Electronic retailing (E-tailing) is the sale of goods and services through the internet. E-tailing includes both business-to-business (B2B) and business-to-consumer (B2C) sales of products and services.
E-tailing requires companies to adapt their business models to capture internet sales. This adaptation involves constructing robust distribution channels such as warehouses, websites, and product shipping centers to ensure efficient delivery to the customer.
Key Takeaways
- E-tailing involves selling goods and services online.
- E-tailing includes both B2B and B2C transactions.
- Companies like Amazon epitomize the scale and reach possible with e-tailing.
- Traditional retail stores are also increasingly investing in e-tailing to expand their reach.
How Electronic Retailing (E-tailing) Works
E-tailing spans a wide range of companies and industries but shares common elements: creating engaging websites, formulating effective online marketing strategies, ensuring efficient product or service distribution, and utilizing customer data analytics.
Successful e-tailing demands strong branding. Websites should be engaging, user-friendly, and regularly updated to match consumer demands. Products or services must stand out and add consumer value, aside from being competitively priced.
A key to exceptional e-tailing is a responsive and strong distribution network. Customers expect swift delivery of products and transparency in business practices, fostering loyalty and trust.
E-tailers capitalize on various revenue channels. The primary source is directly selling to consumers (B2C) or businesses (B2B). Revenues are also driven by subscription models—consider Netflix, which charges a monthly fee for access to content.
Online advertising presents another revenue stream, exemplified by Meta, which earns significantly through advertisements placed on Facebook by companies targeting its massive user base.
Types of Electronic Retailing (E-tailing)
Business-to-Consumer (B2C) E-Tailing
The B2C model is the most common and recognizable form of e-tailing. This involves companies selling products directly to consumers via their websites. Successful B2C e-tailers emphasize excellent customer relations, quick shipping, and engaging websites.
Business-to-Business (B2B) E-Tailing
B2B e-tailing involves selling products or services to other businesses. This spectrum includes consultants, software developers, freelancers, and wholesalers. Wholesalers, for example, sell bulk orders to B2C businesses, enabling those firms to reach end consumers more effectively.
Benefits and Drawbacks of E-Tailing
E-tailing is pivotal not just for e-commerce startups but also for traditional brick-and-mortar stores exploring online expansions. Here’s a look at the advantages and potential downsides:
Advantages
- Lower Operating Costs: E-tailing reduces infrastructure costs compared to physical stores.
- Broader Reach: Companies can swiftly move products and reach a global customer base online.
- Automation: Automated sales and checkout lessen the need for large staff and reduce overhead costs.
- Data Analytics: Insights into consumer behavior help optimize sales strategies, enhance user experience, and boost revenue.
Disadvantages
- High Initial Investment: Setting up and maintaining an e-tailing website, and building robust infrastructure like distribution centers, can be costly.
- Sensory Limitation: E-tailing lacks the physical engagement of in-store experiences where customers can touch, smell, or try products before purchasing.
- Customer Service: Handling returns and customer service online presents unique challenges in comparison to in-person service.
Real-Life Examples of E-Tailing
Amazon.com
Amazon is the largest global online retailer, providing a vast array of consumer products and subscriptions. In 2019, Amazon generated over $280 billion in revenue, reflecting its dominant e-tailing presence.
Alibaba Group
China’s leading e-tailing company, Alibaba, operates both B2C and B2B business models. It connects Chinese exporters to global buyers and has niche projects like the Rural Taobao program, which aids rural sellers in reaching urban customers. In the fiscal year 2020, Alibaba reported nearly $72 billion in annual revenue.
Embracing electronic retailing can provide companies with significant advantages in today’s digital landscape, fostering wider reach and optimized operations.
Related Terms: E-commerce, Business-to-Consumer, Business-to-Business, Distribution Channels, Marketing Strategy, Branding.
References
- Amazon. “2019 Amazon Annual Report”, Page 18.
- Alibaba Group. “Alibaba Group Fiscal Year 2020 Annual Report”, Page 102.
