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What is e-commerce and what are its characteristics?

What is e-commerce and what are its characteristics?

By Rita Hassani Idrissi

Published: 24 October 2024

41.6 million. This is the number of French people who will be buying online in 2021, 1.5 million more than in 2019 (BDM). E-commerce therefore appears to be a high-growth sector that has completely overturned consumers' shopping habits .

The health crisis has also played an important role in this expansion. Covid-19 boosted e-commerce sales for physical retailers by 66% (LSA). Internet users are more numerous than ever, and e-commerce is emerging as a genuine revolution.

As a result, a number of companies already present on the market are planning to open their own e-commerce sites. But to do so, they need to know everything there is to know about e-commerce.

Discover the characteristics of e-commerce, its different types, advantages and disadvantages. All of this, accompanied by some very revealing figures and concrete examples!

What is an e-commerce site?

E-commerce: definition

E-commerce encompasses all commercial transactions carried out over the Internet. It is also known as electronic commerce because the payment methods used are digital. E-commerce can be used on all digital channels, which is what makes it so successful. It can involve :

  • computers
  • smartphones
  • tablets
  • consoles
  • and televisions.

E-commerce is used by companies that already have a physical shop and want to open up to new markets. But it's also used by start-ups with limited budgets who want to get off the ground.

Key figures for e-commerce in 2021

  • Online sales of products and services will reach almost €30 billion in the 1st quarter of 2021;
  • There will be 12% more e-commerce sites than last year (i.e. +18,000 sites, compared with 17,400 in 2020);
  • There are currently 207,400 e-commerce sites in France;
  • In France, e-commerce accounts for 13.4% of all retail sales ;
  • Between 22% and 35% of online sales are made on mobile phones. Source: FEVAD

The different forms of e-commerce depending on the target audience

B2B (Business-to-Business)

Business-to-business (BtoB) refers to all the commercial activities and relationships of a company aimed at business customers. It comes from the English term "Business to business", which refers to sales between two companies.

👉Example: a weaving company selling fabric to a dyeing company.

B2C (Business-to-Consumer)

Business-to-consumer (B2C) commerce refers to all commercial relations between a company and the general public. In e-commerce, this is the most common form of sale.

👉 Example: a consumer buys clothes on a website.

C2B (Consumer-to-Business)

Here, customers provide content, products, services or distribution solutions on behalf of the company. We find this type of business in classic freelance job portals such as Elance, Hopwork, etc.

👉 Example: the company co-creates new products by involving its customers.

C2C (Consumer-to-Consumer)

These are e-commerce sites that enable sales to be made between consumers, for example car hire sites between owners.

👉 Example: a consumer sells a second-hand garment to a consumer on a specialist site (Vinted style).

The e-commerce typologies mentioned below are the most common, but there are other forms such as :

  • G2C (Government-to-Consumer),
  • C2G (Consumer-to-Goverment)
  • and B2E (Business-to-Employer).

The different forms of e-commerce by business model

E-commerce shop selling its own products

This is what you might call a "traditional" e-commerce shop. It has the same features as a physical shop, but in an online version. The company sells its products and delivers them directly to the customer.

👉 Example: the exclusive Yves Rocher site, which only sells its products through its online sites and physical shops.

Dropshipping

This is the most widely used strategy in the world of e-commerce. Dropshipping is a strategy that involves selling the product without owning it.

👉 In this case, the main objective is to market the product, leaving production and shipping to the supplier. Once payment has been made, the seller forwards the message to the supplier, who takes care of shipping the product.

The advantage of this type of strategy is that it requires no up-front costs, but on the other hand, the time required for a marketing campaign is very long.

Membership

This type of e-commerce aims to increase recurring purchases by customers. Consumers take out a periodic subscription (weekly, monthly, quarterly, etc) to access a product or service.

👉 Example: we find this type of e-commerce a lot within platforms offering viewing services and TV series (Netflix for example). The advantage of this model is that it ensures recurring revenue each month.

Marketplace

A marketplace is a shop that brings together several shops. In other words, it is a website on which different companies offer their products.

👉 Example: one of the best-known marketplaces is Amazon. Here you can find countless different products from different brands and sellers. These brands offer their products for sale on the platform in exchange for a commission paid to Amazon.

Services

An e-commerce site does not necessarily only sell products. It can sell services for money. This is a good option for sellers who want to get started without taking any risks.

👉 Examples: training sites, coaching, beauty services (hairdressing, skincare, etc.), etc.

Affiliation

Affiliate businesses have the same characteristics as dropshipping , but go even further. Not only does the shop not send the product directly to the customer, but the sale does not take place on its own platform.

The site redirects the customerto another platform so that they can pay for the chosen product/service. Once the sale has been concluded, this platform pays a commission to the first site. In other words, the site where the customer has located the item represents a sort of catalogue, which will direct the customer to another merchant site where they can proceed with payment.

👉 Example: airline comparison sites such as Skyscanner which, once the ticket has been selected, redirects customers to the airline's site.

Freemium

This is a strategy in which, to attract customers, a free service is offered but with limited functionality. In fact, the customer who starts using a basic version is often attracted by other possibilities, and is therefore indirectly forced to buy a licence with more features.

👉 Example: SaaS software publishers who always offer a free basic version, but in most cases the functionalities are very limited.

Phygital

Phygital is a marketing strategy that combines physical and digital:

  • The physical in-store experience (customer relations and human contact)
  • The digital experience (online interactions with a brand).

👉 Example: the customer orders an item online and collects it in shop. This method is rather advantageous as it saves the consumer from paying delivery charges, which gives them more incentive to buy.

Why go into e-commerce?

The advantages of e-commerce

  • The opportunity to expand your market

    Thanks to e-commerce, you can easily penetrate new sales markets without creating a new website.

  • Reduce the costs of a physical shop
    You no longer need to rent or buy premises to sell your products.

  • Automated inventory management
    Items sold and items available will be counted automatically, giving you better visibility of available stock.

  • Reduced customer journeys
    Customers often have to travel to buy a product. Thanks to e-commerce sites and the shipping of items, they can save not only the cost of travel but also time.

  • Products are quick and easy to buy
    Customers can view the item and order it with a single click from any device.

  • Improved customer relations thanks to round-the-clock chat

  • Customer data collection is considerably improved
    Your customers provide valuable information when they log on to your site, make a purchase or subscribe to your newsletter. You can then offer them new products based on their profile.

  • 24-hour availability of the
    shop    An online shop never closes! Customers can buy at any time.

2 examples of successful e-commerce sites

In absolute terms, there is no perfect e-commerce site that can serve as a benchmark. Each site is different depending on :

  • the company's field of activity,
  • the brand's visual identity
  • the type of product sold, etc.

Zalando

The Zalando brand is a good example of the importance of a good user experience. In fact, the company makes online shopping considerably easier thanks to intelligent services such as "Try first, pay later".

Customers receive their order at home without being charged and have 7 days to try on the items and choose whether or not to keep them. Zalando relies on deferred payment, which allows the customer to be debited at the time chosen by the seller.

Beyond that, the site is ergonomic, easy to use and visually pleasing. The sections are well presented, the images are of high quality and navigation is fluid:

  • detailed product sheets
  • The filters and search system are ingenious and well thought out,
  • their delivery policy is clear and visible, etc.

Yves Rocher

Yves Rocher's e-commerce site is particularly popular because of its well-optimised shopping experience. The product sections are easy to read and divided according to users' needs (oily skin, dry skin, etc).

The site has opted for a predominantly green colour palette to show its commitment to the environment, which is very interesting. The brand has also done a great job of highlighting the promotions and benefits it offers its customers.

So, what are you waiting for to launch yourself into the wonderful world of e-commerce? 💡

Article translated from French