A complete guide to E-commerce

E-commerce has been around for a long time. It started with Phil Brandenberger, a man who purchased the first online product – “Ten Summoner’s Tale” studio album by Sting in 1994. Twenty-eight years later, in 2022, online commerce has taken over the market. It is estimated that e-retail sales worldwide will soon grow to 5.2 trillion dollars.

E-commerce is progressing so significantly that it may soon serve 2.7 billion people. It has simply become an integral part of our lives and a significantly more profitable business model than brick-and-mortar retail stores.

 

What is E-commerce?

 Other terms for e-commerce include electronic commerce, internet commerce, or online commerce. It refers to all activities that involve buying or selling goods and services online.

You can purchase various products, from clothes or sports equipment to software solutions and other subscription-based services. E-commerce no longer happens mostly on computers. Today, mobile devices are in the lead when it comes to online shopping. 55% of page views originate from a mobile device and account for almost half of all e-commerce sales. This year, mobile commerce is expected to exceed more than half of all online sales activities.

Important note: Don’t confuse e-commerce with e-business, since these two terms are not synonyms. E-commerce includes the transaction of products and services solely, while e-business covers all aspects of internet business operations.

 

E-commerce Models

#1 B2C – Business to Consumer: We put this model first since it is the most popular one. In the case of B2C e-commerce, sales happen between a business and a consumer. For example, if you buy swimwear via Asos, you have made a B2C e-commerce purchase.

#2 B2B – Business to Business: It defines a model where a business is selling either products or services to another business. CloudTalk iss a B2B e-commerce model as they offer software solutions to other companies. Many SAAS companies follow a B2B e-commerce model.

#3 C2B – Consumer to Business: A user-based businessmodel. An individual person sells services or products back to a company. Here examples are freelancers and sole traders, such as writers, photographers, etc., but  also affiliate marketers and influencers, promoting branded products on their channels.

#4 C2C – Consumer to Consumer: This model refers to one individual person selling a product or service to another individual person through the internet, for example via platforms like eBay or Etsy.

#5 D2C – Direct to Consumer: The newest e-commerce model, where a brand sells directly to its end customer without going through a distributor, wholesaler, or retailer. A popular example is subscriptions or selling via social platforms like Facebook, Instagram, or Pinterest.

 

E-commerce Market Share

The global e-commerce market is expected to total $5.55 trillion in 2022. That figure is estimated to grow over the next few years, showing that borderless e-commerce is becoming a profitable option for online retailers.

Two years ago, only 17.8% of sales were made from online purchases. That number is expected to reach 21% in 2023, a 17.9% increase in e-commerce market share over two years. Growth is expected to continue, reaching 24.5% by 2025, which translates to a 6.7 percentage point increase in just three years.

 

Global e-commerce sales growth

Global retail sales growth will continue to rise and take up more retail market share. According to eMarketer, online retail sales will reach $6.17 trillion by 2023, with e-commerce websites taking up 22.3% of total retail sales.

Every national market covered by eMarketer saw double-digit e-commerce growth. The trend continues:

Latin America saw $85 billion in e-commerce sales in 2022, up 25% from $68 billion in 2020.

The Indian e-commerce market is expected to grow to $111.4 billion by 2025, up from $46.2 billion in 2020.

Russia, the UK, and the Philippines saw more than 20% e-commerce sales growth in 2022.

China continues to lead the global e-commerce market, accounting for 52.1% of all retail e-commerce sales worldwide, with total online sales just over the $2 trillion mark in 2021. It also has the world’s most digital buyers, 824.5 million, representing 38.5% of the global total.

The US e-commerce market is forecasted to reach over $875 billion in 2023, a little over a third of China’s. After China and the US, the third-largest e-commerce market is the United Kingdom, taking up 4.8% of the retail e-commerce sales share.

The UK is followed by Japan (3%) and South Korea (2.5%).

The top five e-commerce markets haven’t changed since 2018 (China, USA, UK, Japan, and South Korea). Trends from eMarketer suggest that these markets will stay in the top five until 2025.

 

E-commerce Growth by Category 

ComScore data indicates there are a few particular industries seeing a rapid change in regard to retail e-commerce growth. Jewellery and watches were at the top of the growth chart (as of 2016) with 39% growth, followed by furniture, appliances, and equipment (26%), and video games/accessories (24%).

Top sellers ecommerce sales popularity

Mobile shopping and social commerce (or M-commerce)

The COVID-19 pandemic made a significant impact on e-commerce trends around the world. Shoppers flocked to the internet to buy their things. Experts say the pandemic accelerated the shift to online shopping by as much as five years.

M-commerce, or mobile commerce, involves shopping online through a mobile device, like a smartphone or tablet. M-commerce will continue to break out over the next few years. Technological advances like branded shopping apps, 5G wireless, and social shopping make it easier for people to shop on their phones. In 2022, mobile shopping from Shopify merchants captured 71% of online sales via mobile over Black Friday and Cyber Monday.

Online retail continues to expand due to the increasing use of smartphones and tablets globally. In 2023, smartphone retail e-commerce sales are expected to pass $432 billion, up from $148 billion in 2018.

Mobile shopping apps are becoming more popular amongst retailers and shoppers, with one in five US shoppers reporting using them multiple times per day.

Another facet of mobile shopping, social commerce sales is set to triple by 2025. While only 30% of US consumers report purchasing goods through social platforms, nearly half of China’s consumers already shop on social, generating over $351 billion in sales in 2021.

Competition is on the rise, with 49% of brands investing in social commerce content in 2022. Expect more branded shopping apps, more SMS and Facebook Messenger marketing campaigns, and more social commerce content on TikTok and Instagram.

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