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What is e-commerce: in simple words

Simple e-commerce

E-commerce simplifies the shopping path – to purchase a product, the user does not need to go to the store, but just open the site on a computer or smartphone and place an order, as https://seclgroup.com specialists say. 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 collection systems, and other business areas.

Why e-commerce has grown

E-commerce is growing every year, and the pandemic has only pushed the development of the market. A new audience began to use e-commerce services – people over 55 years old. Offline stores began to close and go online.

Globalwebindex researched the reasons why people buy products online. 53% of respondents highlighted free shipping, 41% – promotions and discounts, 35% – the opportunity to study reviews before buying, 30% – quick checkout.

China is the global market leader with $1.3 trillion in online sales in 2020. By 2025, they will grow to $2 trillion.

Types of e-commerce

  • B2C (business to consumer) – selling goods or services to customers directly.
  • B2B (business to business) – when one company sells something to other companies. These can be goods and services necessary for the company – cloud services, accounting, and logistics solutions. In B2B, goods for resale are taken into account – a company sells goods to another company that is engaged in B2C.
  • C2C (consumer to consumer) – when ordinary people are engaged in sales. They sell each other goods and services – products, jewelry, services of a lawyer, a nanny, a tutor.
  • C2B (consumer to business) – the reverse process of B2C: people sell goods and services to companies. For example, designers, developers, and marketers offer their services to the company through outsourcing.
  • G2B (government to business) – sales come from the state, which supplies goods and services for business. For example, it provides airspace or services for collecting information.
  • B2G (business to government) – when a business sells something to the state. For example, it participates in public procurement, receiving contracts from the state for the development of software or the supply of electronics.

Monetization models in online trading

Selling goods and services is not always the main source of profit in e-commerce. Leading e-commerce companies open additional directions and sometimes grow to the size of an ecosystem, of which online trading is one part. The main sources of monetization in e-commerce:

  • Paying for a subscription to a product or service, such as Netflix.
  • Payment for additional services – insurance, delivery, service. When buying tickets, airlines offer to buy insurance, meals on board and improve the seat.
  • Integration with payment services – when companies receive a commission for each transaction through their payment system.
  • The sales commission that sellers pay is how marketplaces earn.

How to make a successful business in e-commerce – 5 examples

Amazon

The largest e-commerce store in the US and one of the leaders in global online commerce. Amazon has a huge network of warehouses, its own delivery service with airplanes, drones, and robots, as well as many business areas – Amazon Business for legal entities, cloud storage, and streaming service.

Alibaba

The leader of the Chinese e-commerce market is included in the ratings of the most valuable companies in the world. Alibaba operates on three models – B2C, B2B, and C2C. For the B2C segment, the company launched Aliexpress. Alibaba has its own Alipay payment system.

eBay

Initially, it worked as an online auction – people exhibited goods, while others bid and bought. After that, the company switched to the classic C2C model with fixed prices. eBay decided not to develop its services, remaining an online aggregator and almost the only place where you can buy rare and collectible items.

Wildberries

A major Russian player in the online retail market. On Wildberries you can buy clothes, shoes, appliances, electronics, cosmetics, and toys. The company has many warehouses and couriers in Russia and has access to foreign markets – CIS countries and Western Europe.

Ozone

The Russian company that entered the IPO in 2020. Ozon sells various categories of goods in Russia and abroad and delivers through self-delivery points, parcel terminals, and with the help of couriers. The company is opening up new markets – for example, Ozon has a service for selling air tickets Ozon.Travel.

What are the features of marketing in e-commerce?

  • Personalization. The company uses information about leads and buyers – their names, where they live, what they are interested in, and what habits they have. This helps to personalize offers – address by name, and offer products that may be of interest.
  • Mobile marketing. People are more likely to place orders from their phones, they use applications of stores twice as often as their websites.
  • Virtual assistants. 40% of users make online orders from voice assistants. Online assistants become additional sellers and consultants. They will answer popular questions and select the right product.
  • Sampling. These are free samples – perfume samples, soda from a food delivery service, and 30 minutes of classes in English. Sampling helps to promote a product and brand both offline and online.
  • Interactive marketing is content that you can interact with: count in a calculator, answer quiz questions and take a test. All this entertains and captivates the user, and marketers get the opportunity to natively talk about the product.

Conclusion

To survive in online trading and make a profit, you need to adapt to new formats in marketing and learn tools to promote goods and services. Among the trends in e-commerce, there are conscious consumption, omnichannel shopping, sales using augmented and virtual reality, and payment by voice and face.

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