What Is E-commerce? Types, Benefits, and More

E-commerce, or electronic commerce or internet commerce, is a big industry with a bright future. With online retail sales reaching nearly five trillion dollars worldwide in 2022, industry analysts expect it to grow in the coming years [1]. Reports reveal that 58 percent of internet users buy something online every week [2]. 

E-commerce isn’t just for well-known brands. From start-ups to big multinationals, businesses leverage e-commerce to sell directly to customers or other businesses.

What is e-commerce?

E-commerce encompasses buying and selling goods using the Internet and transferring money and data to complete those transactions. All stores that sell products online fall under this classification. This could include anything from online marketplaces like Amazon and Etsy to food delivery platforms and B2B services.

Technology is phenomenally changing how we do business, and e-commerce trends continue to grow and evolve. During the pandemic, brick-and-mortar businesses suffered while e-commerce companies boomed. Despite being able to shop in real life, online grocery shopping continues to rise [3].

With simple tools to set up e-commerce websites and e-commerce platforms like Shopify, Etsy, and eBay, anyone can quickly set up an e-commerce store. 

A brief history of e-commerce

E-commerce traces back to 1994 when someone sold a CD to a friend through a website (the first internet sale). Now a global phenomenon bolstered by Amazon and Alibaba, e-commerce has a global reach of 12 to 24 million e-commerce stores worldwide [4]. In the last few years, e-commerce has grown exponentially due to the COVID-19 pandemic, during which many businesses pivoted their models to satisfy customers.

Types of e-commerce 

E-commerce businesses typically fall into one of four main groups. The model depends on who is selling and to whom it's being sold.

Business to consumer (B2C): In this e-commerce model, the business sells directly to a consumer. If you buy a product from a retailer like Amazon, you purchase from a B2C company. Setting up a Shopify store to sell your wares to customers makes your online store a B2C entity. 

Business to business (B2B): The B2B model involves selling products or services to other businesses. For example, a wholesale company that sells car parts to factories is B2B.

Consumer-to-business (C2B): In C2B, individuals sell their products or services to a business through an online platform. Social media influencers and bloggers who receive money from businesses to promote the brand fall under this category. 

Consumer-to-consumer (C2C): C2C e-commerce models typically involve online websites where people sell goods and services directly to others. Examples include eBay, Facebook Marketplace, and Etsy.

Benefits of e-commerce

E-commerce offers numerous benefits for businesses and consumers, including reach, availability, and convenience. This channel has been so successful that many physical businesses now implement omnichannel sales strategies, including selling online. Consider the following benefits:

• Reduced operating costs: E-commerce stores are typically cheaper to set up and operate than physical brick-and-mortar stores. You can cut costs and avoid paying rent, furnishings, signs, etc.

• Extended opening hours and global reach: An e-commerce store never closes its doors to customers. Customers can purchase products at nearly any time of day, anywhere in the world. Your business could exponentially increase sales because they're not limited by opening hours or proximity.

• Increased sales conversions: In the online marketplace, digital marketing offers many ways to enhance the customer experience and reach consumers. Social media and SEO allow you to connect with customers actively searching for goods and services like yours. You can also track your customers' behaviours and habits, such as monitoring their shopping carts and improving your checkout processes.

Learn how to create a Shopify site in an hour or less with this guided project:

The future of e-commerce

Growth in e-commerce is evident in the coming years. Industry analysts expect revenue to grow at 11.51 percent per year for a projected market volume of $1,563 billion by 2027 [5]. It shows no signs of stopping as consumers adjust to the new landscape of acquiring goods and services. To understand these shifts, investigate the following trends shaping the e-commerce industry:

• Automation: Supply chain and logistics are crucial for picking, packing, shipping, and sending items worldwide. The use of CRM tools and robots to automate and speed up this process will continue to improve.

• Personalised customer experience: Using machine learning to optimise the shopping experience offers a more personalised approach. With so many clothing, furniture, and other goods options, it can be increasingly difficult for customers to find the right product. Algorithms can help track buying history and preferences to suggest the right items for customers, while chatbots can help drive better customer service.

• Social shopping: Online shopping targets customers where they are. Instagram and TikTok are huge drivers for brands to acquire new sales because customers can purchase directly from those sites or click to be redirected to the item's page in a few seconds.

How to start an e-commerce business

E-commerce is an important consideration for the future. It's becoming crowded with many businesses competing for customers' attention. As an entrepreneur or business leader, you'll want to make sure your e-commerce business stands out using digital marketing and other targeted marketing strategies.

Get started in e-commerce.

Businesses of all sizes can leverage e-commerce to sell directly to consumers or other businesses, benefiting from reduced operating costs, global reach, and increased sales conversions. Discover ways to market, build, and support your e-commerce business with the Google Digital Marketing and E-Commerce Professional Certificate. The seven courses in this programme cover digital marketing fundamentals, customer engagement, performance analysis, and more.