How E-Commerce Growth Can Help Your Business
Both Amazon and eBay turned 25 in 2020, a strong indication that e-commerce and online shopping are here to stay. After more than two decades of e-commerce growth, the industry has proven it's more than just a niche retail model—it's the predominant shopping solution and should be a key part of most businesses' sales strategies.
The growth of e-commerce
Even before the COVID-19 pandemic, e-commerce has been a trend that's been gaining steam over the course of a generation. In its infancy, the selection of products for sale online was limited, to say the least. Amazon only sold books, and eBay was an auction site for collectors to buy and sell PEZ dispensers.
As technology became more user-friendly and pervasive in everyday life, e-commerce sites went from niche retailers selling books, CDs and electronics to merchants of all sizes selling just about any product or service consumers were searching for.
COVID-19 accelerated e-commerce growth in 2020, as shoppers looked for convenient and safe ways to meet their shopping needs. With stay-at-home orders in place and traditional brick-and-mortar stores closed, consumers turned to their computers, mobile phones and apps to buy everything from groceries to automobiles.
The rise of e-commerce looks like it will continue to thrive long after the pandemic. In the first quarter of 2021, e-commerce spending reached $196.7 billion (PDF), up 39.1% from the same quarter of 2020, according to the US Department of Commerce.
Benefits of an e-commerce strategy
The growth of e-commerce and online shopping is driving traditional brick-and-mortar stores to adapt, with many adding e-commerce options as a complement to their existing sales strategies.
Some of the main benefits:
- Inventory: E-commerce businesses aren't subject to only selling the inventory they physically have in stock. With dropshipping, a retailer can offer thousands of products from all over the world, which will then be shipped directly to the customer by a wholesaler.
- Reaching new customers: An e-commerce business isn't limited to customers who walk by their shop or who know their business. Customers can find them on the internet from anywhere in the world.
- Reaching specific customers: Consumers who search online love the convenience and ease of finding any product and being able to compare prices, even if they ultimately choose to go to a physical store.
- Lower overhead: It just costs less to run an online store.
The bottom line? If your small business doesn't have an e-commerce element, you could be missing out on sales.
Incorporating e-commerce into your business
Not sure where to start? You'll have to make a few investments, such as building a website and preparing to accept payments. Here's how to build an online store.
- Select an e-commerce platform: E-commerce hosting sites give you a platform to sell your product or service. Many of them offer templates to make it easy to set up, as well as an option to buy your own domain name unique to your business. Monthly fees start at around $18 plus transaction fees. The most popular e-commerce platforms are BigCommerce, Shopify, Squarespace, Wix and WooCommerce.
- Design your online store: You want a website that's mobile-friendly and easy to navigate with just a few clean pages. Use high-quality, well-lit photos and easy-to-read descriptions on your product pages. If you already have a logo, favorite font or existing color scheme you use in your brick-and-mortar store or on your marketing materials, use those for your e-commerce store as well to create a seamless customer experience.
- Prepare to accept payments: To accept payments through your e-commerce site, you'll need a merchant account and payment gateway. A merchant account is a bank account that lets you accept credit card and debit card payments, as well as mobile payment options. If you already have a brick-and-mortar store, chances are you already have a merchant account. Payment gateways—such as PayPal, Square or Stripe—allow you to accept online payments and act as the middleman between the customer's credit or debit card and your merchant account. Payment gateways usually plug in easily to your e-commerce platform and link directly to your merchant account.
Is e-commerce right for your business?
The ease of technology and the rise of e-commerce make it an attractive sales option for most businesses. To see if it's right for your business, speak to your trusted business specialists, including your payment processor and your business banker, to determine if you should add an e-commerce site to your existing business and sales channels.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.