In this section, we’ll review the many benefits of eCommerce, major eCommerce trends, types of eCommerce, and sales tax.
Benefits of Ecommerce
E-Commerce is not a trend, and it isn’t going to pass away any time soon. Why?
Benefits to the buyer:
- Convenience
- Quicker and easier transactions
- Informed purchasing decisions
- Easier price and product comparisons
- Improved delivery process
- Targeted communication
Benefits to the seller:
- Since the physical store is omitted, management costs are reduced.
- Products can be sold around the clock (compared to traditional store opening hours).
- The ability to cover customers outside the geographic location. Better control of the sales process and tracking, especially when there is a portal Point of sale (POS)
- Greater visibility to potential customers via SEO
- More control over personnel costs and inventory management
Ecommerce Trends
The biggest trend around ecommerce right now is growth — and that growth extends far and wide.
1. U.S. Ecommerce Growth
Ecommerce has seen tremendous growth within the U.S. in the last 10 years. In fact, data from the U.S. Department of Commerce shows that in 2017, U.S. ecommerce sales grew faster than it had since 2011 and that it represented 49% of the growth in total retail sales. That growth trend isn’t slowing down, either. Statista data predicts that U.S. By 2024, online retail sales of physical goods are expected to be close to 476.5 billion US dollars.
2. Global Ecommerce Growth
Global eCommerce is rapidly growing, too. Emarketer trend data shows that by 2021, retail e-commerce sales may exceed $4.058 trillion. As more and more shoppers cross-border and search for products in the international market, global e-commerce is gaining momentum.
3. E-commerce Growth by Category
ComScore data indicates there are a few particular industries seeing rapid change in regard to retail eCommerce growth. Jewelry and watches was at the top of the growth chart (as of 2016) with 39% growth, followed by furniture, appliances, and equipment (26%), and video games/accessories (24%).
Lastly, let’s review the three types of ecommerce.
Types of Ecommerce
- Business to Business (B2B)
- Business to Consumer (B2C)
- Consumer to Consumer (C2C)
There are three classifications of еCommerce. The classification depends on who sells to whom.
1. Business to Business (B2B)
Stocks and Services are sold from one company to another. For example, HubSpot provides products to other companies seeking better development.
2. Business to Consumer (B2C)
A business sells to a customer. This is one of the most common types of e-commerce.
For example, online clothing stores or online businesses of some popular physical stores, such as Wal-Mart or Target.
3. Consumer to Consumer (C2C)
You may have guessed it-consumers sell products directly to consumers through online marketplaces. Craigslist, eBay, and Amazon are all examples of C2C eCommerce.
Sales Tax for Your Online Store
Now, you may be worried about how to incorporate sales tax into your online sales. Let’s take a look at the sales tax breakdown of each state. There are currently five states that do not levy sales tax: Delaware, Oregon, Montana, New Hampshire, and Alaska
Sales Tax by State
STATE & TAX RATE
Alabama – 4.00%
Alaska – 0.00%
Arizona – 5.60%
Arkansas – 6.50%
California – 7.25%
Colorado – 2.90%
Connecticut – 6.35%
Delaware – 0.00%
Florida – 6.00%
Georgia – 4.00%
Hawaii – 4.00%
Idaho – 6.00%
Illinois – 6.25%
Indiana – 7.00%
Iowa – 6.00%
Kansas – 6.50%
Kentucky – 6.00%
Louisiana – 5.00%
Maine – 5.50%
Maryland – 6.00%
Massachusetts – 6.25%
Michigan – 6.00%
Minnesota – 6.875%
Mississippi – 7.00%
Missouri – 4.225%
Montana – 0.00%
Nebraska – 5.50%
Nevada – 6.85%
New Hampshire – 0.00%
New Jersey – 6.625%
New Mexico – 5.125%
New York – 4.00%
North Carolina – 4.75%
North Dakota – 5.00%
Ohio – 5.75%
Oklahoma – 4.50%
Oregon – 0.00%
Pennsylvania – 6.00%
Rhode Island – 7.00%
South Carolina – 6.00%
South Dakota – 4.50%
Tennessee – 7.00%
Texas – 6.25%
Utah – 5.95%
Vermont – 6.00%
Virginia – 5.30%
Washington – 6.50%
West Virginia – 6.00%
Wisconsin – 5.00%
Wyoming – 4.00%
D.C. – 5.75%
Source: Based on 2020 Data. Refer to the State’s Department of Revenue for up-to-date rates.
Now that we have reviewed some of the basics of e-commerce, in the next Article we will review the steps you should consider if you want to start an online business.