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E-Retailing Essentials: Guide to Online Retailing

sahil bajaj

Sahil Bajaj

Senior Specialist - Marketing @ Shiprocket

May 1, 2024

9 min read

Electronic retailing has gained immense traction over the last couple of years. What exactly does e-retailing entail? How is it done? Can you do it as well? Selling goods online via the Internet is e-retailing. It can be done in various ways and is a brilliant way to make money. Anyone with the right understanding and a little vision can get into e-retailing.

E-retailing is also known as e-tail and internet retail. It works solely on virtual presence. This article elaborates on everything there is to know about e-retailing along with its different types. The article also speaks of the pros and cons of the subject to enable you to come up with the right approach to suit your needs.

Let us quickly dive in.

E-retailing

The World of E-Retailing: Understanding its Basics

Electronic retailing or simply e-tailing is the process of selling goods, services, and products over the Internet. Products and services in e-tailing can include B2B (business-to-business) and B2C (business-to-consumer). 

Retail eCommerce sales reached an estimated 5.8 trillion US dollars in 2023. Moreover, retail eCommerce sales are expected to exceed 6.3 trillion US dollars worldwide in 2024. With a projection of 39% growth, global retail eCommerce sales are expected to surpass 8 trillion dollars by 2027. 

E-retailing needs businesses to customise their business models to capture the sales which can include framing out distribution channels like webpages on the internet, warehouses, and shipping or fulfillment centers. Strong distribution channels are important in e-tailing because they enable product movement to the customers.  

The Inner Workings of E-Retailing:

Several industries and companies are involved in e-retailing. Several similarities exist in most companies that indulge in e-tailing. These mainly include attractive and engaging websites, well-defined and efficient marketing strategies, proper distribution of goods and services, and the use of data analytics. 

The success of an e-tailing business depends on strong branding and marketing plans. The websites must be user-friendly and regularly updated to fix bugs and enhance their performance to meet the demands of the customers. Your products and services must also stand out from your competitors to bring value to the purchaser. The pricing must also be well set to attract the consumer to purchase from you. 

The distribution networks must be efficient and prompt. Customers do not like waiting and having a distributed network enhances your delivery speed. Business practices must be transparent so that customers will be able to trust your brand. 

Companies can earn added revenues through several online methods. However, the very first source of income is through sales of their products to businesses or any consumer. B2B and B2C model-based companies can earn even through the adoption of subscription-based models like those offered by Amazon and Netflix. Advertising and marketing online are beneficial. By placing the right advertisements on your website, you can make some extra cash. 

Types of E-Retailing

There are different methods of e-tailing. These include the following:

  • E-retailing through business-to-consumer (B2C) model: The B2C e-retailing model is the most commonly used business model to sell goods online. It is most commonly used by eCommerce businesses. This model entails the selling of finished products to buyers via the Internet. The goods can be purchased through the website and the products can be shipped from the warehouses and fulfillment centers either by the company or the source itself. Establishing and maintaining good customer relationships are key to successful B2C e-tailing.
  • E-retailing through business-to-business (B2B) model: The B2B model is employed by those companies that sell their products to other businesses or companies. These are retailers including consultants, software developers, wholesalers, etc. The wholesalers usually sell their products in large quantities from the producers to the businesses. These businesses then sell them to the customers. Simply put, wholesalers can sell their products to businesses that opt for B2C models.

Weighing the Pros and Cons of E-Retailing

In 2024, 20.1% of retail purchases are expected to take place online. This highlights the growing importance and adoption rate of online retailing. Considering the many benefits it offers, this figure is likely to grow in the future.

Let’s take a look at some of the most common benefits that make e-retail so popular:

  • E-tailing is a whole lot more than simply eCommerce businesses. Several conventional stores are now investing in e-tailing. This is because e-tailing costs are lower than having physical stores. It also enables businesses to push products more quickly and reach out to a larger consumer base. It also gives businesses an option to shut down physical stores that are under losses and maintain only stores that have good profit margins.
  • E-tailing also enables you to automate your processes, thereby cutting down the need for staff and personnel. They can also streamline their processes through the use of data analytics tools. 
  • The best part of e-tailing is that consumer behaviour can be analysed and trends can be established. It gives businesses a better understanding their sales rates and how they can be improved. 

However, there are some drawbacks to e-retailing, as mentioned below.

  • Maintaining and creating efficient and attractive websites can be extremely challenging. Despite the maintenance costs being lower than physical stores, the making of websites can be quite expensive. When you need to have the infrastructure in terms of fulfillment centers and warehouses, they can cost you large sums. Also, a proper understanding of reverse logistics and returns handling is important to avoid loss-making.
  • Another drawback is that it does not provide businesses with the immersive experience a conventional store does. The chance to feel, try, and smell products is lost and this can hinder sales rates. Thus, e-tailing fails to provide the same type of customer service that a physical store does. 

Let’s See E-Retailing in Action: Real-Life Examples

Although there are several real-world examples of e-tailing, here are some popular ones for you to gain a clear understanding:

  • Alibaba Group: This is the largest e-tailer in China and it operates online entirely. They ship both domestically within China and internationally as well. They have deployed the B2B and B2C e-tailing models as they sell to businesses and consumers as well. Alibaba was the global leader in e-commerce market share with $780 billion in sales in 2022.
  • Amazon: Amazon is the most popular and well-known online marketplace in the world. Amazon accounts for 37.6% of eCommerce sales, securing the highest market share of all eCommerce companies. It offers its consumers products as well as subscriptions through its applications and websites. They sell almost every type of product and have several programs for businesses to sell on their platform. 

The Power of Online Retail: A Look at Its Benefits

The power of online retailing is well-known. Look at the kind of revenues Amazon makes in a year. That should be proof that online retailing is in great demand. Let us take a look at some of its benefits:

  • Accessing markets with ease: With the internet, reaching out and networking has never been easier. eBay, Amazon, Flipkart, etc., are online marketplaces that enable anyone to easily set up an online store and sell easily.
  • Minimised overhead costs: Physical stores are no longer a constraint to selling products. The investment is thus substantially minimised, enabling you to invent brilliant marketing strategies and consumer experiences.
  • Room for rapid growth: All the traditional hurdles of expanding your business through physical stores can be eliminated through online selling. With an effective marketing strategy and efficient scale-up plan, you can increase your sales faster. 
  • Customer intelligence: Different marketing tools can be used to attract different target audiences. These tools will also enable you to gain deep insights into your customer’s needs. It can be easily done through different data analytics tools.
  • Expanding your market horizons: The biggest benefit of having premises-based retailers is their ability to reach markets anywhere in the world in no time. They will be allowed to access markets and create demands for their products easily through different tools available for websites. 

Overcoming Hurdles in Online Retailing: Addressing Challenges and Concerns

The five major challenges in online retailing are listed below:

  • Consumers are expecting multi-channel buying experiences: With the growth of eCommerce and the developments in the logistics industry, shipping times are largely minimised. Customers are now easily moving between online and offline shopping experiences and hence they expect this kind of service from all businesses. This is one of the greatest hurdles encountered.
  • Providing a smooth and hassle-free experience: Customers expect their shopping experience to be smooth and hurdle-free. When they become regular online customers, they want to be treated in the same manner as how a regular customer is treated in a physical store. Implementing a recording system and using past data can be challenging and expensive. However, loyalty programmes are a brilliant method to give your buyers such an experience.
  • Need to stand out and provide something that the others do not: Consumer experiences help build loyalty towards a brand. Bad experiences do not result in returning customers. Promotions, discounts, offers, free goodies, etc., are a lovely way to stand out and gain the attention of your customers while making them feel special. 
  • The integration of different technologies is difficult: Data gathered by companies is growing at an alarming rate and the time taken for analysis of that data is increasing. Finding and combining different solutions and technologies is difficult and it is important to ensure that these do not affect your other operations. Large amounts of investment and research are needed to create a unified channel to meet all your requirements.

Conclusion

E-retailing is slowly replacing the conventional form of shopping. Several companies are investing large amounts of time and money to make online shopping equivalent to the experience provided by conventional physical stores. E-retailing is a process of selling goods and services virtually. Virtual selling mainly happens using either B2B or B2C models. Both of these have their pros and cons. Choosing what model you need to use will depend on how and with whom you want to sell your products. Although online retailing has its advantages, it comes with its own set of challenges that need to be addressed. However, e-retailing is certainly the future, and starting your own e-tailing business will help you scale your business at a faster rate and help you gain more profits in shorter spans.

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