So... What does "eCommerce" really mean in 2021?

Last week, a colleague surprised me by asking “so what is eCommerce, really?” For a moment or two, I wasn’t sure how to answer – there are so many ways to approach the question! This led to a great conversation which got me thinking and, later, writing. Here’s my POV on what eCommerce means in 2021 coming out of that discussion...

Before we define eCommerce, though, let’s get spelling out of the way since so many people are just doing it plain wrong. It’s spelled “eCommerce.” That’s with a lower case “e” and a capital “C” even when used at the beginning of a sentence. Please, please, please don’t put a dash in there (“e-commerce”). Anyone who tells you otherwise is a heathen!

Defining eCommerce is a harder task - let's start with some examples…

That Kid Rock download you just got on iTunes? It’s eCommerce! The Uber you hailed to drive you to your Friday happy hour? It’s eCommerce! The groceries you just picked up curbside at the local Walmart? That’s eCommerce too! What about that signed Shaquille O’Neal jersey that you just bought on eBay? 110% eCommerce!

What do all these examples have in common? You “clicked to buy” (or maybe you “spoke to buy”). Simply stated, eCommerce is any transaction in which selection and payment happen on the shopper’s own device.

Now that we have that out of the way, let’s dig deeper into the types of eCommerce. There are 2 primary dimensions to consider and 2 secondary dimensions. The primary dimensions are WHO is selling and HOW the product gets delivered.

WHO IS THE SELLER?

eCommerce has leveled the retail playing field. Now, pretty much anyone can establish themselves as a national or even global marketer. In some cases, your neighbor might be competing directly with retail behemoths like Walmart and Amazon. Here are the main selling models available today:

• Brand-to-Shopper: This model is usually called “Direct-to-Consumer” (or DTC for short) and occurs when a manufacturer has set up their own shoppable website. Advantages to the brand are tighter control of the shopping experience, the potential for higher margins, and the ability to collect data about the shopper and their behavior. The biggest downside, though, is that the brand has to entice the shopper and much of the time that means big investments in paid media. Big manufacturers like Nike and Pepsi have recently prioritized this model.
• Brand-to-Wholesaler: This model, in which the brand sells to a “middle person,” predates eCommerce. Increasingly, though, brands are using the same technologies and approaches they’ve applied in Brand-to-Shopper to serve Wholesalers. This is rapidly replacing archaic telephone and even FAX-based transactions (yes, as of this writing some companies still FAX).
• Retailer-to-Shopper: This is also known as “first party” selling and represents the biggest part of eCommerce today. The model is in use by a combination of “pure-play” (eCommerce only) and “omnichannel” (eCommerce + physical) retailers. Most of the sales on Walmart.com are Retailer-to-Shopper but that’s not the case for Amazon.com – most of their sales are in fact “Marketplace-to-Shopper.”
• Marketplace-to-Shopper: In the marketplace model, a retailer (or another intermediary) opens up their store and allows “third parties” to sell there too. These third parties can be individuals, wholesalers, and even the brands themselves. Very often, multiple third parties will compete with each other and possibly the retailer to sell a shopper the same item – the winner will usually be either the retailer or the seller with the lowest price. Instacart, Amazon, and Walmart are all examples of marketplace selling.
• Peer-to-Peer: This is the eCommerce version of a swap meet where individuals often sell comic books, crafts, and collectibles to each other. The transactions are facilitated by a peer-to-peer marketplace facilitator - eBay and Etsy are both great examples.

HOW DOES THE PRODUCT OR SERVICE GET DELIVERED?

If you’re generation Y or older, when you hear “eCommerce,” you likely think about the brown UPS truck pulling up to your house with goodies from Amazon. Until recently, this was generally true but over the past 5 years, the number of delivery options has exploded.

• Direct Delivery: This is the brown UPS truck mentioned above. In direct delivery, the seller (whoever that may be), either delivers the product or service to you themselves or contracts another company (UPS, FedEx, Uber, etc.) to handle that for them. Although this the original way that eCommerce orders got to shoppers, there is innovation happening here and it's all about speed. What once took 3-5 days to get to your home now can take a day or even just an hour or two.
• In-Store Pickup: This way of shopping was designed as a way to save the shopper time and stress, When you analyze time spent in a weekly grocery visit, finding a parking spot and transacting the purchase represents a very small part of your visit. Walking the aisles, browsing, and filling your cart are real time killers. With in-store pickup, all of that is moved to your device so you can just walk in and get your stuff.
• Curbside Pickup: This is a variation of in-store pickup that’s even easier because you don’t even have to get outside of your car. Since COVID-19, thousands of restaurants have also implemented this form of eCommerce.
• Digital Delivery: Are Netflix and Audible examples of eCommerce? Most definitely. Wasteful DVDs, CDs, and books have been quietly going the way of the newspaper (dinosaur) as paid content gets delivered directly to the shopper.
• Service on Site: Did you just hire someone from Angi to mow your lawn? If so, that service will be “delivered” to your house and completed on-premise. Service on site is simply the delivery of labor instead of goods.

Things get interesting when we combine the Seller and Delivery dimensions. For example, you can get a curbside pickup for most retailers' 1st party items but what about their 3rd party marketplace items? Is that an important gap and, if so, how could it be addressed in the future?

While the primary dimensions we reviewed define the business model, our secondary dimensions (Buying Context and Pricing Approach) impact how shopping is experienced.

WHAT'S THE BUYING CONTEXT?

Shopping isn’t just for stores anymore. Smart marketers have finally figured out that shopping experiences should be distributed, ideally right to that moment when you’re most inspired and excited about a product.

• In Line with Content: The content you consume says a lot about your interests and how close you are to buying. If you’re watching laundry machine reviews on YouTube, you’re likely getting close. Why not offer you a deal while you’re watching the video? Content providers of all kinds, including YouTube, have been working hard to eCommerce-enable their assets, Amazon’s “Live” service which makes influencer content shoppable is another great example!
• Shoppable Ad: When a retailer or brand advertises a product online, it often takes the shopper 3-5 or more “clicks” to finally get to a shopping cart. Every one of those clicks creates “friction” which leads to shoppers abandoning the process. The advertising and adtech industries have been addressing this challenge with advertising formats that more directly enable shopping.
• Subscription: Subscriptions are the holy grail of eCommerce for marketers. A subscriber only needs to be enticed one time but will, on average, be good for multiple purchases. On the right types of products (consumables), this is good for the shopper too since they know their needs will be met even if they forget to order. Brands like Blue Apron and Stitch Fix are focused on this model.
• Digital Assistants, Voice, and SMS: As Siri and Alexa move beyond the phone and into all your devices (even cars), digital assistants are finally getting useful – both for users and for marketers. Voice-enabled ordering (“Alexa – buy Gillette razors”) is still a very small part of eCommerce today but is expected to grow fast. SMS and chatbots are also quickly becoming bigger parts of the buying process.
• The “Traditional” eCommerce Store: Last but definitely not least is the old-school website. A brand’s direct site can have as few as one product but larger retailers can have millions (Amazon.com is reputed to have about 350 million products available). Whether big or small, good stores provide three main features to shoppers – great browsing and searching, useful product information, and easy payment transactions. These stores will continue to be the hub in eCommerce marketers' distributed eCommerce efforts.

HOW IS PRICING ESTABLISHED?

Comparing prices in the “old days” was a difficult task for shoppers which in some cases meant visiting multiple stores just to get a little information. The Internet has made it easier than ever for shoppers to find the best deal either with a few clicks or with the help of apps. Because of this, setting the right price is a real challenge for sellers – these are the ways they’re doing it:

• Established by Brand: On brand-to-shopper stores, pricing is always established by the brand. This raises some big questions for brands that are also sold by retailers – if the brand offers a better value on their own site, they’re competing with the retailer. If they price too high, no one will buy.
• Established by Retailer: This is always the case in retail 1st party selling. HOW the pricing is established, though, is an interesting question. Price used to be set by retail merchandising departments who researched their category and their competition very closely. Today, 1st party price is often set by “robots” – software that scans (“crawls”) competitive sites continuously to get the data needed for automated pricing decisions.
• Competitive Marketplace: In competitive 3rd party marketplaces, prices are set by the rules of supply and demand. When there’s a glut of product, sellers will start to take price down to move inventory. When inventory’s scarce (like facemasks in 2020), the sky’s the limit.
• Established by Shopper: In some cases, the shopper can “make an offer” to the brand who then decides whether or not the price is sufficiently good to transact. Amazon.com offers this in some parts of their store but it’s infrequently used. It’s a major part of eBay’s model, however…
• Established in Auction: Auctions are similar to marketplaces in the sense that pricing is driven by supply and demand. The difference is that multiple buyers (instead of sellers) are competing for the privilege of transacting. eBay is the best known but there are many sites focused on niches including real estate, autos, luxury items, and even government surplus.

Modern eCommerce is nearly 30 years old and the space continues to evolve at hyperspeed. Tomorrow, there will be more new and interesting ways to buy and sell. Don’t let all the changes and innovations distract you, though, if you can select an item and transact on your device, you’re doing eCommerce!

Want to talk more about this article or about eCommerce in general? Reach out to me here - [email protected].

About the Author:

When Procter & Gamble, the world’s biggest CPG firm, needed a leader to build their new Global Direct-to-Consumer eCommerce team, they chose Allan Peretz. His unique mix of global business strategy, brand management, and information technology credentials made him the natural choice.

As president of Bold Strategies, Inc. (www.boldstrategies.com), Allan now leads an all-star team that provides strategic eCommerce guidance and end-to-end service to brands of all sizes across Amazon, Walmart, Instacart, DTC, and other selling channels.