What is an eCommerce service and how to choose an eCommerce service provider?

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If there is a popular trend in retail, it is about buying and selling online. Online trading is rising rapidly compared to physical stores. Thus, the umbrella term people use to describe buying and selling via the internet is known as ecommerce. However, ecommerce competitive strengths center around the experience of customers.

What is an ecommerce service, and how can you choose an ecommerce service provider? This article digs deeper into dissecting ecommerce and shows you critical factors to consider before you choose an ecommerce service provider.

According to the U.S. Census Bureau, online traders are responsible for nearly 9% of the wholesales. In other words, internet traders account for about half a trillion USD of the total trade. In contrast to the rapid increase of online transactions (about 15%-17% annually), the growth in the whole retail sector is about 5% per year. Most importantly, the trend is even more vital. In 2017, about 1.66 billion online traders spent up to 2.3 trillion dollars on shopping. Therefore, the possibility of the sales volume increasing in 2021 compared to 2017 is doubled.

Furthermore, it is no surprise that a few of the world’s biggest internet companies are ecommerce companies. Subsequently, several brick-and-mortar stores are getting involved with online retail to benefit from the trend and keep their business safe. This leads us to the question: what is an ecommerce service?

What is an ecommerce service?

Ecommerce, similarly known as electronic commerce, involves all the processes that go into the selling and buying of goods, from the manufacturer to the final consumer via the internet or online. E-commerce draws on innovations such as:1

  • Supply chain management;
  • Automated data collection system;
  • Mobile commerce;
  • Electronic data interchange (EDI);
  • Internet marketing;
  • Inventory management systems;
  • Online transaction processing; and
  • Electronic funds transfer.

In other words, e-commerce is the most crucial sector of the industry. Also, it’s equally influenced by the technological development of the semiconductor industry.

Ecommerce typically utilizes the internet for a section of the trading cycle, though it may use technologies like email. Moreover, ecommerce trading includes purchasing services (like digital distributions such as iTunes Store) and goods (like clothes from Alibaba). Similarly, there are three sections of e-commerce:

  • Online Auctions
  • Online Retailing
  • Electronic markets

Consequently, ecommerce is supported by electronic businesses. These online transactions occur either as customer-to-business (C2B), business-to-customer (B2C), business-to-business (B2B), and customer-to-customer (C2C)2.

Furthermore, the words e-business and e-commerce are usually used interchangeably. At other times, the word retail is used to refer to the process of online retail shopping.

However, e-commerce businesses may make use of all or some of the following:

  • Business-to-Business (B2B) trading;
  • Involving in retail for introducing the latest goods and services;
  • Direct online trading for retail sales to consumers through mobile apps and websites, and conversational commerce through voice assistants, live chat, and chatbots;
  • Internet financial exchanges for trading or currency exchanges;
  • Business-to-business electronic data interchange;
  • Involving in online marketplaces, which process other consumer-to-consumer (C2C) or business-to-consumer (B2C) trades;
  • Marketing to established and possible clients by fax or email;
  • Using and collecting demographic data via social media and web contacts.

Lastly, in the previous years, the use of ecommerce marketplaces such as Aliexpress and Alibaba have brought about the considerable development of online retail shopping.

How does an ecommerce service work?

Ecommerce operates via the internet. Customers can access an online store to browse through and place orders for services or products through any of their devices. In this part, there is a brief explanation of how an ecommerce service provider works.

After placing the order, the client’s web browser will send messages to and fro with the server hosting the online marketplace. Also, the information relating to the order will be sent to a central computer called the order manager.

This is followed by transferring the information to the databases that handle the inventory levels. These include the bank computer and the merchant system that controls the payment procedure, before redirecting back to the order manager. In short, this ensures that there are enough funds from the customer to process the order and there is enough store inventory to satisfy the demand.

In addition, after the order’s validation, the order manager will send a notification to the shop’s web server. Subsequently, it generates a message informing the client that their order was successful. Then, the order manager will transfer the order information to the fulfillment department or warehouse for the services or goods to be delivered to the customer. At this stage, access to a service may be given, or digital or physical goods may be shipped to the client.

In conclusion, providers that host ecommerce services may include2:

  • Online marketplaces that only require sellers to register for, like Alibaba.com;
  • Open-source tools for companies to use in-house development to handle; or
  • Software as a service (SaaS) implies that it permits clients to rent online store facilities.

Examples of ecommerce services

By making use of ecommerce services and shopping carts, suppliers or wholesalers create online stores where they display their services and products. Possessing an online shopfront is among the most straightforward strategies of conducting ecommerce. Also, there are numerous ecommerce service providers available. Picking the perfect ecommerce service for your products or services depends on your preferences, company requirements, and financial position. Below, we explained one of the best ecommerce service providers present in the marketplace.

Alibaba.com

Alibaba.com, part of Alibaba Group, is a well-known multinational b2b ecommerce service provider. Jack Ma founded it on April 4, 1999. This b2b platform includes services for both suppliers and buyers, such as online B2B trading, trade assurance, data analytics, digital media and so on.

 

With Alibaba.com introducing a small platform for exporters and manufacturers for international selling, it has gradually become a leading mobile commerce and e-commerce marketplace globally.

Alibaba.com is often listed as an excellent example of a b2b e-commerce business, as it encountered several challenges before becoming a typical example of a b2b business. 

Currently, Alibaba.com is one of the largest online marketplaces globally. For global buyers, the ecommerce platform is exceptionally efficient for sourcing goods in large amounts and for contacting big suppliers3. For manufactors, wholesalers and traders who wish to export their products to the world, they may reach over 26 million active buyers from more than 200 countries.

Other examples of ecommerce service providers include:

  • Magneto
  • eBay
  • Wayfair
  • Shopify
  • Etsy
  • Rakuten
  • Walmart marketplace
  • Newegg
  • Bigcommerce
  • WooCommerce

7 tips for choosing a right ecommerce service provider

Since many of the brick and mortar stores have decided to switch to ecommerce service providers, they need to make some plans for the project. This is the period to choose a service provider. However, how do you pick the right ecommerce service provider for your business?

Of course, starting an online business begins with selecting the right ecommerce service provider. But this is just the beginning, as several factors are taken into consideration when comparing different ecommerce solution providers4. Therefore, here are some tips you can follow:

1: Gathering a strategic team

The vital aspect of a business is the ecommerce service team. Thus, ensure you organize a team of people with good knowledge of both the management and workings of your company5. These include marketing, ecommerce product entry service, retail store management, ecommerce product manager, customer support, and many more. Moreover, you save time by having the necessary personnel at the beginning of the project. Also, you will eliminate avoidable errors. Likewise, there will be lesser resistance to some changes based on decisions made during the process.

2: Pricing and payment

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