If you’ve spent any time browsing the World Wide Web, chances are you’ve come across the word eCommerce.
eCommerce means electronic commerce and refers to all transactions that take place on the Internet. This includes a wide range of online activities and tools, from Internet banking and eWallets, to online ticket sales and auctions.
However, when people talk about eCommerce, they usually refer to online shopping, that is, the buying and selling of physical or digital products over the Internet. A good example of an e-commerce platform is , the largest online marketplace in the United States.
If you are interested in creating an eCommerce website to sell online, this article may be right for you. We will explain everything about the : its profitability, the main business models of eCommerce, the different types of products and services to sell online and the advantages of electronic commerce.
Without further ado, let’s get started, okay?
eCommerce Trends: How profitable is eCommerce?
The e-commerce sector is constantly growing. Here are some remarkable statistics on the growth of eCommerce businesses
- In 2020, online sales accounted for all retail sales in the world. They are expected to continue growing and reach 21.8% in 2024.
- The pandemic led to a global growth in terms of online spending and the figure is forecast to grow to $1 trillion by 2022.
- Experts predict that e-commerce will account for the year 2040.
In short, the e-commerce industry has inevitably become an inseparable part of many people’s lives.
4 main models of an e-commerce business
There are many ways to classify eCommerce businesses. This article will group e-commerce websites into four online market segments, based on the participants involved in the transaction.
Below are the four main ones according to the business model:
1. Business to consumer (B2C)
The B2C model refers to companies that sell products and services directly to end users. There are several ways, such as:
- Retail: when a business sells goods or services directly to consumers for their personal use, rather than reselling them to a third party. Think about buying a phone Manzanaorder a pair of shoes from Adidas or hire someone to mow your lawn for you.
- Dropshipping: merchants do not have to maintain inventory themselves. The seller buys an item from a third-party vendor, who ships it directly to the buyer. Ease of management and low capital are some of the reasons many small businesses have adopted this model. Some examples of dropshipping providers are and .
- Crowdfunding: it is about encouraging people to finance a new business or product in exchange for a reward. The reward can be a small gift, monetary interest, or company stock. Some examples of crowdfunding platforms are and .
2. Business to business (B2B)
In the B2B model, both participants are business entities. Typically, this transaction occurs when a business needs to source materials to create products.
Take automobile production as an example. In this case, a car retailer buys from manufacturers. B2B transactions can include the purchase of tires, rubber hoses and windshield wipers, materials to build cars to be sold to customers. As a result, B2B eCommerce transactions often result in high volume sales and more recurring purchases.
Wholesale e-commerce falls into this category, where companies sell products wholesale and at low prices to online retailers, rather than selling directly to end users. Some examples of wholesale trade companies are , and .
3. From consumer to business (C2B)
C2B businesses allow individuals to sell goods and services to companies. This approach gives consumers the power to set their prices.
As an example, self-employment sites are classified as C2B.
An affiliate program is a marketing system where a business pays someone to promote their goods or services. Companies are willing to pay for the promotion, since the affiliate is usually someone who is well known in the industry and has built up a loyal following. For example, a company that sells makeup products may have beauty bloggers as affiliates.
Companies often give affiliate marketers unique links that they place on their websites. Each time a reader clicks on the link and is directed to the company’s website or online store, the affiliate receives a designated commission.
On the other hand, a freelancer sells his services to companies. Freelancers can be from virtually any field, from web development to financial services. The flow of transactions may vary from one platform to another. Some may require companies to contact freelancers first, while others let companies hire freelancers immediately without prior correspondence.
Thus, e-commerce websites such as , and belong to this model.
Four. From consumer to consumer (C2C)
The C2C business model connects consumers online, allowing one individual to sell to another. Like other models, the C2C model can be used to sell both goods and services. Many people also use this method to sell handmade or second-hand products.
This process usually takes place in online markets that take a part of the profits. Some examples of B2C eCommerce websites that help customers sell to other consumers by signing up for an account are and .
Some eCommerce platforms, such as eBay, also allow customers to sell products through online auctions instead of direct purchase. The merchant puts a product up for auction for a certain period and people can bid on it. When the auction period ends, the person who is willing to pay the most money gets to buy the product. In addition to e-commerce sites, C2C transactions can also be done through money transfer platforms such as PayPasocial networking sites like Instagram either Facebook.
Types of eCommerce businesses according to the goods and services sold
The following are different ideas of the types of businesses and services that eCommerce stores can offer:
- Physical products. They are tangible items, such as clothing, beauty products, jewelry, food, cars, and computers.
- Digital products. These are non-tangible products such as songs, e-books, online courses, and software.
- Services. People offer their skills to do a specific type of work and are paid by the project or by the hour. Some examples of people who offer services on the Internet are graphic designers, web developers and translators.
Online businesses can offer these products and services through a one-time purchase or subscription system. A single online purchase means that the transaction is only made once. For example, the transaction is complete when a customer purchases a shirt and the item is delivered.
Meanwhile, a customer will pay for a product or service monthly or annually with a subscription system. The buyer can enjoy a service or have products delivered to him regularly during the period he has paid for.
For example, when a customer purchases a plan, they can choose to purchase the plan for one year. Customers can also choose to renew the plan manually or automatically.
Another example is a meal kit delivery service like . This online business delivers pre-dosed ingredients and the corresponding step-by-step recipes to customers every week. People can also adjust meals based on their diet type and choose the number of recipes per week.
What are the advantages of opening an online store?
There are many advantages to joining the growing e-commerce industry.
Here are some reasons why it may be better than the traditional brick-and-mortar business:
eCommerce unlocks the global marketplace
Electronic commerce overcomes geographical barriers. It allows merchants to increase their income and sales by selling to anyone, anywhere. Online shopping is made even easier thanks to the prevalence of mobile devices, contributing to the growth of e-commerce.
Both global e-commerce and mobile commerce have grown steadily over the years. Global retail mobile commerce sales are expected in 2024, while global eCommerce sales are expected in 2022.
An online store makes products easier to discover and buy, allowing small businesses to sell trending products on a scale impossible to achieve with a physical store.
In addition, an online store not only has a greater reach, but also eliminates the need to create physical stores. With brick-and-mortar businesses, you have to build inventory, rent space, and hire employees. With eCommerce businesses, on the other hand, you can create an eCommerce store as soon as you know what you’re going to sell and you’re ready to go online.
Open 24/7/365
Having your business on the Internet means that you are always ready to sell. An online store increases sales opportunities for merchants. Unlike a physical store, your income does not have opening hours. In addition, they initiate the search for products on the Internet, so creating an online store will expose your business to a wider audience.
For shoppers, shopping online guarantees instant gratification. No matter the time, consumers can shop online through their computer or mobile device. With just a few clicks or taps, the product can be yours.
This convenience is especially beneficial for those targeting a global audience. You never know what time zone people are in and being open 24 hours a day lessens the chance of losing customers. To further maximize customer satisfaction, use chatbots in your online store to offer 24/7 customer support.
Low operating costs
In addition to eliminating the need to build or rent a physical store, creating an eCommerce store also reduces various operating costs. When you sell online, you can save on product storage costs if you choose a dropshipping business model. Let the supplier place the orders by…
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