The e-commerce industry has received significant hype in the news lately. Analysts speak of the “Amazon effect” and the “death of retail” all the time. The reality is that e-commerce involves much more than just selling on Amazon, and plenty of major retailers are already taking advantage of it.
The e-commerce industry can be broken down into two major segments: online stores and e-commerce platforms.
Online stores are websites that sell products online and are one of the most visible segments of e-commerce. This space includes Amazon, but it also includes major retailers such as Walmart, Costco, and Nordstrom, all of which have significant online presences. One feature of online stores is that they allow smaller companies to build a large audience with less investment than a typical brick-and-mortar store. Because of this, small startups have gained significant traction online even before they had a physical footprint. Examples of these digital-first brands are ModCloth and Bonobos1.
These examples, however, just barely scratch the surface when it comes to understanding online shopping. The reality is that there are many different shapes and sizes of online stores. To better understand these different types, it is helpful to break them down into different categories based on how they are set up. The following are the major types of online shopping:
The e-commerce platform space covers businesses that offer products and software that support online stores. These companies help store owners run and manage their online businesses. Companies in this space may sell predesigned shop templates, assist with inventory management, track customer data, and integrate with social media. This space has many facets and is constantly changing with customer preferences.
Shopify is a well-known example of an e-commerce platform that caters to small- and medium-sized businesses. Magento and WooCommerce also fall under this category. At the enterprise level, Oracle, SAP, and Salesforce are among the growing number of companies that offer e-commerce platforms. Many of these larger companies have made acquisitions in recent years to improve their platforms6.
E-commerce often goes hand in hand with other technology industries such as the following:
Though these other industries are closely related to e-commerce, they are typically classified as being separate from it. As consumer sentiment and demand continues to shift purchasing habits from brick-and-mortar to web-based platforms, it is likely to simultaneously shift development, innovation and investment in the same direction.
This is the first in a several part series intended to cover E-commerce. Our next post will cover more detail in E-commerce investment banking, including mergers and acquisitions. Thank you for your interest and we welcome your feedback and comments below.
Trevor Armstrong contributed to this article.