The history of eCommerce began in 1979 with the first dialup provider, CompuServe. Of course, back then there was no such thing as digital content the way it exists today. Therefore, the provider had to create content on its own.
CompuServe contracted with local newspapers to provide their content digitally. Over time, the site became an information portal with a selection of articles from the ten largest U.S. newspapers. CompuServe monetized it by renting CPU time via dial-up to commercial enterprises.
Nowadays we can clearly see how eCommerce has changed business. It has become an integral part of everyday life, with marketplaces and online stores offering everything from groceries, appliances and furniture to digital goods and hours of content.
eCommerce has changed the very principle of consumption. On the one hand, the trend makes buying everything fast and affordable, and on the other, it creates more demand for new microservices, influencer marketing, and more.
In this article, we will talk about the impact of e-commerce on business and how e-commerce has changed, is changing, and will continue to change the market in the future. We’ll also highlight the key issues your business should consider so you don’t get lost in the dynamic online commerce world.
2. A personalized approach to users serves as one of the main strains of e-commerce business.
3. 24/7 availability, lower prices, flexible delivery and pickup options have influenced the rapid spread of e-commerce into the daily habits of shoppers.
4. E-commerce has directly influenced online shopping behavior and changed market trends, starting with unconscious consumption and shifting to a more rational, healthy approach in the new decade.
5. The COVID-19 pandemic impact showed that SMEs that have moved to e-commerce have proven to be able to survive the most recessionary times compared to their brick-and-mortar competitors.
6. Shifting focus to mobile applications and introduction of AI capabilities and AR/VR technologies will be the main drivers of e-commerce development in the coming years.
7. Increasing attention is being paid to sustainability and the ability of e-commerce businesses to have a positive impact on the environment.
Global Reach and Accessibility
Why has e-commerce expanded? The expansion precursor of e-commerce was the emergence of EDI (Electronic Data Interchange) systems to automate business transaction processes. In the 1970s, banks began offering their customers the ability to conduct transactions via telephone and computer, becoming the prototype for online payments and Internet commerce that we know today.
The second key moment is, of course, the advent of the Internet. From the late 1990s into the 2000s, e-commerce developed rapidly. With the creation of the first global payment system, PayPal, the use of e-commerce to purchase goods gradually became an everyday habit for consumers.
By providing a secure alternative to cash, debit and credit card transactions, PayPal expanded the habit of paying for goods online instantly, becoming a pioneer in the B2C ecommerce transaction.
E-commerce impact on business has transformed the economic environment as well, bringing together such global categories as online sales, online banking, ticket and hotel bookings, payment system transactions, online marketing and advertising.
But the most important quality of e-commerce for business is the ability to reach a global audience through cross-border expansion. Online stores and marketplaces are not limited by geography and can serve customers from all over the world. With that business reach expands to new markets through various e-commerce channels.
To business, this has opened up many opportunities for customer base expansion and international expansion.
24/7 Accessibility and Convenience
Why is business-to-consumer e-commerce convenient? The answer is simple: e-commerce has made shopping more accessible than ever. From a consumer perspective, being able to buy goods from the comfort of your home and have them delivered right to your doorstep has made a revolution in terms of comfort.
In addition, e-commerce has no specific hours of operation. Online resources are available within round-the-clock operation. This accessibility factor has contributed greatly to the growth and success of e-commerce.
Speed, simplicity and one-click accessibility of online shopping has led to a significant shift in customer preferences. For example, according to the Salesforce survey, 73% of respondents expect companies to match their preferences, underscoring the need for tailored approaches. And 66% expect companies to listen to and meet consumer expectations.
E-commerce has provided consumers with a personalized approach that not even physical representation of a luxury brand can guarantee. In this way, it challenged traditional brick-and-mortar stores, forcing companies to adapt or risk being left behind.
Transformation of Business Models
While e-commerce transformation was occurring for users driven by user demand itself, long-established business models were undergoing similar changes as well.
Starting from B2C, ecommerce adopted other traditional business models, e-commerce has leapfrogged them and introduced additional elements:
- Multichannel retailing. A concept where a company combines online and offline channels to provide a consistent shopping experience across multiple touch points. Multichannel retailing tools include click-and-collect, buy now, pay later (BNPL), buy online, return in store (BORIS), inventory visibility, etc.
- E-commerce technologies. E-commerce is becoming a whole new way of using and working with information, involving many technological solutions not previously used in traditional markets: the introduction of CRM systems, search engine optimization (SEO), cloud solutions, email marketing, artificial intelligence, machine learning, and so on.
- New standards in customer service. In e-commerce, we don’t talk about staff or store interiors. Customer satisfaction standards are now influenced by user-friendly website design, easy navigation, secure payment options, fast and secure checkout, and speed of delivery. The business is closely working with analytics data, buying patterns and relying heavily on customer feedback.
Innovation in the business model of online platforms is also reflected in the social and interactive aspects. Some ecommerce platforms have gained prominence by integrating social media, allowing users to interact with friends while shopping, forming the social e-commerce model. With a prime example of F-commerce, also known as Facebook commerce.
There is also D-commerce, a digital revolution in the form of an e-commerce business model that focuses on providing only digital goods: e-books, music, TV series, games, and so on.
These innovative business models not only push the boundaries of e-commerce, turning users’ browsing behavior into an advantage, but also increase the importance of user awareness and trust in brands and products.
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Impact on Business Operations
E-commerce has taken a different look at conducting business processes, especially those related to shipping.
In a traditional business, you as the owner are responsible for replenishing your stores on a daily, weekly, or bi-weekly basis. With an e-commerce platform, the business gains more control, but loses some of the optimization.
Customers can order goods in any quantity, which means the e-commerce business is responsible for the “last mile”. That is, it picks up and ships small batches of goods at a time. When running an omnichannel commerce platform, there is also a need for segregated inventory because picking and shipping requirements can vary widely.
There are several ways e-commerce business ensure efficient communication between the links in the supply chain:
- Order and inventory management systems through software solutions (automated order fulfillment, PIM software, etc.).
- Outsourcing, where supply chain, warehousing, logistics, and order packing can be handed over to a business partner.
- Implementing warehouse management systems with barcode, QR code, or RFID tag tracking for real-time shipping quotes and real-time inventory tracking.
- Demand planning and just-in-time (JIT) stocking techniques to keep inventory levels low and rely on rapid replenishment.
- Enterprise resource planning (ERP) involves software that helps organize business processes in one place, checkout optimization, including supply chain operations.
- Segmenting merchandise and managing SKUs based on sales velocity, profitability, or product characteristics using ABC analysis.
- Using dropshipping, a business model that emerged with the development of e-commerce tools. It is a business based on the sale of goods that are not available directly from the seller. When payment is received, dropshipper orders the goods from the supplier and ships them to the customer. This system has allowed many new entrepreneurs to save money by eliminating the need to maintain their own warehouse.
Read more: 6 Ways to Improve eCommerce Shopping Cart Checkout Conversion Rate
Consumer Behavior Changes
As mentioned earlier, the rise of e-commerce has led to customers having high expectations of businesses. And when we look at how has online shopping changed the world, it is through the prism of consumer behavior.
The main demand from users is for a seamless and hyper-personalized online experience that is not affected by the type of device used for payment and ordering.
In addition, due to the close intersection of e-commerce and social platforms, users have begun to pay more attention to business values. Consumers want to see brand engagement with issues such as convenience, health, performance, user centricity and sustainability. Online shopping has shifted from an unconscious shopping relevance in the 2010s to one of awareness and usefulness.
E-commerce has also changed the way companies approach their marketing. While business back then used to rely mainly on target audience advertising, the social aspect of e-commerce has provided social media promotion opportunities such as review, influencers’ recommendations on YouTube, Instagram and other social media. This is now especially relevant to the younger Gen Z generation.
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Personalization and Targeted Marketing
Throughout this article, we have often talked about personalizing the user experience as one of the key reasons for the rapid development of e-commerce. What is it all about?
Thanks to data analytics, predictive analytics and consumer behavior tracking tools, businesses can tailor their marketing strategies by targeting people in a specific group. This can include segmentation by age, geographic location, gender, hobbies, and most frequently viewed products.
Using advanced analytics, companies can personalize marketing strategies and predict customer behavior to create a more engaging and enjoyable experience.
An ecommerce business can also fully personalize products. For example, an online store that sells t-shirts and other accessories has built-in functionality to create designs of their own with tools for customizations, add initials, and so on. As a result, users get exactly what they want with just a few clicks.
Want to create your own online store with personalized products? Simtech Development can help with this task by creating a high-performance and user-friendly platform that meets the needs of even the most creative businesses.
Cost Efficiency and Sustainability
E-commerce today has been able to escape the problems of traditional businesses that have physical stores.
By eliminating the overhead costs of utilities and rent from the cost chain, online businesses have benefited more in the eyes of consumers. After all, when there are no facility costs, goods are offered at a lower price.
From a more global perspective, e-commerce maintains a balance between meeting the needs of the current generation and future ones. This translates into sustainability—e-commerce can sustain its business without depleting natural resources. Directly impacting on how ecommerce is changing the world, and more specifically helping to keep the environment clean.
According to Statista, more than 50% of US and UK residents want online brands to use less packaging, and a third of US consumers are willing to pay extra for sustainable packaging.
For example, with the rise of dropshipping and on-demand manufacturing, businesses can keep inventory levels low and produce products only when there is demand for them. This reduces excess inventory and plastic waste, making e-commerce a greener option.
Expansion of Small and Medium-Sized Enterprises (SMEs)
Thanks to the rise of e-commerce, SMEs have found a relevant way not only to expand and reach a global audience, but also to survive times of crisis. For example, during the COVID-19 epidemic, many small brick-and-mortar stores took their business online to avoid shutting down. It’s not the only one, but the clearest example of how ecommerce helps small businesses in recent years.
Through e-commerce SMEs may have several advantages when it comes to reaching new markets.
First, e-commerce gives small businesses a more democratized field in terms of competing with larger companies. If your business produces the right product, qualitatively superior to your competitors, then the customer will take notice of you. How? That’s what the next two points are about.
Second, e-commerce gives small businesses the ability to target specific markets with precision, using marketing tools like Google Ads and Facebook Ads.
Third, e-commerce gives small businesses the ability to track their marketing efforts and return on investment (ROI) in real time. By tracking site traffic, conversion rates, and other key metrics, small businesses can fine-tune their marketing campaigns and budget issues for maximum effectiveness.
Mobile Commerce and the Future of eCommerce
The proliferation of smartphones and other mobile devices has also contributed to the rise of e-commerce. Consumers can and, more importantly, want to shop on the go. This is confirmed by statistics:
Mobile e-commerce (M-commerce) has also created a demand for mobile application development services and smartphone-optimized websites (or PWAs, progressive web applications) that provide a seamless experience.
The future holds the growth of the mobile commerce segment, as the duo of social media and e-commerce are gradually adopting mobile apps as well. For example, TikTok has created a whole store with goods promoted through short video content in the same app.
Along with this, e-commerce will evolve to include more devices for shopping. With the rise of connected IoT devices, people will be able to shop through other smart devices.
With the continued focus on personalization, artificial intelligence and automation (AI chatbots, AI consultant, image search, and so on) will also become a direct contributor to e-commerce: creating recommendations and optimizing sales and delivery processes.
VR/AR development revolutionizes ecommerce in the same way. Shoppers can already try on products, participate in virtual demonstrations, and shop from home, simulating an offline purchase. In the future, this trend will only increase with the proliferation of 3D tools.
Read more: What Would Be eCommerce Trends in 2024?
Increased Competition and Market Dynamics
The e-commerce market is constantly evolving, not least because of the “red ocean” it has created. Here is why: wide audience means competition not only with local online shops but also with global giants.
This forces companies to constantly innovate and improve their products and services, gathering more consumer insights. SMEs are also joining the race, creating a playing field for more niche online stores and marketplaces.
In which area of business has e-commerce been most influential? This dynamic is most evident in electronics, cosmetics and beauty products, fashion and, of course, food and beverage.
Data-Driven Decision Making
The shift from traditional retail methods to e-commerce strategies has included a focus on data-driven operations, which in turn marks a significant evolution in the industry.
By leveraging vast amounts of consumer and operational data and using advanced analytics tools, companies are improving customer satisfaction, optimizing operations, and driving growth.
Data analytics enables e-commerce companies to gain a deep understanding of customer behavior. By analyzing browsing patterns, purchase history, and interactions, companies can identify customer preferences and buying habits and adapt their strategies accordingly.
Challenges and Negative Impacts
The rise and impact of e-commerce has brought many opportunities to businesses of all sizes, but it has also presented entrepreneurs with a number of challenges and obstacles.
One of the biggest fears shoppers have when making online purchases is the theft of personal information and financial data. The growth of e-commerce has led to the emergence of new types of cybercrime.
Logistics is another challenge, as shipping goods is a critical aspect of e-commerce. Transportation disruptions such as delayed delivery or damaged goods can lead to customer dissatisfaction and financial losses.
Besides, some consumers are still wary of online sellers, especially lesser-known brands or companies without physical stores.
In addition, the development of e-commerce often faces regulatory and compliance issues, due to differences in taxation requirements and regulatory landscapes among countries. This makes it difficult to conduct international transactions and process customer data.
Conclusion
We have listed the highlights of how online shopping affects society and how ecommerce has changed business. Despite the challenges, e-commerce will continue to grow and evolve. And participating in it is an inevitable part of doing business in the digital age.
Online shopping has become an integral part of many people’s daily lives and is expected to continue to do so. To succeed, however, businesses must proactively adapt to market changes and strive to overcome obstacles.
Overcoming these obstacles requires attention to security, innovation, customer service, and strategic planning. As well as working in step with careful attention to user experience.
Simtech Development has been helping e-commerce companies since 2005 by building robust online trade platforms, and all the additional functionality needed to keep up with the latest trends. If you have a task to build a market platform or a concept with which you want to enter the e-commerce world, contact us. We will take care of all the technical aspects so you can focus on your strategy.