An Introduction: What is E-commerce
E-commerce according to Wikipedia is “the activity of electronically buying or selling of products on online services or over the Internet”. It is also known as electronic commerce or internet commerce.
Anything that you may purchase, ranging from an earphone to ordering cars, from an online platform is considered e-commerce. Some of the more successful examples of e-commerce businesses are Amazon, Alibaba, E-bay, Shopify, Flipkart, Myntra, Foot locker, etc.
As you can already guess an online business must have some sort of dependence on the technology it uses. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. So in this sense, its effectiveness depends also on technological advances, apart from other factors.
The first e-commerce transaction was completed in 1971, 19 years before the first web browser was invented. It was conducted over a network between two universities — the Stanford Artificial Intelligence Laboratory and the Massachusetts Institute of Technology — between students organizing a sale which was, you’d never guess it, cannabis.
E-commerce Business Models
The various models for an e-commerce business are:
- Business to Consumer(B2C);
The sale takes place between a business and a consumer, like when you buy a phone from an online retailer. Example: Alibaba, Amazon, Shopify
2. Business to Business (B2B);
Refers to a business selling a good or service to another business such as a wholesaler selling to a retailer.
3. Direct to Consumer (D2C);
This is the newest model of e-commerce which deals with a brand selling directly to their end customer without going through a retailer, distributor, or wholesaler. Example: social selling via platforms like Instagram, Pinterest, Facebook, Snapchat
4. Consumer to Consumer (C2C);
Sale of goods or services between consumers. Example: E-bay
5. Consumer to Business (C2B);
Individuals selling their services or products to a business organization. C2B encompasses influencers offering exposure, photographers, consultants, freelance writers, etc.
Why E-commerce?
1. Convenience;
When you go to buy a good from a conventional retail store first you need to travel or commute which can incur costs such as gas, parking, or bus tickets. Secondly, you can only visit them during their business hours. In contrast online stores are available 24 hours a day and you can browse their selection of goods from the comfort of your home, preferably sipping a cup of your favourite drink.
2. Personalization and customer experience;
E-commerce marketplaces can create rich user profiles that allow them to personalize the products offered and make suggestions for other products that they might find interesting. This improves the customer experience by making shoppers feel understood on a personal level, increasing the odds of brand loyalty.
3. Information and reviews;
What e-commerce lacks in providing the ability to inspect merchandise it makes up in the form of the product description with pictures, instructions, safety procedures, demonstrations, or manufacturer specifications. And to top it all off e-commerce businesses have the functionality allowing customers to post a review and rate the product. Reading these makes it easier for consumers to decide on products if they feel the specifications provided are insufficient.
4. Global Marketplace;
Customers from around the world can easily shop e-commerce sites — companies are no longer restricted by geography or physical barriers.
5. Price;
Since brick and mortar is no longer required, digital sellers can launch online stores with minimal startup and operating costs. This in turn directly converts into cheaper prices for the consumers.
E-commerce in Bhutan
There are already many e-commerce businesses that are functional in Bhutan. As a result, Bhutan has already come up with licensing schemes and policies for this sector making its status more transparent.
These businesses offer products of all kinds ranging from common kitchen items, baked goods, fast food to the more expensive jewellery, televisions, etc.
Some of the more prominent examples of established e-commerce businesses in Bhutan are Becomingforyou, Tshong, Azha Pasa, and Zala.
Global Trends in E-commerce
· China is the largest e-commerce market in the world by value of sales. China’s e-commerce sales surpassed the combined total of Europe and the United States.
· In 2020, over two billion people purchased goods or services online, and during the same year, e-retail sales surpassed 4.2 trillion U.S. dollars worldwide. China has the largest digital buyer population in the world, amounting to more than 710 million people.
· Indonesia is the country with the highest mobile commerce reach.
· In 2020, total sales made via mobile devices came in at $2.66 trillion.
· The number of social shoppers is also rapidly increasing. This entails e-commerce through social media platforms such as Facebook and Instagram.
· Overall, the share of e-shoppers among internet users is growing, with the highest proportions found in the age group 25–54 (79 %), closely followed by the youngest age group 16–24 (78 %).
· The highest purchases in the EU in 2020 was clothes followed by home accessories and food deliveries.
· Amazon is the most popular online retail website by online traffic.
· Based on a survey of 8,709 global consumers in 29 countries, CSA Research found that 65% of consumers prefer content in their language, even if it’s poor quality. Moreover, 40% will not buy from websites in other languages.
Impact of covid 19 on E-commerce
As millions of people stayed home in early 2020 to contain the spread of the virus, digital channels have become the most popular alternative to crowded stores and in-person shopping. In June 2020, global retail e-commerce traffic stood at a record 22 billion monthly visits, with demand being exceptionally high for everyday items such as groceries, clothing, but also retail tech items.
Studies show that in the US, as many as 29% of surveyed shoppers state that they will never go back to shopping in person again; in the UK, 43% of consumers state that they expect to keep on shopping the same way even after the lockdown is over.
The pandemic has shown to be beneficial to the e-commerce sector as many people had to resort to online services increasing penetration and from the survey also some form of new customer retention.
Global retail e-commerce sales and Forecasting
Data for the global retail e-commerce sales have been extracted from statista
Taking the growth rate from the years 2014–2020 we can calculate an average growth rate of about 21.6% with a standard deviation of 6.8%. We will then use this to further extrapolate the data for 2021 and 2022.
Under these Assumptions, we can forecast an approximate of 5.2 Trillion USD in 2021 and 6.33 Trillion USD in 2022 from global retail e-commerce sales. If we take standard deviation into account we can calculate the sales for 2021 ranging between 4.9 Trillion USD 5.5 Trillion USD and for 2022 ranging between 5.9 trillion USD and 6.7 Trillion USD.
Conclusion
The future is digital, and the future is now.
With the transition into the digital age, it is only evident that the e-commerce industry is having unprecedented growth. The pandemic which caused governments to impose lockdowns further encouraged more people to move into the digital space and get introduced to e-commerce further strengthening its case. This industry has already become well-established and regulated and will only continue to grow as the digital world advances.
