E-commerce and m-commerce

M-commerce is buying and selling through wireless mobile devices, such as smartphones and tablets. It is a form of e-commerce: buying through a retailer’s smartphone app is both e-commerce and m-commerce. Customers can also buy through a website viewed on a mobile device.

Businesses do not have to build their own online store. Marketplaces such as Amazon, eBay and Etsy allow businesses, including small enterprises, to sell through an existing platform.

Why digital commerce has become more important

The growth in smartphone and tablet use has made online shopping available wherever customers have an internet connection. Customers can browse and buy without travelling to a shop, and they are not restricted to its opening hours. This convenience fits around busy lives and creates more opportunities for businesses to receive orders.

Mobile-friendly websites and apps make the process easier. For example, Next’s app allows customers to view products, check availability, place orders and track their progress. These features help customers complete purchases and manage them afterwards. App messages can also communicate special offers, encouraging customers to return.

The closure of non-essential shops during the COVID-19 pandemic accelerated the move towards online shopping. As more customers shop digitally, an effective online service becomes increasingly important for businesses seeking to remain competitive.

Reaching national and international customers

A physical shop mainly attracts people who can visit its location. An online store can be accessed by customers across the country and overseas, extending the business’s market reach without requiring it to open shops in each market. This is particularly useful for small businesses that cannot afford overseas premises.

Access to more potential customers creates opportunities to increase sales. However, being visible internationally is not the same as serving customers successfully. The business must be able to fulfil orders and arrange reliable deliveries. Overseas delivery can cost more, and customers may be unwilling to pay the charges.

Wider reach also works in both directions: UK businesses can sell abroad, but overseas competitors can sell to UK customers. Digital commerce therefore increases opportunities and competitive pressure at the same time.

Benefits for the business

Orders can be placed around the clock. Customers can buy at times that suit them, including when physical shops are closed. This can increase sales opportunities, although packing and delivery do not necessarily operate 24 hours a day.

An online-only business can avoid expensive retail premises. Saving shop rent and associated costs may help it offer competitive prices or improve profits. Online selling still has costs, so these savings must be compared with website, storage and delivery expenses.

Customer information can support future promotion. Information about purchases can help a business identify what interests its customers and make later promotions more relevant. A convenient buying process and useful delivery tracking can also encourage repeat purchases.

Drawbacks and operational demands

Customers can compare rivals easily. They can quickly check similar products and prices, including those offered by overseas businesses. This makes switching suppliers easier and can put pressure on prices and profits.

The online service needs investment and maintenance. Product information must be accurate and up to date, and the website or app must be easy to use. Technical problems can prevent purchases. Security systems must also be maintained: fears about fraud or misuse of payment details can discourage customers from buying.

Goods still need storing, packing and delivering. A large volume of orders may require warehouses, stock-control systems and staff. Late or missing deliveries can damage the business’s reputation and reduce future sales.

Customers cannot physically inspect products before buying. A product may look suitable online but disappoint when it arrives, increasing returns. Processing refunds and returned goods takes time and adds costs. The lack of face-to-face contact can also make it harder to explain products or gather immediate customer feedback.

Judging whether online selling is worthwhile

The best choice depends on the product, the target customers and the business’s resources. Online selling is more attractive when customers value convenience and the business can deliver its products reliably at an acceptable cost. Its advantages may be weaker where customers need to handle a product or receive personal advice before buying.

A business should weigh extra sales and savings on premises against the costs of maintaining its digital service, fulfilling orders and handling returns. It may choose to combine online selling with physical shops so customers have more than one way to buy. The key question is whether the additional sales can be served profitably, not simply whether online selling reaches more people.

• Mobile-device growth and convenient shopping encourage online purchases.
• Customers can order 24/7 without visiting a shop.
• Businesses can reach national and international customers without opening shops there.
• Wider reach also brings more overseas competition; delivery capability limits the opportunity.

Benefits versus drawbacks

Overall judgement

Suitability depends on the product, customer preferences, available finance and reliable order fulfilment. Compare additional sales and cost savings with digital, delivery and returns costs; more sales do not automatically mean more profit.