In this video were going to cover what ecommerce and M commerce are and the advantages and
disadvantages to a business of using both.
What is E-Commerce?
The term E-Commerce means Electronic commerce.
It is a business model where businesses buy and sell goods by electronic means over the
internet.
E commerce can be can be conducted over computers, tablets & smartphones and as technology develops
other smart devices are added to this list such as shopping via voice through things
like amazons Alexa.
Ecommerce can be either be a compliment to physical stores or can be used as an alternative
to having a brick and motor store altogether.
According to Statista 4.2 trillion dollars was spent via ecommerce in 2020
and this is estimated to reach 6.3 trillion by 2024.
Although this sounds a lot, in the UK ecommerce accounts for around only 19% of overall retail
sales so there is still a long way to go before online sales outpace physical sales.
Some of the biggest brands operate solely on an E-Commerce basis.
The most obvious business is amazon but others include; Gymshark
Boohoo Ebay.
Plus thousands of small businesses are utilising ecommerce to sell products and services over
platforms such as shopify, Wix and etsy.
Ecommerce has changed the way people shop.
This has meant that many retailers have some form of online presence which compliments
their physical stores.
Apple Sainsbury’s
& Sports direct are just a few of the big ones to use a combined business model.
So why have so many businesses adopted an ecommerce business model.
Lets have a look at the advantages and disadvantages of operating online.
The first advantage and most obvious is it can reduce overhead costs when compared to
a physical store.
This is why many independent and small business have been able to set up online.
Upfront costs are much lower for a shopify store compared to a physical building plus
the use of drop shipping, where the business owner doesn’t even need to handle the products
they are selling has again reduced costs by stopping the need to store goods in a warehouse
as they products go straight from the manufacturer to customer.
Another benefit of this is that it reduces the risk of starting a business as there are
lower start up costs involved and many chose to start these businesses as side hustles
before they take a risk and quit their day jobs.
A third benefit is that it allows a business to have access to a much larger amount of
potential customers.
As ecommerce can have a global reach.
Without an online presence business may only be able to sell to people close to their physical
store whereas ecommerce allows sales to be made globally.
There are also no closing times when operating online.
You can sell at any time of the day or night, in any time zone, with 24/7 availability.
And finally there are a verity of payment option in terms of card, payments, paypal
and even crypto currencies.
This is convenient for customers but also great for business as the options mean that
the business receives payment at the time of purchase.
but also one click payment on websites makes the process simple for the customer and puts
less thinking time between the purchase meaning higher conversation rates and sales.
Like most things there are also disadvantages to E-Commerce
There are more competitors as other retailers in your sector are also taking advantage of
the benefits of ecommerce.
This has meant that customers can also compare prices easily without having to travel to
another store as they can simply open a new tab and browse a competitors site or even
use a price comparison site.
Another disadvantage is that it is a totally different business model compared to physical
stores and therefore the business needs employees with the skills to operate an ecommerce business.
The site needs maintenance but it can also break down or be hacked which can put your
whole business out of operation.
Finally if a physical product is purchased online then customers have to wait for item
to be delivered.
Although amazon have manged to cut delivery times dramatically to same day deliveries
in some cases.
Customers still have to wait for their goods and in a lot of cases have to pay for delivery.
Businesses are always looking for even better ways for customers to buy from them which
has birthed a new subsector of ecommerce…
Mcommerce.
Lets have a look at Mcommerce in more detail.
What is M-Commerce?
The ‘M’ in M-Commerce stands for mobile.
M-Commerce is a type of E-commerce that is specifically conducted through a mobile device
such as a smartphone or tablet.
M-commerce has come along due to the rise and popularity of smartphones.
New technology is continuing to make online shopping easier and mobile commerce has continued
to grow rapidly with the continued success of smartphones mobile applications and security
updates.
The range of devices capable of mobile commerce is growing plus platforms, such as Facebook
Instagram and TikTok have made shopping on mobile a priority with the launch of "buy
buttons" and ‘Shop now’ options on their mobile platforms.
This has enabled users to conveniently make purchases from retailers via social media.
The ability to have card details stored online has meant the friction surrounding customers
having to enter lots of details before purchasing has been removed customers can now purchase
via fingerprint or face id plus sites like amazon have a one click buying system which
speeds up the process further.
So why has m commerce become so popular?
A lot of the advantages are similar to ecommerce in terms of 24/7 shopping and access to more
potential customers however some advantages are more uniquely specific to M-Commerce.
Such as M-Commerce being even more convenient for busy customers.
As they have shopping access wherever and whenever they need it.
Unlike general ecommerce , M-Commerce is particularly convenient for people with busy lifestyle
as it allows them to make purchases via mobile whilst at work or out and about in between
performing their daily tasks.
Another advantage is that businesses can easily integrate their marketing with their sales.
An online ad on social media can link directly to a retailers app or websites and purchases
can be made straight through from the initially advert right through to purchase and payment
very quickly.
As an added advantage, m-commerce platforms can add a countdown timer or show a limited
quantity of items to encourage a sale through scarcity too.
Therefore, a smooth user experience equals better conversion rates & income.
M- Commerce also integrates well with traditional retail outlets as it allows customers to have
loyalty cards on their phone, scan qr codes in store to access online content, unlock
rewards or even checkout via your mobile phone using apps like Sainsbury’s scan and go
app.
Finally one of the biggest advantages is that businesses can communicate with their customers
in many different ways through mobile devices such as push notifications, email, text and
social media.
The ability to establish such a direct line of communication with customers is a major
reason why so many companies are now choosing to create e-commerce applications.
For example push notifications have a 90% open rate compared to email that can average
as low as 20% making it is a great way to market your goods or services to your customer
without being too intrusive.
Disadvantages Technological literacy is required.
If a customer doesn’t have a mobile device, or does not have an understanding of how to
use a mobile device then they cannot access the M-Commerce experience a business is providing.
It may be that certain businesses have apps that need to be downloaded from the app store,
or have websites where accounts need to be made.
This may be a barrier to some potential customers that do not have the capability to work such
technology.
Despite advances in security people still have hesitations when purchasing on mobile
devices especially when out of their own wifi network as they are concerned about security
and also fraud.
This can prevent them from purchasing in this way.
Another disadvantage is that competitors are also on mobile devices making it highly competitive.
Just as with ecommerce, m-commerce widens the amount of potential customers to do business
with and because of this the amount of competition is huge.
There is a high chance that there will be several businesses offering the same online
experience and product as you.
Finally the app or platform being used for customers to do M-Commerce with your business
needs to be responsive and easy to use.
Mobile users are notoriously impatient and their attention online is very limited.
The amount of time that a consumer is willing to wait to purchase from your business is
very small.
This means that If your mobile app or site is not responsive and simple to use then people
will leave your site and shop with a competitor, resulting in a lost sale.
All in all, ecommerce and its sub sector mcommerce are excellent tools and are forecast to continue
to grow over the next decade.
I wouldn’t be surprised that if some point in the near future ecommerce overtakes physical
purchases in retail outlets as more and more businesses move to an ecommerce business model.
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