What is e-commerce, how it works, advantages and types
In recent years, the rise of e-commerce has significantly revolutionized the way consumers and companies conduct business transactions. After all, this phenomenon transformed the retail landscape, providing a convenient, accessible, and global shopping experience.
It is even possible to say that e-commerce not only redefined consumption patterns, but also triggered a digital revolution that impacts from small entrepreneurs to large corporations.
According to a study released by Valid Coupon, with data from Statista on e-commerce sales, Brazil leads the ranking for online sales growth, with 22.2% in the year 2022, and an estimated growth of 20.73% per year, between 2022 and 2025.
Also according to the study, Brazil has an expectation of growth almost twice as high as the world average, which is 11.35%, and even higher than countries such as Japan (14.7%), the United States (14.55%) and France (11.68%).
Whether based on the national or international scenario, companies need to be aligned with everything that happens in the market. In this sense, the migration of buying and sales relations is currently one of its main trends.
Thus, in the digital age, e-commerce emerges as an economic driving force, shaping the way business is conducted and challenging traditional commerce traditions.
What is e-commerce?
By definition, e-commerce refers to businesses that structure the buying and selling process online. In this model, the purchase and sale of products or services are facilitated by digital platforms, allowing consumers to carry out transactions without the need for a physical presence in a traditional store.
E-commerce covers a wide range of activities, from the purchase of everyday consumer goods to the contracting of specialized services. Transactions can take place in various formats, such as virtual stores, mobile apps, online auctions, and others.
As more and more people are immersed in the digital environment — whether seeking information about products and services or performing an action, such as a purchase — a change in consumer behavior has been noticed, directly impacting the way in which companies carry out their communication, the structure of their business and their reputation.
How does e-commerce work?
E-commerce transactions generally start on an online platform, which can be a website, a mobile app, or even a presence on social networks. This platform serves as a meeting point between buyers and sellers.
From there, the seller presents their products or services in a digital catalog, including information, images and, in some cases, customer reviews to assist buyers in making decisions.
To proceed with the purchase, buyers must select the desired products or contact the store (in the case of sales through social networks, for example), providing information such as delivery address and payment method.
Because it is a digital commerce, electronic payment is generally prioritized, but buyers must always be aware of the security of the e-commerce where they are placing their order, in order to avoid fraud.
After completing the order, the service is made available to the buyer or, in the case of purchasing products, the product is sent to the physical address of the person who purchased it.
How did e-commerce appear?
The great turnaround for e-commerce occurred in the 1990s with the development of the World Wide Web. In 1991, the first online sale took place, marking the effective beginning of electronic commerce. Companies like Amazon and eBay were founded in that decade, paving the way for the expansion of e-commerce.
In the mid-1990s, the popularization of the internet led to an increase in the number of online users and the development of secure technologies for financial transactions. Thus, the first security protocols, such as SSL, appeared, which would be essential for e-commerce.
Over time, e-commerce evolved and adapted to market demands, incorporating innovative technologies, such as artificial intelligence, augmented reality, and advanced payment methods.
This ongoing transformation reflects not only the change in consumer preferences, but also the growing importance of e-commerce as a significant driver of the global digital economy.
The expansion of e-commerce in Brazil
Although e-commerce in Brazil did not emerge during the pandemic, it was undoubtedly one of the main factors for its expansion in the country, since, with physical stores closed, Brazilians began to prioritize making online purchases.
Abcomm data show an increase of more than 40% in e-commerce revenues from 2019 to 2020, the year in which the Covid-19 pandemic began. After this peak, revenues continued to grow in the following years, reaching over R$ 169 billion in 2022.
The change in consumer behavior meant that new technologies were implemented to facilitate the shopping experience, through, for example, instant payment methods, such as the PIX.
Regarding the growth outlook for the coming years, the study shows that the number of online shoppers is projected to reach 102 million by 2027, compared to 83 million in 2022.
What are the types of e-commerce?
The diversity of e-commerce models meets a wide range of needs, allowing efficient transactions in various contexts, from direct sales to the consumer to the complex interaction between global companies. Let's check out some examples:
Business to Consumer (B2C)
The B2C model involves direct business-to-consumer transactions, where consumers buy products directly from businesses. An example of this model are retail stores.
Business to Business (B2B)
In this model, transactions take place between companies that buy products or services from other companies.
Consumer to Consumer (C2C)
Consumers interact directly, buying and selling with each other on platforms such as online auctions, for example.
Consumer to Business (C2B)
Here, consumers offer products or services, and companies respond with offers, as is the case of freelance platforms and digital influencers.
Social commerce
This model integrates social media elements into the buying process. In it, companies use platforms such as Instagram and Facebook to sell products directly through their pages.
Voice commerce (V-commerce)
With the advancement of voice assistants, such as Amazon Alexa and Google Assistant, V-commerce allows consumers to make purchases using voice commands.
What are the advantages of an e-commerce?
E-commerce offers a series of benefits for both consumers and companies, driving the transformation of the commercial landscape. Among them are:
Global accessibility and availability
E-commerce allows companies to reach consumers around the world, eliminating geographical barriers and significantly expanding the potential market. In addition, online stores are open 24 hours a day, 7 days a week, providing convenience to consumers who can shop at any time, adjusting to their schedules and routines.
Reduction of operating costs
E-commerce eliminates many of the costs associated with a physical store, such as space rental, utility bills, and full-time staff. This may result in more competitive pricing for consumers. Still, consumers have access to a wide variety of products and services in a single location, without the physical limitations of a traditional store.
Agility in inventory updates and offers
Inventory updates, promotions, and special offers can be implemented in an agile manner, keeping consumers informed about the latest news and encouraging purchase.
More personalized shopping experience
E-commerce platforms can personalize product recommendations based on purchase history and consumer preferences, segmenting offers and providing a more personalized shopping experience.
It is also possible for companies to collect and analyze consumer behavior data, allowing a deeper understanding of the target market and the adaptation of marketing and sales strategies.
Guide to starting your own e-commerce
If you want to be successful, you need to know that a virtual store must offer its customers an intuitive and easy-to-navigate platform and a 100% secure purchase. When these requirements are met, there is a greater chance that the consumer will return to the store more often.
If you haven't digitized your company yet, here are some tips for starting your e-commerce:
Search for business models
Before deciding what to sell online, you need to analyze the different business models that exist. Therefore, research needs to be your first step. For example, currently in the market there are businesses based on services, software, product sales, etc.
Start the ecommerce niche search
Choose your niche based on numbers. It's not enough to just like a segment, it's important to seek to tangibilize that preference to understand if its pros and cons are worth all your resources and time. For this analysis, pay attention to a few points: do you already have relevant competitors? Is the market heated? Is the market saturated? Do I have any competitive advantage that would make me stand out in this scenario? What is my purpose and my differential?
Validate the target market and product ideas
Before effectively thinking about product ideas, you need to think about who your target audience or persona is. What does the store represent? Who are your ideal customers? Once you have identified the image you want to project and the customer you are serving, you can start with a few products on display and gradually expand your portfolio.
Register your e-commerce business
To do this, register your business; choose the name of your store; obtain any necessary business licenses; obtain your identification number from the employer; find the right suppliers; create your logo and obtain your visual identity.
Finalize your ecommerce business plan
Now is the time to get your business plan down on paper and determine your initial budget, loan needs, and monthly expenses. You need to find your break-even point, both in unit sales and in duration (in months).
Create your online store
When you're officially the owner of an ecommerce business, you'll need to register your domain name and any redirection URLs that may be relevant. There are literally hundreds of ecommerce shopping cart platforms, both free and paid. Therefore, you need to choose the one that best fits your budget. Setting up an online store is much more than just adding your products and content. You also need to set up other strategies, such as your email marketing and automation.
Attract customers to your e-commerce store
It is important that you analyze the type of marketing that best fits your business model and thereby analyze the performance of your site to attract more and more consumers.
What is the future of retail? 4 tips for succeeding in your online business
The future of retail is changeable, as its structure changes according to the transformation in consumer behavior. Therefore, retail will always be an innovative, dynamic and fast sector and the consumer defines the success or not of your business.
For the entrepreneur, this is an opportunity for success and promising sustainability. Here are some tips that will help you get a good result:
Don't rush the launch of your store
Creating a website is a detailed, laborious process that requires a lot of attention. One of the biggest mistakes made by entrepreneurs is to force or rush the launch of a website, as there is only one chance of impressing their customers/market.
As much as you don't have problems like the domain, if something is poorly done and the consumer notices, this can generate conflicts.
Focus on the user
Unlike physical stores, online commerce does not allow consumers to touch, feel, smell and see (firsthand) products before making a decision.
Therefore, it is necessary to find another way to win that customer. Some of the best tips to get around this include offering adequate prices, offering free shipping, and facilitating the checkout process with simplified shopping carts.
Stay on top of SEO
As the e-commerce economy experiences rapid growth, more and more companies will grow at the same time in this sector. Therefore, you must be on the first pages of Google.
Qualified SEO will help you stay competitive in the long term, and will make you stand out from the competition.
Invest in Mobile
Whether on a global or national level, the use of mobile has been the main form of online consumer interaction.
Second report State of Mobile 2022, published by App Annie, Brazilians lead the global ranking of cell phone use, with an average of 5 hours per day of use.
Adapting your business to consumer behavior should be your priority. If you're not building ecommerce businesses with mobile devices, in mind, you might be irrelevant in three to five years.
