All You Wanted to Know About E-commerce

E-commerce is a formidable force that is changing the market dynamics. it is a popular go-to solution for most online entrepreneurs and shoppers. It has significantly replaced the traditional brick and mortar stores.

Mobile devices account for 70% of e-commerce traffic. More and more people are reaching out to e-commerce stores for their shopping needs. E-commerce is expected to account for 17% of the entire retail sales by 2022 according to Digital Commerce 360.

Even as e-commerce continues to capture the hearts of many shoppers, the environmental footprint of e-commerce business remains a hushed conversation. Is it all glitter or is there a dark side to online shopping on the environment?

What is E-commerce Business?

E-commerce or electronic commerce business is an umbrella description of buying and selling of products and services on an online platform. It’s all about selling online.

There are three core types of e-commerce models which are differentiated based on: 

• The types of products on sale
• The types of consumers
• The platform for selling the product

E-commerce platforms focus on four main products for sale:

• Digital products
• Physical products
• Affiliates
• Services

Physical products are tangible goods that are shipped to the consumer from a warehouse. Digital products are not tangible products. These are sold online as digital files you can download.

Businesses can also outsource in-person or digital services online to customers including pet training services (in-person services) or media streaming services (digital services).

E-commerce businesses such as affiliate marketing rely on affiliates. A business earns commissions through affiliate links following a sale. Examples include blogs or websites that sell products online.

E-commerce businesses are also defined by their target market. There are three core classes of e-commerce business consumer market.

• Business to Business (B2B)

E-commerce businesses outsource their products and services to other businesses. They include advertising firms and stock sales.

• Business to Consumer (B2C)

E-commerce businesses sell their products or services to consumers. They include Amazon and online travel booking companies.

• Consumer to Consumer (C2C)

E-commerce businesses where one consumer auctions his products or services to another consumer. The purchase occurs via online marketplaces such as Facebook, eBay, and Craigslist.

• Business to Government (B2G)

E-commerce businesses outsource their products or services to government agencies.

E-commerce businesses can sell their products on various platforms including;

a) E-commerce marketplaces

An e-commerce business sells its products or services on online marketplaces such as eBay, Amazon, and Etsy.

b) Branded e-commerce stores

These are e-commerce platforms owned and managed by the founders. The creators sell their own products and include Shopify and Big Commerce.

c) Conversational commerce

E-commerce businesses sell their products or services on social media platforms. These platforms include Instagram, Facebook, Snapchat or Pinterest.

Why e-commerce business is attractive to most entrepreneurs

You can build your own business empire from scratch and platforms like Shopify allow you to set up an online store with zero charges.

• Unlimited access to a rich depth of audience around the globe
• Be your own boss
• Freedom to work from anywhere – on a virtual office in any location in the world.
• Offers a profitable side project or full-time gig

How e-commerce Business affects the environment

Environmental implications of e-commerce have a significant positive and negative impact on the environment.

Positive Impact of e-commerce Business:

E-commerce businesses showcase a positive footprint on the environment including;

• Reduced Carbon Footprint

Online e-commerce businesses consume 30% less energy than traditional brick and mortar stores. Brick and mortar stores need lighting, security applications, cash registers, and temperature regulators to be installed.

The employees expend energy commuting to and from the work premises. Transport is a major contributor to large emissions of carbon dioxide to the environment. E-commerce businesses reduce their carbon footprint. How? By allowing employees to work from a virtual office.

Shopping online also reduces commuter traffic to stores and malls which in turn reduces carbon emissions. Online businesses enable paperless transactions by using electronic receipts for purchases.

• Secondary Market for used Goods

Online platforms give a new lease of life to your worn out products. eBay is a platform that allows millions of consumers to sell their old goods online. It provides a better alternative to disposing of them in bins which contributes to waste and pollution.

E-commerce has created a longer lifespan for consumer goods. Auctioning of used products at large scale reduces wastage and increases market efficiency for second-hand goods.

Over the years, a giant online market for secondary material especially vintage clothing has grown drastically.

Negative Impact of E-commerce Business

Even though E-commerce stores save us the hustle of traditional shopping they present a dark side to conserving our environment.

• Increased Energy Consumption

Faster delivery requirements can mean trucks move half empty. Faster transportation models increase fuel consumption especially when we favor trucks over the rail. Energy use racks up by a large degree as consumer preferences shift to faster delivery to satisfy the impatient modern shopper.

• Increased Carbon Footprint

The modern shopper is impatient. Same day or fast delivery solutions increase the carbon footprint. Most of the goods will be delivered using air and road since rail and sea are slow. The distance driven per item to each consumer increases drastically scaling up the carbon footprint. Also, home deliveries and subsequent customer returns increase traffic and carbon emissions.

Investing in low emission delivery trucks, dispatching tracks when full plus ensuring uniform delivery time are examples of strategies e-commerce business can adopt for sustainable business practices.

It is also crucial to use recyclable delivery bags or ask the consumer to return the bags. The challenge facing most businesses is designing packaging to that is 100% sustainable

The Bottom Line

E-commerce is a better business model for most entrepreneurs. But to ensure sustainable e-commerce the entire sales process needs to be digitized from the beginning to the end.

E-commerce business is a double-edged sword with a positive side as well as a dark side. But with further improvements on its negative side, it will only get better. E-commerce is to shopping like what Badoo is to relationships. We just can’t do without it.

About the Author: This article is contributed by Mark. He is a finance enthusiast and writes about different market trends.