E-commerce is a business model that allows buying and selling goods and services over the Internet. Devices including computers, smartphones, and tablets facilitate these transactions. Considered a disruptive technology, e-commerce allows various transactions such as business to business (B2B) and business to customer (B2C).
Retailing entails activities and steps entrepreneurs use to sell goods and services to consumers. Therefore, both e-commerce and physical retail stores are engaged in retail sales.
Notably, the COVID-19 pandemic has changed the way people shop with its health and safety guidelines. Most businesses adopted online retailing and e-commerce strategies to cushion themselves against financial losses while protecting their customers in response to the pandemic. Consequently, this propelled the e-commerce industry, which has become more of a necessity to many businesses - today, virtually every retail enterprise needs an online presence to thrive.
In 2019 about 1.92 billion people, or 25 percent of the world’s population, bought goods and services online. In 2020, e-commerce was responsible for 21.3 percent of all retail sales in the US. Experts state that by the end of 2023, e-commerce sales will exceed $6.5 trillion, representing 22 percent of global retail sales. Besides, some analysts project that by 2040, about 95 percent of all purchases globally will be through e-commerce.
However, the question remains - will e-commerce replace physical stores? Despite the statistics being in favor of the former, physical stores are here to stay, at least for a while. Indeed, physical stores have transformed how they operate. Entrepreneurs and managers practicing this business model know the advantages brick-and-mortar stores have over e-commerce and have capitalized on these advantages.
Among them, physical stores have immediately available products and offer a better customer experience, since consumers can see and touch the products. Moreover, they have quicker and easier return processes than e-commerce.
Nonetheless, e-commerce will continue taking a significant market share from brick-and-mortar stores. This is largely due to the benefits e-commerce offers both the retailer and the shopper.
First, e-commerce stores are always open, which appeals to consumers who wish to shop during non-business hours, on weekends, or holidays. Fulfilling orders is also easy for the retailer, since all they need is an Internet-enabled device.
The retailer saves overhead costs if an e-commerce store doesn’t run alongside a physical outlet. In turn, they may be able to offer lower prices and discounts to customers.
E-commerce stores are also visible. Once a store creates an online presence, anyone anywhere in the world can see its products and services and make a purchase if the store allows cross-border transactions. Even in cases where this is impossible, an online store reaches all parts of a country in ways a physical store can’t. Such accessibility makes e-commerce stores easy to scale.
Since e-commerce runs over the Internet, getting customer data and insights is possible. This gives the retailer more control over their marketing and other business activities. Such information helps entrepreneurs manage their inventories and tailor their messages and promotions.
The physical needs of an e-commerce store are simple. For instance, an entrepreneur may only need a small office to handle management, marketing, and accounting. They may also require a small space for inventory. If they need any extra space, they may outsource additional square footage from a third-party fulfillment center.
Additionally, e-commerce makes contactless shopping and payment possible. Shoppers quickly select their preferred products and pay for them online. The retailer then delivers the products without the shopper coming into contact with anyone. Again, this helps to manage COVID-19.
Retailing entails activities and steps entrepreneurs use to sell goods and services to consumers. Therefore, both e-commerce and physical retail stores are engaged in retail sales.
Notably, the COVID-19 pandemic has changed the way people shop with its health and safety guidelines. Most businesses adopted online retailing and e-commerce strategies to cushion themselves against financial losses while protecting their customers in response to the pandemic. Consequently, this propelled the e-commerce industry, which has become more of a necessity to many businesses - today, virtually every retail enterprise needs an online presence to thrive.
In 2019 about 1.92 billion people, or 25 percent of the world’s population, bought goods and services online. In 2020, e-commerce was responsible for 21.3 percent of all retail sales in the US. Experts state that by the end of 2023, e-commerce sales will exceed $6.5 trillion, representing 22 percent of global retail sales. Besides, some analysts project that by 2040, about 95 percent of all purchases globally will be through e-commerce.
However, the question remains - will e-commerce replace physical stores? Despite the statistics being in favor of the former, physical stores are here to stay, at least for a while. Indeed, physical stores have transformed how they operate. Entrepreneurs and managers practicing this business model know the advantages brick-and-mortar stores have over e-commerce and have capitalized on these advantages.
Among them, physical stores have immediately available products and offer a better customer experience, since consumers can see and touch the products. Moreover, they have quicker and easier return processes than e-commerce.
Nonetheless, e-commerce will continue taking a significant market share from brick-and-mortar stores. This is largely due to the benefits e-commerce offers both the retailer and the shopper.
First, e-commerce stores are always open, which appeals to consumers who wish to shop during non-business hours, on weekends, or holidays. Fulfilling orders is also easy for the retailer, since all they need is an Internet-enabled device.
The retailer saves overhead costs if an e-commerce store doesn’t run alongside a physical outlet. In turn, they may be able to offer lower prices and discounts to customers.
E-commerce stores are also visible. Once a store creates an online presence, anyone anywhere in the world can see its products and services and make a purchase if the store allows cross-border transactions. Even in cases where this is impossible, an online store reaches all parts of a country in ways a physical store can’t. Such accessibility makes e-commerce stores easy to scale.
Since e-commerce runs over the Internet, getting customer data and insights is possible. This gives the retailer more control over their marketing and other business activities. Such information helps entrepreneurs manage their inventories and tailor their messages and promotions.
The physical needs of an e-commerce store are simple. For instance, an entrepreneur may only need a small office to handle management, marketing, and accounting. They may also require a small space for inventory. If they need any extra space, they may outsource additional square footage from a third-party fulfillment center.
Additionally, e-commerce makes contactless shopping and payment possible. Shoppers quickly select their preferred products and pay for them online. The retailer then delivers the products without the shopper coming into contact with anyone. Again, this helps to manage COVID-19.
