What is e-commerce?

Blogs 18 Mar 2022

Let’s delve into the online retail world, from online marketplaces to creating your own digital store. Here’s how you can use e-commerce to reach new customers and grow your business.

The Internet has revolutionised the way that businesses think, market and operate. In fact, many consumers can hardly remember a time where you couldn’t buy anything in a few clicks. Most importantly, the online world has opened up countless opportunities for businesses – offering lower costs and competitive advantages across industries. And it’s these opportunities that have been especially beneficial for small businesses since the start of the pandemic in 2020.   

In an ever-growing online world, companies now have access to a much wider pool of prospective customers, and can achieve business growth much faster than traditional sales methods. For small businesses that don’t have the resources to open stores in multiple locations or market to customers across borders, the prospect of e-commerce has been a welcome shake-up. 

It can be difficult to know where to start with e-commerce, especially if your business has always been a brick-and-mortar store. In fact, 1 in 4 small businesses still don’t sell online. This article will help you to get your head around online retail and work out how to make e-commerce work for your business. 

An introduction to e-commerce 

What is e-commerce? 

E-commerce refers to any business sales that are made via the Internet. Businesses can operate solely online or use e-commerce as a branch of their sales strategy, because no matter your product or service, there’s a way to sell it online.  

Customers can shop online via computers, tablets, smartphones and other smart devices – and pay through a range of different payment methods too.  

E-commerce models 

There are a number of different ways you can access the online market and sell your products over the Internet, depending on your own business offering. The five main e-commerce selling models have some crossover with traditional selling methods, and cover the following areas: 

  • B2B - Business-to-Business 
  • B2C - Business-to-Consumer 
  • D2C - Direct-to-Consumer 
  • C2C - Consumer-to-Consumer 
  • C2B - Consumer-to-Business 

B2B: Business-to-Business 

Business-to-business e-commerce works the same way as it does in physical stores – businesses sell wholesale products or raw materials to other businesses who’ll use them to create their own products.  

The benefit of e-commerce: thanks to lower costs of e-commerce stores, B2B sellers can offer more competitive prices to their business customers.  

B2C: Business-to-Consumer 

The most well-known business model translates just as easily to the online world. Businesses sell their products or services to consumers through an online platform – as opposed to a brick-and-mortar store. 

The benefit of e-commerce: businesses don’t have to rely on footfall in their area for sales. With an e-commerce store, they can sell to anyone in the world.  

D2C: Direct-to-Consumer 

Where many smaller businesses used to rely on larger stores to retail their products in person, online selling allows businesses to sell their products directly to consumers (D2C) and eliminate the need for distributors or suppliers.  

The benefit of e-commerce: small businesses keep more of their revenues by operating more independently than ever before. 

C2C: Consumer-to-Consumer 

This method allows consumers to sell to other consumers without running a business per say. Platforms like Etsy and Depop allow for this type of business.  

The benefit of e-commerce: individuals have the opportunity to make money, without starting a fully fledged business. 

C2B: Consumer-to-Business 

Where individuals offer their services to businesses, such as freelancers or influencers, they’re considered to sell using the consumer-to-business model.  

The benefit of e-commerce: freelancers have access to a much larger pool of clients, thanks to social media and the Internet. 

How can small businesses benefit from e-commerce? 

No matter the size of your business, you can adopt whichever of the previously mentioned e-commerce models to fit your company. But, selling online makes sense for smaller businesses because of: 

  • lower costs from not having to pay overheads 
  • more flexibility and the ability to open an online store 24/7 
  • a larger pool of customers, thanks to the ease of international shipping 
  • unlimited marketing opportunities with social media  
  • the opportunity to personalise products and services for customers 

How you can maximise business success online 

E-commerce empowers smaller businesses to find new opportunities and sources of income. Here’s how to make sure you’re getting the most out of your online activities.  

Choose trusted e-commerce platforms 

When you’re choosing a platform for your e-commerce site, whether it’s a payment portal like PayPal or your whole site with solutions like Shopify, make sure the services you opt for come from trusted providers. It’s important to provide an e-commerce experience that your customers trust and feel comfortable using.  

If you don’t have the resources to create a whole new website to host your online store, you can choose to sell your products or services via other platforms such as eBay or Etsy. These options are easy for small businesses to use as they take care of the payment side of things. 

Market your business well 

It’s essential to get the message out about your business online if you want to be as successful as possible. So, you need to effectively market your business online. Leverage practices like search engine optimisation (SEO), content creation (blogs, email marketing) and social media to grow your audience and presence online.  

Learn how to leverage social media and get your brand noticed online with practical tips and advice on FSB’s digital marketing hub

Create a great user experience 

Similarly to how you craft your customer’s experience in store – from visual merchandising to customer service – the same needs to be done online. Your website should: 

  • show off your business and brand personality 
  • provide the right information for customers visiting your site 
  • offer support and advice via an FAQs page, Help Centre or chatbot  
  • be safe, secure and accessible 

Each of these factors come together to provide a seamless experience for your customers when they visit your website, helping them to complete their purchase efficiently and smoothly.  

An infographic summing up the information in the article

Pitfalls to avoid with e-commerce 

While online retail opens up a lot of opportunities for smaller businesses, business owners will be all-too aware of the risks involved with a new business venture. There are some dangers to watch out for when setting up and running an e-commerce store. 

Leaving your business vulnerable online 

A key danger of selling online is the vulnerability of your customers’ data and personal information. To avoid your site being hacked or data being compromised, make sure that you invest in cyber security. 

FSB’s cyber security and data protection hub includes a range of resources and bitesize videos from experts to help you protect your businesses online.  

Forgetting customer experience 

Another challenge that businesses face in the online marketplace is that customers can’t touch or feel products when making purchase decisions. So, to reduce the chances of your customers returning products, provide as much information as possible.  

This could be done through detailed product descriptions, videos or tutorials, or showcasing reviews so customers can get a better feel. 

Want to get started selling online? 

E-commerce brings huge potential for smaller businesses looking to expand their customer base and discover a new way to sell their products or services.  

As an FSB member, you’ll have the support you need to start selling online, including 24/7 legal advice, financial expertise, regular networking events and so much more.  

Ready to get results from your e-commerce store?

Discover more e-commerce tips and knowledge through our small business e-commerce hub. It's packed with expert insights and actionable advice to support your online business from start-up to success.

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