U In our previous article we tried to identify the most basic elements for starting an e-commerce business. We say “most basic” because, of course, successfully launching and especially running any business, including an online one, takes more than just covering the basics. A well-designed product, a defined budget, a sound pricing policy, a target audience, good accounting, professional (online) marketing and, ultimately, the use of proven systems and tools for converting visitors into customers are all essential and important elements of your future online business. But don’t let this discourage you. We will go step by step, and you will see that all of this is achievable if you believe in yourself and your product and, of course, stay persistent in your goal.
What Exactly Is E-commerce?
In its simplest form, e-commerce is the buying and selling of goods and services on the Internet. People commonly use the terms e-commerce or online shopping to describe the process of searching for and selecting products in online stores, and then paying with payment cards and other electronic payment processing systems.
There are many electronic payment methods, and we will describe some of them in upcoming articles. It is worth noting that, although the so-called cash on delivery payment method, i.e. paying for products in cash upon delivery, is currently widely used, we will not cover it in detail, because we believe that in Serbia, as in the rest of the world, cards, e-wallets, online transfers and similar methods will soon become the dominant way to pay online. There are many reasons for this expectation, but more on that later.
E-commerce Business Models
Online merchants operate under many well-known business models. The chosen model depends primarily on who the seller is and who the buyer is. Accordingly, e-commerce business models are generally divided into:
- B2B (Business to Business)
- B2C (Business to Consumer)
- C2C (Consumer to Consumer)
- C2B (Consumer to Business)
- B2G (Business to Government)
- G2B (Government to Business)
- G2C (Government to Citizen)
We will briefly describe only some of these e-commerce models, the ones we expect to be of most interest to a wider audience. This by no means implies that the other models are less important or interesting.
B2C (Business – to – Consumer)
The best-known and most popular form of e-commerce. Online stores operating under the B2C model sell their products directly to end customers. The customer finds the right goods or service on a company’s website, then orders and pays for it, and the company – the seller – then delivers the product directly to the end customer. Our intention is to focus mostly (or primarily) on this business model.
B2B (Business – to – Business)
Although B2C e-commerce gets far more attention, in fact B2B e-commerce generates higher revenues on the global market. The entry of giants such as Alibaba and Amazon into this field indicates that the focus will increasingly shift in the B2B direction, and that B2B websites will increasingly resemble the ones we are used to in the B2C world.
An online store operating under the B2B business model sells its products to other companies, which later offer those goods to end customers. Typical B2B e-commerce is trade between manufacturers and wholesalers or between wholesalers and retailers. It is the exchange of goods, services and information between businesses. For example, the owner of a retail company orders and buys goods through the manufacturer’s online store and then, upon delivery, offers them to end customers in a local shop.
G2C (Government – to – Citizen)
Public administration and government agencies generally use the G2C model in their dealings with citizens. Examples include websites that auction motor vehicles, machinery or other similar products. Also very popular are websites where citizens can obtain various confirmations, decisions or certificates (company registration, marriage certificates, civil registry extracts and the like). The main goal of such G2C websites is to save the time (and money) needed to obtain these services from the state.
What Does E-commerce Bring Us?
The rapid growth of online sales happening before our eyes is primarily the result of customers’ and merchants’ awareness of the benefits e-commerce brings them. Selling online allows your customers to shop anytime, wherever they are. Think about that for a second. A sale you realistically could not make, because the customer cannot visit your store during business hours or lives far away, suddenly becomes not only possible but likely.
This is precisely the main reason for the growth of e-commerce over the past ten years or so, a growth that shows no signs of slowing down. Customers increasingly demand the convenience of online shopping, and merchants have two options: embrace it or ignore it. We all know that many large and smaller companies are already racing to capture as much of the e-commerce space as possible, but since the potential is practically unlimited, don’t worry, there is enough room for everyone.
The Customer Is Always Right!
Every successful seller knows that success is only possible by giving customers what they need, at the moment that suits them and in the way that works for them.
For most customers, e-commerce has become the preferred way to shop, mostly because of its simplicity and convenience. Customers can buy goods and services from the comfort of their home at any time of day or night. Secure, fast and simple online payment options top the list of reasons why customers choose e-commerce. In short, customers see e-commerce as something that saves them time and money.
The level of detail and the product descriptions customers expect from an online store are extremely important. Your website gives them all this information at any time, making it easier for customers to decide whether or not they want to buy your product.
Let’s not fool ourselves: e-commerce emerged and keeps growing solely because customers want it. That is exactly why we will start the list of e-commerce benefits with the benefits enjoyed by them – the customers.
- Support and availability 24 hours a day, 7 days a week. The customer can make a purchase or get information about a product/service at any time of day or night, wherever they happen to be at the moment.
- An e-commerce customer knows that an online store usually offers a wider selection of variants of a single product, as well as faster delivery of the purchased product.
- Shopping online gives the customer the ability to compare several similar products and an easier choice, whether that choice is based on price, product quality or some other product feature.
- The customer can leave a comment or, even more importantly, read the comments of other customers about specific products before deciding to buy.
- Accessibility of information. In just a few seconds, the customer can find detailed, relevant information about the product.
- The customer knows that e-commerce leads to increased competition among merchants, knows that the margins a merchant makes on online sales are higher, and therefore expects to save money by shopping online.
Do I Really Need This?
For most people considering launching online sales, the first thought is probably the technical complexity of setting up an online store. That is understandable, especially if you are not an experienced web designer. In addition, those without advanced knowledge of the specifics of online marketing and sales are often discouraged and shy away from entering what they consider unknown territory. Large, successful companies, for example, worry that their effort to introduce online sales will not meet expectations and will jeopardize the company’s own success.
However, the truth is that when large companies decide not to take the risk, there are hundreds of other companies behind them waiting for their chance and ready to fill the resulting gap. There are countless examples of this. Just open a newspaper and look at which companies are the most successful in the world today and where they were only a few years ago. Everywhere you look, there are companies that were big in the traditional sense and, simply because they failed to recognize the benefits of e-commerce, lost a significant share of their customers to companies that had until then been under their radar. They surely regret it deeply today, but … C’est la vie.
Simply put, a properly implemented e-commerce business brings far too many benefits for anyone to have the luxury of ignoring them:
Increased sales. According to reliable statistics, online sales have grown enormously over the past few years. It is estimated that the revenue growth companies can achieve by introducing online sales can reach up to 250%. This is because many customers prefer the simplicity and accessibility of e-commerce platforms, especially when they accept online payments with their favorite cards or alternative methods such as PayPal and others…
More customers. There is no doubt that e-commerce makes ordering simpler and offers a wider choice of payment methods. This automatically attracts new customers, especially so-called impulse buyers. The fact that an online store can accept various payment methods means that the range of potential customers keeps getting wider.
Open 24/7. Many businesses that don’t use e-commerce know how hard it is to be open 24/7, because it multiplies costs, both for staff and for related operating expenses. E-commerce, on the other hand, allows merchants to stay open at all times without any increase in operating costs. Transactions and payments are carried out without the need for human involvement. Especially in smaller businesses selling digital products, there is full automation – purchase, payment, confirmation, invoicing and delivery all take place online, without any intervention by the seller.
Instant transaction processing. E-commerce enables instant payment transactions. This frees merchants from the worries caused by other payment methods, such as when a seller waits 30 days or more for delivered goods to be paid by invoice. In addition, we all know how much energy and time it takes to collect receivables from customers. E-commerce transactions are instant, and the merchant usually has the collected funds in their bank account immediately, or as soon as possible.
Lower operating costs. Compared to a traditional store, an e-commerce store has drastically lower costs. Accordingly, the margin earned on each item sold is higher. The math is completely different, but in short, once you start selling online, your cost of sales drops dramatically. This is especially true once you start attracting more visitors to your website. As a result, your margin grows, allowing you to sell goods online at lower prices, which customers appreciate. And so the cycle continues.
Market expansion. A business that operates exclusively in the traditional way (offline) can face a serious challenge if it wants to expand its market. Through e-commerce, on the other hand, a company can expand its market with minimal investment, both within its own country and city and globally. There are no borders on the Internet. An online seller can quite easily find more customers, better suppliers and more suitable business partners around the world.
Access to customer data. E-commerce provides access to far more data on customer behavior, needs, wishes, etc. By using this data, online merchants can continuously adapt their online store, as well as their marketing strategy, to make it much more effective.
Simple recurring payments. If your particular business requires recurring payments (memberships, subscriptions and the like), e-commerce platforms are the right solution. You can set up your e-commerce solution so that, at checkout, the customer can simply opt to have their card (or other payment method) automatically charged a set amount at the appropriate intervals. This system makes life easier for both merchants and sellers. For customers – because they don’t have to keep track of when their subscription to their favorite magazine expires. For sellers – because it makes the revenue generated this way more predictable.
Finally, all things considered, selling online is very profitable for any small or larger business. It is relatively easy to launch, especially compared to a traditional business, and the benefits are visible almost immediately.
… But Do It Smart!
Of course, you need to be careful and avoid well-known mistakes such as: insufficient security, poor online marketing, bad website design, too many customer complaints, overly strict terms of sale and delivery, and the wrong choice of payment acceptance system (Payment Gateway). However, if you are careful and avoid these typical mistakes, moving to e-commerce will be one of the best business decisions you have ever made.
Does all of this make sense for you? Ultimately, that is for you to decide. But if any of the above sounds good (and it should), I recommend that you take the time to think about something that can have a very positive impact on your business in the years and decades ahead.
But if you decide to go in that direction, do it the right way. Don’t do things halfway… because in that case you are better off keeping that money in your pocket.
When deciding to buy something from you, the customer must be absolutely comfortable giving you their credit card details. If customers have any doubts about the quality of the goods or the accuracy of product descriptions, rest assured that your store’s conversion rate will be dismal. The same applies if customers have doubts about the credibility of your company, online store or card acceptance system. There is no room for compromise here.
An online store requires serious planning and marketing if we want it to succeed. Hire professionals in these areas. Fortunately, there are experts in our country who will help you promote your online store.
A well-implemented online store is a highly sophisticated solution that gives you autonomy in managing payment processes, logistics, warehouse control, etc. But keep in mind that you need at least one person to take serious care of this channel of your business. Someone still has to keep product stock levels up to date, update prices, monitor delivery of sold products, etc.
In conclusion, we hope this article has clarified the reasons behind the emergence and development of e-commerce and what its benefits are and, finally, that it has made you think about how well e-commerce suits you.