Introduction to eCommerce

eCommerce in a few minutes

It’s hard to find someone who has not shopped for something online. To many of us, it’s not embracing change or something new but part of everyday life. Today it’s a natural reaction to take out your phone and log on to your eRetailer of choice when you need something. A purchase that was done in minutes and with ease.

Before we dive into everything eCommerce the question to all of us savvy shoppers and marketers out, there is… What is the difference between “eBusiness” and “eCommerce”?

Many of us, myself included have been guilty of using these terms interchangeably in the past, but the two terms are not synonymous.

A quick explanation is that eCommerce is the action of buying and selling online. At the same time, eBusiness Includes but is not limited to the act of buying and selling products and services online along with all business activities conducted online from marketing automation to supply chain management and everything in between.

eCommerce Business Models

When most of us think about eCommerce, we think of either our customers buying our products or services online or the recent purchase we made for ourselves.

As you know, when we go down this rabbit hole that is eCommerce, we are faced with a continually evolving industry, and there is always something new to learn.

To keep things more as a snapshot, I find that there are four key business models that most people agree on. Below are what they are with a short description:

• Business-to-Consumer (B2C) — The most common model used by most retail brands. A vast amount of what we buy to satisfy our needs and want online comes via a B2C model.
• Business-to-Business (B2B) — The next most common model. Here it’s all about one business selling to another. This could be from a product to a service. Either physical or virtual but sold online
• Consumer-to-Consumer (C2C) — Welcome to open marketplaces or digital classifieds. This model is where consumers sell to consumers. There is no business involved.
• Consumer-to-Business (C2B) — A less common one but gaining popularity in today’s current environment. This model is consumers selling their services to businesses.

eCommerce platforms

Let’s talk about the types of platforms you could build or use. Yes, they are essentially all websites, but each has its specific purpose. It’s these platforms that we as marketers spend our budgets on to have leads travel down the consumer journey to reach this point. The point they go from leads to customers.

The engagement, content, and experience are vital. Having the right set-up is equally essential for customer experience. I am going to explore four types below:

Direct-to-consumer (DTC):

When one brand or retailer sets up an independent online store that they own and operate under their name, the brand has full control over the experience a customer would have when on their platform.
DTC platforms are growing as brands want to own the conversion stage of the funnel and collect the data that helps improve marketing initiatives.

Bricks-and-clicks:

They are used by retailers who want to have both an online and a physical store. It is a method many retailers incorporate to sync both these channels together.

With this platform, retailers can incorporate a full digital strategy for customers who want to purchase online, and for customers who prefer making a purchase offline, it is still useful.

Pure players:

A retailer without an offline presence. As a model, they are growing thanks to the addition of services, innovative data analytics, and reliable logistics rapidly. Pure players have only been selling online since their inception and enable brands they work with to leverage their distribution networks, platforms, and customer base.

These companies tend to have sizeable financial support and have a stake in whether products sell or not as they tend to take a margin on every sale.

Marketplaces (multiple sellers)

The marketplace model can be both a D2C or a C2C platform. The platform tends to be responsible for driving traffic to the site and in some cases responsible for the logistics of products sold.

Marketplaces give brands and individuals the potential to reach a wider audience as they can create a storefront, and the marketplace handles the transactions.

eCommerce revenue models

We have covered the various models and platforms now let’s explore revenue models how your business can make money online. Many brands explore incorporating more than one model, as different consumers are open to other ways to shop.

Below are what I feel are the key eCommerce revenue models:

Dropshipping

A business or individual sells products online, which they don’t produce or own. They are distributed by a third party, with the owners of the dropshipping site never coming into contact with the product.

Subscription

This is a model that a business provides ongoing services regularly for a regular payment from consumers. Initially, this model was used by magazines and newspapers. Still, in recent years, the subscription model is being adapted by brands within the fashion, entertainment, and food industries, to name a few.

Owned and operated/ manufacturing

Larger organizations and brands that manufacture and own their retail stores tend to adopt this model. A prevalent model when it comes to a single brand/ owned and operated eCommerce platform. These are brands that are moving their offline sales strategy online.

White labelling

To implement this model, your business essentially rebrands products from another manufacturer and sells them under your brand. Unlike dropshipping, in this case, you would have access to the product and handle the logistics element.

Wholesaling

A middle man between a manufacturer and retailer. Wholesalers provide a way for the retailer to have access to stock they need when they need it. There is an element of risk here as the wholesaler has to predict and order stock based on trends. However, if they got it right, it can be highly lucrative.

Freemium

A model that is typically used by digital-based products. A freemium business model allows consumers to access the product for free with limited features and functionality. The goal is to give consumers a taste and to convert them to a paid premium plan to gain full access.

Conclusion

I wrote this article to give readers a summary of this industry. As I mentioned, there is more to learn and read if your interest is piqued. eCommerce has been evolving to connect consumers with sellers with ease and making products more discoverable across online platforms and marketplaces.

eCommerce is winning the retail battle and forcing offline strategy to change along with the experience a customer has. This does not mean the end of offline retail but rather introducing one omnichannel shopping experience.

Running a profitable online store requires you to have a strong understanding of eCommerce. Knowing what type of platform works for you, the best business model for your business or brand, and finally which revenue models should be incorporated is the essential and the initial steps to take.

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Written by Toshak Jethwani