What is E-Commerce? Definition, types, and Business Models
E-commerce offers tons of business opportunities, whether you’re already a business owner or interested in becoming one.
Here’s what you need to know about e-commerce.
E-commerce refers to the selling and buying of products or services online.
You have two main options to start selling your products online:
1. Run your own e-commerce website or
2. List your products on an online marketplace.
Having your own e-commerce website is like owning a physical store. When online shoppers visit your website, they can only browse through your products Some of the most popular e-commerce website builders are:
Shopify, BigCommerce and Weebly
On the other hand,
Listing your products on an online marketplace is like selling in malls or in grocery stores. Shoppers can browse through various products from different sellers to choose the best deal.
Among the popular online marketplaces are:
Amazon, Alibaba and eBay
E-commerce has 4 main types:
Example: An online retail store that sells directly to end consumers.
This can be done both on an e-commerce website and an online marketplace.
Example: A company that sells products or services directly to another company.
Businesses that sell to other businesses usually sell their offerings through their own website.
Example: A freelancer that offers writing services to business owners through websites like Upwork or Fiverr.
Example: A consumer that sells new or pre-loved products to another consumer through websites like eBay or Etsy.
Another aspect to consider with e-commerce is the business model because it will determine how you’ll generate income from selling online.
Here are the different types of e-commerce business models:
This model allows you to accept customer orders without keeping actual products in stock.
Rather, a third party fulfils and delivers the order to the customer on your behalf.
A subscription service lets you send products to a customer over a specific time — weekly, monthly, or yearly — depending on your customer’s chosen plan.
This model works well for the
food, fashion, health and lifestyle, and entertainment industries.
Example: Netflix and Spotify
Wholesaling is the practice of selling goods in bulk to retailers at discounted rates.
The retailer then sells the goods to end consumers at profitable prices.
Retailing is the opposite of wholesaling. Rather than selling goods in bulk, you sell goods in lesser amounts, or even by piece, to end consumers. You can earn through this model by adding a markup to the discounted items you got from wholesalers. In this model, a third-party manufacturer produces the product on behalf of your brand. All exclusive rights are granted to your business, entitling you to sell the produced materials as your own.
Determine your business model to find out what you can manage and how to make profits. Figure out the focus of your business through product and niche research.
Determine where you will sell:
An e-commerce website, via an online marketplace or both?
Know your target audience so you can deliver your messages to the right people.
Register your e-commerce business and brand name. Apply for all the necessary licenses and permits to make your business legal. Prepare a solid business plan which must include the financial and inventory management aspects of your store.
For example of an E-commerce store you can visit Ezazan.com
Pickypackstore.com is also a startup of e-commerce business in Pakistan.
Future of ecommerce.
The future of ecommerce is expected to continue to grow and evolve, with more businesses and consumers using online platforms to buy and sell goods and services. Some key trends that are likely to shape the future of ecommerce include:
- Continued growth in online sales and revenue: Ecommerce sales are expected to continue to grow at a steady pace, with more businesses and consumers adopting digital platforms for shopping.
- Increased use of mobile devices for ecommerce: The use of smartphones and tablets for online shopping is expected to increase, with more businesses developing mobile-friendly websites and apps to make it easier for customers to shop on the go.
- The rise of social media commerce: Social media platforms are increasingly being used as a channel for ecommerce, with businesses using social media to promote their products and services and customers using it to make purchases.
- The growth of personalized and personalized experiences: Ecommerce businesses are expected to use data and artificial intelligence to offer more personalized shopping experiences, with personalized product recommendations and personalized marketing messages.
- The rise of new payment technologies: New payment technologies, such as cryptocurrency and mobile payments, are expected to become more popular in the future, providing customers with more options for how they pay for their online purchases.