Non-digital aspects of eCommerce

I find one thing curious: when I talk to many people about eCommerce, including —or precisely— those most connected to the online world, they are often surprised when I say that at least 50% of the most relevant aspects of an eCommerce are not digital.

But isn’t electronic commerce selling on the Internet? Yes, that is exactly what it is, but that action involves tasks that are not digital at all. In that sense, an online store (a concept we will use in this article as analogous to eCommerce) is much more similar to any physical retail business: the business lies in buying products at a lower cost than the price at which they are later sold, obtaining a profit margin that makes the project profitable.

As you can see, the core of the commercial activity is exactly the same as that of any physical store, and that is why we have to face the same challenges and solve a series of issues that have little to do with the online world. I am referring to matters such as finding suppliers, logistics, customer service and the legal and financial issues that will arise throughout the life of the project.

Of course, there are exclusively digital points —think, for example, of all the technology behind an eCommerce or how little the customer acquisition process of a physical store has to do with that of an online one— but we must never forget that eCommerce is a business and has to behave as such.

And this is the point that many people have not internalized in their mental picture. They think that because it is “on the internet” the physical tasks disappear, and that is not the case. Not at all.

Let's look in a little more detail at each of the more physical aspects (to call them something) that are part of an eCommerce project:

Logistics in eCommerce

This is a more or less obvious section: when you buy things remotely, someone has to bring them to your home. Unlike a high-street store, where you go in and buy what you want or can, in an online store there is (at least) one company in charge of collecting your order and getting it to the address indicated.

The previous point refers to shipping, but there are more logistics-related issues that an eCommerce has to deal with, for example, returns (also known as reverselogistics). Returning to the example of any physical store: when you buy something that has a defect or does not work, you go back the next day with your receipt and the shop assistant, with more or fewer obstacles, refunds the amount.

In an eCommerce it is not expected that the customer will come to the premises to return it, but rather that a courier company collects the product to be returned, brings it to our premises and, once here, our systems assign it a location or physical space in the warehouse. Again, there is very little digital in this process.

Since we are talking about warehouse, perhaps at first, depending on the size of the products we handle, we may not need one, but as soon as the business grows a little we will need space both to store the goods and to pack them.

And we come to another non-digital particularity of eCommerce logistics: packaging or packing. This task also has a double non-digital side: on the one hand, buying and storing packaging material (boxes, packing tape, bubble wrap…) and, on the other, the job of packing and labelling the goods for shipment. If we thought that electronic commerce consisted exclusively of sitting in front of a computer and typing away, we can see we were wrong. The PC work has to be done, of course, but so do many other tasks away from it.

Purchasing and product management

Leaving the logistics side aside, there is another fundamental task that is very little digital: purchasing and managing the products for sale. In this article we are referring to online stores (not a dropshipping) system) and in any store, physical or digital, there have to be products for sale.

The way to obtain them can vary: you search and buy online, manage it by phone or turn to local wholesale suppliers, which is very common at the beginning of the project if you do not already have a supplier portfolio.

If this is our case, it is very possible that local suppliers will not deliver to our address, but rather that we have to go with our vehicle to buy the goods, bring them to the premises, unload them and find them a location.

As you can see, it is not just (although also) a matter of doing research and benchmarking on the Internet to see if we have options to compete in the sector…

Customer service

Electronic commerce is the same as buying and selling, right? Well no, or at least not only. After the sale begins the after-sales, part which, mainly because of the shipping logistics involved, entails much more work than in a physical store. You can imagine the number of calls along the lines of "where is my order?“.

To this we must add that, in the step before the purchase, there will be a multitude of customers contacting us to request information about our products or conditions and although every day more people will do so through digital channels (WhatsApp, eMail, Social Networks or Chats…) there is still a large group of customers who will prefer the telephone.

It is possible that, because of this, you are considering not placing a visible phone number on your website, but what you save on this type of management you are probably losing in sales. Not every eCommerce is Amazon or eBay, nor can every project afford to have no telephone sales channel…

Taxation, finance and legal aspects

Here it is worth going back to the beginning of the article, when we said that an eCommerce is a company. As such, it is subject to general laws and to some particularities it has to comply with.

In the same way, it will have to pay its taxes (VAT, corporate tax…), the administrator's self-employed fee, employee salaries, premises… And all of that has to come out of the profit margin obtained between the purchase price of the goods and the price at which I sell them.

For this reason, a good financial plan will help us from the very beginning. Having taxation and e-commerce regulations clear will help us avoid unpleasant surprises in the form of unexpected payments, drops in revenue or even fines. Can anyone tell me how this differs from traditional commerce?

Conclusions

If you have made it this far, you may have the impression that an online store has much less of a digital side than you thought. That is not my intention. An eCommerce has a huge digital side, everything that comes to mind and probably more.

What I wanted to highlight is that there is another, lesser-known side that is very physical and that, if you are thinking of launching your store so you can spend all day in front of the computer creating Stories on Instagram or writing articles so the blog ranks better on Google, maybe you should give it another thought.

eCommerce has a lot of “e” (electronic) but also a lot of “Commerce” and this part is often undervalued or left aside when we think about setting up an online store project, and it is just as, just as, just as important as the digital one.

With this post I only intend to warn you so that what happened to so many of us when we started does not happen to you. What I would have given to know it back then ;P

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