Imagine your supplier in Frankfurt made shipment of your desired stuff to your residence in Sydney and needed to be paid via a bank in Dubai. Further imagine, your son’s college fee is due for payment in Istanbul and you instructed your Tokyo office to immediately remit the funds, via a bank in Shanghai, to clear this obligation. If you think these are the routines of some corporate honcho, imagine some personal mediocre examples. You ordered a pizza, shopped monthly grocery and paid your credit card bill, while sitting in your cozy sofa. Suddenly, you remembered and sent money to your sister in Dhaka. Can you imagine the common link in all the above imaginations? No prize for guessing it is called E-commerce. In this article, an attempt has been made to assess E-commerce’s challenges and opportunities in 2021.
E-commerce, commonly known as electronic commerce or naively termed as internet commerce, deals with the buying or selling of goods or services via the internet and the transfer of money to do these transactions. It is an easy mistake to confuse eCommerce with e-business. E-commerce refers to the commercial transactions of goods or services, while e-business means all aspects of doing business online.
Also read: You Think Digital Currencies Will Not Thrive? Think Again.
The e-Commerce Evolution
The first E-commerce transaction was conducted on August 11, 1994, when a CD was sold buy an individual to his friend through his website. Since then, eCommerce, which can be operated through computers, tablets, or smartphones, has revolutionized the way consumers or businesses buy or sell. Every conceivable product or service is available through e-commerce portals. It hardly comes as a surprise that international retail e-commerce turnover was earlier projected to touch $27 trillion. However, in the aftermath of COVID-19 catastrophe, global retail e-commerce sales decelerated to 16.5% growth to a collective $3.914 trillion in 2020.
Four Major Market Segments of E-Commerce
Ecommerce operates in all the four major market segments as below:
- Business to Business (B2B): When a business sells goods or services like raw materials of software to another business like for use.
- Business to Consumer (B2C): When a business sells goods or services like furniture or consultancy to an individual.
- Consumer to Consumer (C2C): When a consumer sells a good or service to another consumer.
- Consumer to Business (C2B): When a consumer sells their products or services to a business house.
The Greatest eCommerce Challenges in 2021
COVID-19 pandemic has proved itself a blessing in disguise for e-commerce growth. However, this growth is not without its fair share of competition. E-commerce has been transformed for a luxury to a necessity due to the pandemic. The number of online shoppers has enhanced to 30% in FY20. Some of greatest challenges and opportunities faced by e-commerce in the year 2021 are summarized below.
Growing Customer Expectations: COVID-19 pandemic has only enhanced online customers’ expectations. Today customers expect low-cost or free returns, free shipping, user-friendly websites, personalization touch, consistent shopping experience. Clients also prefer to use any choice of payment options like PayPal, ApplePay, Alipay, GooglePay and Payoneer.
Stretched Customer Options: Location and convenience are key to success. Customers’’ preferences from where and how they shop are broadening. This presents acute challenges in e-commerce. New shopping experiences include local e-commerce hubs that brings the convenience of hometown shopping online. Using social media giants like Facebook and Instagram for online shopping also proved beneficial for e-commerce landscape. E-commerce growth has dissolved the physical boundaries. Today, competition is not among local or national online sellers or physical stores moving online. It also comes from companies increasingly selling to other countries. With the advancement of internet and e-commerce, the world has become a global village and physical boundaries no longer matter. Cross border sales to US consumer has increased to 42% year on year basis in May 2020.
Attracting customers: In this age of ruthless social media and plethora of advertising channels, it is not a child’s play to attract customers’ attention. The dynamics of 4Ps of marketing i.e. the product, the price, the place and the promotion have gone through a radical transformation. Thus, connecting with and attracting customers are a challenge in itself.
Just like a double-sided coin, e-Commerce’s challenges are not without its fair share of opportunities.
Revamped shopping behaviors: As they say, the only thing permanent in life is change. E-commerce growth has successfully changed the way consumers shop. Today, older generation consumers, who were once wary of online shopping, are happily switched to this mode.
Digital advertising competition: COVID-19 pandemic has presented a blessing in disguise for advertising competition. In this era of survival of the fittest, entities and marketers that are able to lead to adopt innovative advertising campaigns will reap its rewards. Digital advertising is not entirely a novel idea. But, like many other things, pandemic has also accelerated its pace.
Enhanced demands of home-related products (entertainment, books and ready-to-eat foods): While social distancing may not last in near or far future, its psychological effects will remain with the consumers for a very long time to come. It presents remarkable opportunities for innovative entrepreneurs and marketers. Ecommerce niches that had low traction soon become productive battle grounds. For example, eating-out and outside- entertainment habits are dying, while in-door entertainment and eating are gaining popularity, thanks to e-commerce revolution.
In the end, it can safely be argued that e-commerce has fully revolutionized the way shoppers shop. E-commerce presents both challenges and opportunities. In future, one of the yardsticks for measuring success and failure of businesses will be their ability to capitalize on the e-commerce.
