E-Commerce

In recent decades, e-commerce has become one of the most important sales channels for many companies in various sectors. Customers can make purchases of various kinds from the comfort of their own couch and have everything from clothing and everyday items to food delivered directly to their doorstep . While customers benefit from the convenience and time-saving , companies enjoy digitally processed business processes and therefore economic advantages. Automated purchasing processes, the resulting reduction in transaction costs and the integration of ERP and merchandise management systems minimize the cost of entire business processes and ensure greater customer satisfaction.

But what exactly is e-commerce? What forms are there and what are the advantages and disadvantages of online trading for companies? What is the importance of search engine marketing and search engine optimization?

E-commerce: terminology & meaning

The term e-commerce is derived from the English word electronic commerce and means electronic commerce or Internet commerce. E-commerce refers to all commercial transactions between retailers and users that take place via the Internet. The term covers the entire purchasing process. E-commerce is therefore a sub-sector of e-business. Online shopping in particular has emerged as a particularly popular variant of e-commerce in the last decade and is especially popular in the B2C sector. However, offering digital services such as online banking or online marketing also falls under the heading of e-commerce. For companies and customers alike, trading via the World Wide Web is now the norm. Since the turn of the millennium, sales in the B2C sector in Germany have increased almost linearly from 1.1 billion euros to 86.7 billion euros in 2021. A key feature of e-commerce is the automation of various processes. While companies use this to optimize purchasing processes or entire business processes, customers also benefit from the digital offering.

Although some advocates of bricks-and-mortar retail see e-commerce as a threat to physical stores, it can certainly support the retail sector. Especially in times of the coronavirus pandemic, many companies that previously relied exclusively on the stationary sale of their products were able to continue operating even in times of lockdown. The position of online retail was once again significantly raised to a new level and has since seen an additional increase in customers from older generations.

How does e-commerce work?

The basis for functioning e-commerce is a platform on which products and services are offered to customers. Potential customers can use a digital system - either their own store system or a digital marketplace - to access a provider's products or services, obtain the information provided and place the desired service in their shopping cart. By integrating a payment system, a purchase can be made at any time. The connection to an ERP or merchandise management system ensures that stock levels are updated automatically. An order confirmation is also sent automatically.

Forms of e-commerce

Companies can sell their products and services online via various channels.

Own webshop

Specialized online retailers in particular use their own online store for digital commerce. These are operated on the basis of store systems, which are often linked to an inventory management system to automatically update stock levels. While companies selling via marketplaces only have to spend time setting up products, having their own store also involves a not irrelevant financial outlay in terms of creation and maintenance.

Digital marketplaces

If you want to sell online, you don't necessarily have to run your own online store. Well-known marketplaces such as Amazon, eBay & Co. offer online retailers the opportunity to sell their products via external web stores without much effort. Here you benefit in particular from the reach of these portals. The disadvantages are that you cannot promote your brand without restrictions, are dependent on the marketplace and have to pay commissions.

Store & marketplace

For most online retailers, a good mix of their own online store and sales via marketplaces has proven successful. This allows you to expand your reach via various sales channels and ideally cover customer needs. This model is known as "omnichannel".

Legal situation in e-commerce

The operator of any online store is legally required to make certain information publicly available in their store and to grant their customers certain rights. In accordance with Section 355 of the German Civil Code (BGB), information about the 14-day right of withdrawal must be provided in writing. In addition to the withdrawal policy, operators must also publish the following information:

Imprint

GTCs (voluntary)

Legally compliant requests for action

Correct price indication incl. indication of VAT & shipping costs

Availability of products

Shop systems: the basis for digital commerce

Anyone who runs their own store is faced with the choice of a suitable store system. From a user-friendly backend for the maintenance of customer and product data to the provision of analyses, a store system has various functionalities and takes over business processes:

Data maintenance & management of customer & product data
Management of orders & shipping
Various payment & shipping methods
accounting
Data analyses
Marketing options, such as newsletter dispatch

Orders are booked via interfaces to an electronic merchandise management system and stock levels are adjusted accordingly.

Types of store systems

Extension of the CMS: Various content management systems that are used to create and operate websites offer the option of extending your own website with additional functionalities, including a web store. Integration usually takes place via the purchase or installation of a corresponding plugin. Depending on the CMS, this plugin is also offered free of charge.

Software-as-a-Service: A simple and flexible option for operating your own online store is to rent a cloud-based store provider on a monthly basis. These usually have a practical and easy-to-use modular system and enable simple handling of your own online store. With some providers, hosting is included in the monthly fee. With other providers, this must be organized and paid for separately. The disadvantage: SaaS is a standardized solution. Customization and individual functionalities are only possible within a predefined framework.

On-premises: With a one-off license for on-premise software, you have the option of configuring your store as you wish. The hosting is usually on your own servers. This solution is significantly more cost-intensive and is primarily suitable for larger companies. As the cost of technical maintenance and operation is often quite high, many companies resort to the support of an e-commerce agency. If you have programming skills, license-free systems are the best option. Solutions such as Shopware allow for the individual design of the backend and frontend as well as the integration of functionalities.

Payment systems for maximum customer satisfaction

The internet-based sale of products and services requires different payment systems to those used in physical stores. Depending on the store system used and the payment system selected, online retailers can offer their customers any payment method, from payment by credit card to purchase on account via PayPal to online bank transfers such as giropay or Sofortüberweisung. Store systems have interfaces to which external payment providers can be easily connected. Customers prefer digital payment systems to purchase on account or invoice purchases are processed via other providers. Companies can also give their customers the option of paying in installments.

The advantages and disadvantages of e-commerce

Automated business processes for greater customer satisfaction & business benefits

Whether a company chooses pure or additional sales via the Internet, it benefits from various business advantages

Open around the clock: E-commerce allows customers to shop whenever it suits them best - there are no opening hours on the internet.

Fast processing of purchase processes: Automated business processes lead to faster processing of orders without delay and consequently to more efficient sales processes.

Diverse payment systems: The use of payment systems allows customers to choose their preferred method of payment.

Location-independent distribution: E-commerce enables companies to distribute their products and services on a large scale and tap into new markets. E-commerce eliminates the need for physical stores. There is no longer any dependence on specific customer catchment areas.

Low transaction costs: Those who rely entirely or predominantly on online sales can make significant cost savings. High transaction costs incurred by hiring staff to check stock levels and possibly renting or maintaining stationary stores are reduced by using merchandise management systems, for example.

Efficient marketing: With search engine marketing such as paid ads or search engine optimization, products can be advertised directly and purchased by customers in just a few clicks.

Fast response time: The chat function, contact by email, etc. remove the hurdle of personal contact for customers with questions and contribute to customer satisfaction.

Disadvantages: digital trade with effort

Despite various advantages, e-commerce has some disadvantages:

Loss of personal advice: While customers are advised more often in stores, e-commerce often does away with personal customer contact
High competitive & price pressure: Competition in e-commerce is higher than in physical retail. Search engine marketing is therefore essential and the competition must also always be analyzed when setting prices.

Complex setup:

The role of search engine marketing in e-commerce

In order for potential customers to become aware of your store, it must also be advertised. Depending on the sector, competition in e-commerce is very strong and requires advertising measures to draw attention to your services. Search engine marketing is indispensable for this. With paid advertisements via Google Ads and Bing Ads and possibly social ads, companies can advertise specific products and services and draw the attention of interested parties to their own online store by addressing customers individually. You can also increase your webshop traffic with organic measures such as search engine optimization and ensure increasing conversions through improved rankings of your store or individual store products. As an SEO agency, Amazon SEO agency and Google Ads agency, we are at your disposal with our concentrated expertise.

Conclusion: What is e-commerce?

The supplementation and partial replacement of bricks-and-mortar retail by online retail is here to stay. Purchases can be made around the clock and conveniently from anywhere where there is Internet access, thus making a significant contribution to satisfying customer needs and consequently increasing customer satisfaction. E-commerce is also a popular addition to stationary sales from the point of view of store operators and pure online retailers have also established themselves on the market in recent years. The development of additional markets, reduction of transaction costs, acceleration of purchasing processes and improvement of sales processes and business processes is considerable and therefore represents an opportunity for every company in almost every sector in B2C business relationships. Digital commerce is also becoming increasingly popular in the B2B sector.

Companies have the option of selling their services via digital marketplaces such as eBay, Amazon & Co. or setting up their own web store. When choosing the right store solution, it is important to consider whether individual functionalities are required. As setting up an e-commerce store is very time-consuming, it is worth seeking professional help from a digital agency or advertising agency.