The Rise of E-Commerce and The Challenge of the Physical Retail Industry

E-commerce is essentially the act of electronically trading or purchasing of goods over the Internet or via online channels and over internet connections. This trading includes online payment systems such as PayPal, online merchant accounts, credit cards and others. These electronic means of payment may be processed through wireless phone connections, cell phones, pagers, or other means of instant messaging (IM). E-commerce is very fast becoming a well-known mode of commerce in which the transactions are often carried out between customers and sellers, from office to office, or across international borders. With e-commerce also comes a plethora of software that enables businesses to process various transactions.

The growth of e-commerce has been driven by an increase in internet usage throughout the world. E-commerce activities have led to the growth in consumer electronic commerce, which, in turn, has been accompanied by growth in the development of online marketing strategies. While consumers conduct business more frequently online than ever before, brick-and-mortar establishments have begun to adopt various methods for marketing their products and services.

To date, there are many instances where consumers conduct business in both brick and mortar and online. Today’s consumers are increasingly using the Internet for purchases including obtaining access to various retail outlets and conducting business with wholesalers and dropshippers who can provide products at wholesale prices. Additionally, e-commerce has enabled consumers to purchase books, music, DVD’s, computers, software and other digital media from the comfort of their home. Consumers are able to make purchases of these items at a physical location or from an online store. These examples of traditional modes of marketing are being replaced by Internet sales and advertising.

In order to facilitate the purchase and sale of goods and services online, retailers have developed an extensive range of online stores and retail outlets, sometimes referred to as e-commerce portals. E-commerce stores offer a variety of products, which include electronics and computer equipment, clothing, food, accessories, health and beauty, jewelry and a variety of other merchandise. With the introduction of online stores, the process of conducting business has changed dramatically. For example, in addition to providing consumers with a method of purchasing goods and services, E-commerce venues also play a significant role in the creation of sales leads.

Electronic commerce and E-commerce models allow companies to capture the names and addresses of potential customers. E-commerce websites usually feature search boxes for providing information about the products and services that they sell. Through these features, companies are able to gather data about potential clientele. By combining the personal information of consumers and compiling detailed customer profiles, E-commerce sites are able to generate sales leads. This process allows E-commerce merchants to follow up with consumers once they have provided their contact information, such as name and address, through the electronic commerce portal.

Most e-commerce websites use payment gateways such as PayPal, which allows consumers to transfer funds between buyers and sellers with minimal charges. Payment gateways act as a “honey pot” for E-commerce businesses. The profits generated by such businesses are nontaxable, as the fees they charge are based on the volume of transactions made. The Electronic Commerce Improvement Act of 2021, commonly referred to as ECIA, grants the U.S. government authority over electronic commerce and determines the regulations necessary to implement the Act.

Consumers have access to multiple methods of communication when shopping online and many prefer to conduct business through e-commerce venues. For instance, rather than driving to a retail outlet to make a purchase, shoppers can do so from the comfort of their living room or bedroom. The advantage of purchasing an item from an E-commerce website is that the customer’s privacy is protected and the transaction takes place entirely on the Internet, which decreases the chances of being scammed. Consumers are able to complete their transactions at any hour, which increases customer satisfaction when it comes to E-commerce venues.

Although e-commerce has brought about much convenience, it also poses certain challenges to the physical brick-and-mortar retail industry. As many people shop online, fewer people actually show up to their local stores to make a purchase. Also, many of the customers who shop online do not make purchases in person, but merely conduct business on the computer. This means that physical storefront locations will be affected if more people begin to conduct business through their computers rather than coming into a physical store to make a purchase.

Author: Patrick Robinson