What Is E-Commerce?
Have you ever thought to yourself what is e-commerce really? E-commerce (short for electronic commerce) refers to any type of commercial transaction that is carried out electronically via the internet. Online shopping is the most common form of e-commerce. Mobile commerce (shopping via an internet connected mobile device on the web, via and app or at the point of sale) is a modern form of e-commerce. It is sometimes referred to as m-commerce as well. Electronic commerce covers everything from an online grocery store to digitally downloaded video games.
What most e-commerce websites have in common is a digital basket and checkout system. They allow customers to add items to their order and easily pay online. Today anyone with a little know-how can use existing e-commerce platforms (such as wordpress e-commerce) to build an online business. Special e-commerce website design companies offer services to give these sites a unique look.
A Pioneering Pizza
In 1994 some brave soul was the first person to order a pizza online from an e-commerce website. It was a pepperoni and mushroom with extra cheese. Online shopping or e-commerce is now something that most of us take for granted, and ordering pizza or browsing online clothing stores is second nature to millions. In fact there’s an entire generation of young people that have never experienced a world without the ability to get products or food home delivered after a few clicks of a mouse or swipes of a screen. But it obviously hasn’t always been like that. In December 1995 just 0.5% of the global population were using any form of the internet. A cheesy midnight snack drove pioneering geeks to take the risk and invest in the fledgling $131 million e-commerce market. The likes of the Home Shopping Network and telesales was far more lucrative.
Fast forward a decade to 2005 when the likes of eBay and Amazon shopping took off. Online shopping sales had reached a whopping $109.4 billion, with 15.7% of the world connected. Today almost half of the globe is online and internet retail is worth a staggering $1.55 trillion!
But why has there been such exponential growth? Simply put, e-commerce solutions are easier. It is nice to explore products in person or try things on at clothing stores. However our busy lives have dictated that it’s just not worth the effort. Data compiled by eReviews for a new infographic on global facts about e-commerce, reveals that 73% of consumers prefer to buy from an e-commerce website because it saves time. There’s also a wider variety of choices, prices are often cheaper due to the lack of overheads and middlemen and the ease of price comparison, and you don’t have to face the annoying hustle and bustle of isles and checkouts. E-commerce has jumped retail forward by leaps and bounds.
One element that was integral to this success was secure payment processing. You can’t efficiently or securely shop online with cash, and if you thought the fear of credit card fraud was high today, imagine what it was like in the mid 90s when online shopping was still the wild west.
1994 was a milestone for putting people’s minds at ease. It marked the development of Secured Socket Layers (SSL) encryption, which was first certified by the Netscape browser. Websites were than able to transmit data safely and securely. This meant that if it was intercepted it would make no sense unless it was decrypted. E-commerce solutions adopted this and marketed as the new safe way to shop on the internet.
PayPal’s launch in 1998 (then called Confinity) also began the process of standardizing online payment. Credit card companies upped their game by introducing PCI data security standards by 2004. Today the options are endless, with everything from mobile wallets to cryptocurrencies like Bitcoin.
A Global Market
The United States couldn’t remain the only significant player in the e-commerce market. Today it’s China that has the distinction of the largest online economy of $562.66 billion, due to its huge population. However, since 2010 the United Kingdom has dominated the market per capita (i.e. the amount per person that’s spent online). Around half of all online shoppers also actively seek out British goods. This is due to the perceived notion that British fashion and luxury items are high quality.
The US still stands out as the corporate online giants that got in at the ground floor. E-commerce website Amazon launched in 1995, but it wasn’t until 2003 that it turned a profit. It’s lucky that they weathered the storm because today it is the most successful e-commerce business in the world, with net sales of $107.01 billion! The site is distantly followed by China’s Alibaba ($12.3 billion) and eBay ($8.59 billion).
Interestingly – books – which are what Amazon built themselves on, are still the most sold item worldwide on the web. There’s an irony there somewhere, when the internet is and endless database of free information. It’s also an endless database of goods. Physical bookstores for example could only manage a few hundred thousands titles at the most. Amazon blow’s them away with the ability to database and sell millions. Choice without the limitation of bricks and mortar is one of the prime benefits of e-commerce. Why go to an electronics store when you can have access to every single electronic online and compare prices until you find the cheapest option?
What Does E-Commerce Mean Today?
One fact that cannot be denied is that e-commerce is still continuing to grow. There are now 110,000 e-commerce sites on the web generating meaningful profit, and thousands (if not millions) more trying to establish themselves. Only half of China’s population is online, and sales in the country are expected to exceed $1 trillion by 2018! In the Asia-Pacific region there is year-on-year growth of 44%, and the number of digital buyers in India alone is expected to reach 41 million by the end of 2016.
The answer to the question of “what is e-commerce?” also continues to evolve. Most people still prefer to use a desktop or laptop to shop via an e-commerce website. We are seeing mobile commerce (mobile sites and apps)slowly gaining traction. The adoption of mobile shopping will help US online sales to reach $523 billion by 2020. PayPal UK reports that 59% of its transactions are now made via mobile devices. Smart phones are compounding the convenience that traditional online shopping sites have brought us. The best e-commerce sites now have mobile options. Shopping from the comfort of your own home was revolutionary. Now you can shop from literally anywhere as long as your device is with you.