What is an ecommerce software application

E-commerce and shop systems


What is e-commerce? Explanations and tips for the selection of shop systems

What is e-commerce?

E-commerce, electronic commerce or electronic trade, refers to any trade, purchase, sale of goods and services by electronic means (Internet, fax, mobile communications, etc.). Buyer and seller have no direct physical contact with each other. E-commerce takes place primarily on the Internet. The trade takes place in different areas such as business to consumer area (B2C), business to business area (B2B) or consumer to consumer (C2C), business to administration (B2A) as well as crowdsourcing or crowdfunding.

There are various forms of e-commerce. Retail and wholesale companies can operate both stationary and online trading and offer their goods online and offline. But dealers can also offer goods exclusively on the Internet.

Benefits of digital commerce

The advantages of digital trade for the customer are clearly the accessibility of the shops, marketplaces and auction platforms, the wide range of information options, the quick and convenient buying experience and the prompt dispatch of goods.

For the seller, the advantages are in any case the global reach and the mostly lower operating costs, targeted marketing and the independence of location. In this way, for example, enough customers can be advertised for niche products on the Internet.

The online shop is the basis of e-commerce. This can be operated alone or connected to an auction or sales platform (marketplaces). Of course, several of your own shops (multishops) can also be used. One advantage of online retail is the expansion options (size and type of range, expansion of retail to other regions or countries, etc.), which are often rather limited in stationary retail. The effort to open a branch with rooms abroad is significantly higher than to set up shipping to another country in the internet shop.

Definition of the shop system

The shop system forms the basis for creating and operating the online shop. Most of the shop systems are structured like a modular system and save the data in a central database. The functional scope of the shop can be supplemented by modules or extensions if necessary. This usually makes shop systems extremely flexible and usually also highly scalable.

A shop system for e-commerce, like many other software, is available both as on-premises or as SaaS software. A large number of open source systems are available on the market, especially for shop systems. Often several online shops (multishop) can be managed via a central database for product data. The possible duplicate content is a disadvantage for search engines. The systems are mostly industry-neutral. They can be tailored to specific industries via plugins, add-ons and adjustments.

The content in commerce is often controlled via content management systems or product information management systems (PIM) centrally via a database. For the various sales options (B2C, B2B,) there are legal, organizational and sales differences that commerce systems should take into account.

Chatbots are often used in conjunction with web shops. For example, they can help with style advice. More information on chatbots: Chatbots and AI - Hype or Opportunity

Important components and functions of the e-commerce shop systems

Shop systems can be composed of a whole range of different modules and functions. In addition to the most important component, the online shop front itself, these can be modules for articles and product groups (e.g. customizing), marketing functions or interfaces. Important components such as seals of approval, payment systems or risk management or fraud prevention are also included.

Online shop

The online shop is the visible part of the shop system on the Internet. The products are presented in the shop. Using a shopping cart function, these can then be packed into the virtual shopping cart and paid for at the checkout. Numerous features such as the display of accessories, similar products, customer accounts, personalized views, multimedia content, customer recommendations, etc. can customize the shopping experience for customers in the internet shop.

Important aspects when operating the shop are target group orientation, possible product configurators, connections to marketplaces, search engine optimization (SEO) and, for example, functions for evaluation and statistics. The possibility of further developing the shop is just as important. Here, license aspects of the software must also be observed.

Merchandise management or ERP

The interface to merchandise management or ERP is essential for the efficient operation of trading software. E-commerce or e-business is one of the building blocks of the ERP software. If the web shop is well frequented, the automated transfer of customer data, orders, payment data, etc. is an advantage, since it can then be managed faster and more profitably.

The merchandise management or company software includes purchasing and sales, warehouse management, accounting, customer relationship management, payment systems, etc. and supports trading on the internet. The connection of merchandise management and electronic commerce system helps to reduce errors, double entries, etc. and supports the provision of content in the shop. The availability of goods in the shops is displayed in real time due to the connection to the inventory management system. A central product information system ensures a uniform product presentation on all channels.

Further information on ERP and inventory management

Payment - payment method

A crucial point in eCommerce is the payment process (ePayment process). A wide variety of payment methods and payment service providers are available for commerce solutions and, as a rule, merchants should not only offer one or two payment methods. Payment options include: Prepayment, purchase on account, cash on delivery, direct debit or electronic direct debit, credit card payment, PayPal, Sofort. Giropay, ClickandBuy, payment via Amazon, Skrill, telephone and smartphone payment, etc.

The selection of payment methods is an essential aspect for successful online trading. When selecting the payment methods, not only the costs of the method and the risk of payment default should be taken into account, but above all customer acceptance. The method that is cheapest for the retailer does not necessarily have to be the one with the highest acceptance.

Another aspect of e-payment is the processing options. Personal payment data can be entered directly in the shop, but it can also be redirected to an external website. It is not only the safety standards to be observed that are important here, but also risk management.

Fraud Prevention / Fraud Detection / Risk Management

Protection against fraud is essential for every retailer. Fraud cases are a big problem in online trading. Fraudsters use not only purchase on account and direct debit as payment methods, but also, for example, the so-called “friendly fraud” in which goods are ordered, paid for by credit card and a chargeback is initiated shortly before the cancellation process. Fraudsters also like to use identity theft to acquire goods.

Fraud prevention, also known as fraud prevention, can be carried out in real time during the online ordering process. E-payment is preceded by creditworthiness and plausibility checks in the backend. In this way, incorrect addresses, stolen account and credit card data, negative creditworthiness, etc. can be checked. Modules and functions for fraud prevention use, among other things, session and limit checks as well as IP and double booking blocks, address verification, velocity check and scoring.

Shopping with mobile devices

An important component of shop systems are the functionalities related to the shopping experience with mobile devices. Increasing the range of a shop through the mobile usage options in particular enables increased sales. Features such as a responsive design, short page loading times, easy operation and high usability are a basic requirement so that customers do not jump off before the purchase is made. When shopping with mobile devices, however, the focus is not only on buying goods on the Internet, but also on advertising for products that may be purchased in a shop or also on Click & Collect - choosing in the Internet shop and picking up or dropping off. also trying on and picking up in the shop.

Further information on industry-specific interfaces

Security / seal of approval

Security is a fundamental requirement for Internet commerce. Customers are paying more and more attention to how their data, especially bank details, are handled. SSL encryption is the standard for data exchange between the shop and the customer's device. Data protection does not stop with the data transfer, but continues when the data is saved, further processed, etc.

One possibility for customers to find out more about the safety and quality of a shop are the possible seals of approval that a shop carries. Examples include "Trusted Shops", "internet privacy standards", "EHI-certified online shop" and "TÜV S @ fer Shopping".

More information on certifications and seals of approval.

Advertising

Whether online or offline business, advertising for the goods and services offered is essential. The most diverse forms and options of advertising are available on the Internet. Shop operators can, for example, use so-called geotargeting to display targeted advertising for products on search engines when the potential customer is near their shop.

Geomarketing supports shop operators in the targeted use of banners and shopping ads for products. With re-targeting, for example, categories or products already viewed by the customer are immediately displayed again when they visit the shop again.

More information on geomarketing.

Multi, cross and omni-channel sales

Multi-channel, cross-channel, omni-channel - there are many sales channels and each of these sales channels has its advantages and disadvantages. In the case of multichannel sales, the individual sales channels such as the shop, Facebook, the retail store etc. are “used” separately. In the so-called cross-channel, the online and offline world is networked and, for example, goods are ordered on the Internet that can be picked up in the store (click & collect).

In omni-channel sales, the various channels merge and there is communication without media discontinuity. When the individual sales channels work well together, business benefits can usually be gained from this.

More information on sales

After-sales service

By definition, after-sales service includes everything that has to be provided after the purchase of a product, such as maintenance and repair, training, instruction or management services. Memberships in customer clubs, newsletters, SMS or professional support are also part of service-oriented after-sales marketing.

The after-sales service is an important way of differentiating yourself from the competition. Good after-sales services usually increase customer loyalty and at the same time reduce willingness to switch.

More information about help desk and support.

Newsletter

Newsletters and mailings are one of the most common and at the same time most effective marketing methods in e-commerce. The shop system usually includes functions for creating and sending newsletters to all customers or to a specific customer group. Often, however, newsletter systems can also be linked to a shop if the shop itself does not contain such features. The shop operator can use the newsletter to receive information about new articles, offers, events, etc. supply. Since newsletters require the opt-in procedure, the customer is already interested in the products, etc., so that leads and sales can be generated more easily.

Client grouping (customer groups) / CRM

In eCommerce, client grouping or customer groups are a special way of addressing customers individually by classifying them. Customer group functions can be used, for example, for individual price labeling, discounts, newsletters or article assignments. The client grouping features also include the assignment of certain designs or layouts, approval and registration functions and net prices for B2B customers.

More information on CRM

Interfaces

Interfaces of shop systems can include not only the interfaces to inventory management or the ERP, but also those to price search engines, logistics service providers, shopping portals, Amazon, eBay and Co. as well as to manufacturers and suppliers. Appropriate interfaces reduce the workload. If data can be exchanged automatically with other systems (internal or external), incorrect entries and redundancies are reduced, among other things.

More information on interfaces.

Customizing of articles

Shop systems that enable the customizing of articles or their individualization are particularly interesting for shop operators, for goods of daily use. Having mugs, shirts, etc. individually designed by the customer makes the goods and the shop particularly interesting for the customer. Mass customization of products is increasing all the time. Customers want to add their own creative expressions to articles. This ranges from individual texts and images to business logos and marketing messages.

Fulfillment

In connection with trading on the Internet, there is not only the sole selling via a shop, but also warehousing or warehouse management, packaging, franking and shipping or logistics, invoicing, dunning and, in addition, returns management and customer care. This scope of services can either be taken over by the provider of the internet shop itself or outsourced to external fulfillment service providers. As a rule, the logistics, i.e. the dispatch of the goods, is taken over by an external service provider or carrier.

More information on warehouse management.


A selection of typical basic functions for shop software:

  • extensive product and category presentations
  • Create customer accounts
  • Allocation of article, customer and invoice numbers
  • Search function
  • different payment options
  • different types of discounts
  • Show accessories or similar products
  • Integration of multimedia content
  • Image display with magnification function
  • Customer recommendations and reviews
  • Create customer groups
  • Display and change of the order status
  • Shopping cart display
  • integrated warehouse management (stock display, automatic adjustment)
  • Deposit of imprint, terms and conditions, cancellation form, etc.
  • Special offers
  • Packing list for warehouse

The important additional functions include:

  • Insert minimum order quantity per item
  • Define packing unit per article
  • Recommendation of articles (Tell-A-Friend)
  • Social media functions
  • Creation of delivery notes and PDF invoices according to DIN
  • Visitor statistics
  • Calculation of shipping costs
  • automatic dispatch notification to customers
  • Base price function
  • Sale of whole packaging units
  • Age rating individually controllable per customer
  • Credit check
  • VAT ID check

Further tips for the selection of shop systems, shop software and web shops:

  • When planning the shop, think about the number of products you want to offer in your shop and whether further products should be added later. Smaller SaaS rental shops sometimes have a limit on the number of items, so you should check whether the selected shop solution meets your requirements.
  • So-called call-to-action functions are also particularly important for sales success. They encourage users to put products in the shopping cart or are displayed when a customer looks at a certain product. These functions such as pop-up windows etc. should be available and be able to be used in a targeted manner.
  • When making your decision, consider which target group you want to address, e.g. companies (B2B) or private individuals (B2C). In the case of companies, it can often happen that they would like to receive an offer before buying a product. If necessary, check whether the shop solution fulfills this requirement if your target group should include companies or municipalities.
  • The product configuration via a product configurator is very important. Depending on the product, it makes sense to provide options for combining individual product options. A good example of this are vehicle configurators.
  • Ask about the variant procedure, variant combination of the respective product, similar to the product configurator.
  • Also think of promotional cross-selling functions. Here, functions are already provided in the shop system that suggest additional products or services for an already selected product or service.
  • Check whether the behavior and functionality of the shopping cart and the ordering process can be configured individually by the administrator for the online shop.
  • For a particularly customer-friendly shop, for example, there should be opportunities for customers to view information such as current orders and status information on availability.
  • Possibilities to select different shipping options and a corresponding parcel tracking, i.e. interfaces to logistics providers, are of great importance. In the B2B area, delivery dates should also be displayed.
  • Another interesting function for customer loyalty is a so-called memo system. There should also be the option to manage these watch lists and to order them directly from these watch lists (wish lists).
  • Think of interfaces to ERP systems, databases, warehouse management, other shop systems, Google, shopping portals or partner portals. One example is central data management, which is used, for example, by the ERP system, in the warehouse management software used and by the shop system. This proves to be an advantage, especially in the order processing process.
  • Also ask whether the software includes online marketing tools such as newsletter dispatch, voucher generation, banner systems, affiliate systems or the like.
  • Options for configuring order options, such as entering texts (for gift cards, greeting cards, etc.), uploading files with e.g. greeting texts (personalizing products), express orders, birthday deliveries, etc.
  • Modern presentation options for products, accessories and product extensions should be included in the range of functions. Teaser texts, professional product videos, zoom function, detailed images, etc. are to be mentioned here in particular.
  • Evaluation functions and options such as statistics, graphics, trend forecasts and simulations are of great importance for management decisions. The shop system should include such features.
  • Integration options in Office programs such as e-mail and word processing as well as spreadsheets should be taken into account when making the selection.
  • An independent criterion which is not directly related to the software solution, but which should be considered, is the legal advice on everything to do with the online shop, e.g. on the topics of GDPR, imprint, cookies, terms and conditions.
  • Sources of information for optimal planning of an Internet shop are e.g. the e-commerce guide, look specifically for the guide, which you can request as a book or download as a PDF document. Your competent IHK could be a good advisor, e.g. the IHK from Hanover deals extensively with the topic of e-business.

Sales in e-commerce continue to grow

In a study by the German E-Commerce and Mail Order Association (bevh) 1 In the case of 40,000 private individuals aged 14 and over who were asked about their spending behavior in online and mail order retailing and their consumption of digital services (e.g. in the area of ​​travel or ticketing), there were significant increases between 2019 and 2020 in particular for everyday goods such as groceries, drugstore items and pet supplies. Total sales of goods in e-commerce rose by 13.4% in 2020 compared to 2019 to 83.4 billion euros. Digital services such as ticket purchases and hotel bookings fell significantly in 2020 due to the pandemic. Sales fell from 19.6 billion euros in 2019 to 9.2 billion euros in 2020.

Graphic: Sales data for e-commerce 2020 compared to 2019. The data source is a static survey by the Federal Association of E-Commerce and Mail Order Germany e.V.