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E-commerce, the undisputed winner of 2020

3 min. reading
E-commerce / 28 June, 2021

Edgar Mondragón Tenorio Journalist

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In 2020, one of the undisputed winners was the E-commerce sector, driven by the restrictive measures applied in all countries of the world, which promoted the closure of physical establishments to reduce waves of contagion.

Online stores sprang up like mushrooms in the rain, and many of the previously existing outlets consolidated their place in this sector.

The future of e-commerce: How to invest?

The future of e-commerce: How to invest?

The pandemic accelerated a process of digital transformation that was already underway, triggering the need for users to shop from home. How can we invest in and take advantage of this trend?

Understanding the business

In simple words, E-commerce can be understood as the sale of physical or digital products over the Internet, however, there are substantial differences that we must consider understanding the complexity and potential of this market that continues to expand at an accelerated pace.

To begin with, there are 5 types of e-commerce

  1. B2B (Business to Business): in this model, companies offer various products and services for other companies to buy.
  2. B2C (Business to Consumer): this is the traditional model, in which companies sell their respective products and services directly to consumers.
  3. C2B (Consumer to Business): this is the inverse version of the traditional model, under this concept people make different types of services available to companies.
  4. C2C (Consumer to Consumer): this is perhaps the best-known form of e-commerce, since it involves interaction between consumers and suppliers through different marketplaces, such as Mercado Libre.
  5. S-Commerce (Social Commerce): this modality has become so common that sometimes we do not consider it, it is given by means of the spaces that some social networks already have destined to lodge electronic commerce.

Differences between E-commerce and Marketplace

Although they may seem similar, there are differences between these models. An E-commerce is basically an online store that only sells, through its platform, its own products, and for this, in the first instance, owns its own web domain.

The e-commerce takes care of the entire process from warehousing, delivery logistics, marketing, and payment processing.

On the other hand, the Marketplace is the space for different product suppliers to host and promote their products. In this modality, the Marketplace is regularly in charge of managing payments in exchange for a commission.

It is also in charge of the promotion of these products at the convenience of this host, taking away the independence of those who offer their products there in terms of marketing strategy. At the same time, those who host in these spaces expect to see their sales boosted by the renown of the big Marketplaces.

The marketplace

Although it may seem the opposite because of how overwhelming Internet marketing can be at times, the truth is that, regardless of the boost this sector has had because of the pandemic, today 80% of commerce is still offline, which means that this sector is constantly expanding and there is still a lot of ground to cover.

This is a market with many challenges ahead and it must face several challenges to reach a full boom. Among others, the fact that a large part of the world’s population still does not have an Internet connection, which immediately rules out many potential consumers.

Another factor is the cultural differences in the acceptance of e-commerce. Around the world there are scenarios as diverse as, in Spain, 19% of the population with internet access made purchases by this means in 2019, while in England, more than 50% of the population makes weekly purchases in some e-commerce, or in China, up to 82% of the population was already in the habit of buying various products online in the same year 2019.

By 2020, in Spain, the proportion of people who made purchases online increased to 70%. In Mexico, online sales in the same year increased by 80% compared to the previous year, and in the United States, Walmart alone also saw its online sales increase to 74%.

Currently, India, China, Mexico, the Philippines, Malaysia, Canada, Argentina, Russia, Indonesia, and South Korea are among the fastest growing e-commerce markets, and it is estimated that this sector will reach $6.54 trillion in sales by 2023 worldwide.

The expansion of electronic commerce, or e-commerce, is not likely to stop any time soon; on the contrary, there is still plenty of market space to cover and opportunities remain in sight.

 

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