eCommerce platforms have transformed the modern age of retail and digital shopping. A well-constituted eCommerce ecosystem is mandatory to sustain in the world of eCommerce. With a better understanding of the eCommerce ecosystem, you can grow a successful eCommerce business.
What is an eCommerce Ecosystem?
An eCommerce ecosystem is a network of interconnected digital platforms, businesses, and service providers that work together to enable digital shopping. Various components, functions, and systems come together to build an eCommerce ecosystem to make online business more flexible. In a competitive eCommerce landscape, the key elements of the eCommerce ecosystem together build a strong marketplace from where businesses can reach a global audience while ensuring a seamless shopping experience.
Key Components of eCommerce Ecosystem
Different components of the eCommerce ecosystem collectively fashion a unified network to prompt business and markets. To run a smooth, successful eCommerce business one must learn how these components work and how they interact with each other. So here goes-
eCommerce Platforms
eCommerce platform is an integral part of the eCommerce ecosystem. It is a software application that manages all the transactions between buyers and sellers. From this platform, developers can build functional websites and apps using different tools. Developers can also integrate different functionalities like inventory management, customer accounts, and payment gateways into their applications. Some leading eCommerce platforms are BigCommerce, Shopify, Wix, and Volusion.
Generally, there are three kinds of eCommerce platforms based on the level of infrastructure control:
Warehouse Management System (WMS)
A Warehouse Management System is software that manages warehouse operations from the period the product enters the distribution center until it leaves. It helps to regulate an automated warehouse with efficiency. Through WMS retailers automate- order processing, picking, packaging, and warehousing which would be done manually otherwise in a traditional system.
Retailers
Online retailers sell their products as a single vendor through their personalized website. If a retailer sells exclusively through their website, the marketplace doesn’t earn revenue from them.
However, many online retailers do use marketplaces to increase their reach. In those cases, marketplaces earn revenue via commissions, listing fees, or subscription services.
Online retailers can directly send products to consumers’ addresses while they can reach a wider customer base, which is not possible in traditional brick-and-mortar stores.
Marketplace
An online marketplace is a website or an app where buyers and sellers interact through buying or selling products or services. It supports eCommerce businesses by facilitating commercial activities. Online marketplaces don’t own inventories rather they host inventories of different businesses. It offers a user interface for consumers to see, compare, and purchase products.
The marketplace makes a profit by taking a commission from each sale. Sellers may be charged with a specific percentage to showcase their products on the marketplace. Marketplace also earns via paid advertisement through which sellers can promote their products and boost sales. In addition, the marketplace also profits from monthly or annual subscriptions.
Amazon is one of the most famous marketplaces with over 200 million users. It is convenient to use and offers a wide range of commodities. Amazon’s revenue comes from web services, subscriptions, and retail. Another leading marketplace is Alibaba which generates revenue from advertising, commissions, and value-added services.
Marketing
Marketing tools like social media and advertising drive traffic through promotional activities. It offers a personalized experience that converts customers while providing them with products or services they need.
Marketing helps to engage and retain consumers through different campaigns. A company can also build a strong brand image through marketing which can ensure conversion rates while boosting sales. Marketing encourages repeat sales and increases customer loyalty. A few popular marketing approaches are SMM, SEO, Email marketing, Content marketing, etc.
Payment
For smooth transactions, the eCommerce ecosystem needs a platform, e.g. Stripe, or PayPal. Business owners, sellers, and customers need a safe payment process. Online payment system provides a fast and simple solution for different payment methods.
Shipping
Shipping means mobilizing ordered items and transferring them from the warehouse to the desired location. This includes shipment tracking and filing paperwork. In shipping, goods are transferred through different mediums such as road, air, or water. There are certain carriers like FedEx and UPS which mainly handle shipping management.
Logistics and Fulfillment
Logistics is the process that handles the flow and distribution of goods. Logistics encompasses production, handling, warehousing, packaging, forwarding, etc. for seamless operations, a well-constituted logistics management has no alternatives.
On the other hand, the fulfillment process is a part of the logistics which involves picking, packing, and shipping goods.
Mobile App
To grow your business you should extend to the mobile app market. You can provide personalized shopping experiences through mobile applications by enabling users to browse, select, and purchase from eCommerce platforms. Mobile features and analytics help to engage and retain customers.
Call Center
Customer satisfaction is one of the most important aspects of the eCommerce business. The call center provides support and resolves issues to ensure customer satisfaction. This helps to enhance customer experience while securing loyalty and retention.
Loyalty System
Loyalty program motivates customers to repeat purchases. It drives sales, boosts customer acquisition, and increases retention. A customer loyalty program helps to build long-term relationships between customers and brands. Loyalty systems can be integrated as add-ons or they can also operate independently.
ERP (Enterprise Resource Planning)
ERP is one kind of software that integrates organizational operations such as risk management, cost management, supply chain, finance, purchasing, and budgeting. It combines company operations and helps businesses to track their progress. With ERP company manages their data, it unifies customer information across all channels which helps with customer service.
Compliance
eCommerce business is bound by laws and regulations just like offline business. They have to abide by industry standards. eCommerce business must comply with different policies, taxation, data protection & privacy. For example, if Amazon wants to do business across borders it will have to comply with local legislation.
Also Read: Choosing The Right eCommerce Business Model for Your Business
Security and Data Privacy
Security is one of the key components of the eCommerce ecosystem. For secure transactions safeguarding the personal information of consumers is a must. Any kind of security breach is nonnegotiable.
Order Management System (OMS)
The Order Management System is software that helps eCommerce businesses with their order management process and order fulfillment.
Through OMS both customers and employees can track orders from beginning to end. It also helps companies with inventory management and warehouse management.
Customer Relationship Management (CRM)
CRM helps companies manage and analyze the personal data of customers like purchasing history to enhance customer experience. The growth of the eCommerce business depends on better customer experience.
You can track customer conversion rates, customer preferences, and customer interaction through CRM.
Product Information Management (PIM)
Selling products is the ultimate goal of any eCommerce business. To market and sell products, businesses need centralized management of product data, this is where PIM comes into play. With rich data, PIM ensures omnichannel marketing leading to advanced eCommerce operations.
Also Read: 20 Top eCommerce Business Ideas to Get Started
Final Words
For a successful eCommerce business understanding the key components of the eCommerce ecosystem has no alternatives. A well-constituted eCommerce ecosystem helps to streamline the digital operations of your eCommerce business while boosting sales and ensuring customer retention. For the growth and success of your eCommerce, you must know how the components of the eCommerce ecosystem work and interact with each other.
FAQs
What is an eCommerce Ecosystem?
An eCommerce ecosystem is a digital platform that includes a wide range of components to enable digital shopping.
What are the challenges in eCommerce?
Challenges that eCommerce businesses face are- high competition, customer dissatisfaction, data privacy and security, etc.
What are the key components of the eCommerce Ecosystem?
A few key components of the eCommerce ecosystem are the eCommerce platform, PIM, CRM, logistics and fulfillment, etc.
