What is an eCommerce business and what do they do?

Whether you're a consumer or a business owner, the growth of eCommerce in recent times represents one of the biggest shakeups to how commercial trade operates across Australia. From large companies creating online sales channels to startups going virtual, it’s clear that eCommerce presents an exciting new age of opportunity.

eCommerce - short for electronic commerce - encompasses all transactions conducted virtually. It can refer to any company or individual that buys and sells goods and services over the internet, making it a massive market globally.

From buying clothes to booking a holiday, eCommerce is an efficient way for customers to complete transactions with minimal effort online. Not only is it a convenient way for consumers to shop, but it's also an effective sales approach for many businesses. In fact, the Business-to-Consumer (B2C) eCommerce market in Australia is expected to be worth almost $80 billion by 2026.

The eCommerce industry saw a remarkable increase of 23.4% value last year as per Australia Post research. Surprisingly, more than 80% of households embraced online shopping, contributing to 12.3% year-on-year growth.

Here's a comprehensive guide that will walk you through the eCommerce landscape in Australia, what eCommerce businesses are all about, and how they operate.

What does an eCommerce business do?

An eCommerce business is a digital storefront where customers can purchase products or services online. From large retailers to small businesses selling handmade goods, the possibilities are endless. With the convenience of shopping from home and the ability to reach customers across the globe, it's no wonder that eCommerce has become such a popular choice for entrepreneurs looking to start their own business.

A recent report by Pattern – a leading eCommerce accelerator – revealed that Amazon and eBay dominate Australia's eCommerce scene, with an astounding 58.3 and 57.6 million average monthly site visits.

Apart from eBay and Amazon, the biggest shop fronts for eCommerce in Australia are supermarkets Coles and Woolworths, retailer Kmart, and pharmacy Chemist Warehouse, according to Statista, with these sites generating around a third of local eCommerce.

While most Australians buy from within the country, one-in-five of eCommerce participants purchase internationally. China is the largest international source, accounting for 40% of transactions. According to Australia Post, that’s followed by the United States, which accounts for 21% of overseas purchases, the United Kingdom on 14%, Hong Kong with 6%, and New Zealand on 3%.

In terms of how eCommerce businesses operate, they can be set up to work on a Business-to-Consumer (B2C) model as well as Business-to-Business (B2B), Business-to-Business-to-Consumer (B2B2C) or Business-to-Government (B2G).

Where does eCommerce take place?

As mentioned above, the two eCommerce heavyweights in Australia are eBay and Amazon, which operate as e-marketplaces. These large online trading platforms, as well as the myriad of others that operate nationally and overseas, provide a way for businesses to sell products digitally, and usually offer features like inventory management and analytics to help vendors.

For vendors, other benefits of e-marketplaces are that, unlike setting up your own website, there are fewer upfront ongoing costs. There's also the vast global reach of the platforms.

Company websites are also a popular option in the industry. In contrast to an eCommerce platform, which can serve to decrease the brand visibility of individual businesses against peers, a website can be useful to get a business discovered and build a loyal customer base.

As the Australian government point out, if you're a vendor that wants to inform prospective customers about where your operation is located, what services and/or products you have on offer, and to position yourself in the market, then a website is a must.

Social media - either by itself or as part of a mix with other channels - is the other main eCommerce avenue popular in Australia. Here, think mobile apps and trade driven via popular social platforms like Facebook, Instagram and TikTok.

Additionally, there’s the growth of 'social commerce', which refers to the intersection of conventional eCommerce with cutting-edge social media marketing. According to Forbes, this is where companies incorporate elements like user-generated content, influencer content and 'consumer calls to action' to social posts to drive potential traffic to a website or platform where transactions are then completed.

Many companies have also turned to omnichannel retailing, where businesses offer both online and in-store shopping experiences, to make the most of both new- and old-style channels to market. If done effectively, omnichannel retailing can result in companies leveraging multiple channels to improve relationships with customers, create more effective outreach to target markets, and increase share of consumer spend, as per Infomatica.

Benefits of running an eCommerce business

Tapping into eCommerce can provide Australian businesses with a multitude of benefits, some of which you'll uncover in further detail below.

No need for a physical space

As eCommerce allows bricks and mortar businesses to shift online, it can enable organisations to save on costs associated with physical retail. In addition to savings on in-store labour, there's potential cost reductions on things like lease/rent, electricity, phone bills, heating/cooling, displays, physical repairs and building maintenance.

Flexibility for sellers

Physical stores must abide by restrictions on trading times in accordance with local laws and regulations, but that’s not the case in the world of eCommerce, with products and services available around the clock. Hence, irrespective of real-world trading hours - and global time-zones - sellers can offer products and services to prospective buyers 24/7.

Convenience for buyers

With growing workloads and a faster pace of life, it can be difficult for consumers to get in-store to locate, and then purchase, products and services. In this context, eCommerce is ideal as it enables customers to browse and make purchases at a time that suits them. Most eCommerce sites and platforms give customers all the relevant product details, warranty information, reviews, and descriptions to make a purchase at any time.

Limitless reach

The reality is that a bricks and mortar seller can only reach a certain number of buyers. eCommerce is a gamechanger, allowing retailers to expand their reach across national and international borders. Helpfully, several eCommerce marketplaces have developed their own logistics and delivery systems, streamlining the process of getting products to buyers.

3 challenges for eCommerce businesses

Businesses entering the eCommerce market should also be aware of challenges involved. Here are three of the most common challenges facing the industry:

1. Shipping costs

eCommerce generally involves a significant amount of delivery, so shipping costs can be high. This is something that vendors need to keep a close eye on because if a business sells low-value products, shipping costs can end up being even higher than the product cost.

2. Customer relations 

Given vendors interact with consumers online, it can be tricky to develop strong customer relationships as there’s a lack of face-to-face interaction. That's why, as per experts polled by Business News Daily, winning eCommerce means making extra effort on customer service, as well as on pricing, product offerings and loyalty programs.

3. Cybersecurity 

Online vendors need to keep a watchful eye out for cybercrime. Business owners need the proper cybersecurity framework to keep customer data safe. Measures such as data security software and tight access control for staff can help keep defences high. For sellers, it can also help to ensure that sites outline the company's privacy and security protection to create a feeling of customer safety.

What does the future of eCommerce look like in Australia?

Australia is the world's eleventh largest eCommerce market and is poised for impressive growth in the years ahead. In fact, it's forecast to grow at a rate of 15% through to the end of 2024, while the bricks and mortar retail market is tipped to achieve only 3.4% growth over the same period.

eCommerce is also set to take up a larger share of retail trade, increasing to 9% in the same period. By 2033, Australia Post forecasts around one in three dollars will be spent online.

The future for eCommerce in Australia, as per the research, looks positive due to changing customer expectations, which it cites as the key driver for continued market growth.

A major factor of this is lifestyle change. According to Australia Post, as consumers become more mobile and technology driven, they are set to receive deliveries that have higher value than ever before.

The next decade will likely see big demand for apartments, it predicts, as consumers deal with an uplift in housing scarcity, and the pace of life quickens. This is predicted to lead to an increased need for 24/7 eCommerce solutions.

Additionally, sustainability in eCommerce is tipped to become a major factor. Increased consciousness of environmental sustainability is forecast to see more shoppers opting for more sustainable delivery - even if it means waiting longer, and potentially paying more.

With eCommerce set to play a bigger role in both the lives of consumers and businesses, it's important to have a good understanding of how to navigate the area to make the most of the changes set to take place in the years ahead.

Brother's solutions for eCommerce business owners

Starting an eCommerce business or opting to trade online can be an exciting but daunting prospect, especially when it comes to managing customers, invoicing, and shipping. Luckily, Brother has a range of solutions to make these tasks easier for both new and established businesses.

Whether you're just starting your selling journey online or looking to expand your current operations, Brother's high-quality print, scan and label products can help streamline your operations and keep your customers happy. You can trust Brother to provide the support and expertise you need to succeed in the competitive world of eCommerce. Contact us today.