What Is an eTailer? The Essential Elements for Success
What is an eTailer?
“eTailer,” short for “online retailer,” is a term used to describe a business that earns a significant portion of its income from online sales.
Online sales are booming
While online retail has steadily grown for over a decade, COVID-19 disrupted consumers’ ability to purchase from a physical brick-and-mortar storefront. In response, consumers flocked to online sources like Amazon to buy household items. Grocery stores, department stores, and other retail outlets quickly expanded their online presence to accept online purchases and, in some cases, offer home delivery.
Online sales worldwide are expected to top $8 trillion by 2026. Sales in the US alone were over $1 trillion in 2022. As a result, eTailing is growing with no sign of slowing down.
Types of eTailers
eTailers typically fall into two categories: Business to Consumer (B2C) and Business to Business (B2B).
Most retailers are B2C companies who buy inventory from a wholesaler and sell their products directly to consumers. The wholesaler typically buys large quantities of products from their suppliers. Since they purchase in bulk, wholesalers get the products at a reduced cost and pass the savings to the retailer. The retailer then sells small quantities of the items at a profitable markup to individual consumers.
B2B companies include wholesalers, distributors, and manufacturers who sell their products to other companies. These companies make large purchases of raw materials and finished products and, therefore, can purchase the items at substantially reduced costs compared to consumers.
A third type of eTailer has been growing since the pandemic: Direct to Consumer (DTC). These represent distributors and manufacturers who started bypassing the wholesalers and distributors after seeing their distribution channels dry up and offering their products directly to the consumer. This market has proven to be quite lucrative for these businesses, even after the effects of the pandemic have subsided.
Elements of successful eTailing businesses
While eTailers can differ by size, market, and target audience, several elements remain consistent across those that are successful:
Engaging online presence – Successful eTailers have a visually appealing, easy-to-navigate web presence. Product listings include price, images, availability, and a clear, concise description of each product. The checkout and payment process must be secure and easy to follow, and orders must be easily tracked in your financial and inventory tracking systems. Marketplaces like Etsy, Amazon, and eBay offer a familiar interface where eTailers can sell their products with little or no technical setup.
Reliable supply chain – To sell products online, the company first needs products to sell. Stock-outs can destroy customer satisfaction and return orders. Successful eTailers ensure they can rely on their suppliers for continuous availability of products by watching for potential disruptions in the supply chain (natural disasters, wars, political changes, changes in tariffs, international events, etc.) and having alternatives available if their primary supplier comes up short.
Warehousing and inventory tracking – Startups might be able to operate out of their garage, but as they grow, they need a physical warehouse to house their inventory. Warehouse and inventory management systems help make sure items are tracked accurately. Tying these systems to your financials and web stores allows you to track sales and display accurate inventory counts. Companies can choose from several warehousing options for the one that best suits their business model.
Order fulfillment – Once orders are received and processed, the products must be picked, packed, and shipped to your customers. eTailers must decide on the optimal logistics for their business. Considerations include whether they are shipping from one warehouse or multiple geographically dispersed warehouses, whether the shipping costs are the lowest, whether the delivery time to the customer is the fastest, etc. Some companies, like Amazon, offer warehousing, inventory tracking, and fulfillment services from their warehouses for a fee.
Effective marketing – Successful eTailers understand their market and advertise using the media channels that appeal to that market (or markets). Aside from traditional media (television, radio, print, etc.), options for advertising online include gaming platforms, social media, search engines, and more. The goal is to find the right message and advertising media for your target audience.
Continual analytics – Online activity is easily tracked, and successful eTailers analyze all aspects of their customer interactions, whether by phone, email, or online. For example, here are just some of the types of questions they are trying to answer with their analytics:
- Which ads and advertising channels generated the most revenue per dollar spent?
- Which items are selling the most? The least? Which items are our most profitable?
- Is cart abandonment a problem? Where is it happening in the buying process? Why is it happening?
- How are customers finding us? How can we maximize our ability to be found on search engines?
- What items are being returned and why?
- How well are we managing inventory for popular items (how often do we experience stock-outs)? For unpopular items (overstock)? Which items should be discontinued?
Integrating your online retailing operations
As you can see, many moving parts to a successful eTailing business exist. Whether you are integrating online retail as part of your brick-and-mortar store or eTailing is your sole source of income, integrating your financial, warehousing, inventory management, and fulfillment gives you visibility into your company’s online operations, which is essential for sustained growth.
ArcherPoint can help.
We offer an integrated platform built on Microsoft Dynamics 365 Business Central that integrates your back-end processes with your online stores and marketplaces.