E-commerce is on the rise with technology constantly evolving at a rapid pace. Even with COVID-19 causing major disruptions all over the world, the eCommerce industry continues to grow while raking in trillions of dollars every year. Curious to know more about this booming industry? Read on to find out everything you need to know about eCommerce here.
ECommerce stands for electronic commerce and refers to the buying and selling of goods or services on the internet. With a wide range of systems and tools ranging from mobile shopping to online payment options, eCommerce provides many options that ease the process for both buyers and sellers. Businesses that engage in eCommerce conduct their online marketing, selling, logistics, as well as fulfilment through an online store, eCommerce platforms, or a combination of both.
The history of eCommerce is tied closely to the history of the Internet but to keep it brief, we’ll focus on one of the first few companies responsible for revolutionising the eCommerce industry: Amazon.
Amazon was one of the first few companies to create a full-scale business model for online retail and it was started by Jim Bezos in July 1995 who used it to sell books. Within a month, Amazon was able to sell books in every state in America and even in 45 other countries while making US$20,000 per week in sales.
Now Amazon has expanded to sell almost everything you can think of and while there are many reasons for its success even today is because it was able to create an e-commerce site that was customer-oriented and therefore making it an easy and reliable way for people to find what they want. After going public in 1997, Amazon has gone on to become the world’s largest online retailer and managed to bring in US$75.5 billion in sales revenue during the first quarter of 2020 alone. Now that’s an impressive feat.
We know that eCommerce can bring in big bucks for big companies such as Amazon but what about the other players in the industry?
Well for starters, eCommerce provides an avenue for small businesses to sell directly to customers. With COVID-19 forcing many businesses to close and affecting their revenue. eCommerce can help them discover new opportunities such as diversifying their offerings as well as reaching out to new customers, particularly those who prefer to do their shopping online.
Sellers are also able to sell to customers all over the world with online marketing reaching out to relevant audiences who are already keen to buy a particular product or service. Without the need for a physical store, eCommerce sellers also get to save money on rent or employees to run the store, leading to higher margins overall.
For consumers, eCommerce benefits them by making shopping available to them on the go, 24/7. They are not constrained by the operating hours of a regular brick-and-mortar store and with premium shipping services such as Amazon Prime Now, customers don’t even have to wait too long for their purchases to arrive.
Additionally, thanks to data that can be collected to create their personalised profiles, customers can receive product suggestions based on their past purchase behaviour and they can also easily compare prices among companies who sell online, saving them both time and money in the process.
While eCommerce can bring a lot of benefits to buyers and sellers, it has its own set of disadvantages too. Sellers have limited interactions with customers and it can be hard to understand their needs, wants, and concerns especially when they are just starting out. In this case, they have to rely on surveys and customer support interactions to gather data on their customers. Sellers also have to be mindful that online customers demand ease and speed during their buying process so a slow or complicated website will cause them to abandon their cart and negatively impact the seller’s reputation.
ECommerce is also limited in the way that it doesn’t allow shoppers to touch, see or feel the things they want to buy especially. This especially concerns products such as clothes and shoes which can be tried on in traditional brick-and-mortar stores. However, companies are finding new ways to overcome this limitation such as Sephora which uses Augmented Reality (AR) technology to allow their customers to virtually try their makeup products such as lipsticks.
Ultimately, the eCommerce industry is still fairly new and still has the potential to grow even bigger than it is now. In Singapore alone, eCommerce is predicted to triple in value to US$7 billion in conjunction with its growth in Southeast Asia that is set to reach an unbelievable US$300 billion by 2025. From this, we are certain that the future of eCommerce is a bright one with more and more people preferring to shop online than before.
At the end of the day, the customer is still king with more sellers eager to jump on the trend. This will mean more personalised experiences to cater to the growing consumer demand as well as the use of artificial intelligence to enhance the buying process. ECommerce sellers will have to remain nimble and be quick to adapt to changes so that they can ride the wave of eCommerce success for years to come.
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