What is electronic commerce or E-Commerce

If you are wondering what the definition of electronic commerce is, it is very simple: Any transaction for the sale of goods or services carried out over the internet. E-commerce allows us to buy or sell an item at any time and from anywhere, which has led to a revolution in society’s consumer habits.

What do we mean when we talk about e-commerce?

When we talk about electronic commerce, we refer to the purchase and sale of any product or service that is done through the internet. So, here I would enter, for example, from selling a simple t-shirt online, to contracting insurance for your car through the internet.

When was e-commerce created?

It is considered that the foundations of e-commerce were established by Michael Aldrich in 1979, when he connected his TV to the computer via the telephone. This idea laid the foundations of the concept of e-commerce as we know it today: not visiting a physical store to buy. The truth is that it would not be until many years later, when the acquisition of computers by the average user became popular, when the first online stores would begin to appear. Jeff Bezos founded Amazon in 1994, one of the first online bookstores that achieved more than 1 million online sales in the first months of launch. As we all know, over time, Amazon would become the most famous online store in the world. But, the truth is that electronic commerce began to emerge in the early 2000s, when society began to have the Internet in their homes. At the same time, Paypal was born to facilitate online shopping. Until then, online stores accepted checks as payment! Currently, based solely on data from Spain, 71% of internet users make regular purchases online, this is more than 19 million people in Spain alone.

What is electronic commerce for?

Internet commerce is a very powerful tool for businesses and users. At a business level, the fact of being able to market your products at any time and from anywhere means that your sales can grow exponentially. In addition, since you are in control, you can provide all the additional information you want about your product, which will lead to a greater number of sales. As a user or buyer, online commerce gives us greater freedom over what we buy. For example, we can compare the price of the product quickly and easily between the different marketplaces, in addition to knowing first-hand the opinion of other buyers. And, the most obvious: Buy comfortably, from home and at any time. All this is nothing more than the advantages of electronic commerce compared to traditional offline shopping.
Online shopping ecommerce 24 hours customer support service concept with payment options

How is e-commerce and internet presence different?

Today, almost any company has an internet presence. Web, blog, social networks … Nothing new. Providing information online to your potential customers about your products or services is something more than necessary today. But some companies go further and have an online store. In this way, in addition to having a presence on the internet, they will be able to sell their products online. It could be considered that, once we have a solid internet presence, the natural step for any company is to create its online store or market its products in third-party stores. Here, the user experience will have to be taken into account to create a successful online store.

E-commerce statistics

A good way to measure something is with statistics and those related to online commerce are very positive. Some relevant data on internet sales would be the following:
  • By penetration, the countries with the most online shoppers are Indonesia (86%), China (82%) and Germany (81%). The calculation, to be realistic, was made by dividing the number of online commerce consumers by the internet users of each country. According to a study carried out by Eurostat, in Europe it indicates that more than 70% of internet users are online shoppers and the world average is 75%.
  • If we apply this to mobile commerce, the world average is around 55%, although in Spain it is around 40% of Internet users only.
  • Regarding the ages, it is clear that the younger, the greater penetration there will be and the range of 16 to 24 years are the main consumers of electronic commerce. Despite the fact that the purchasing power level may be lower.
  • Average annual spending varies a lot from country to country, of course. In Spain, in 2018 there was an expense of € 525 per user, while in the US, which leads this statistic, each user spent on average € 1,703.
  • By product category, in the top 3, the best sellers were fashion and beauty ($ 525 billion), followed by electronics ($ 393 billion) and food and personal care ($ 209 billion) .
It will help you to read: How to Start Your First Ecommerce Business

Types of e-commerce

B2B

B2B online commerce (business to business) is electronic commerce carried out between companies. In this type of online commerce, the front-end is as important as the client’s private area. That is why, at a single glance, the client-company will be able to access the list of products they buy, recurring orders, delivery times and stocks, invoices … In the end, these types of transactions are usually recurring sales, and it is not so much about attracting new customers but about building loyalty to the existing customer.

B2C

When we talk about B2C (business to customer) online commerce, we are referring to “traditional” electronic commerce, between companies and people. For this type of online commerce, the design of the online store gives much more importance to the image, to the front-end, than to the personal area of ​​the buyer. As they tend to be more generalist products, it is important to have a high internet presence as well as a positive relationship with customers, so that the buyer knows your products and does not opt ​​for the competition.

C2C

This form of electronic commerce is customer to customer, that is, between people and is on the rise than ever. There have always been newspaper classified ads, now with the evolution of the internet, buying and selling between people is having an unstoppable growth. In many cases, the seller will act practically like an online store to use, advertising their product, with professional photos, reviews of previous buyers, accepting various forms of payment and sending the product to the buyer’s home in a very short time.

C2B

The last type of electronic commerce, and less widespread, is the Customer to Business. But it is not a sale of a natural person to a company but rather the user will offer how much they are willing to pay for a good or service. For example, an auction for a flight or a hotel. Another good example would be companies that allow buyers to group together to make a purchase of a product together and obtain, then, a volume discount.

How to create an online store and sell online

To start selling online there are two options: create your own online store or sell your products through a marketplace (Amazon, Google Shopping, Ebay …). The second option is much simpler than the first, you will only have to publish your products on the seller’s website, although it is true that the sales commissions that some marketplaces take will make the margin you stay with is minimal. To create an online store, one of the first things you will have to think about is how many products you are going to sell, since it is not the same to sell 50 products than 5000. You will also have to take into account if your e-commerce is B2C or B2B. Because, for example, some softwares are more oriented to one type than another due to the different integrations that they allow us to carry out (ERP, CRM …). Once we have carried out the different investigations of which is the software that best fits with our business model, it will be time to create the online store. That’s where the web developer comes in, who will build the online store so that it works correctly on any platform. The design of the online store is very important. For example, having good photographs of the products, as well as clear and descriptive descriptions is essential. The more information we provide the user, the more likely they are to make a purchase. To sell online, you have to take into account the different regulations and the law of electronic commerce. Your online store must meet different guidelines so that it is within the law. The most important will be Law 34/2002 of July 11. And it is important to also comply with the LOPD. Once we have the store prepared at the development and legal level, it will be time to integrate it with the payment methods that we are going to accept (Paypal, credit card, etc.), for which we will have to carry out different tests with financial companies to participate in this process. As soon as we have the payment methods available, we can sell! Marketing here will be key to getting sales. You will probably have to spend a lot of time (and money) on different campaigns; content marketing, online advertising, etc …
payment methods lavitona
payment methods lavitona

Important points of a good electronic commerce.

Your online business must meet some aspects, always taking into account the usability and design of the online store:
  • Order: The distribution of the products and other elements of the online store, as well as the amount of products that we put per page will be key to having an orderly store or not. The simpler the design of the online store, the easier it is to navigate through it and find what the user is looking for. This will probably translate into sales.
  • Information: The main problem with selling online is that the product is not tangible. In some cases this is indifferent, especially if you are going to purchase a service, but in others it will be the main reason to abandon the cart. That is why all the information we can provide about the product will make the sale more conducive.
  • Speed: An online store with a slow loading time will cause many potential customers to abandon it directly.
  • Simple and intuitive purchase process: The fewer steps your purchase process has, the less likely it is that they will abandon the cart. So we must create a simple process, with a few steps that quickly takes us to the payment gateway.
  • Contact and FAQ (frequently asked questions): Providing different means of contact and answering all possible questions that the user may ask (shipping times, return policy, etc.), will make the buyer see us with greater security and confidence.
  • Call to action (CTA): The calls to action in an online store, in many cases, will be key for the buyer to “bite”. A banner offering a discount in exchange for subscribing to the newsletter is a good example of an effective CTA.

The future of e-commerce

The future of online commerce is very promising, if we base ourselves on the exponential growth it has had in recent years. It is estimated that by the year 2,050 95% of world sales will be made through internet commerce. And the truth is that now, if we try to think of something that you cannot buy online, it is hard to find it, right? It is also estimated that mobile purchases will continue to grow as they have been doing up to now and that augmented reality and virtual reality will gain strength to offer the customer a more satisfactory user experience. Another important detail is that secure electronic commerce will be, worth the redundancy, increasingly secure. As we have seen with the entry into force of the new European law on payment services, the psd2. You can learn more about it by reading the article What is the PSD2 directive on our blog. What will make the most reluctant to start buying online.