This is when businesses are selling products to consumers, basically people like you and me.

Online retail (including dropshipping) is more often than not working on a business to consumer model.

3. Consumer-to-Consumer (C2C)

C2C e commerce occurs when consumer sells directly to a consumer. This has seen a particular boom in the last 10 years.

Sites such as depop, gumtree and shpock have made a great name for themselves very recently.

eBay are still the market leader having established themselves in 1995 followed closely by etsy who were founded in 2005.

4. Consumer-to-Business (C2B)

Consumer to business is a slightly less common type of ecommerce. This materialises when a consumer sells or contributes money to a business.

Companies who have used crowdsourcing or a kickstarter campaign to fund their business would fall under this bracket.

5. Business-to-Administration (B2A)

This type of ecommerce happens when transactions are carried out online between companies and public administration.

This area tends to involve a variety of services such as social security, employment and legal documentation.

This type of e commerce has seen an increase in recent years with the increased investment in e-government.

6. Consumer-to-Administration (C2A)

Lastly this type of ecommerce involves all transactions between individual people and public administration.

A few examples of this would be:

  • Education – publishing and circulating information, distance learning
  • Tax – Tax return forms and payments
  • Health – payments to health services, appointments

What is the Best Ecommerce Website Builder?

“An ecommerce website builder? Why do I need one?”

Well, simply they are all the rage these days for anyone who wants to launch their own online shop.

However this brings up many questions and potential problems in terms of selecting the right website builder for your specific needs.

First off, you don't want to choose an ecommerce website builder and then realize one year later that you're paying too much in transaction fees. Also you may find you can't handle the design tools because they are made for more experienced developers.

Therefore, a good way to look at your ecommerce website builder shopping experience is with two areas: (a) what you want to accomplish, and (b) what your own personal needs are:

  • With the personal needs, it all comes down to how experienced you are and how quickly you plan on scaling up. A builder with hundreds of templates is great for a beginner, but what if you'd like to get into the custom CSS, and that's not available?
  • The second area to evaluate is what you want to accomplish. This ties into the tools, settings and features that are offered through the various platforms. With that, we want to take a look at the current state of ecommerce and the major trends to plan for the functionality you'll require.

We review a large range of e commerce website builders in this article Ecommerce Website Builder: The Best Tools to Create a Winning Online Shop.

Here are a brief synopsis of 4 of the biggest tools and what sort of company who suit them:

Shopify

Shopify have also been at the forefront of making e commerce accessible for everyone. Plans start as low as $9 and there are 24 free website themes that you can use to get you started at a very low price.

Shopify have turned the ecommerce on his hard and have made the process of a setting up a website incredibly easy for even the biggest technophobe.

This is backed up with their 24/7 customer support that’s on offer. You can take advantage of email, phone and live chat support regardless of the pricing plan you are on. Ensuring that support is available in the first few months when you’ll probably be in need!

Is Shopify suitable for me?

If you are looking to start your e commerce business from scratch today then Shopify is a great choice. Additionally as your business grows, Shopify can grow match you by offering you better shipping discounts as well as unlimited staff accounts and advanced reporting.

Read a thorough review of Shopify here.

WooCommerce

Whereas every other ecommerce website builder in this list is ‘hosted’, WooCommerce is ‘self-hosted’.

Whereas hosted means that you pay for the solution and the hosting is packaged with it, self-hosted means that you need to find your own hosting and pay for it.

If you already have WordPress then you can simply just attach the WooCommerce plugin to it for free and you are ready to go. As you would be aware as well WordPress has a variety of other plugins to help you improve your store.

Is WooCommerce suitable for me?

If you are looking to start your own store on a budget and have a decent knowledge of hosting and web development then WooCommerce is the option for you!

Also ideal if you already have a WordPress and you know how to operate that.

Read a thorough review of WooCommerce here.

Magento

There are two versions, one is what they call an open-source solution similar to WooCommerce where you need to purchase your own domain and hosting.

Alternatively there is the hosted solution, but this can be very, very expensive.

Magento is used by some of the biggest companies in the world and the scalability of it is seemingly endless.

Whereas you could probably recognise a Shopify store just by looking at it, Magento has a massive range of themes that can make your website look totally unique.

Is Magento suitable for me?

If you are starting up you may consider the free open-source option. The hosted solution isn’t suitable for companies who are just starting up.

If your business takes off and you feel you need more flexibility with your website then Magento would be ideal.

Read a thorough review of Magento here.

Bigcommerce

Bigcommerce markets itself as a platform for “growing sales”, pitching themselves as a more high-end version of Shopify.

At $29.95 the lowest end pricing plan is affordable and their themes and app store are full of great options. The backend is very intuitive though which makes it accessible even for people who aren’t that confident with an ecommerce website builder.

Similar to Shopify, support is available 24/7 to ensure you are getting the answers to those questions that will undoubtedly crop up early on!

Is Bigcommerce suitable for me?

If you are ambitious and see your business taking off very quickly then Bigcommerce is a great tool to support that.

It’s very accessible, has a range of backend features for discounts and coupons and also offers you the chance to sell through Facebook.

Read a full review of Bigcommerce.

Ecommerce Marketplaces

Just selling items on your online store is really limiting the potential of how much money you can make.

With inventory management software it’s never been easier to manage your stock across multiple channels. Which means that you can concentrate on what matters most, selling more products!

Here’s a short list of marketplaces that you should be looking to set yourself up on alongside your online store.

eBay – People have the assumption that eBay is purely for C2C business, but that’s not the case.

There are also a whole host of B2B and B2C transactions happening on the site. If a product isn’t selling well on your website, try putting it on eBay as an auction to recuperate some money back.

Amazon – There isn’t an awful lot that Amazon doesn’t sell now, so even if your idea for a product hasn’t been done before there will be a place for it on Amazon!

With around $90,000 being spent on Amazon every minute around the world it’s imperative that you list your products here.

Etsy – Etsy in an online marketplace that is ideal for anything that is handmade. It specialises in the vintage and unique!

The website has a fantastic community vibe to it and is great for building up a good reputation as a seller.

Alibaba – Alibaba is a marketplace for manufacturers, suppliers, exporters, importers, buyers, wholesalers, products and trade leads

A huge advantage is that you have access to a countless suppliers who sell pretty much any product you can think of it. If you don’t have an original idea and just want to start of selling then check out Alibaba.

How do I start an ecommerce business?

When you start an ecommerce site you realize that there are loads of items that need to be checked, cross-checked and tested to ensure that your customers have a good experience. That’s why we put together an expansive checklist for new ecommerce sites.

Often, the largest obstacle that business owners face is being unfamiliar with the process, So we put together a post on ten easy steps to learn how to open an online store, whether you already sell products in a brick-and-mortar location or you're starting an online business from scratch.

Are you sitting around with a sweet new product idea and you want to start selling it online? Have you been selling in a brick-and-mortar shop and now you want to bring your business online? The solution is building an online store, so I want to show you how to start an online shop in just 15 minutes.

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