What is eCommerce? An Introduction to Online Sales

Intro to eCommerce

What is eCommerce?

Put simply, eCommerce refers to any business that is conducted over the internet, particularly those interactions which involve the exchange of goods, services, and money. So why isn’t it “O” for Online Commerce, or “I” for Internet Commerce? Well, no one consulted me in the 1960’s when Electronic Commerce was first conceived.

Technically, eCommerce has been conducted regularly for more than 50 years, but only within the last 15 years has it become commonplace – practically mandatory – for businesses of any size. It has evolved from laboriously slow business-to-business connectivity into the fastest-growing industry in the world. Today, the majority of new businesses begin online, due to the significantly lower operating costs and streamlined chain of processes that are possible. But even more important than costs or efficiency is the fact that doing business online enables any company to have global reach, right out of the gate.

A modest bookstore run from a garage in Seattle might, might, succeed. But by leveraging the exponential growth of the internet and having the whole world as his community, that’s exactly what Jeff Bezos did. And now, we have the enormously successful and industry-defining amazon.com, which is nearly synonymous with modern eCommerce.

With role models like Amazon held as the gold standard of what’s possible for an online business, the industry has been growing exponentially. Every year, eCommerce accounts for more than $1.3 trillion in sales around the globe. That number is increasing at a staggering rate as more and more countries and consumers get on the web (according to market research firm eMarketer). Figures like those are hard to ignore; many companies now revolve entirely around enabling other users to start their own online businesses. Merchant Maverick is dedicated to evaluating those services. But for now, I’ll go over the various methods that eCommerce businesses have to reach their customers.

1. Online Marketplaces

You may or may not know this, but Amazon is a confluence of many rivers; its products are sourced by many thousands of individual merchants. If you’re new to online retail, online marketplaces like Amazon can be the best place to dive in. These marketplaces have a lot of the technical components taken care of, relieving you of that burden. They enable merchants to do what they do best, rather than forcing them to dual-task as IT specialists.

The marketplaces can also be somewhat niche, meaning that the people who shop there are already looking for items in your general category. Etsy is a great example, where crafters and fashion designers of all stripes are given a common venue. You won’t see a lot of high tech gizmos on Etsy, but you will see a ton of crocheted baby hats. If hand-made, vintage, or next-trend fashion is your thing, Etsy is a great place for your potential customers to find you.

Quickbooks has curated a short list of 20 such marketplaces. These venues often come with a hefty transaction fee for every sale you make. You can look at this as a finder’s fee – the website connected the shop to the shopper, enabling the sale. Or you can see it as the cost of doing business – you outsourced all of the technical components that you didn’t have the time, expertise, or inclination to handle for yourself.

A lot of online businesses start here. Those that are successful then have the resources to graduate to more elegant stand-alone solutions, such as their own website. But before we dive in to starting your own site, let’s look at the next half-step up in complexity; the mobile store.

2. Mobile and Micro Stores

Mobile stores typically require minimal technical know-how. They reach a broader audience than marketplaces, and allow for more precise control over the merchant’s marketing campaigns. Mobile stores are simplified versions of self-sufficient websites, which we will get into shortly. Mobile sites are miniature stores piggybacking on pre-existing websites such as your blog, social media sites, or even within emails.

A prime example are the business pages that are cropping up on Facebook. Just as everyone and their dog has a Facebook page these days, so do many businesses. FB surfers can float on in to your store, see your products, and purchase them – all without ever leaving the Facebook website. The ability to reach your customers even while they are engaged in social recreation is a huge opportunity, if a bit diabolical.

To help you with your marketing, Facebook’s ready-made social sharing tools do most of the work for you. When you “like” that photo of the adorable kitten in your news feed, that action is visible to your friends. And when you “share” that photo yourself, all of your Facebook connections get a fresh view of that kitty. The same can be applied to your products, which means that if your products are very popular with a few people, they’ll soon be very popular with exponentially more people, all with very little effort on your part. relatively speaking.

To learn more about how to leverage this eCommerce tool for your business, check out this article on Buy Now Buttons and social media.

3. Websites

This is your bread and butter. Or in my case, bacon and avocado.

Websites can be small and simple, with just the basics. (The ‘business card my 6-year-old whipped up in Notepad’ of websites.) Or they can be the beacon of modern enterprise. (The Jarvis to your Tony Stark.)

Of the modes of eCommerce that we cover in this article, self-sufficient eCommerce websites are most like a physical store. As such, they require the most investment, technical knowledge, and maintenance, yet they can potentially produce results that level the playing field between entrepreneurs and big-name brands.

The basic list of technical necessities which you’ll have to handle for yourself:

  • Domain name
  • Web host
  • SSL certificate
  • Merchant Account and Payment Gateway
  • eCommerce shopping cart
  • Web Developer (or development software)

This is by no means a complete list, but these comprise the essential backbone of every eCommerce website. I will go into (much) greater detail in another article.

Some services out there will do some, or possibly all, of this checklist for you. For a fee, of course. These services are known as Shopping Carts, which gives the reader a correlation of what to expect. Developers like Shopify, Bigcommerce, and Volusion are some of the most well-known carts, and offer their software in the form of a monthly subscription. This is known as SaaS, short for Software as a Service. There is nothing to download or install; simply create an account on their website, and their respective tutorials will walk you through setting up your shop entirely in the cloud.

Other Shopping Carts can be downloaded and hosted on your own servers, which enables the merchant to have much more control and potential. These carts are the epitome of eCommerce, complete with commensurate technical requirements. But that is for another article entirely.

4. Dropshipping

Finally, we arrive at the secret password of easy eCommerce (or so many people think).

Dropshipping can be the easiest method of doing business online, since very little is required of you. Running a dropshipping business requires no on-hand inventory, no website to create and maintain, and very little marketing. In short, acting as a dropshipper means you work to broker sales between a customer and a vendor. Nothing more, nothing less.

But don’t be fooled. It can also be the hardest. Dropshipping may be the easiest to start and maintain, but it is the hardest to turn any profit. Dropshipping typically consists of trying to move “junk items” like low-tech gadgets, novelty jewelry, and gimmicky clothing. If you hit the jackpot, you can make tens of thousands on the next craze. One such trend was the now-ridiculed selfie sticks, which earned sudden popularity and died out of profitability nearly as fast.

Dropshipping is far from the Holy Grail of eCommerce. It’s more likely you’ll waste time trying to promote items that will generate few sales, and those sales will be low-dollar. However, if you’re a weekender e-tailer, dropshipping can bolster your primary income.

Conclusion

Before they get started, it is the dream of every would-be online entrepreneur that they will roll out of bed at 10am, shuffle to their laptop, and hit a few buttons with one hand while sipping coffee from the other. Voila! Money in the bank, right? Of course not. While doing business online may make some problems all but vanish, it brings a whole new set of challenges. The same business acumen and diligence are required whether your company is in brick-and-mortar or in “the cloud.”

If you’re reading this article because eCommerce is the next step for you, Merchant Maverick has a ton of resources to get you on the right path. We’ll help you discover which Shopping Cart will best meet your needs, and we’ll illuminate the maze of online Accounting. Wondering about acquiring a business loan to jump-start your venture? We’ve got you covered there, too.

Good luck, and happy selling!

Erik Robie

Erik Robie

Erik is a writer, small business developer, and photographer, making his home in Northern Colorado. He has been publishing his writing for 15 years, and occasionally sells his photos when he can pull himself away from the keyboard. When he's not writing the CRM, HelpDesk, and Shopping Cart categories for Merchant Maverick, he can usually be found on his mountain bike, playing volleyball, hiking with his camera, or keeping the local coffee shops in business.
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