What Does it Mean to be an Online Retailer?

Shopping has undergone a significant transformation in recent years with the rise of online retailers. These businesses, also known as e-commerce companies, allow customers to purchase products or services through the internet. 

However, many people may not fully understand what it means to be an online retailer or the advantages and challenges that come with it. 

In this article, we will explore the meaning of online retailers and take a closer look at the benefits and drawbacks of shopping with them. 

From convenience and variety of products to competitive pricing and personalization, we'll dive into what sets online retailers apart from traditional brick-and-mortar stores and the challenges they face.

Whether you're a seasoned online shopper or just getting started, this article will provide you with a comprehensive understanding of the world of e-commerce.

I. Online Retailer Meaning?

What Does it Mean to be an Online Retailer?

Definition of online retailer: An online retailer is a business that sells products or services through the internet. Online retailers offer customers the convenience of shopping from their own home and have become increasingly popular in recent years.

Importance of online retail in today's economy: Online retail sales have grown rapidly in recent years and are projected to continue to grow in the future. 

According to a study by eMarketer, global e-commerce sales are expected to reach $4.9 trillion by 2021. This growth is driven by factors such as increasing internet penetration, the rise of mobile devices, and changing consumer behavior.

2. Types of online retailers

A. Marketplace retailers: 

Marketplace retailers, such as Amazon and Etsy, operate as a platform for multiple third-party sellers to sell their products. Read: Ecommerce-dropshipping

This allows customers to find a wide variety of products in one place, but also means that quality and customer service may vary.

B. Direct-to-consumer retailers: 

Direct-to-consumer retailers, such as Warby Parker and Casper, sell their own products directly to customers. This allows for more control over the customer experience, but also requires a larger investment in inventory and distribution.

C. Hybrid retailers: 

Hybrid retailers, such as Birchbox and Dollar Shave Club, sell both their own products and those of other brands. This allows them to offer a curated selection of products while still maintaining control over the customer experience.

3. Advantages of shopping with online retailers

A. Convenience: 

Shopping online allows customers to purchase products at any time, from anywhere with an internet connection. This eliminates the need for customers to travel to a physical store, saving time and effort.

According to a survey by the National Retail Federation, 61% of Americans prefer to shop online due to the convenience it offers. 

Additionally, online retailers often offer features such as virtual try-on, virtual tours of products, and live chat support to make the shopping experience even more convenient.

B. Variety of products: 

Online retailers often carry a wider variety of products than physical stores, making it easier for customers to find the products they need. 

This is because online retailers have less physical space constraints and can carry a larger inventory.

According to a study by the Digital Commerce 360, online retailers offer an average of 5.8 million products, compared to the average of around 170,000 products offered by brick-and-mortar retailers. 

In addition, online retailers can source products from a variety of different suppliers, meaning they can offer a more diverse range of products than a physical store.

C. Competitive pricing: 

Online retailers can offer competitive pricing due to lower overhead costs. A study by Accenture found that online retailers have an average cost advantage of 9.5% over brick-and-mortar retailers. 

This allows them to pass the savings on to customers, making online shopping an attractive option for those looking for deals. Online retailers also often offer a range of discounts, sales and promotions to attract customers, making it easier for customers to find a good deal. 

Furthermore, customers can easily compare prices between different online retailers to ensure they are getting the best deal possible.

D. Personalization: 

Online retailers can use data collected from customers to personalize the shopping experience, such as recommending products based on previous purchases. 

A study by Epsilon found that personalized emails have an open rate 29% higher than non-personalized emails and a click-through rate 41% higher. 

This can make the shopping experience more enjoyable and efficient, as customers are more likely to find the products they are looking for. 

Additionally, online retailers can use data to create targeted marketing campaigns, which can increase customer loyalty and repeat purchases. A study by Accenture found that personalization can increase purchase intent by almost 20%.

E. Comparison shopping: 

Online retailers makes it easy for customers to compare products and prices from different retailers, helping them make informed purchasing decisions. 

Customers can easily access reviews and ratings from other customers, compare features and specifications of different products and even watch videos of the products in action. 

According to a study by BigCommerce, over 60% of online shoppers compare prices and products across multiple retailers before making a purchase. This allows customers to make more informed decisions and find the best products for their needs and budget.

4. Challenges faced by online retailers

A. Shipping and logistics: 

Online retailers must have efficient and reliable shipping and logistics processes in order to meet customer expectations and avoid delays. 

A survey by MetaPack found that delivery speed and cost are the top two factors that influence customer satisfaction with online shopping. 

This can include investing in sophisticated logistics software, developing partnerships with shipping providers, and managing inventory levels effectively. 

In addition, online retailers have to deal with the challenges of shipping to customers in different locations and ensuring that products are delivered in a timely and safe manner.

B. Returns and exchanges: 

Online retailers must have clear and easy-to-use return and exchange policies in order to maintain customer satisfaction. 

According to a survey by Narvar, over 60% of customers check the return policy before making a purchase. This can include offering free returns, providing detailed instructions on how to return or exchange products, and responding promptly to customer inquiries. 

Furthermore, online retailers must also be prepared to handle the logistics of returns, including arranging for the return of products and processing refunds.

C. Cybersecurity: 

Online retailers must take steps to protect customer data and prevent fraud in order to maintain trust and avoid costly data breaches. 

A study by Accenture found that the average cost of a data breach for retailers is $3.86 million. This can include investing in advanced security measures such as encryption and firewalls, as well as regularly monitoring for suspicious activity. 

Additionally, online retailers must comply with various data protection regulations, such as GDPR and CCPA, which can be complex and time-consuming.

D. Competition with brick-and-mortar stores: 

Online retailers must compete with brick-and-mortar stores for customers, and may need to offer unique value propositions in order to stand out. 

A study by Salesforce found that customers value the ability to see and touch products before making a purchase, and that the in-store experience can be a major differentiator for brick-and-mortar retailers.

This can include offering a wider variety of products, lower prices, or a more personalized shopping experience. 

In addition, online retailers must also be able to compete with the convenience and immediacy of physical stores, such as the ability for customers to see and try on products before making a purchase.


In conclusion, the term "online retailer" refers to a business that sells products or services through the internet. Online retailers have become increasingly popular in recent years due to the convenience, variety of products, competitive pricing, and personalization they offer. 

However, online retailers also face challenges such as shipping and logistics, returns and exchanges, cybersecurity, and competition with brick-and-mortar stores.

Overall, online retailers have revolutionized the way we shop, making it easier and more convenient for customers to find and purchase products. 

As technology continues to advance, online retailers will likely continue to improve the shopping experience and offer new and innovative ways to connect with customers. 

With the increase of online shopping, it is important for traditional brick-and-mortar retailers to adapt and incorporate the benefits of online retailers to their business models.
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