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Glossary term

E-commerce platforms

Quick definition

An e-commerce platform is software that enables the commercial process of buying and selling over the internet.

Key takeaways

 

An e-commerce platform needs a search feature that lets customers find a specific product, a cart feature that lets them manage their order, and a payment feature.

A company can choose to use an e-commerce solution hosted by an e-commerce provider like Shopify and delivered through the cloud, or they can host a custom e-commerce platform on their premises.

Mistakes companies make include not figuring out their goals in advance, not choosing the best e-commerce platform for their needs, and not paying attention to security regulations.

In the future, new devices like IoT, voice, and virtual reality (VR) will change the landscape of e-commerce stores


Ganeshwaran Jayachandran is the director of product management at AwareX. Before this, he worked on the product marketing team for Magento and was responsible for all cloud initiatives for the Magento Commerce product suite. Prior to working for Magento, Ganeshwaran managed strategic payment products for the Vantiv/Worldpay e-commerce platform.

 

Tory Brunker is the director of product marketing for Magento Commerce at Adobe. Tory has worked in the B2B marketing sphere for over 20 years, leading marketing for companies like Dell, Office Depot, and World First. At Adobe, she handles strategy and delivery for Magento Commerce, Magento Order Management, Magento Business Intelligence, and all other products in the Magento Commerce portfolio.

Q: What is an e-commerce platform?

A: E-commerce is purchasing and selling activities happening over the internet. The different types of commerce include B2B, B2C, C2C (consumer to consumer), and C2B (consumer to business). An e-commerce platform is the software application where both parties, the seller and the consumer, come and play their role. Essentially, a consumer should be able to use an e-commerce platform to discover products, shop around using a cart, and then check out.

Q: What are the different types of e-commerce platforms?

A: The three main types of e-commerce platforms are SaaS (software-as-a-service) platforms, PaaS (platform-as-a-service) platforms, and on-premises platforms. SaaS and PaaS platforms both deliver the e-commerce solutions through the internet. SaaS platforms, like Shopify, involve software only. Once they add a hardware element as well, they become known as PaaS platforms.

On-premise e-commerce solutions are hosted locally by the retailer and managed by their IT staff rather than being set up by another provider and accessed through the cloud. SaaS and PaaS options are best for smaller companies or companies that are just getting started in e-commerce. They offer professional setup and support, but they usually charge a monthly fee to use the site in addition to transaction fees on every purchase. On-premise platforms allow a company to have more control over their e-commerce site and create a custom storefront solution.

Some of the most popular e-commerce platforms in the market today are Shopify, BigCommerce, Magento, WooCommerce, Wix, Big Cartel, Squarespace, Salesforce Commerce Cloud, and Volusion. Platforms like Shopify, Squarespace, and WooCommerce — which is a free WordPress plugin — are better for small businesses who need something easy to get them up and running, while Magento and BigCommerce are more tailored toward larger enterprises with high order volumes. Website builders like Squarespace or Wix offer drag-and-drop templates that are easy for retailers without much coding experience, while other platforms have more complex back ends.

Q: How does a company choose an e-commerce platform?

A: Choosing an e-commerce platform needs to include a pretty exhaustive search process. A company will look at what they can do with a certain platform and how the features of the platform will meet their needs. Gross merchandise volume (GMV) is one important criterion companies need to consider.

Higher GMV merchants tend to have more custom configurations, so they’ll be looking for a suitable platform that allows substantial customization. Lower GMV merchants might be looking for standard services, so they might need a suitable e-commerce platform with standard services at a relatively lower cost. Other criteria that will affect a company’s choice of platform include the search feature, payment options (whether the customers have to use a credit card or if they can pay through a service like PayPal), security level, and how the platform ties into a larger campaign.

No single e-commerce platform can offer everything to all customers. Each platform leaves gaps, so when you’re choosing a platform to use, consider what specific needs you want the platform to address. One option is to choose an extensible platform that can be customized with additional plugins and add-ons, so that even if the base platform doesn’t do everything, it can be integrated with other services like content management systems (CMS) and enterprise resource planning (ERP) systems to make up the difference.

Q: What features does an e-commerce platform need?

A: One of the features that e-commerce software needs is the ability to search the store so customers can find products. Any e-commerce site should also have a shopping cart where their purchaser, or interested party, can store and view their intended purchases before moving into the checkout process. Because the purpose of an e-commerce platform is to facilitate purchasing, the platform needs to have a payment gateway so that customers can pay for their products. These three features — search, cart, and payment — can be wired together in any way you want to form a basic e-commerce platform.

In addition to those three basic features, an e-commerce platform can also have features like a database to store transaction details, inventory management to track the available merchandise, customer support, and order management to improve the customer journey. A platform might also have security features and integrations to expand into new channels. The features vary from platform to platform, so a brand should consider what features will help them meet their goals before choosing an e-commerce platform.

Q: How does a company set up an e-commerce platform?

A: If an e-commerce business is interested in a particular platform, they will go through the selection process. Once they choose a platform, they will work with the provider to implement it. At the time of implementation, the provider will try to understand the online business and make sure the business scenarios are captured. The e-commerce platform provider will make sure the site looks good and that the customer can do everything in the online store that they could do in a brick-and-mortar store.

To get the most out of their e-commerce platform, companies should do their research and choose a platform that meets their needs, and they should work closely with the solution consultants. Solution consultants can help a company understand how to get the most out of the platform. They will look at all the features of the platform and identify how each will be made to work for that specific company.

If a company is looking to implement an e-commerce website, they should determine what their business goals are for that platform. For example, if they’re a retailer or B2C business, they will want to drive revenue from that particular channel. And they’re looking to augment their non-online channels, meaning their brick-and-mortar store. But if they’re a B2B business, they may actually be looking for that e-commerce site to drive not only orders and revenue, but perhaps also some additional engagement within those accounts — and actually drive leads and additional sales activities as opposed to just direct purchases or product fulfillment for B2B companies.

Q: How do e-commerce platform needs differ between large and small companies?

A: Large companies generally have a brand perception that they want to maintain. They want to have a platform tailored to their needs. And they want to have a bigger impact in terms of their revenue. For example, GMV is one KPI. They will generally look at how a platform will drive purchases of a specific merchandise, reduce the cart abandonment rate, and improve security.

A small business, on the other hand, may not be looking at all that. They will be looking at whether the customer journey will now be fulfilled. They don’t have huge revenue targets. And they are more focused on getting up and running. The goals are drastically different between large and small retailers

Q: What mistakes do companies make with e-commerce platforms?

A: Some common mistakes companies make include choosing the wrong platform, not focusing on search engine optimization or having a poor SEO strategy and having a poor product catalog. Sometimes companies won’t do their research and will choose the cheapest, fastest product rather than a platform that will actually meet their needs. Companies can also run into problems with their customization — either they haven’t customized enough and aren’t meeting their needs, or they have customized too much and have created an overly complex product. 

Another mistake is a lack of quality security around a merchant’s site. Any merchant that accepts credit card payments needs to be in compliance with PCI security standards, and sometimes this requirement gets overlooked. And regulations change from country to country, so what’s relevant and applicable in the United States is completely different from Europe. 

To avoid making mistakes, companies need to make sure they’re working with a partner who can point them in the right direction and answer any questions. And they need to understand their business needs and their goals, and how an e-commerce platform will achieve those goals.

Q: How have e-commerce platforms changed over time?

A: E-commerce platforms grew out of the mail order or telephone order purchasing options that were popular in the 1970s and 1980s. The mail order/telephone order business cycle was incorporated into the online model. And now there are two pieces to online purchasing — branded e-commerce sites, which are specific to the retailer, and the marketplace, which is made up of sites like Amazon.

Q: How will e-commerce platforms continue to evolve?

A: Every platform has limitations, whether that’s its ability to host customizations and adopt new technology, its cost effectiveness, or its level of security. Future developments will address some of these limitations, as well as provide enhanced support for B2B interactions and improved mobile commerce workflows.

Going forward, a major change that will affect e-commerce platforms is the implementation of and integration with new devices. With an IoT device in your car, for example, you could make a purchase through your dashboard while driving. Those use cases have already been tried out and been found successful. IoT-driven commerce is the next step for e-commerce, along with voice and augmented or virtual reality.

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