What Is E-Retailing? Guide to Types and How It Works
By Indeed Editorial Team
Published October 21, 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Many types of businesses use the internet to best optimize sales and overall company revenue. E-retailing is an important part of this strategy. E-retailing can be the main point of revenue for a company, or it may be an additional sales strategy to reach new customers for a relatively low price. In this article, we define e-retailing, discuss the key elements involved in its function and review the two basic types of e-retailing options.
What is e-retailing?
Electronic retailing, also known as e-retailing, eRetailing, e-tailing or internet retailing, is the process of selling goods or services online. This is a rapidly growing market that allows increased access and convenience for customers and relatively quick and easy sales opportunities for businesses. Most e-retailers fall into one of two categories:
1. Pure play e-tailers
For these companies, online retail is the only mode of commerce. Instead of having a physical space for customers to visit and handle products, they rely on entirely on online sales for company revenue. This allows them to avoid traditional expenses, like storefront space, cashiers or shopping assistants. Other advantages for pure play e-tailers include the ability to offer a wide range of products, 24/7 shopping opportunities and worldwide reach.
2. Brick-and-click e-tailers
These are stores that have an online shopping option in addition to a traditional physical space. They may use their online stores to help expand company reach, target audience and sales beyond what the traditional brick-and-mortar storefront might accomplish. Meanwhile, having a physical store may help encourage customer loyalty. It can also target casual passersby and individuals without access to online shopping as potential customer.
With online sales as popular as they are now, most physical stores also have an online shop, making them brick-and-click e-tailers. A computer seller that conducts most business online but maintains some in-person stores where clients can come with questions or to look at products is an example of a brick-and-click e-tailer.
How does e-retailing work?
E-retailing strategies can differ based on the company type and the products and services they sell. Here are some elements of the e-retailing process that most companies follow:
Online marketing strategies and branding can help set your business apart from your competition. This is your first opportunity to engage the customer and direct their attention toward your product. Website design, SEO best practices, social media strategy and effective advertising campaigns are all useful tools in marketing strategy and lead generation. Your website is one of your most valuable marketing tools in e-retailing. This is the best place to show what makes your products unique.
Engaging and easy-to-use selling platform
Once you have captured a potential customer's interest, it's important that they stay engaged long enough to complete their purchase. To facilitate this, you can include colorful patterns or special deals to maintain customer interest and excitement. One of the major differences between e-retailing and traditional in-person shopping for the customer is that they rely on images as the main representation of the product, rather than seeing it in person. This means that attractive and accurate photographs of your product are also vital to include on your website.
You can also focus on easy navigation. If customers can quickly and efficiently get to the right pages on your site, they are more likely to complete their purchase. E-catalogues or shopping cart features can help create an easy-to-use shopping platform. You might also include links or pop-ups that direct your customer toward other suggested products based on their interest to encourage more sales.
Effective product distribution
An expansion into e-retailing generally entails a scaled-up product distribution system. If you're selling a physical product, you may need to expand your warehouses and personnel for shipping and handling in order to meet new online demand. Quick and efficient processes for product delivery may make the difference in a customer's buying decisions. For example, if a customer needs a product in the next three days, they may specifically look for e-retailer options that can accommodate that need.
It's also important to reflect accurate delivery time estimates to encourage customer trust and loyalty. This is particularly true for returns or exchanges. E-retailing suggests that the customer has only interacted with the product online, and there may be a higher return rate than in a brick-and-mortar store. You can accommodate for this by ensuring that your return policy and process is clear, and that the shipping and handling is quick and careful.
Customer data analytics
Keeping track of customer data can lead to improved sales and increased revenue in the future. In addition to sales, you might track and analyze who is viewing your website, what they are looking at and how long they spent looking at each page. This may help to determine new audiences to target or changes that might better streamline your website based on page views. You may also use this data to refine your customer relationship management tools or initiate online customer service systems.
Types of e-retailing
There are two main types of e-retailing:
1. Business-to-business (B2B) e-retailing
This type of retailing is when one business sells its product or service directly to another business or company online. One common B2B relationship is between a wholesaler and a smaller business. The wholesaler can sell an item in bulk for the smaller business, who then sell it to individual customers. Alternatively, a wholesaler might sell a material online that a smaller company needs to produce its product. Software developers, service providers, freelancers and consultants are a part of this category of sales as well.
Online B2B transactions often involve large quantities of the product. This means that price is especially important, as it may have a major impact on the budget and decision-making process for the client company. Responsible and timely shipping and handling are also vital, because the client company may need to receive the product before they can complete their own product process.
Read more: What Is B2B Sales?
2. Business-to-consumer (B2C) e-retailing
Business-to-consumer e-retailing is when companies sell their products or services directly to consumers over the internet. A consumer buying a branded mug off of a company's website is an example of B2C e-retailing. This model for e-retailing can also include subscription-based models, which rely on monthly or yearly payments for continued access to a service or collection of goods. For example, many streaming services use subscription based models to sell their services directly to customers in a B2C e-retailing transaction.
For this type of e-retailing, consumers may make their buying decisions based on price and expected delivery date. Customers also expect the quality of the product to match that of the description. You may add a rating or review section to your e-retailing platform to encourage customers to leave positive reviews. This may help assuage new customer concerns about product quality, which can help boost sales.
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