If you're starting an eCommerce business or already own one, you know there's a lot that goes into it.
From choosing the right platform, to tracking metrics, to growing sales, and more.
We've put together a comprehensive eCommerce business guide to help demystify the industry and give you the tools you need to succeed.
Let's start with the basics.
eCommerce, also called electronic commerce or internet commerce, is the buying and selling of products or services over the internet. This may be the only way a business conducts business, or it could supplement an existing brick-and-mortar store. All that matters is they advertise, sell, and complete the transaction online.
What Is an eCommerce Site?
An eCommerce site is a website specifically built to sell products or services to customers. The entirety of the transaction takes place online, including the eCommerce payment.
What Is an eCommerce Business?
An eCommerce business is a business that operates mostly or entirely via the internet. There are four major types of eCommerce businesses.
- Direct to consumer business model (DTC). Here, the business sells its products direct to consumer (see D2C meaning). This is the most common form of eCommerce and there are more direct to consumer brands than any other type.
- Business to business model (B2B). In this model, a B2B business sells its products or services to another business. The second business will then either resell the product or use it. These companies may host their own site, or sell to other businesses via B2B eCommerce platforms like BlueCart eCommerce. This gives them access to thousands of customers while taking away the stress of website creation, design, and reporting.
- Consumer to business model (C2B). Here, individual consumers sell directly to a business, essentially the reverse of a DTC business. These models are almost entirely based on services, like freelancers or independent contractors. A third party owns the site and connects the parties while collecting a small fee.
- Consumer to consumer business model (C2C). Often called a consumer online marketplace, these sites allow individuals to sell products or services to one another. The site is an independent company that takes a percentage of each sale.
Running an eCommerce business takes a lot of effort. That's why it's important to keep an eye on emerging industry trends.
2020 was a banner year for eCommerce and established some new norms that have changed the future of eCommerce.
Here are five of the biggest trends from 2020:
- Emerging markets. In 2020, markets like India, China, Brazil, Russia, and South Africa saw stronger growth than the U.S. This trend is expected to continue and an estimated 3 billion buyers will have access to the internet in the next two years.
- Changing consumer behavior. Due to the COVID-19 pandemic, eCommerce saw a shift in the purchases and needs of their customers. Customers’ desire for quick, contactless shipping helped drive this trend and is likely to continue. Essentials like health, hygiene, and groceries all saw strong online growth. They're also more likely to use an eCommerce marketplace over a business-owned eCommerce site. Luckily for food suppliers, BlueCart eCommerce lets them get their products in the hands of businesses and customers quickly. The easy-to-use digital catalog and integrated payment processing make selling a breeze.
- The Growth of B2B eCommerce. One surprising trend from 2020 was the growth of B2B eCommerce. More than $1.3 trillion in online B2B sales were made in 2020. That's more than a quarter of total global eCommerce sales. In the next decade, expect to see continued growth for B2B businesses and a rise in B2B eCommerce platforms. This is the same case for wholesale businesses (see wholesale meaning).
- AI and AR. Artificial intelligence and augmented reality are slowly becoming important tools in the eCommerce space. By understanding customer behaviors and providing new ways to see products, more customers are buying than ever. AR in particular is being used with product images for customers to see how products would look in their homes.
- Rising acquisition costs. One side effect of increased competition is rising costs. As more businesses entered the fray in 2020, customer acquisition costs also rose. This further highlights the need for a strong organic eCommerce SEO plan to help attract customers. You'll also need to know how to do an eCommerce SEO audit. This will keep costs lower while letting you compete with the bigger names in the industry.
eCommerce Industry Growth
The eCommerce industry saw unprecedented growth in 2020 with a global increase of about 20% over 2019. In the U.S. alone, more than 16% of all retail sales happened online. It’s a 45% increase over the previous year.
That's why it's more important than ever to take control of your fulfillment operations.
Order fulfillment in eCommerce is the picking, packing, and shipping of online purchases to customers.
Order fulfillment may be done in the eCommerce business's warehouse by employees or it may be outsourced to a third party. It is also a major driver of revenue and can increase eCommerce sales when done well.
What Is an eCommerce Fulfillment Center?
An eCommerce fulfillment center is a physical location where a third party logistics provider fulfills orders.
These locations are different from normal warehouses as the products within them belong to other businesses. These centers are strategically located to help fulfill orders for multiple businesses in a given region.
eCommerce Fulfillment System
An eCommerce fulfillment system, also called fulfillment software, is used to automate the inventory management process. This includes things like generating a list of products to pick, creating shipping labels, and tracking packages as they are shipped.
Fulfillment software features vary, but they usually include various tools for inventory control. This includes tools like inventory forecasting and reorder point analysis reports as well as tracking established inventory KPIs. These systems can also be integrated into the business's POS system and eCommerce platform for instant data transmission.
eCommerce Fulfillment Companies
If you operate a small eCommerce business, you likely can't handle many orders at a time. That's where an eCommerce fulfillment company comes in. These 3PL companies can move far more product more efficiently and usually have multiple facilities that make it easier to sell to distant regions.
There is no best fulfillment company, since different industries have different needs. Pick a fulfillment company that aligns well with your eCommerce business plan and can ensure customer satisfaction.
This isn't an area to take the cheap route since revenue greatly depends on it. Knowing how to package and ship your products will pay dividends.
How to: eCommerce Packaging
eCommerce packaging is a valuable tool for marketing your brand, ensuring customer satisfaction, and avoiding inventory loss.
But with so many packaging options on the market, it can be hard to decide what to use for your business.
eCommerce Packaging Bags
If your company sells light, but not fragile products, shipping with poly mailer bags is a great option. These bags are made of a durable, and recyclable, polyethylene film. They're water-resistant and offer a good amount of protection for a low price.
eCommerce Packaging Boxes
The most common types of eCommerce packing boxes are made of corrugated cardboard. Though often viewed as just "brown boxes", there are actually many styles available with different pros and cons.
Here are the three most common:
- Regular Slotted Containers (RSC). RSC boxes are the ones that you are most likely to use. All flaps are the same length and two parallel sides meet in the middle. These boxes come in a variety of sizes and offer decent protection for a low price. Most types of inventory can be shipped in these boxes.
- Full Overlap (FOL). For heavier or more fragile goods, FOL boxes are a good choice. They're nearly identical to RSC boxes, but two parallel flaps entirely cover the box. This means there's no small gap between flaps and your products are less likely to come out accidentally or be damaged. However, they are slightly more expensive and do require additional fastening to keep closed, so overhead expenses will increase.
- Auto-locking bottom. These boxes come with a built-in folding component on the bottom. This allows your staff to push on the box to quickly make a sturdy bottom. It saves time and expenses on tape, but they are more expensive than the other models.
Sustainable eCommerce Packaging
In the past 30 years, due to rapid eCommerce growth, packaging material has become one of the biggest contributors to global waste. To combat this rising issue, there are now many sustainable packaging options on the market.
Here are our top three:
- Recyclable packaging. The simplest way to improve the sustainability of your packaging is to use recyclable materials whenever possible. Use recycled paper for inserts, reuse branded bags and boxes, and avoid using plastic whenever possible. You should also use a digital catalog instead of wasting paper. For food suppliers, BlueCart eCommerce is a choice for this. It's the best-in-class digital catalog that can easily be customized to fit your needs.
- Reduced packaging. Over-packaging is a major problem in the eCommerce industry. Try to avoid using unnecessary packaging materials or shipping products in boxes that are much larger than needed. You can also use product kitting to ship multiple orders in a single bundle. It's also a great reason for your staff to try cross selling multiple products.
- Plant-based packaging. One of the fastest-growing trends in packaging is the use of biodegradable, plant-based materials. Coconut fibers, compressed mushrooms, cornstarch, and more.
Now that you've packaged up your products, you need to know how to ship them.
How to: eCommerce Shipping
Shipping eCommerce products includes all services and materials used to get your products to your customers.
Follow these steps:
- Determine shipping methods and rates. You need to figure out what shipping options you'll give your customers. Free shipping is one of the strongest growing eCommerce trends, but it can be hard to do if you're just starting an eCommerce business.
- Calculate shipping costs. We'll go into more detail below, but figuring out how much shipping costs is an important part of understanding your overhead expenses. Keeping costs under control will also let you establish optimal pricing so you can maintain a strong profit margin.
- Establish packaging and marketing plans. Picking the correct materials to use for shipping will help keep costs low and avoid inventory loss in shipping. Not only that, but you can brand your packaging as an easy method of B2B marketing or DTC marketing.
- Get insurance. In addition to eCommerce business insurance, you'll need to pick up product liability insurance. This provides legal and financial coverage for instances when your products cause damages. These damages could be to a person's property, bodily injury, illnesses, or even wrongful death.
- Invest in tracking software. You can invest in standalone tracking software or pick an eCommerce platform or eCommerce marketplace with integrated tracking. This way you can keep your customers informed and avoid unnecessary returns or complaints.
How to Control eCommerce Shipping Costs
Managing eCommerce shipping costs is the key to running a successful shipping operation. Since eCommerce shipping rates vary, here are the factors to consider:
- Package dimensions and weight. Most shipping companies charge based on something called dimensional weight (DIM). This takes into account the amount of space a particular package will take up in their shipment.
- Shipping destination. Unsurprisingly, shipping to a faraway or difficult-to-reach destination is more expensive. In the U.S., most carriers use shipping zones to calculate their shipping rates.
- Delivery speed. Faster shipping is always more expensive, but it's also becoming an industry standard. Try to find the balance between fast and affordable shipping. This will ensure customer satisfaction while avoiding excessive costs.
- Product value. High-value products will cost more to ship than other items, since they'll need gentler handling. Their packaging costs more, and carriers will not want to take on the risk without adding on costs. You'll also need better insurance to cover any prospective losses.
- Unexpected problems. Shipping issues happen. Products get damaged or lost, address labels are incorrect, or packages are sent to the wrong place.
Once you have your shipping under control, you can focus on selling more. Using an eCommerce marketplace is a great way to do this.
An eCommerce marketplace is an eCommerce site owned by a third party where multiple businesses or individuals sell their products or services.
Marketplaces like BlueCart eCommerce are built to scale with your business. It truly takes care of all the hard work in building a site for you.
eCommerce Marketplace Management Tips
Many business owners think selling products through an online marketplace sounds easier than managing a website. This isn't always the case. There's still a lot you need to do to optimize your sales and manage your products on a marketplace.
Here are a few tips:
- Focus on inventory management. eCommerce marketplaces feature a wide array of products. It's more important than ever to have a handle on different types of inventory you carry and your inventory practices. Avoiding issues with dead stock and backordered items will keep your customers happy and your bottom line green.
- Keep track of your finances. Though eCommerce marketplaces make it easier than ever to run a business, staying on top of eCommerce accounting is vital. BlueCart eCommerce is great for this since the integrated reporting lets you see the information you need, whenever you need it.
- Build your brand. eCommerce marketplaces attract more users every day. Make sure you highlight what makes your offerings unique and use consistent branding everywhere from your product pages to your eCommerce packaging. BlueCart eCommerce makes sure your business's logo is on every page so your customers never forget.
- Use online advertising. Since competition is high and you don't have your own site or retail location, advertising is the key to drawing in customers. Many marketplaces have integrated advertising platforms, but you can also make great use of Google's ad program to get new users.
eCommerce Marketplace Service Provider
An eCommerce marketplace service provider is a third party company that provides various marketplace services to eCommerce businesses. These companies can help upload products to the marketplace, design advertisements, and even train staff on how to best sell on an eCommerce marketplace. There are many service providers on the market, so find one that offers the services you want while keeping costs reasonable.
Your other option is to use a headless eCommerce platform.
What Is Headless eCommerce?
Headless eCommerce is a form of website architecture where the frontend and the backend of an eCommerce site are separated. This means that the part of the site the user sees can be edited visually without affecting the products or data on the page.
The backend data includes product information, imagery, and other widgets or programs. It can all be edited separately and the site is automatically updated by an API call. That's technical jargon for a code that signals that data should be transferred from one place to another.
Headless eCommerce Benefits
No business would use an eCommerce platform that doesn't help their business in some way.
Here are five ways headless eCommerce can benefit a business:
- Quick set up. Sites using headless eCommerce platforms can launch new experiences quickly and get right to selling. They also offer some of the best eCommerce SEO tools and robust options for editing on page SEO.
- Easy employee training. Since headless eCommerce is split into two parts, it's much easier to work with. This means your employees can quickly learn how to edit the frontend of the site without months of work. No one person needs to do both parts of the editing, so you can have specialized employees to optimize your site.
- Highly customizable. If your eCommerce site looks like everyone else's, it's going to be hard to attract new customers. Headless eCommerce platforms are very adaptable and can be used to create a distinct user experience for your business. You can even use customer feedback to adjust the site with little effort and turn one-time buyers into a long-term relationship.
- Increases customer satisfaction. The highly adjustable interface of headless eCommerce platforms means that they can be made to suit customer needs. This can be done through responsive design, user accessibility options, or even page architecture. It's also a great tool for upselling and cross selling.
- Adjustable on the fly. All eCommerce sites and platforms run into issues occasionally. Since headless eCommerce is so easy to edit, it's also easy to fix. Products can go up or come down nearly instantly. Paired with a perpetual inventory system, this can be done in real-time.
After choosing a platform, you'll need to start tracking looking at analytics to optimize your business.
What Is eCommerce Analytics?
eCommerce analytics is the act of gathering data that impacts your business and using it to understand eCommerce trends and make data-driven decisions.
eCommerce Metrics to Track
KPIs, or key performance indicators, and metrics are types of data that are used by a business to determine success.
Here are the top ten eCommerce KPIs and metrics to look at:
- Conversion rate. Your conversion rate is the percentage of website visitors that made a purchase. If this number is too low, you'll want to look into why your prospects aren't becoming customers.
- Customer lifetime value (CLTV). CLTV is a measure of the total value each customer has to your business. It is a mixture of conversion rate, average order value, and return customer rate. It can uncover issues with customer retention and tell your sales team that they need to work on maintaining relationships.
- Average order value (AOV). By calculating the average value of all orders, you can determine if you need to make changes that avoid losses. You may want to establish a minimum order quantity (MOQ), lower shipping costs, or reduce the time between purchase and fulfillment.
- Profit margin. Every business owner likes to see a large profit margin. This number shows the difference between your costs and revenue. If this number is low, it means you need to look at increasing prices or reducing costs like inventory carrying cost.
- Return on investment (ROI). If you pay for any form of advertising, you'll need to calculate your ROI to determine effectiveness. This will let you know how much money you make off of every dollar spent.
- Cost per acquisition (CPA). Another paid advertising metric to look at is CPA. This is the total ad spend divided by buyers. If this number is lower than the revenue those customers bring in, your ads are hurting more than helping.
- Bounce rate. This metric tells you what percentage of website visitors leave without clicking on anything. It's a very valuable number that can highlight issues with page speed, website quality, or just a lack of good SEO content for eCommerce.
- Organic search rankings. Though a more complicated metric than many of the others, organic search rankings are very valuable. They show what words people search to find your site and how well you meet their needs.
- Gross Merchandise Volume (GMV). GMV is a measure of the total value of products sold during a given time. It's a valuable metric that signifies overall success. If this number is increasing, it means your bottom line is as well.
- Customer satisfaction. The final metric you need to keep an eye on is customer satisfaction. Though it's harder to quantify, it affects every aspect of your business. Regularly speak with your customers or use surveys to get a sense of their happiness.
Tracking these metrics can best be done by investing in the right eCommerce software.
eCommerce software is the foundation upon which all eCommerce business is done. These platforms and programs simplify and automate various aspects of an eCommerce business.
There are two types of eCommerce software you need to know:
- On-Site. This software is installed and managed by developers employed by your business. When issues arise, they are the ones that fix the problem. This model is the traditional one, but is becoming less popular with eCommerce businesses.
- Software as a Service (SaaS). These are the "hands-off" software solutions. They are hosted in the cloud by a third-party provider and all updates and features are applied automatically. They also allow new businesses to open in 1/3rd of the time.
Best eCommerce Software
The best software for an eCommerce website is the software that handles the hard stuff for you. It should make less work for you and let you focus on making money.
Here's what you should look for:
- Software integration. Since you'll be using many types of software in your business, you'll want to make sure they can all communicate with each other. Luckily for food suppliers, BlueCart eCommerce can easily be integrated with most fulfillment services, eCommerce payment gateways, and more. This lets businesses focus on selling their products and growing their profits.
- Benefits to customer experience. The right software serves to make your customers' transactions seamless. If your software hampers their experience in any way, it can lose you money and a lasting relationship.
- Product management. Managing your eCommerce fulfillment operations takes a lot of work. Make sure to get an inventory management software that makes inventory control easier for your staff.
- Marketing capabilities. Software that lets you market your products are vital in increasing your sales. This may be stand-alone software or integrated into your choice of web platform. BlueCart eCommerce lets you send emails from the platform. It even has a built-in promotional function, so you can set up a deal and send out an email blast all in one place.
- Reporting functionality. As a business owner, you need to know what is happening in your business. Pick software with robust reporting options that can give you the info you need. You'll want to know sales data, manage inventory allocation, and track your eCommerce shipping.
Finally, with all the software chosen and in place, you can focus on growing your sales.
How to Increase eCommerce Sales
Learning how to increase eCommerce sales is the key to growing your eCommerce business. Unfortunately, it takes a lot of work to increase sales.
Here are the five best ways to increase eCommerce sales:
- Use email marketing. One of the most effective marketing tools is email campaigns. Sending cold emails to a list of prospects is an easy, low effort technique that has a higher conversion rate than other efforts.
- Work on eCommerce SEO. Where you rank in search results can dramatically affect how many prospective customers your site gets. Focus on improving on page SEO for eCommerce to draw in qualified customers.
- Use A/B testing. One of the best ways to increase eCommerce sales conversion is by testing various elements on your site. You may inadvertently be damaging your ability to sell by having a confusing or difficult website. Testing will let you provide your customers with the best experience.
- Get on social media. More brands than ever are using social media to help drive sales. Try to promote your products without coming across as boring. Younger customers are making purchases through these apps more than ever, so standing out is a must.
- Try promotions. A tried-and-true method of driving sales is to offer a discount or other incentive to purchase. BlueCart eCommerce has a deal functionality built-in and you can even send promotional emails from the platform.
Best eCommerce Sales Channels
The best eCommerce sales channels are the ones that drive the most customers to your site for the lowest cost. This may come in the form of social media, eCommerce marketplaces, or via a subscription box service.
Here's what to look at when picking a channel:
- Business model. Do you participate in dropshipping or sell consigned goods or do you need to know how to find vendors? Do you handle fulfillment on your own? Ask yourself these questions and pick the channel that matches your business.
- eCommerce software. The tools you use for your business will have a major impact on the channels you can use. Being able to integrate your existing software is vital. If a channel can't sync up with your platforms, you'll need to pick another or invest in other tools.
- Target audience. If your target audience doesn't use the channel you choose, you're just throwing away time and money. Pay attention to their needs and lifestyles and pick the channel that matches them.
Take Charge of Your eCommerce Business
Running an eCommerce business requires managing many different aspects of your business. You need to understand sales channels, analytics, fulfillment, and more. Follow our tips above and you'll be well on your way to turn your eCommerce business ideas into profits.