Definition
Ecommerce or electronic commerce means maintaining relationships and conducting business transactions that can include selling information, services and goods by means of computer telecommunications networks or simply put, online.
Ecommerce encompasses a wide variety of data, systems and tools for online buyers and sellers all together and can go from mobile shopping to online payment encryption and beyond.
Ecommerce means that most businesses use an ecommerce store or platform to conduct online marketing and sales activities while overseeing logistics and fulfilment.
It has different spelling variations:
- E-Commerce
- eCommerce
- Ecommerce
- e-commerce
- e commerce
all of them considered synonyms and correct – what you use is your choice.
Before we go deeper into the evolution of ecommerce lets see what types of ecommerce are out there.
Types of ecommerce models
Like when we talk about commerce in general, there are six main models of ecommerce that businesses can be categorized into, these are: B2C, B2B, C2C, C2B, B2A and C2A, let’s start with the first one.
Business to Consumer (B2C)
Means transactions made between a business and a consumer, it is the most used sales model when it comes to the ecommerce context.
Business to Business (B2B)
Means sales made between businesses such as a manufacturer and a wholesaler or retailer.
Because it does not include consumer facing most often this type of ecommerce sales focuses on raw material or products that need to be repackaged or combined before being sold to customers.
Consumer to consumer (C2C)
In its early form the ecommerce business model was based on C2C that means the sale of products and services between customers.
So basically you are selling to other customers – second hand products or you can have a relationship like what you see on Amazon and eBay.
Consumer to Business (C2B)
You take the traditional model of ecommerce and turn it backwards like what you see in crowdfunding projects. In other words an individual makes their products or services available to business buyers.
Business to Administration (B2A)
Includes transactions made between online businesses and administrations, a relevant example includes services related to legal documents or social security.
Consumer to Administration (C2A)
Function on the same idea as B2A but with consumers selling online products or services to an administration, this type of ecommerce might include online tax preparation or online consulting for say education.
Moreover these last two categories are focused on increasing the efficiency within the government by using the support of technologies.
Advantages and disadvantages of using ecommerce
Advantages
Convenience
E-commerce can occur 24 hours a day, seven days a week.
Moreover customers can find exactly what they need, at any time, directly from their desktop or mobile device, and that can translate into more business for your company.
Increased selection
In many cases stores offer a wider array of products online than they have in their brick-and-mortar counterparts.
Moreover stores that solely exist online often offer consumers exclusive inventory that is unavailable elsewhere.
Borderless transactions
If a physical store limits business operations to a specific geographical area an ecommerce website, on the other hand, allows your business to reach customers globally thus maximizing your selling potential.
Earnings while you sleep
Due to the fact that the internet never sleeps, your products are available for purchase at any time to customers around the world.
Unlike the online, a physical store will likely operate during regular business hours.
Scalability
As your customer base grows, you can expand more easily your ecommerce businesses to accommodate more sales.
To do that you’ll simply need to increase the bandwidth on your ecommerce platform to accommodate more traffic and orders.
If we talk about expanding your physical store typically means relocating or renovating and that can be expensive.
Personalized experiences
When selling using ecommerce, you can leverage the power of AI to give the customer a personalized shopping experience.
Using this type of technology you can suggest to customers products they’re likely interested in thus increasing your business’s sales.
Access to innovative technology
Technology continues to improve and that will offer you more ways to streamline your business processes thus saving you time and money.
Moreover by using ecommerce you’ll find a range of apps and integrations that will help you market your products, improve team collaboration, and provide faster customer service.
Affordable and effective marketing
Rather than rely on traditional marketing methods you’ll be able to use a range of affordable marketing channels to drive customers to your ecommerce business.
Those marketing channels come in the form of search engine marketing, organic and paid social media ads, and email marketing. All these channels will allow you to reach a segmented market for a lower cost.
Disadvantages
Limited customer service
If you are shopping online for a gadget, you cannot simply ask an employee to demonstrate a particular model’s features in person.
Although many websites let you chat online with a staff member, this is not a typical practice and sometimes you have to wait too long to get an answer.
Lack of instant gratification
When you buy an item online, you often have to wait for it to be shipped to your home or office.
Even though retailers like Amazon make the waiting game a little bit less painful by offering same-day delivery as a premium option for select products you still have to wait to get to touch or try the product.
Inability to touch and feel products
Online images do not necessarily convey the whole story about an item, and sometimes the product you receive does not match the image you saw online.
So ecommerce purchases can be unsatisfying when the products received do not match consumer expectations.
Forms of Ecommerce
Ecommerce can be found in a variety of forms that involve different transactional relationships between businesses and consumers, as well as different objects being exchanged as part of these transactions.
According to these criteria we have the following forms of ecommerce:
Retail
Includes the sale of a product by a business directly to a customer without the existence of any intermediary.
Wholesale
Means the sale of products in bulk, often to a retailer that proceeds to sell them directly to consumers.
Dropshipping
Defined as the sale of a product, which is manufactured and shipped to the consumer by a third party.
Crowdfunding
Implies the collection of money from consumers in advance before a product is available in order to raise the startup capital necessary to bring it to market.
Subscription
The automatic recurring purchase of a product or service that comes on a regular basis until the subscriber chooses to cancel.
Physical products
Includes any tangible good that requires inventory to be replenished and orders to be physically shipped to customers as sales are made.
Digital products
Include all downloadable digital goods, templates, courses, e-books, software or media that must be purchased for consumption or licensed for use.
Services
Defined as a skill or set of skills provided in exchange for compensation. This means that the service provider’s time can be purchased for a fee.
Back in time when it all started
The history of ecommerce dates way back, it was introduced to the public about 40 years ago in a much different form and because in time shopping has become one of the most popular activities on the Web it continued to grow more every year.
Nowadays ecommerce has helped many businesses grow by using new technologies, improvements in internet connectivity and widespread use by the consumer.
To put it simply, ecommerce or electronic commerce is the buying and selling of goods or services on the internet.
Everyone can sit in the comfort of their home and shop anytime they want or they can build pages to display their goods and services.
The history of ecommerce dates back to 1969 when two electrical engineers, Dr. John R Goltz and Jeffrey Wilkins founded CompuServer using dial-up connections.
Moreover they were the ones that introduced the earliest forms of email and internet connectivity to the public and pretty much dominated the ecommerce landscape through the mid 90s.
Since then many more businesses have taken online commerce by storm.
Even though in the beginning ecommerce meant the process of executing commercial transactions electronically with the help of technologies like Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) it has changed a lot.
Nowadays it goes from mobile shopping to online payment encryption and beyond encompassing a wide variety of data, systems and tools for buyers and sellers too.
Another important moment that starts all this online adventure takes place in 1979 when Michael Aldrich invents electronic shopping.
He is an english inventor that introduced this type of shopping by connecting a modified TV to a transaction-processing computer via a telephone line.
With the help of this technology, closed information systems were opened and shared by third parties for secure data transmission thus becoming the foundation upon which modern ecommerce was built.
Before the Internet began to advance in popularity, after the 90s, another important step was taken in 1982 when Boston Computer Exchange was launched, becoming the world’s first ecommerce company.
This company’s primary function was to serve as an online market for those that were interested in selling their used computers.
When using the Internet escalated, security protocols were invented (like HTTP and DSL) that gave rapid access and a persistent connection to the Internet.
Further on, precisely ten years later, in 1992 Book Stacks Unlimited launched the first online book marketplace, three years before Jeff Bezos founded Amazon.
Its founder Charles M. Stack switched in 1994 the direction of the online bookstore by going from a dial-up bulletin board format to the internet and operating it from the Books.com domain.
Having better Internet connection and a more profound understanding of what can be done online even bigger things happened and influenced the world today.
One of those things is the launch of Netscape navigator on October 13, 1994, as a web browsing tool.
This browser included an encryption feature that made transactions more secure, before modern giants like Google got on the market.
The opportunities keep coming and in 1995 Amazon and eBay launched on the market and went from local selling to massive ecommerce platforms that enable consumers to sell online to audiences around the globe.
From there on ecommerce brands got wiser and started delivering more convenient and practical solutions every day, this due to the fact that the world started sensing the money making potential that ecommerce could give.
So investors appeared and with them early brands like PayPal or Alibaba which worked to put themselves as leaders on this new market.
By 2000 a great number of companies from both the United States and Europe had their businesses services represented in the World Wide Web (WWW).
From this time on, the meaning of the word ecommerce changes, becoming the process of purchasing available goods and services over the Internet using secure connections and electronic payment systems, and with it the new millennium does too, becoming a digital wonderland and making brick and mortar stores redirect their businesses.
In this new millennium Amazon.com started its march toward ecommerce domination, eBay basically evolved overnight and PayPal became the global standard for digital payment platforms.
As a response to a growing market, sites like Myspace, Facebook and later Instagram began to change the way users interact with the internet by introducing a new generation of users.
In 2011 Facebook gave advertising opportunities to Business Page owners via sponsored stories.
With the help of these campaigns, ecommerce businesses could target specific audiences by using the social network and get in the news feed of those targeted audiences.
More on the way ecommerce shopping on social platforms evolved later in the articol.
Another step for ecommerce social media is the practice of using social media to market an ecommerce store.
Ecommerce stores can use social media to build brand awareness, attract online followers, and generate online sales.
Companies can also use social media to get their brand, profile, and products shared online.
But when it comes to ecommerce evolution, it lies with the introduction on January 9, 2007 of the first iPhone from Apple.
Even though it was not the first smartphone released (Ericsson did that with R380) the iPhone represents a watershed moment in the evolution of human-internet interface.
Due to this device internet use went from desktop computer to the mobile phone and with it so did all ecommerce brands.
Nowadays with the global spread of smartphones and access to fast broadband connections ecommerce is now present on mobile devices such as tablets, laptops and even watches.
Once the world’s first “digital generation” – meaning those born and raised in a world where the internet was already a ubiquitous presence – came of age, ecommerce revenues skyrocketed to unimaginable heights.
Products like collectables, clothing or big-ticket items like vehicles, jewellery and home electronics made way for smaller-ticket items like cosmetics, sporting goods and even groceries.
Ecommerce and social media platforms
You may wonder what is ecommerce on social media and what are its advantages and disadvantages.
Well social media ecommerce is basically the practice where you use social media to market an ecommerce store.
These stores can use social media to attract online followers, build brand awareness and generate online sales.
Moreover you can also use it to get your brand, profile or products shared online.
And lets not forget that today over 80% of the followers nowadays try to reach out to brands using social media.
Even when it comes to customer care, more people turn to social media instead of using phone or email support when they have an issue with a product or service.
Because in time the Web has become an interactive medium of human communications, nowadays it often replaces traditional media.
Due to the fact that there is so much content available on global distributed sites new types of media products appear, many times free of charge.
In this category we can include blogs, video aggregators like YouTube, social media (Facebook, Instagram, Pinterest and so on) and customized electronic newspapers.
Because we are talking about media, this aspect of the Web too leads to its use in marketing.
Web advertising varies from ad displays on Web sites to keyword ads for information seekers that use search engines like Google.
With the help of marketing techniques social media has changed the way shoppers shop from an ecommerce retailer.
On social platforms brands seem more open because more doors have opened for them to sell their items on the Web.
With the help of software agents and systems that recommend products based on user profile brands can now target their customers more easily.
Customers too, benefit from the variety and availability of products and of the fact that the price of goods is generally lower on the Web – due to the ease of comparison shopping in cyberspace and the fact that ever-new business emerge because the marketplace reaction can be gauged so rapidly today.
This deep knowledge of individuals is available to marketers because they use an electronic collection of multifaceted profiles every time people browse the Web.
All this knowledge is used on social media whose popularity and influence has built a huge audience for shopping on social platforms.
It has been proved that internet users spend an average of 2 hours per day on social media, making it a major influence on consumer purchasing habits.
With the influence of growth social commerce becomes an even more important channel in online shopping. All this because consumers use social media to learn about products and brands.
If back in the day a business presence would be advertised in papers and physical storefronts now, in the digital era business reputation lives and dies according to their social media standing.
Now social media is used by brands not only to advertise but to increase their online presence and to deliver high quality services too.
While more traditional strategies like SEO and PPC allow you to improve your online visibility and get new customers, social media marketing gives you a more effective way to grow brand awareness and bring more traffic to your site.
Moreover social media has been an important part in the evolution of online shopping because many consumers turn to social media for help when buying something.
They want to know what others are saying about a certain product, if the product is popular on social media and so on.
Since ecommerce is driven by website traffic, social media becomes critical in directing followers to your landing or product page.
If people talk about you on social media you generate awareness, and people will talk about you whether you use social media or not.
I know word of mouth is still the most credible form of advertising but let’s not forget that without an active presence you let somebody else tell the story.
When the story is told in a negative way or a user is complaining and nobody notices, then you have a problem.
So you use social media to talk back, make connections and build relationships that will benefit you.
If you do not use it to your advantage it has been shown that people will publicly shame a business or switch to a competitor if they feel their expectations are not fulfilled.
We have to accept that social media is more than a source of entertainment – it is the first place people turn to for research and opinions.
Because many shoppers rely on social media to learn about what they want to buy so a positive experience with your brand on social media can be very powerful.
Social media platforms offer a less formal way of communicating with potential customers than any other advertising channel and that is why most people use it to engage in conversations to learn about your products or services.
And due to the nature of social media your current customers can easily share your brand with friends and family if they like what they see – this is an ideal situation for any online retailer, so let the social media do some of the heavy lifting for you.
Social media platforms that can help you boost your business in ecommerce
We talked about the importance of using social media to promote your brand so now I am going to name a few social media platforms that can help you grow your business.
It is the most popular social network with more than 2.5 billion users so it is a logical move to create an account for your business on Facebook. Of all the active users some of them for sure are your potential customers.
After your account is set you can start sharing photos of your products, sales announcements, links to content that may be of interest or any number of things you want your followers to see.
You can also use Facebook to target advertising campaigns and reach users based on age, gender, location, interests and behavior.
So use this platform to get your brand in front of your customer by utilising its massive audience.
Another great platform that can help your business is Twitter, it has 330 million monthly active users and more than half of them confirm they have bought a product they first saw on Twitter.
You can rest assured that if you share information about sales and links to product pages you can easily start conversations about your brand and thus drive traffic to your site.
Twitter can also be a helpful tool for customer service since users tweet these days directly at brands to give voice to their opinions or ask questions.
So while using this platform make sure you respond to your users quickly and professionally to show that you care about your customer.
Like on Facebook you can also run ad campaigns on Twitter too and target your audience based on who they follow and what words they use in their tweets.
The third platform for you to promote your business is Instagram.
This platform is built around sharing photos so you can use it to show off your products or give a behind the scenes look at your business.
With 1 billion daily active users you can be sure your potential customer is on this platform and wants to learn more about his favorite companies and the team behind the brand.
Make sure you have high-quality visual content and Instagram will give you advertising options similar to those on Facebook and a call to action button to help users buy the products they love.
Snapchat
Even though it is a fairly new territory for both marketers and businesses, Snapchat is another awesome way to give people a behind the scene look at your company.
Because it is used mainly by young people it still managed to reach 229 million users, so it is a safe bet you will find potential customers on it.
Due to the fact that it is used by few marketers, you can take advantage and reach your audience before the competition catches on.
Just make sure to tell your followers on other social media platforms that they can find you on Snapchat too.
Then proceed in posting photos, videos or other interesting things on Snapchat so the ones that follow you can get the inside scoop on your business.
These are some of the platforms available to you, now all you have to do is take advantage of their tools and grow your business.
The moment you have selected the social platforms where you want to start building a community, make a plan.
I say this because every social platform and app comes with its own set of features so make sure you are up to speed with everything on that platform before you start building your community.
Mobile trends and apps in ecommerce
Since smartphones were launched on the market the way people live, work, socialize, shop and play has changed.
Being connected all the time, in any place, has brought new ways of doing commerce, through mobile apps.
With the launch in 2016 of social shopping integration apps like the ones found on Instagram (“Shop Now” button) or Pinterest ( ”Buyable Pins”) marketers found a new oazis.
Because this generation likes to stay connected, especially on mobile devices, that are easy to use and carry around, smartphones revenues boomed.
Now to be relevant you are expected to take advantage of mobile commerce features and have support for your online store on multiple devices like laptops, smartphones, tablets and so on.
Meaning that your online store content must be optimized for various screen sizes.
It is a big investment and a lot of work but it will pay off in the end because multichannel shoppers not only shop more often but they spend three times more than the rest of shoppers.
A client of mine that invested in the optimization of his site for multiple devices received the investment 10x in just 6 months.
Lets not forget that most people do not log on social networks with the intent of shopping even though the purchasing journey might begin on social media.
How many times it happened to you when you’ve started your social media navigation and ended up in a store outside social media and made a purchase. It happens to all of us at least one time in life.
So to determine your followers to notice your ads you need to keep the experience interactive, contextual and social both on your website and on your app or social media.
One efficient way to do that is by using carousel ads, a kind of advertising format that combines videos or images into a single ad in an interactive way.
This type of ads offer the opportunity to tell a story and also showcase products in the process by using an engaging way and at the same time promoting your business.
They are available on Facebook, Instagram and Twitter, to name a few of the social media platforms that offer you the chance to highlight multiple products or share the story of a single one.
While using all that social media and mobile devices have to offer to take your brand on the front page do not forget that if you add an app to the mix you will benefit from its superpower, customer retention.
So once you have reeled in customers and you have given them the experience they so much crave, focus on retaining them.
If you do your job right your customers will be hooked because no industry has been left untouched by mobile apps.
Nowadays they represent ”the expectation” for consumers worldwide and if that is not enough to convince you that mobile apps can take your business to the new world here are some of the best and most innovative mobile ecommerce apps.
Ecommerce mobile apps
The rising usage of smartphones and the advancement of the ecommerce industry is increasing every day and proves to be a boom for businesses and app developers.
Online shopping has become one of the most popular parts of an ecommerce business because the use of smartphones shows that customers feel safe using them and also shows the level of comfort of shoppers on mobile phones.
Even though there are millions of apps listed and uploaded on the app store almost every other day, few manage to be successful and get on the customers smartphones, either because they found the perfect niche or because they have exceptional functionalities.
In this segment we will take a look at some of the most successful shopping apps in ecommerce.
Amazon Shopping
By far the leading online marketplace worldwide with more than 200 millions visitors every month, gives users an excellent shopping experience.
The light and fast functionality of the mobile app allows you to search and filter various products on different parameters with just a couple of clicks.
You can use multiple payment gateways, so you can have an easy checkout and you get permanent updates about your order status.
Moreover with the localization system of the app, users can also use offers from nearby local businesses and discounts too.
eBay
The mobile app provided by eBay has enabled users from around the world to bid whenever they want.
Beside that the search options are made in such a way that they can enhance the buying and also the selling experience.
Another plus is that the app features also have barcode scanning included for price comparisons, guest checkouts, autocomplete searches and linking of your PayPal accounts with the eBay accounts to make transactions faster and so on.
If you enable eBay alerts, you get updates about the latest auctions, when an auction is closing soon or if somebody else outbid you.
Groupon
This is an American online marketplace that provides what we call ”deal of the day” recommendation services for their customers and connects subscribers worldwide with local merchants.
It also offers resources related to traveling, goods and services, things you need in general – like eating out at a restaurant or shopping at a fashion store.
Due to its popularity in the United States it has become one of the most used apps there and it is no wonder since the mobile application feature offers customers great deals and discounts on a variety of products.
What is more, the app sends promo codes or alerts for deals found near the users location that they can either redeem or share with family or friends.
Grofers
This is an India based app that provides on demand delivery services by picking up stuff from nearby stores and delivering them to you within a time limit.
By using this app you can place requests for grocery and staples, meat and dairy, fruit and vegetables, household and pharmacy items and so on and get them delivered at your doorstep.
The app has a great design with full width photographs and a simple way to navigate on it that entices the users.
H&M
Originated from the USA, H&M has become one of the leading companies in fashion all over the world and it provides an incredible app for both Android and iOS users.
It has a great design with intuitive screen graphics and book style product menu.
It also provides many features like sharing of items on social media platforms with family and friends by bar-code scanning, has push notifications that can give you timely sales alerts or can direct the user towards the nearest H&M location.
Starbucks
The app was first created for payments and rewards through the use of mobile devices to enable coffee lovers to pay with their phone.
Users can add funds on their loyalty card and can later use it from their smartphones to buy drinks from the store, tip baristas and earn loyalty points on the go.
The app can also be used if you want to download free music or games or you simply want to find the closest Starbucks store.
If you accumulate enough Gold stars you can benefit from free refills and food.
Trivago
Is an app that helps you search for hotels by displaying the name, price, availability, images and reviews of hotels from a particular place.
After the user makes the selection, he is redirected to the hotel portal to complete the room booking.
As an addition the app offers beside hotel searches interactive maps and displays accommodation in close proximity to the users current location.
Uber
This is a great on demand cab service app that connects the riders to the drivers and uses GPS technology so the rider can access the exact progress of the cab.
It also allows you to compare the fare quotes for different vehicles and you can even use your e-wallet to pay for the ride.
At the end of the ride both rider and driver get to rate each other and leave their feedback.
Walmart
Walmart is like Amazon, a huge marketplace that provides a great shopping experience to users from the comfort of their home.
Customers can easily filter and search the products from walmart.com or they can access the local store inventory as well.
One of the features of the app allows smart shopping lists with the manufacturer’s coupon codes, QR code scanning, a voice-search feature for adding products to your shopping lists, real time price calculation and an easy to use checkout process and so on.
Wish
Is a popular American shopping site for purchasing clothes, accessories, electronics and gadgets at a steep discount.
The app is available for both iOS and Android platforms, this helps simplify as well as enhance the whole experience of online shopping making it more approachable.
Another thing that makes the app so popular is the fact that they usually give huge discounts and offers that determine customers to go for instant purchase.
Moreover by using it consumers can connect easily with international sellers or share and suggest products to their friends.
Sephora
This cosmetic brand is famous all around the globe and one of the leading cosmetic companies providing a great variety of luxury cosmetics worldwide.
Even though it has many features on its mobile app the one that stands out is the augmented reality feature.
This feature is called ”Sephora Virtual Artist” and allows the user to virtually try on the product she or he wants before the purchase. In this way the user has the possibility to choose the right product and be sure it looks good when it is put on.
Nike
The international brand for footwear, apparel, equipment, accessories and services delivers innovative products, experiences and services in store and through its mobile application to its customers.
Being customer focused, the app connects the physical and digital environments, what is more the barcode scanner allows users to verify the availability of products or to make reservations for them.
If you are loyal to the brand you can become a Nike plus member and have the possibility to access special Nike products, exclusive offers and discounts with no delivery charge facility.
You can also gain reward points for in-app purchase and many more.
LIKEtoKNOW.it
LIKEtoKNOW.it is a discovery app that follows a unique approach because it allows users to shop something they have found somewhere else.
By using this app you can find out more about a product by taking screenshots of an image or influencers from Instagram or Snapchat and you are all set.
Later you can purchase the products featured in your screenshot from your phone in the LIKEtoKNOW.it app.
It is free of charge and available on both Android and iOS.
Goat
This app represents a safe way when it comes to buying and selling sneakers.
If you use it you get free and secure verification services so whenever you buy something you can know for sure that it is authentic and matching the description in the app.
Moreover all the sellers are vetted, the photos of the product are verified and the product is inspected before being shipped to the buyer.
Another feature that makes it a great app is the fact that it provides data to help you set a price and display what buyers are willing to pay so you can sell quicker.
Goat also gives you prepaid, pre-addressed labels to facilitate easy shipping.
It is free and available on Android and iOS.
Wanelo
Is a fun way to shop for a variety of unique products posted by app users. You can follow your favorite stores and users with similar tastes in one place.
Moreover every day Wanelo will show you new products that match your personality and preference. It does that after it learns about your style by looking in the wardrobe of saved products in your profile.
Another great thing about the app is that it gives you the option to search across all of your stores from small boutiques to well known brands.
It is available on Android and iOS and it is free of charge.
Shopify
Shopify app represents a great way to manage your orders and products, track sales or connect with your staff.
This is possible due to the fact that Shopify handles everything from hosting, CDN, SSL certificates, marketing to payments, mobile payment included, to a safe and secure shopping cart and shipping, it has it all.
If you own an ecommerce store, be it jewelry, clothes, furniture and almost everything you can think of, Shopify has all that you need for you to run the store smoothly.
By using this app you get features that include creating discounts, performing marketing campaigns or having follow-ups with your customers.
To use the Shopify app you need an active store with Shopify.
These are just some examples of great brands that profited from mobile apps to bust their sales and interact with customers taking them among the giants in the market.
Brands that turned into top ecommerce giants
It seems like it was yesterday when the idea of online shopping took the internet by storm all around the world and since then blossomed into an industry of more than 30 million online stores and 2.14 billion shoppers in 2021.
Out of all these stores less than a million make more than 10K annually and only a few take the majority of the market share.
Here are the top ecommerce companies that are generating billions of dollars through online sales.
Now there are different ways one could measure the size of a particular ecommerce business.
You can do that by taking into consideration the number of customers it has, the revenue it generates or the company self worth.
But one of the most used ways to compare online stores is by using GMV, the metric for gross merchandise value (sometimes used as gross merchandise volume or gross merchandise sales).
This metric shows the total value of all items sold through your online store or marketplace.
GMV gives a different perspective from say revenue. Lets take for example eBay, because it operates as a marketplace it doesn’t sell products directly to the consumers so its revenue is a small part of its GMV.
Unlike it Amazon has its own retail operation and also sales from third party merchants on its marketplace so its revenue has a higher share from its GMV.
We can easily say that online stores like brand retailers that sell their own inventory will have the same amount of revenue as the GMV.
After seeing their revenue and GMV we made a list with some of the brands that became top ecommerce companies.
These companies are: Amazon, Alibaba, Ebay, Shopify, Rakuten, Jingdong or JD.com, Zappos, Home Depot, Zalando and Otto.
Amazon
Is the biggest of them all and I do not think it needs introduction.
Since 1994 when it was founded it has now become the highest revenue generating ecommerce company and ultimately the world’s largest online conglomerate.
It has gone from selling books to a full-fledged online store with a variety of products that include electronics, clothing, software, pet supplies and books.
Using a strategy of ”growth at all cost” it focused on top-line growth and let go bottom line profits.
This new level of leadership escalated the company’s growth and made it one of the top ecommerce companies in the world.
Moreover the company started to branch out and introduced new services to bring improvements to the business.
One of these new services is Amazon Web Services or AWS which provides web hosting servers to website owners making it the second most profiting business for Amazon after its online store.
And they do not stop here because the company is also highly data driven so it uses this extracted data and analyzes it so it can come up with newer and better products and services.
Another innovative service is Amazon Prime, a subscription service that provides shoppers with unlimited 2 day shopping from Amazon, video and music streaming, exclusive access to certain items, early access to deals and more.
With its annual growth and the billions they make it is no wonder that Amazon is the world largest ecommerce company.
Alibaba
Founded in 1999 by Jack Ma, this ecommerce giant comes from China and it caters not only to consumers but also to retailers.
Moreover its core commerce business consists of:
Taobao – the consumer to consumer marketplace that services mainland China and enables small businesses and entrepreneurs to reach individual consumers.
Tmall – is another version of Taobao and is dedicated to business to consumer ecommerce in China.
AliExpress – created for international shoppers it gives small businesses from China the chance to sell to customers from all over the world.
If all these brands are added to its whole marketplace – the go to source in Asia for finding manufacturers and suppliers – this company share of all commerce made online is even bigger.
You just have to think of a product and Alibaba for sure has multiple vendors that offer that product in more than one version.
So with its sheer dominance on the asian market and the possibility of expanding globally it is safe to include it to the list of top ecommerce companies.
eBay
Starting as an online auction house in San Jose, California, the 90s, it first sold collectibles but it is now focused on new products at a fixed price.
The thing that makes eBay unique is its bidding feature, so if you are interested in a product you can bid on it and the highest bidder gets that product.
Anyone can join and post products to sell for others to see because eBay has a variety of product categories which cover almost everything.
Due to launching “Best Price Guarantee” service eBay has become more like a business to consumer retailer instead of a marketplace for other businesses and this move is paying off.
If you are wondering how the company got on this list if they do not own the product, well the answer is they get a share of every sales transaction on the store and this little share brought them billions.
To get them even further eBay has invested in Flipkart which is a singaporean retail store operating in India.
Shopify
Represents a new way of making business online because it does not operate its own centralized marketplace but provides a platform for small and big merchants to sell items on their own website and other third party marketplaces.
Shopify mainly gives you a chance to manage your business from one central location, easily track sales and inventory, help fulfil orders and help customers create their own website (online shop).
To use Shopify you have to pay a subscription fee that depends on the size of your business – one person entrepreneur or multibillion dollar brands.
Lately more and more of its revenue comes from merchant solutions because Shopify offers payment processing, shipping services and cash advances to merchants.
This is profitable because merchants started looking for an alternative to Amazon, as the marketplace becomes more crowded every day and also has many disadvantages for the merchant.
Moreover if you want to establish a brand and take control of the inventory and sales on your website, Shopify is the perfect alternative.
The constant growth of merchant solutions and subscriptions has taken this company to new heights and among the top ecommerce companies in the world.
With Shopify the power of selling online is in the customer hands.
If you want to find out more about Shopify please read this in depth article: What is Shopify?.
Rakuten
Is a Japanese ecommerce company that operates an online mall for big brands in Japan but also owns several ecommerce operations in countries like the U.S, France, Brazil and the U.K.
To have a clue about the size of this company you should know that it hosts 40.000 businesses and has purchased numerous foreign assets.
Among these investments we can count building a wireless network to improve profitability.
Operating Japan’s largest internet bank and being the third largest credit card company.
Beside this it also owns a travel agency, insurance company, matchmaking service, and golf reservation system among others.
It is a major investor in Lyft and Pinterest and owns Viber.
Moreover Rakuten is the official sponsor of the Golden State Warriors, an NBA franchise and FC Barcelona, a Spanish Football Club.
And to spice things up it also challenges the top streaming service, Netflix, by purchasing Wuaki.tv, a Spanish streaming service.
These investments are made to create an ecosystem of services that can give customers everything they need and also promote the brand.
All these makes it one of the world’s largest ecommerce companies with transactions that reach trillions of Yen.
At this moment Rakuten is not available to European Economic Area (EEA) due to GDPR non-compliance.
Jingdong (JD.com)
This chinese company has built out an unparalleled logistics network with more than 500 warehouses and about 7000 delivery stations.
Because it operates the entire logistics operation itself about 90% of the orders get to customers by the next day.
The investment in a high tech delivery system by using drones has given JD a big boost in revenue and the build of 150 drone launch centers has given them the possibility to deliver faster in rural areas.
With the launch of JD Plus the customers can enjoy free shipping for up to 60 times per year, free ebooks, special discounts, loyalty points and iQiyi premium service – the largest online video platform in China.
JD has also partnered up with Walmart which will further integrate their platforms, supply chains and resources in China and keep them at the top of the chain.
Zappos
Founded in 1999 by Nick Swinmurn, Zappos is an online shoe store very popular for its customer service.
Even though Amazon bought it in 2009, the company still focuses on ”WOWING” its customers by offering the best customer service without any conditions.
That means they do not charge shipping, return costs or purchase costs and after the delivery you can return the product if you do not like it and get your money back.
Due to the excellent customer support in the world the company reached the top of the ecommerce industry.
Home Depot
Was founded in Atlanta and is the largest home improvement retail chain with over 2000 physical stores in three countries.
Beside the US Home Depot has expanded to Canada and Mexico building more than 300 stores.
What is interesting about this company is that even though you can buy online with one click you have to go collect your home improvement products from the physical store.
This did not stop it from reaching billions in annual revenue and becoming a force in retail.
Zalando
Is the spot to go if you are into fashion or want to be a fashion designer.
Based in Berlin, Germany, Zalando focuses on selling products from more than 1500 brands for fashion, shoes and a variety of apparel, all around the world.
Beside fashion accessories Zalando also offers gift cards, vouchers and online sales that bring in millions of users.
What takes it to the top are those more than 700 million visitors and the fact that it operates in 15 different countries.
Otto
Originating in Hamburg, Otto is rated as one of the largest and most successful ecommerce companies.
It is known for the ability to reinvent itself and the constant innovation that helps in keeping up with the latest and biggest technological trends worldwide.
Moreover it is one of the most visited platforms for buying due to the fact that you can find here products from the fashion, the sports, the electronics and home equipment industry.
The great interface presented on its website makes the process of buying simple and the constant innovations bring customers onto its website and keep them engaged.
By having partnerships with the most sought after brands and having a presence in more than 30 countries in Europe, North and South America and also Asia has taken Otto at the top of ecommerce companies.
Everyone of these companies give various opportunities to start investing in ecommerce because there is no doubt that ecommerce is a goliath industry.
All these ecommerce companies have a huge influence in the online business landscape, this thanks to their ever-expanding and increasing business portfolios and innovations.
Ecommerce statistics
To get inside the mind of everyday consumers, you need to understand what they expect and look for when shopping online, and more importantly, adapt your store to not only meet those needs but exceed them indefinitely.
Below are some ecommerce statistics to help you better understand today’s consumers and their shopping habits.
1. In 2021, over 2.14 billion people worldwide are expected to buy goods and services online. (Source: Statista)
2. By 2040, it’s estimated that 95% of all purchases will be made through ecommerce. (Source: Nasdaq)
3. Is estimated that the ecommerce share of total global retail sales until 2024 will be 21.8%. (Source: Statista)
4. Consumers spent $861.12 billion online with U.S. merchants in 2020. (Source: Digital Commerce 360)
5. About 81% of consumers trust the advice of family and friends over businesses (Source: HubSpot)
6. The ecommerce industry is growing 23.2% year-over-year. (Source: Statista)
7. In 2020, digital and mobile wallets accounted for 45 percent of global ecommerce payment transactions. This share is set to increase to over 50 percent in 2024. Credit cards ranked second with a 23 percent market share in 2020, a figure which is projected to decline in the coming years. (Source: Statista)
8. At this date there are more than 377 million active PayPal accounts in the world. (Source: Statista)
9. In 2020, 2.17 percent of global ecommerce website visits were converted into purchases. (Source: Statista)
10. In 2021 due to poor design, development and lack of ecommerce knowledge site owners lost only in the US and EU the astonishing sum of $260 billion from lost orders which could be recoverable if they’ve hired a professional developer to optimize the checkout process. (Source: Baymard Institute)
11. Mobile shopping is estimated to reach $3.5 trillion in 2021. (Source: Statista)
The future of ecommerce
With the sudden influx of online sales the ever changing landscape of ecommerce can be both scary and exciting.
That is why brands of all sizes try to keep up with one another by creating stellar website designs and using digital marketing strategies to take their online sales up to the roof.
Trends continue to shift and try to shape the way people all around the world purchase products. So the future of ecommerce is as bright as the sun and here is why.
When we talk about online we say connectivity and with that comes an increase in data flow, emerging markets like China, Brazil and South Africa, and a big shift in cross border ecommerce, all are playing a big role in the future of ecommerce.
Getting over the restrictions of physical borders means that consumers can shop from the comfort of their home, receiving notifications and promotional email that entice them to browse on ecommerce websites.
If we take a peak at those emerging markets it is estimated that by 2022 around 3 billion buyers from those markets will get access to the internet.
Now imagine the number of retail sales from all those buyers and the high number of potential clients that can be found there.
Lets not forget an even more important thing about these markets and that is they are relatively untapped by existing ecommerce businesses, so yeah, you struck gold if you act now.
Here lies the opportunity for new ecommerce brands to give it a try in these markets and tailor their business services toward local audiences and build a sustainable brand.
Another fact that proves ecommerce is the ”thing” comes from the fact that mobile devices are everywhere and with them come mobile apps.
You already know by now that we have a mobile application for pretty much everything, from grocery shopping, to fashion, gaming and so on.
So it is no wonder that mobile apps dominate online commerce.
Beside that more and more brick and mortar brands are joining the bandwagon.
We have seen that online shopping in many parts of the world has by far outpaced the sales from brick and mortar stores.
Don’t get me wrong brick and mortar stores are still incredibly valuable especially now when they have learned to go with the flow and offer unique shopping experiences and brand themselves on the Internet.
Don’t go anywhere there is more to come, and this from B2B ecommerce that has turned into a giant.
It is a fact that ecommerce is no longer dominated by B2C and that is because there is a new growing trend, B2B.
That trend comes from companies that buy software, products and services for their own workforce.
Because it is important for companies to have softwares that can automate as many processes as possible and that the staff is well equipped and has the proper environment to do their job.
So now B2B means more than wholesalers selling to retailers, it is a booming industry and the tech companies led it.
All these new technologies make our life easier and help businesses be more profitable so it is not a surprise the amount of money invested in B2B purchases.
A huge trend that takes more and more attention among businesses is ecommerce personalization.
So much so that it will get to be a standard as customers’ expectations of personalization increases.
Personalization has gone from just acknowledging a customer to displaying a unique and individualized shopping experience to every customer.
All this is done by analyzing personal information that include demographics, browsing behavior, buying history and any other data that is relevant to a customer’s shopping journey.
So businesses invest a lot in this segment to attract clients and keep them engaged.
Another trend that is gaining popularity in the world of ecommerce is the rise of voice technology.
With the introduction of voice devices like Amazon Echo, Apple HomePod and Google Home new ways on how customers interact with brands appeared.
Now voice browsing is widely adopted by customers and thus voice commerce is on the rise too and businesses have a new opportunity to sell and grow.
With the new technologies available to shop online the payment methods will change too because payment options represent the element that will drive a customer to make the transaction.
It is safe to say that you can lose a client if an available payments channel of their choice is not there.
This is why to stay ahead of the trend you as a business have to take notice of new payment forms.
These days digital wallets are the new raving so using Google Pay, Apple or Samsung Pay is already implemented by businesses.
Using this type of service allows customers to make purchases through electronic transactions and simplifies the shopping experience.
One method of payment that is set to take the internet by storm is cryptocurrency.
For now cryptocurrency is used for large business transactions but the recent partnership between Overstock and ShapeShift is about to change that since they have accepted a great number of cryptocurrencies as payment on their online stores.
Conclusion
These are just a few facts that show the direction in which ecommerce is going and with this intense purchasing power of global consumers, the proliferation of social media users and the growing infrastructure and technology, the future of ecommerce is shinier by the year.
Ecommerce has done things that were impossible 20 years ago.
I love the fact that from my office or from the comfort of my own house I can shop in any corner of the world.
I have bought products from all corners of the world via the internet.
I want some exotic condiments from India or the product is available in other countries and not in mine, no problem. I just fire up my laptop or mobile and start a shopping spree.
Of course the far away are you from a location the higher the shipping price is.
Honestly in many cases the price of the shipping is worth it.
In the near future as a store owner if you do not go global and your competition will do, soon enough you’ll be out of business.
All I can say is stay tuned the story goes on…