Understanding E-commerce Businesses – A Simple Breakdown

In current times, starting an online business, or going into e-commerce is a rising trend. With companies such as Lazada, Shopee, Amazon, & Zalora making headlines based on their success stories, many people want a piece of it. But with many people focusing on markets that are saturated, it would be best to break out, and niche down into other e-commerce markets. Not too sure what they are? Then here’s a breakdown of what you need to know about e-commerce businesses

What is E-commerce?

In brief, e-commerce, or originally known as “electronic commerce” is the exchange of currency for goods or services over online platforms.

Types of E-commerce Businesses

1. Business to Business (B2B)

A B2B is when a business sells something of monetary value to another business. Simply put, B2B e-commerce happens when transactions are made between two businesses. Examples:

• Graco is a spray painting company that sells spray painting tools and equipment to construction companies.
• Dropbox is a storage-based organization that caters to individual users as well as large scale organizations.
• Xerox is known to be a household printing brand that is favored amongst consumers but also offers prints and material services to companies.

2. Business to Consumer (B2C)

A B2C business sells its goods and services to consumers. In B2C e-commerce, an organization has to market its products to be purchased by its target audience Examples:

• Apple Inc. is an internationally recognized brand that sells smartphones and other technological gadgets to its’ customers.
• H&M is a clothing line that has successfully opened its’ stores worldwide for consumers.

3. Consumer to Business (C2B)

When consumers sell their own products and services to businesses it is known as a (C2B). C2B e-commerce happens when individual customers produce value and businesses purchase the offer given Examples:

• Credible bloggers who write quality reviews for organizations are subjected to receive compensation for their services.
• Photographers are able to sell their work through an online platform as stock images.

4. Consumer to Consumer (C2C)

C2Cs are when consumers sell their products and services to other consumers, or in other words, the exchange of goods amongst consumers. Examples:

• Some of the most prominent sites used for consumer-to-consumer e-commerce activities would be Amazon and Carousel.
• Consumers are able to interact and make bargains amongst one another based on their preferred placement of value.

5. Government to Business (G2B)

Government-to-business e-commerce refers to services and information provided by a government entity to an organization. (G2B) pertains when transactions are done by a business to the government. Examples:

• Purchase of business licenses
• Legal fees
• Tax payments through official government portals

6. Business to Government (B2G)

This is a business model made by a company to be purchased by the government. In (G2B), companies sell their products and services to the government. Examples:

• Infrastructural and construction companies can offer supplies and technological solutions to government parties.
• Organizations with IT expertise is also able to provide B2G e-commerce by sorting out electronic frameworks and software related issues.

7. Government to Consumers (G2C)

Similarly, the application can also be placed upon a consumer-to-government relation. C2G e-commerce is a government-based business platform that interacts with consumers. Examples:

• Payment for legal documents and taxes can be registered through governmental channels.

This covers a brief and to the point introduction on the types of businesses in e-commerce. Now with that in mind, let’s discuss the types of businesses you can start in the e-commerce industry.

Examples of E-commerce Businesses

E-commerce businesses come in multiple forms of transactional relationships between organizations and consumers. This also includes different objects being exchanged in the process.

1. Retail:

Goods produced by a business are directly sold to a customer without intermediaries.

2. Wholesale:

This model refers to selling products in bulk, often to retailers that would sell them to individual consumers.

3. Crowdfunding:

The process of gathering sufficient funds in order to kickstart a startup capital for a product to be available on the market.

4. Dropshipping:

The purchase of a product which is manufactured and delivered to the consumer by the works of a third party.

5. Digital Products/SaaS:

Software or data that are purchased and digitally downloaded by the consumer.

6. Physical Products:

Goods that are tangible and would require to be physically shipped to consumers. These products are usually restocked once the inventory has been depleted.

7. Subscription

A number of fees paid regularly to an organization in exchange for their products or services on a timely basis.

8. Services:

A payment provided by an individual customer to a specific person of expertise or skillset.

How To Start An E-Commerce Business

Now that you’ve gained a better understanding of E-commerce basics. It is now time to apply them to your business model. Usually, setting up a legitimate online store would easily take less than a day, however, analyzing, constructing, launching and growing a successful E-commerce business is a thorough and multi-layered process that requires detailed planning as well as strategy.

The Right Product

To start an E-commerce store, you will first need to decide on what products to sell. Some serious consideration and research are required to find a genuinely profitable idea. Healthy margins should be emphasized on the chosen product as that will allow the organization to yield profit and scale the e-commerce business in the future. After knowing what you would like to sell, you’ll need to figure out how and where you are able to source these materials. Keep in mind, the four main methods of gathering products and inventory in e-commerce are making, manufacturing, wholesale and dropshipping.

A Proper Strategy with Strong Support

In e-commerce, it is important to look into your competition, pricing strategy, and your unique selling point. During this stage, it is a good idea to create your own business plans that will assist your organization in visualizing its long term growth target and identify the potential crises.

Branding

Once you have a promising model and proper overview of the industry, it is now the time to start sorting out the key aspects of your e-commerce store, such as your brand name, domain name, and logo. With your brand crafted to its’ perfection, growth can easily be accelerated, attracting potential customers. With that, you should also spend some time learning and understanding the basics of SEO, so that everything progresses smoothly.

How will Your E-commerce Store Exactly Sell? 

The setup of your online shop can be achieved in two ways:

Building an E-commerce store from scratch – This would mean that you either develop a site on your own or hire a freelancer to do it for you. It might take longer and consist of a higher cost, but building a custom online store is able to give you extensive customization and all the decision making. Using an off-the-shelf e-commerce platform – Choosing from existing pools of themes and tools provided in an integrated platform, you can build an online store with ease and within a more efficient timeframe.

• Before launching – Make sure you are well prepared to measure the success of your launch. At this stage, you should define your key performance indicators to help you track your progress and performances, fixing any issues that emerge. It is also important to take care of your social media profiles, working on good email marketing, keyword research, installing Google Analytics, creating your shipping strategy and finalizing the launch campaign.

• After launching – Congratulations! You are now an e-commerce businessman/businesswoman. Having to launch your e-commerce store, you should carry on to the promotional phase. Your responsibility now would include marketing efforts and site optimization.

Benefits of E-commerce Businesses

1. Going Worldwide

Typically, with a store on-ground, you are limited by the geographical area that you can offer your products and services. With an e-commerce website, the whole world becomes your playground. Your organization might even attract potential investors and partnerships that would further contribute to the growth of your company.

2. Lower Costs

Running an e-commerce store can lower the cost needed for multiple functioning aspects of the organization. Advertising and marketing can be effectively achieved through organic search engine traffic and social media traffic. Most e-commerce stores are able to self-optimize, that would mean fewer employees are needed to run the business.

3. Convenience For All

Consumers no longer need to scout for the products or scavenge around a store in order to purchase a single item. E-commerce businesses make the process of buying and receiving tailored to the comfort of their’ consumers.

4. Complete Information Provided

Trying to find out what is the nutritional information of a certain product? Or whether it has been approved by legal ministries? Or perhaps it contains ingredients you might or might not be allergic to? Fret not. E-commerce businesses are a wondrous space to package and place sufficient information to reassure its’ consumers.

5. OPEN 24/7/365

E-commerce businesses basically run on its own. Online stores are accessible anytime and anywhere by its’ users, bringing in a consistent flow of profit.

Final Thoughts

With rich insights and the right resources, anyone will be able to grow a stable E-commerce foundation in any strategized manner. Starting an online business might be dauntingly hard work, but it is definitely rewarding at the very end. There are many tools and materials that would provide great assistance as such. Business owners need to realize that e-commerce is the way to the future and take up necessary actions to be ahead in the game.