Ecommerce
What is ecommerce and what are its advantages?
Ecommerce, in its most common sense, is a virtual store that sells from a website. More broadly, ecommerce is a buying and selling system that uses the internet to conduct sales and maintain close contact with customers.
In reality, the evolution of electronic commerce means that ecommerce sales aren’t just generated from a website. An ecommerce business also leverages social media and mobile apps, either for direct sales or as a source to bring the target audience into a sales funnel.
1. Advantages of ecommerce
From the seller’s perspective, comparing traditional brick-and-mortar sales to ecommerce, selling online offers several advantages, such as:
- Lower costs.
- Reaching a broader audience (global market).
- Provides autonomy and flexible hours.
- Lower initial investment required to open the business.
- Makes it easy to have thousands of products available 24/7.
- Makes it very easy to scale the business as needed.
- Convenient customer segmentation.
- Allows you to send customers automated email marketing campaigns.
2. Ecommerce models
Depending on the business model, you can find the following types of ecommerce:
– Own products. In this case, it’s an online store that operates much like a physical store, managing its product inventory but selling exclusively online.
– Membership. This ecommerce model is based on recurring sales through a periodic subscription model, with Spotify being a prime example.
– Dropshipping. This ecommerce model only handles taking and billing orders, delegating logistics to the wholesaler who delivers the order to the final customer.
– Marketplace. This is a store on a web platform where different sellers offer their products and pay a commission for each sale to the owner. Amazon is a great example.
– Services. These are service-based ecommerce stores that sell offerings like consulting or training, meaning they don’t sell physical products. Coursera is a good example.
3. Types of ecommerce
Ecommerce businesses can be classified based on the market or type of customers they target. The most common ones are:
Business to Consumer (B2C)
This is the most common type, where products and services are sold directly between a business and the consumer (final customer).
Business to Business (B2B)
In this case, businesses create products and services that they sell to other businesses.
Business to Government (B2G)
In this model, businesses conduct their commercial operations with governments and public institutions over the internet.
Consumer to Business (C2B)
In this business model, the end user or consumer creates a product or service that a company uses to complete a business process and gain a competitive edge.
Consumer to Consumer (C2C)
This business model facilitates trade between individuals, meaning one person sells to or provides services for another person.