What Is Electronic Retailing (E-tailing)?
Let me explain electronic retailing, or e-tailing, directly to you: it's the sale of goods and services through the internet, covering both business-to-business (B2B) and business-to-consumer (B2C) sales of products and services.
If you're running a company, you'll need to adapt your business model for internet sales, which means building distribution channels like warehouses, internet webpages, and product shipping centers.
Remember, strong distribution channels are essential in e-tailing because they're what get the product to the customer.
Key Takeaways
To sum it up quickly, electronic retailing is simply selling goods and services online. It includes B2B and B2C sales, with Amazon.com being the largest player offering consumer products and subscriptions via its site. Even traditional brick-and-mortar stores are now investing in e-tailing through their own websites.
How Electronic Retailing (E-tailing) Works
Electronic retailing spans a wide range of companies and industries, but most share common elements like an engaging website, a solid online marketing strategy, efficient product or service distribution, and customer data analytics.
For success, you need strong branding—your website has to be engaging, easy to navigate, and updated regularly to match what consumers want. Your products and services must stand out from competitors, add real value to people's lives, and be priced competitively so price alone doesn't drive customers away.
Efficient distribution networks are crucial; customers won't tolerate long waits for deliveries. Transparency in your business practices builds trust and loyalty.
Companies earn revenue online in various ways, starting with direct sales of products to consumers or businesses. You can also use subscription models, like Netflix charging monthly for media access. Another option is online advertising, such as how Meta earns from ads on its platform targeting its massive user base.
Types of Electronic Retailing (E-tailing)
Let's break down the types. Business-to-consumer (B2C) e-tailing is the most common and familiar to everyday internet users—it involves companies selling finished goods directly to consumers through their websites, with products shipped from warehouses or manufacturers. Success here depends on maintaining good customer relations.
Then there's business-to-business (B2B) e-tailing, where companies sell to other companies. This includes consultants, software developers, freelancers, and wholesalers who sell bulk products from manufacturing plants to businesses, which then resell to consumers. Essentially, a B2B wholesaler might supply a B2C retailer.
Advantages and Disadvantages of Electronic Retailing (E-tailing)
E-tailing isn't just for online-only companies; traditional stores are increasingly investing in it too. Infrastructure costs are lower than running physical stores, allowing faster product movement and access to a larger customer base online.
You can close unprofitable physical locations while keeping the profitable ones. Automated sales and checkouts reduce the need for staff, and websites are cheaper to open, staff, and maintain than physical stores. Advertising costs drop because customers find you via search engines or social media.
Data analytics are invaluable—you can track shopping behavior, like spending habits, page views, and engagement time, to cut lost sales, boost engagement, and increase revenue.
On the downside, building and maintaining an e-tailing website can still be expensive, especially with warehouses and distribution centers for storage and shipping. You'll need resources to handle returns and disputes.
E-tailing lacks the immersive experience of physical stores—customers can't smell, feel, or try products, which often drives purchases. Browsing in person is more enjoyable and can lead to more spending, plus brick-and-mortar stores offer personalized service that's hard to replicate online.
Real World Examples of E-Tailing
Take Amazon.com as a prime example—it's the world's largest online retailer, selling consumer products and subscriptions through its site. In 2019, it generated over $280 billion in revenue and more than $11.6 billion in profit. Competitors like Overstock.com and JD.com operate similarly online.
Alibaba Group is China's biggest e-tailer, operating across China and internationally with a model that includes both B2C and B2B commerce. It connects Chinese exporters to global buyers and has programs like rural Taobao to help sell agricultural products from rural areas to urban consumers. In fiscal year 2020, Alibaba brought in nearly $72 billion in revenue and just under $19.8 billion in profit.
