Evolution of eCommerce
- Amruta Bhaskar
- Feb 3, 2021
- 1 comment(s)
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The year is 2021 and e-commerce is already a mammoth industry. No wonder so many investors have interests in the future of e-commerce.
In 2019, global sales totalled $3.5 trillion worldwide. While this is good news, it is certainly not new. Between 2014 and 2017, there was a steady growth rate of about 25.6 percent in e-commerce sales. With the staggering number, there are fears that e-commerce is killing brick and mortar stores.
Over the years, several high-profile downsizes, and bankruptcies have been witnessed. Will e-commerce see the death of physical retail stores in the world? To understand what the future holds, it is essential to understand how the industry has evolved.
Would you believe that it’s been barely over 20 years since Amazon sold their very first book? As one of the most well-known companies worldwide today, it’s incredible that they got their start a mere two decades ago.
But their growth is reflective of the industry as a whole. Over the course of 20 years, e-commerce evolved from a novel new idea to an industry that’s now a major part of the world’s economy. In fact, in 2015, Americans spent over $341 billion online.
Then, in 1994, Pizza hut officially became the first major business to offer online purchasing. One year later, eBay and Amazon were founded. Many people view this is as the start of eCommerce as we know it today.
By 1996, online sales surpassed $1 billion. This is an incredible jump given that the Internet was still only 5 years old – and it certainly forecasted the industry’s later growth. Even so, no one could’ve predicted the $25 billion in sales that took place in 2000.
By the next year, e-commerce solidified its place in the retail industry with 70% of Internet users making an online purchase during the holiday season. In 2005, the term “Cyber Monday” was coined, and the Monday after Thanksgiving officially became the biggest online shopping day of the year.
E-commerce giants such as Amazon, eBay, Walmart, and Alibaba have taken the retail industry by storm.
In 2015, Amazon accounted for 50 percent of the growth in e-commerce. That growth accounted for 9 percent of all retail sales in 2014. This shows the sheer volume of transactions online on Amazon.
The growth of internet-based shopping has had an impact on brick and mortar businesses. However, physical businesses that close are born online.
Automation is a key growth factor in e-commerce. The automation stretches from warehousing through smart inventory management all the way to the delivery of products.
Today, giant companies such as Amazon has automated warehouses inventory management that occurs through smart sensors, RFID tags, and smart shelves. Through smart sensors and the internet of things, companies can track shipments with much ease and automatically notify the customers of the location of their products.
With automation in supply chain management, e-commerce businesses are running more swiftly today than before. That is why many big guns are investing in industrial automation.
The number of shipping and fulfilment centres is growing all over the world. As the number of customers shopping online grows, there is an increasing demand to ship goods within the shortest time possible.
The fulfilment centres are smarter and more automated today than they were a few years ago. The centres guarantee fast shipping, access to data in real-time, and brand representation to your customers.
There is a race to deliver goods to customers faster, and e-commerce businesses are bringing products closer to the people.
The pressure on manufacturers to create environmentally sustainable products is on. For so many shoppers, anything plastic is out of their cart. Glass is now one of the most popular among containers. With the rise in environmental activists, e-commerce companies are moving towards more sustainable products.
The private label refers to a company producing a unique product but packaging and selling the product under another company’s brand name. This has helped so many startup companies create unique products without investing a lot of capital to market their own line of products.
One of the ways in which big data affects e-commerce is in marketing and privacy. Tech companies can acquire, analyze, and use data in such volumes that it is sparking privacy debates.
Data gathered include how people use their social media accounts, pages they follow, what they look at, watch, and listen online, what they buy, what they post, and many others.
With the data collected, e-commerce companies can effectively run data-based marketing campaigns. The campaigns return personalized ads to prospective customers. The ads you get are based on your preferences as seen from your online activity.
Big data is also applied in the improvement of the operations value chain. Ecommerce businesses use big data to assess different aspects of a business’s operations. They analyze how the value chain of the business affects profitability.
This means checking how the activities of a business affect the value offered to customers. Through the analysis, businesses reduce costs and increase profits.
In summary, big data allows companies to collect data in every stage of operations and from a variety of sources. The data shows every step in the chain, the costs, time taken, and the value the step adds to the business. The analyses help managers to make informed decisions.
Although big data has shaped the way e-commerce business markets, its future is uncertain. There are debates on how big data affects the privacy of users.
Entities such as the E.U. are regulating data use and advocating for consumer privacy. There is so much potential in big data but that might be capped by ethical and legal regulations. However, companies can still use big data internally to streamline operations.
Giant tech companies are increasingly packaging big data products and selling them to small businesses. With increased consumers’ desire to support local businesses, large e-commerce players are already making big money by selling software and technological tools to small businesses.
All e-commerce businesses will likely take their businesses to specialized data service providers to meet the demands of the retail market. This way, Software as a Service business will grow exponentially and this will benefit e-commerce businesses.