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In this guide:What is E-CommerceThe history of E-CommerceThe 5 main types of E-Commerce5 of ...
In this guide:
E-Commerce is a global powerhouse spanning various industries while being accessed by billions of people every year. With the global market expected to exceed $4 trillion in 2023 and further projections of $6 trillion expected by 2027, it is no surprise why many have utilised the online selling solution to grow their business.
In our ultimate guide to E-Commerce, you will discover the history of E-Commerce, some of the top companies and industries within the market, and what the future holds for E-Commerce.
Electric commerce, more commonly known as E-Commerce, involves the buying and selling of products and services on the market over the internet, from clothing, food, furniture, tickets, banking and more. E-Commerce is an online version of retail - and an alternative to the high street and traditional physical shops.
E-Commerce occurs between buyers and sellers who trade online via websites or downloadable apps. The process involves more than one party, from the brand or individual selling an item or service to the software capturing the customer's data to the bank that digitally transfers the money between the buyer and seller.
Some sellers solely use E-Commerce to sell their products to buyers, while others use it as an extension of their physical store. With over 2 billion people worldwide utilising online trading platforms to buy products and services, E-Commerce has completely reimagined how we buy and sell in the modern tech world.
E-Commerce was born in 1994 when NetMarket facilitated the first online transaction, a CD sale between friends. Since then, E-Commerce has grown significantly, with a plethora of platforms catering to buyers and sellers, from freelancers to global brands, replacing or providing an alternative to physical stores. Moreover, tech innovations such as smartphones and apps continue to support the evolution of online shopping, making it more seamless and increasingly popular.
There are several types of E-Commerce that brands will use to operate their business. An organisation will opt for a specific type depending on the products and services it provides. Let's take a look at the 5 main types of E-Commerce.
Organisations within the B2C E-Commerce market will sell their product or service directly to those who use goods and services directly - unlike B2B, where the product or service is sold to a business before it is used by the end user. For example, an individual may buy a pair of trainers from a business's online store or downloadable app. B2C is the most common type used by companies within E-Commerce, the majority of E-Commerce jobs fall in this area.
C2C E-Commerce often occurs on platforms like eBay and the Facebook marketplace, where a consumer sells a product or service to another consumer. An example of C2C would be a consumer selling their old furniture or used goods to another consumer on eBay.
Consumer to Business (C2B) is a business model where consumers act as suppliers, and businesses serve as buyers. This type of E-Commerce is typically associated with contractor or freelance work.
For example, if a company needs a graphic designer for a short-term project, freelancers specialising in graphic design can bid on the project, and the business can choose the best candidate for the job. In this scenario, the individual consumer or freelancer offers their services to a business, and the business acts as the buyer of those services.
D2C is a modern type of E-Commerce whereby a brand will avoid using a distributor, retailer or wholesaler to sell their products or services and instead sell directly to the end consumer. This model is usually adopted by subscription services, such as tails.com. With D2C, a brand will often use its own E-Commerce platform or form of social media like Instagram, TikTok or Facebook.
For example, an independent clothing brand may sell its products directly to the consumer without the assistance of a third-party retailer. This type of E-Commerce is rapidly growing. We have supported a number of scale-ups from all industries with marketing and e-commerce recruitment, including Sneak Energy and Look Fabulous Forever.
A still developing type of E-Commerce is B2B. B2B in the E-Commerce space involves a business completing a product or service transaction with another business. An example of E-Commerce in the B2B space could involve an electronics company selling laptops to a digital marketing agency that needs the resources to support its employees. B2B transactions typically involve large transactions and often involve companies forming partnerships, whereby one organisation will frequently utilise the products or services of the seller. This area is becoming increasingly common, with the number of B2B E-Commerce jobs on the rise.
9 examples of E-Commerce business models
Now that we've established the main types of E-Commerce, let's explore how companies can make money within the E-Commerce space. In this section, we will explore nine examples of E-Commerce business models associated with this form of trading.
1 . Retail
Retail E-Commerce, also called online retail, electronic retail, e-retail or e-tail, is a delivery model whereby the sale of a brand's products or services is completed via an online store and is a D2C transaction without an intermediary.
The wholesale business model typically entails the sale of goods in large quantities, often to retailers who subsequently offer them to their customers through direct-to-consumer (D2C) channels.
3. Drop shipping
Drop shipping involves a product manufactured and shipped to a consumer through a third party. Essentially, a consumer buys a product from a brand’s E-Commerce store, which is then passed to the brand’s drop shipping supplier, who ships the product to the consumer.
E-Commerce companies can create a D2C subscription offering whereby their product or service is sent to the consumer on a recurring basis. For example, an E-Commerce business may offer consumers a weekly meal prep subscription.
This E-Commerce business model involves providing a service to customers or clients in exchange for a fee. These services are purchased online but could be conducted in person or remotely and may include:
Individual coaching courses
White labelling involves a business selling already existing products manufactured by another company. When a consumer buys a product, the E-Commerce brand will receive the white-labelled item before repackaging it with its own branding before delivering it to the buyer.
7. Private labelling
Private labelling is a model commonly used by brands that lack or may not have manufacturing facilities or the budget to create their product. An E-Commerce private labelling brand will contact a contractor to manufacture their products and potentially support with shipping and delivering the product to the consumer.
8. Physical products
The physical products model is an E-Commerce offering whereby a product must be restocked and available to be physically shipped to consumers who purchase the goods online.
9. Digital products
Digital products are downloadable items that E-Commerce brands will offer to consumers in their online stores. These digital products could be e-books, software, courses, templates, cloud-based tools and media that must be purchased to be used.
Globally, anywhere between 12 and 24 million E-Commerce stores engage with more than 2.14 billion shoppers yearly - 27% of the world's population. Of these active and passive buyers, the average shopper makes at least 19 online purchases per year. But where do people typically shop, and which brands are dominating the E-Commerce space? Out of the millions of online stores, we've outlined some of the most notable, popular and biggest companies within E-Commerce.
Amazon is a household name and one of the largest E-Commerce companies in the world. Founded by Jeff Bezos in 1994, the now online shopping juggernaut started out as an online bookstore and has since grown to sell a diverse range of products worldwide.
Recording 3.68 billion monthly website visitors in 2020 alone, more than half of Amazon's purchases are completed within 15 minutes - 28% are completed in 3 minutes or less. Accounting for 38.8% of global E-Commerce sales, Amazon has the largest market share compared to all E-Commerce organisations.
Revenue: $514 billion (2022)
2. Alibaba Group
Founded in 1999 with a presence in over 200 countries and a global reach of over 1 billion shoppers, Alibaba Group is a Chinese E-Commerce brand and retailer with subsidiaries that deliver a range of services, from retail chains and cloud services to logistics. Its subsidiaries include the B2B brand Alibaba, C2C company Taobao and B2C business Tmall.
Alibaba Group's subsidiaries are the largest marketplaces in the world, with profits surpassing all US retailers combined - including the likes of Amazon.
Revenue: $134 billion (2022)
Japanese E-Commerce organisation Rakuten was founded in 1997 and is the largest of its kind in Japan, with over 544 million average consumers visiting their site per month as of 2021.
Rakuten dominates over 25% of the B2C market in Japan, with over 30% in market segments including food, apparel and household products. The brand also operates Japan's largest online bank while supporting the FinTech and digital content space.
Revenue: $15 billion (2022)
As one of the first brands to make a mark on the scene, eBay is a pioneer within the E-Commerce space. Launched in 1995, the US organisation became famous for its online auction-style feature, encouraging C2C shopping whilst also supporting B2C.
eBay was hugely successful within the dot-com bubble of the 90s and is still prominent in the market today, with 1.7 billion people visiting their site monthly in 2021 alone. A business that once supported the sale of a whole town, eBay is still one of the biggest E-Commerce brands in the world.
Revenue: $10.7 billion (2022)
Canadian E-Commerce brand Shopify is a multinational organisation supporting online stores across the globe, with over 2.1 million daily active users. After launching in 2006, the E-Commerce platform provides its consumers with a broad range of services, from customer engagement tools to marketing and payment methods.
Shopify prides itself on supporting the growth of startups and innovative companies looking to grow their online presence and manage their business, offering a monthly subscription service.
Revenue: $5 billion (2022)
Now we've outlined some of the biggest E-Commerce marketplaces and discovered the sheer size of the market; we must recognise the diversity of the space and the various industries it caters to. From fashion to entertainment, let's explore 5 of the top industries within the world of E-Commerce.
From clothes, shoes, accessories and other apparel, fashion is the most popular industry in the E-Commerce space. As fashion evolves and new trends continue to emerge, brands within the fashion industry utilise the online market to engage with shoppers and provide the latest fashion products to their customers. Additionally, to highlight the industry's size, the global E-Commerce fashion market is expected to reach $871 billion in 2023 and over $1,000 billion by 2027.
2. Health and beauty
The E-Commerce health and beauty industry caters to a broad range of consumers, from makeup, perfumes, vitamins, and other personal care products. In addition, within the online shopping space, celebrities and influencers often promote health and beauty products similarly to the fashion industry. Predicted to reach $449 billion by 2027, health and beauty is another massive industry within the E-Commerce space.
3. Food and drink
Be it subscription offerings like HelloFresh, or delivery services like Deliveroo and JustEat, the food and drink industry is a huge contributor to the success of E-Commerce. Predicted to grow at a CAGR of 22% from $57.09 billion in 2022 to $69.77 billion in 2023, the food and drink industry continues to scale and shows no signs of going anywhere.
Online retailers within the electronics industry supply consumers with products like computers, smartphones, gaming devices and other electronic goods. A booming industry within the online space, E-Commerce electronics cater to various types of E-Commerce discussed in this piece, notably B2C and B2B. Moreso, the industry reached a market size of $539 billion in 2022, a number expected to reach $614 billion in 2023 and $975 billion by 2027.
5. Entertainment and media
The entertainment and media industry remains prominent in E-Commerce, from media subscription and streaming services like Netflix and Spotify revolutionising the online space in recent years. With the media segment of the market predicted to reach $36 billion by 2023 and $42 billion by 2027, the industry continues to evolve and cater to the mass market of global consumers.
Looking ahead, the future of E-Commerce looks bright, with no signs of slowing down. E-Commerce sales are expected to grow by 10.4% in 2023, with the market also estimated to reach $6.3 trillion in the same year and over $8 trillion by 2026.
Moving forwards, the customer is being placed at the heart of E-Commerce developments, with new E-Commerce job titles being created in order to accommodate this transformation.
Other innovations will also continue to develop and play a part in the future of E-Commerce, including digital wallets secure online payments, AI and machine learning to elevate customer experiences and enhance consumer behaviour, as well as more omnichannel approaches utilised by E-Commerce brands to selling products and services.
By 2040, 95% of all global purchases will be made online, signifying that E-Commerce is certainly here to stay. With 5.3 billion people worldwide having access to the Internet - over half of the global population - the opportunity for E-Commerce to continue thriving is immense.
With that said, let’s look at five of the biggest developments in the online space that will shape the future of E-Commerce:
AI is poised to have a significant impact on the future of E-Commerce. One of the most notable ways AI can help E-Commerce is through machine learning algorithms, which can analyse large amounts of data and provide insights that businesses can use to make more informed decisions. For example, AI can help companies personalise their offerings and better target their marketing efforts to specific customer segments.
Additionally, AI can improve the efficiency of supply chains by predicting demand, optimising inventory levels, and automating certain tasks, such as order fulfilment and shipping. AI-powered chatbots can improve customer service by providing 24/7 support to quickly answer inquiries and resolve issues.
Overall, AI has the potential and is poised to make E-Commerce more convenient, efficient, and customer-centric in the coming years.
Subscription services are set to profoundly impact the future of E-Commerce. More and more consumers are seeking out convenience and personalised experiences, and subscription models provide both. With a subscription, customers can have their favourite products delivered to their doorstep on a regular basis without having to worry about reordering. This not only saves time but also provides peace of mind.
Moreover, subscription service models also allow for better customer retention and increased customer lifetime value for businesses. Plus, subscription-based E-Commerce allows for more predictable revenue streams, which can be helpful for companies to plan their resources and investments.
Subscription-based E-Commerce will continue to be an integral part of E-Commerce for the foreseeable future, offering a promising path for businesses looking to build strong long-term relationships with their customers.
The Metaverse, a virtual world where users can interact with a computer-generated environment and with other users, has the potential to revolutionise E-Commerce. As the Metaverse becomes more integrated with our daily lives, it will offer new opportunities for businesses to connect with customers in a more immersive and interactive way.
In the Metaverse, customers will be able to see and experience products in a virtual setting before deciding to make a purchase. For example, virtual reality technology will allow customers to try on clothes, test products, and even see how furniture would look in their homes before making a purchase.
Additionally, the Metaverse can create new revenue streams for businesses, such as virtual real estate and virtual goods and provide a more social and personalised shopping experience, with customers being able to interact with others and receive recommendations from AI-powered assistants.
Ultimately, the Metaverse will undoubtedly shape the future of E-Commerce, and businesses that can adapt and thrive in this new environment will be at a significant advantage.
As mentioned with D2C, businesses can bypass traditional retail channels and sell their products directly to consumers through their own online stores. This provides several benefits, including greater control over the customer experience, increased profit margins, and the ability to collect more customer data.
D2C also allows businesses to build stronger customer relationships by offering personalised experiences and direct communication channels. For example, the likes of Nike, Under Armour, and Adidas all intend to utilise D2C strategies to boost their E-Commerce sales, the latter of which aims for D2C to make up 50% of its net sales by 2025.
Additionally, D2C E-Commerce allows businesses to innovate and iterate more quickly by testing new products and features in real time. As more consumers become accustomed to shopping online, D2C will continue to gain traction as a preferred way to shop.
Ultimately, D2C E-Commerce is poised to greatly impact the future of E-Commerce. Businesses that embrace D2C E-Commerce and offer exceptional customer experiences will be well-positioned to succeed in the future of E-Commerce.
Personalisation strategies are also set to positively impact the future of E-Commerce. With so many online products and services, customers seek personalised experiences catering to their needs and preferences. Personalisation strategies allow businesses to provide tailored recommendations, product suggestions, and marketing messages to customers based on their browsing and purchase history and other data points such as location and demographics.
Additionally, personalisation strategies will continue to impact the future of E-Commerce by offering new and innovative ways to pay. For example, some customers may prefer to use digital wallets, while others may prefer to pay with cryptocurrency.
As technology continues to evolve, personalisation strategies will become even more sophisticated, offering businesses new ways to engage with customers and create long-lasting relationships.
Investing in your E-Commerce teams can help you secure the future of your business. If you need top talent to help take your E-Commerce business to new heights, are struggling to fill your vacant E-Commerce jobs, or want to upload a vacancy, we can support you.
As a specialist E-Commerce and digital marketing recruitment agency with a proven track record of connecting exciting companies with exceptional talent at any level, we are best placed to provide the best recruitment experience you will ever have. So discover our E-Commerce offering or get in touch with a member of the team today.