Seizing the numerous opportunities offered by ecommerce
18 Jan 2023
The term “ecommerce” refers to the buying and selling of goods and services electronically on the internet, particularly via online shops and online marketplaces.
What is meant by the term “ecommerce”?
Features and characteristics of ecommerce
Objective of ecommerce
Advantages
Disadvantages
Online shop or marketplace model in ecommerce?
o A choice of shop systems
Payment systems at a glance
Marketing in ecommerce
Legal issues
Conclusion
Ecommerce is a growth market – for good reason. Many traders want to take advantage of the numerous business opportunities offered by ecommerce. But how does online trading work and what benefits does it offer? What do traders who want to set up their own online shop have to take into consideration? How do I attract customers to my online shop and which payment methods have proven effective? You can find answers to these and other important questions about ecommerce in the following.
What is meant by the term “ecommerce”?
The term ecommerce stands for electronic commerce. It refers to the buying and selling of goods and services electronically on the internet, particularly via online shops and online marketplaces. Even though online banking, for example, is also regarded as an element of ecommerce, the term is predominantly used for online shopping. In addition to the buying process as such, ecommerce comprises all processes required for making a purchase.
Characteristics and features of ecommerce
Key elements: In ecommerce, business processes are conducted electronically. In addition to the actual purchase itself, ecommerce also includes all processes that initiate and complete a purchase. ecommerce processes can also be handled via digital systems other than the internet, such as electronic databases and accounting software.
Digital technologies form the foundation of ecommerce and enable digital data exchange. The spectrum of technologies ranges from simple Bluetooth wireless technology to highly complex systems based on artificial intelligence (AI).
Normally, online retailers use their own online shop on the internet as a central platform for selling their own products or services. Here you’ll find a step-by-step guide to creating your own online shop. Customers can easily view the offering from their smartphone or home PC just as in a physical shop, order items 24/7 and in most cases pay directly online.
What else is required? A functioning online shop needs an inventory management system that
immediately adjusts the stock when an order is placed,
sends the invoice automatically,
handles the shipping, and
informsbuyers automatically by email about the shipment.
With the help of CRM systems, you can stay in contact even after the purchase. Since many retailers often also sell their products via bricks-and-mortar outlets and other channels as part of cross-channel or omnichannel marketing, the various sales channels must be coordinated or tailored to the individual target groups. In the future, PoS will be redefined and bricks-and-mortar and digital shopping will merge into a single reality – networked, permeable and multi-optional.
Important! The optimal coordination of all channels is crucial in ecommerce – from logistics to marketing to customer service. It is fatal if a product offered in the online shop isn’t in stock.
Don’t think of ecommerce solely in terms of traditional direct-to-customer business. It actually covers several different types of trading:
B2B (Business-to-Business)
B2C (Business-to-Consumer)
C2C (Consumer-to-Consumer)
D2C (Direct-to-Consumer/Customer)
Objective of ecommerce
In short, the key objective of ecommerce is to increase sales and minimise operating costs by optimising sales processes. Ecommerce thus serves to increase efficiency by accelerating sales processes through automation and low personnel input.
Another advantage is that since there is no need to maintain a shop of your own, there is no rent to pay. Companies can also open up new sales markets more easily and with lower operating costs and make their range of products visible beyond their own locality.
Advantages
Online trading has significant advantages. We have listed some of the most important below:
Fast: Purchases can be made and completed quickly.
Time-independent: Orders can be placed around the clock.
Time-efficient: Purchases can be made quickly and without having to visit a bricks-and-mortar shop.
Location-independent: Products can be ordered that are not available locally.
Comparable: Prices and products from different suppliers can be compared.
Convenient: Orders can be placed from anywhere – even from the couch.
Efficient: Ecommerce speeds up sales processes and minimises personnel costs.
Disadvantages
In addition to numerous advantages, ecommerce also has certain disadvantages. These include:
Costly: Building and maintaining the digital infrastructure can cost time and money.
Impersonal: Personal advice from trained staff and a personal approach to customers are usually lacking.
Knowledge-intensive: The planning and realisation of digital advertising require a certain amount of expert knowledge.
Insecure: Security of payment and data and compliance with data privacy standards can be a problem.
Very competitive: A high number of competitors increases competition and price pressure.
Price-intensive: In highly competitive markets, products need to be advertised regularly in order to maintain awareness in the marketplace.
Trends
Ecommerce has been booming for years and there is no end in sight to its success story. According to a study by industry association Bitkom, one third of online shoppers buy something online at least once a week. On average, people spent EUR 207 per month on the internet in 2021. Men (monthly expenditure: EUR 230) were significantly ahead of women (EUR 180) in this respect.
What makes online shopping so popular? According to study respondents, it is flexibility, convenience and choice. The most important advantages cited were independence from opening hours (71%) and home delivery (70%). 64% of respondents appreciated the size of the offering and 56% the time savings. In addition, the supply function is becoming increasingly relevant: 32% (2020: 21%) say they shop online because there are no or only a few shops in their locality. In rural areas, this figure rises to 55% (2020: 43%).
Basis: Online shoppers 16 years and over (n=1,048) / *Internet users 16 years and over (n=1,109)
Source: Bitkom Research 2021 / Press release: ecommerce trends 2021
What makes a difference? A key challenge for online retail is the individualisation of the shopping experience. The trend is clearly moving towards personalised offers and customer communication, be it customised gift vouchers, discounts for frequent shoppers or individual purchase recommendations. Analysis and tracking tools register shopping and surfing behaviour to enable more personalised communication with customers. Retailers learn which products their customers particularly like and the value they put on particular products.
Online shopping is also increasingly taking place via smartphone. According to the Bitkom study "ecommerce trends 2021: How Germans shop online", the smartphone edged ahead of laptop for the first time as the most popular device used for shopping. 60% of those surveyed use the smartphone for online purchases. Younger people in particular shop via smartphone – with four out of five 16-29 year-olds using it compared to only a quarter of those aged 60 and over.
Online shop or marketplace model in ecommerce?
In addition to selling via your own online shop, you can also sell products via marketplaces. The best-known examples of these are probably Amazon and eBay. But there are numerous lesser-known platforms, such as Sugartrends, that are successful in the market. This model is particularly suited to traders who don’t want to have to deal with the more complex technology of online shops. A mix of online shop and selling on marketplaces has proved an excellent optimal combination for many retailers. Selling via social media also plays an important role here. For instance, an Instagram shop can offer a good additional source of income.
“Online marketplaces are particularly relevant for companies that don’t yet enjoy such a high level of brand awareness or that have all the technology and are already running an online shop.”
A choice of shop systems
If you want to start up an online shop, the first thing you need to do is decide on the right shop system for your requirements. If the shop only carries a few products, a shop module or shop plan may be the right way to go. Such systems are quick to set up and inexpensive, but they lack flexibility and functionality. In addition, they do not belong to the trader, but to a provider such as Shopify or 1&1.
The second option is a WordPress ecommerce plugin. This is an interesting solution if you already run a WordPress blog. This can then be “upgraded” to a shop using Shopware or open-source solutions for WordPress.
However, if you want to sell a lot of products and generate correspondingly high revenue, you need to use professional shop software. With this software, you can completely modify the design of the online shop and add individual functions. You can also integrate all major payment methods
“There are now lots of tools that even non-experts can use to set up webshops without extensive prior knowledge.”
Payment systems at a glance
You can have the most attractively designed online shop but you’ll lose out on customers if they can’t buy what they want using the payment method they want. Choosing the right payment method is a decisive factor for success in ecommerce.
According to the digital industry association Bitkom, most online shoppers (42%) prefer online payment service providers such as PayPal, Klarna or Amazon Payments. One in three online shoppers (32%), especially older people, prefer to order on account. Bank card (11%), direct debit (7%) and instant bank transfer (4%) are preferred by only a few online shoppers.
In order to be able to offer these types of payment method in an online shop, you need to employ payment service providers. These companies specialise in connecting up online payment methods to online shops.
The issue of online payment systems is an extremely important one for any company wanting to set up its own online shop. Conzoom Solutions will soon be exploring this topic in more detail in a separate article.
“Consumers prefer to use online payment services, which enable secure, simple and fast checkout at the digital shop.”
Marketing in ecommerce
Wouldn’t it be great if you could just set up your own online shop and see the sales figures go through the roof without hardly having to lift a finger! The only problem – it’s a fiercely competitive environment. Targeted marketing is therefore vital.
“If you can’t be found, you don’t exist.”
Search engine marketing, or SEM for short, is a well-known marketing tool. The term covers search engine optimisation (SEO) for unpaid organic traffic and search engine advertising (SEA) for paid traffic. Social media marketing and email marketing are also frequently used techniques. The former involves creating content for target audiences on social networks. Many social media platforms also have integrated shop pages that offer the possibility of selling the company’s own product range directly through them. With email marketing, emails are used, for example, to inform customers about promotions.
Affiliate marketing is another element of online marketing. In this type of approach, affiliates act as advertising partners by offering products or services from companies or traders on their websites and receive a commission. Another marketing measure is display advertising where graphics such as banners are used instead of plain text advertising.
“Social commerce is basically referral commerce.”
Legal matters
Mandatory requirements: Anyone who creates and operates an online shop must comply with a number of statutory provisions. The main aim here is to ensure data security for customers. Important statutory provisions (in Germany) include:
Obligation to provide an “Impressum” (legal notices) page on the website
Consumer’s right of cancellation of the contract
Information regarding cancellation rights
Data privacy
Data privacy statement
Legally compliant buttons
as well as a number of other requirements
General Terms and Conditions of Business: These contain provisions regarding payment, conclusion of contracts and similar matters. Although not required by law, operators of online shops should nevertheless draw up General Terms and Conditions of Business for their own shop. It should be ensured that shoppers have read these before concluding the purchase.
Conclusion
Eommerce offers a wealth of opportunities. However, you need to ask yourself if ecommerce is suitable for your business concept – whether as an addition to bricks-and-mortar retail or as a standalone area of business. This is a decision that needs to be weighed up individually for your own situation and offering. Although there are a number of potential pitfalls in ecommerce, the advantages outweigh them in the vast majority of cases.
