What is e-commerce and what are its characteristics?

41.6 million. This is the number of French people who will be buying online in 2021, 1.5 million more than in 2019 (BDM). E-commerce therefore appears to be a high-growth sector that has completely overturned consumers' shopping habits .

The health crisis has also played an important role in this expansion. Indeed, Covid-19 boosted e-commerce sales for physical retailers by 66% (LSA). Internet users are more numerous than ever, and e-commerce is positioning itself as a veritable revolution.

As a result, several companies already present on the market are planning to open their own e-commerce sites. But to do so, they need to know all about e-commerce.

Discover the characteristics of e-commerce, its different types, advantages and disadvantages. All this, accompanied by revealing figures and concrete examples!

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What is an e-commerce site?

E-commerce: definition

E-commerce encompasses all commercial transactions carried out over the Internet. It is also known as electronic commerce, because the payment methods used are digital. E-commerce can be used on all digital channels, which is what makes it so successful. It can involve :

• computers,
• smartphones
• tablets
• consoles,
• and televisions.

E-commerce is used by companies that already have a physical store and want to open up to new markets. But it's also used by start-ups with limited budgets who want to get started.

Key figures for e-commerce in 2021

• Online sales of products and services will reach nearly 30 billion euros in the 1st quarter of 2021;
• There are 12% more e-commerce sites than last year (+18,000 sites, compared with 17,400 in 2020);
• There are currently 207,400 e-commerce sites in France;
• In France, e-commerce accounts for 13.4% of retail sales ;
• Between 22% and 35% of online sales are made on cell phones. Source : FEVAD

The different forms of e-commerce by target market

B2B (Business-to-Business)

Business-to-Business (B2B) refers to all the commercial activities and relationships of a company aimed at business customers. It comes from the English term "Business to business", which refers to sales between two companies.

👉Example: a weaving company selling fabric to a dyeing company.

B2C (Business-to-Consumer)

Business-to-consumer (BtoC) refers to all commercial relations between a company and the general public. In e-commerce, this is the most common form of sale.

👉 Example: a consumer buys clothes on a website.

C2B (Consumer-to-Business)

Here, customers provide content, products, services or distribution solutions on behalf of the company. We find this type of business in classic freelance job portals like Elance, Hopwork, etc.

👉 Example: the company co-creates new products by involving its customers.

C2C (Consumer-to-Consumer)

These are e-commerce sites that enable sales to be made between consumers, for example car rental sites between owners.

👉 Example: a consumer sells a second-hand garment to a consumer on a specialized site (Vinted style).

The e-commerce typologies mentioned below are the most common, but there are other forms such as :

• G2C (Government-to-Consumer),
• C2G (Consumer-to-Goverment)
• and B2E (Business-to-Employer).

The different forms of e-commerce by business model

E-commerce store selling its own products

This is what you might call a "traditional" e-commerce store. It has the same features as a physical store, but in an online version. The company sells its products and delivers them directly to the customer.

👉 Example: the exclusive Yves Rocher site, which sells its products exclusively via its online sites and physical boutiques.

Dropshipping

This is the most widely used strategy in the world of e-commerce. Dropshipping is a strategy that involves selling the product without actually owning it.

👉 In this case, the main objective is to market the product, leaving production and shipping to the supplier. Once payment has been made, the seller forwards the message to the supplier, who takes charge of shipping the product.

The advantage of this type of strategy is that it requires no up-front costs, but on the other hand, the time required for a marketing campaign is very long.

Membership

This type of e-commerce aims to increase recurring customer purchases. Consumers take out a periodic subscription (weekly, monthly, quarterly, etc.) to access a product or service.

👉 F or example, this type of e-commerce is often found on platforms offering viewing services and TV series (Netflix, for example). The advantage of this model is to ensure recurring revenue every month.

Marketplace

A marketplace is a store that brings together several boutiques. In other words, it's a website on which different companies offer their products.

👉 Example: one of the best-known marketplaces is Amazon. Here you can find countless different products from different brands and sellers. These brands offer their products for sale on the platform in exchange for a commission paid to Amazon.

Services

An e-commerce site doesn't just sell products. It can sell services for money. This option is well suited to sellers who want to get started without taking any risks.

👉 Examples: training sites, coaching, beauty services (hairdressing, skincare...).

Affiliate

Affiliate businesses have the same characteristics as dropshipping , but go even further. Not only does the store not send the product directly to the customer, but the sale does not take place on its own platform.

The site redirects the customerto another platform to pay for the chosen product/service. Once the sale is concluded, this platform pays a commission to the first site. In other words, the site where the customer has located the item represents a kind of catalog, which will direct the customer to another merchant site where he or she can proceed with payment.

👉 Example: airline comparison sites such as Skyscanner, which, once the ticket has been selected, redirects customers to the airline's site.

Freemium

This is a strategy in which, to attract the customer, a free service is offered , but with limited functionality. In fact, the customer who starts using a basic version is often attracted by other possibilities, and is therefore indirectly forced to buy a license with more features.

👉 Example: SaaS software publishers who always offer a free basic version, but in most cases, the functionalities are very limited.

Phygital

Phygital is a marketing strategy that combines the physical and the digital:

• The physical in-store experience (customer relations and human contact)
• The digital experience (online interactions with a brand)

👉 Example: the customer orders an item online and collects it in-store. This is a rather advantageous method, as it avoids the consumer having to pay delivery charges, which further motivates them to buy.

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Why start e-commerce?

The advantages of e-commerce

• The opportunity to expand your market

  Thanks to e-commerce, you can easily penetrate new sales markets without having to set up a new website.

• Reduce the costs of a physical store
  You no longer need to rent or buy premises to sell your products.

• Automate inventory
  Items sold and items on hand will be counted automatically, providing better visibility of available stock.

• Reduced customer travel
  Customers often have to travel to buy a product, but with e-commerce sites and shipping, they can save not only the cost of travel but also time.

• The speed and ease of purchasing products
  Customers can view the item and order it with a single click from any device.

• Improved customer relations thanks to 24-hour chat

• Customer data collection is considerably improved
  Your customers provide valuable information when they log on to your site, make a purchase or subscribe to your newsletter. You can then offer them new products based on their profile.

• 24-hour store availability
  An online store never closes! Customers can buy at any time.

2 examples of successful e-commerce sites

In absolute terms, there's no such thing as a perfect e-commerce site that can serve as a benchmark. Every site is different, depending on :

• the company's field of activity,
• the brand's visual identity
• the type of product sold, etc.

Zalando

The Zalando brand is a good example of the importance of a good user experience. Indeed, the company makes online shopping considerably easier thanks to smart services such as "Try first, pay later".

Customers receive their order at home without having been charged, and have 7 days to try on the items and choose whether or not to keep them. Zalando relies on deferred payment, which allows the customer to be debited at the time chosen by the seller.

Beyond that, the site is ergonomic, easy to use and visually pleasing. Headings are well presented, images are of high quality and navigation is fluid:

• detailed product sheets
• the filters and search system are ingenious and well thought-out,
• their delivery policy is clear and visible, etc.

Yves Rocher

Yves Rocher's e-commerce site is particularly appreciated for its well-optimized shopping experience. Product sections are easy to read and divided according to user needs (oily skin, dry skin, etc.).

The site has opted for a predominantly green color palette to show its commitment to the environment, which is very interesting. The brand has also done a great job of highlighting the promotions and benefits it offers its customers.

So, what are you waiting for to enter the wonderful world of e-commerce? 💡