for those who wanted to start e-commerce business. you are in the right place.
In this article, let’s take a look at everything you need to know to start an e-commerce business what is e-commerce? how to start your own ecommerce business what are the available platforms? Plus, you’ll discover the latest trends and tips for surviving in today’s e-commerce era.
let’s get started.
- what is electronic commerce?
- history of electronic commerce
- top ecommerce business statistics you need to know
- how important is e-commerce?
- some advantages of electronic commerce
- ecommerce business revenue models
- the four main e-commerce business models: b2b, b2c, c2c and c2b
- how to start an ecommerce business in 2022?
- e-commerce structure
- future of e-commerce: how e-commerce will change in 2022 and beyond
- ecommerce jargon buster
While e-commerce is about the transaction of services and goods, people often confuse e-commerce with e-commerce or e-commerce business. there is a little difference. while e-commerce is just about transacting goods and services, the e-commerce business model deals with all aspects of an online business including selling:
- physical assets
- digital products
- and affiliates
- By 2021, more than 2.14 billion people are expected to shop online. (statista.com)
- Global e-retail sales are projected to grow to $4.8 trillion in 2021 from $2.8 trillion in 2018.
- By 2023, e-commerce accounts for about 22% of global retail sales.
- e-commerce represents approximately 8.1% of total retail sales in North America.
- Amazon is the largest e-commerce company in the US. uu.
- India is the fastest growing country in the eCommerce industry during 2019-2023.
- profitable prices
- online advertising is much more affordable and effective
- expand the reach of your business
Any business that has an online presence and fits into one or more of the categories listed above. it gives you an idea of what kind of service/product you offer to your client.
Let me explain.
Physical Goods: If you sell and ship actual tangible products to your customers that they can touch and feel once they receive your product, that’s a physical good. for example, a water bottle, baby toys, etc.
Digital Products: A digital product, on the other hand, is not an actual physical product. In general, if your customer buys a digital product from you, they do not receive packages from you. but they can download the digital file you sold.
ebooks, software, audio and video files belong to this category.
Services: Online businesses can provide in-person or digital services to customers. These include providing training services, computer repair service, or an interior design service. Any eCommerce business model that provides a service rather than a product falls under this category. these services can vary from days to years depending on the line of business.
Do you know that eCommerce businesses can earn from affiliate marketing? The money earned this way is called commission which is earned through affiliate links who agree to pay them with the money they earn from a sale.
for those who don’t know what an affiliate is? here is the answer.
affiliate marketing is a popular way to drive sales and generate income online. it is a win-win solution for both the company and its affiliate partner.
history of electronic commerce
electronic funds transfer (eft) and electronic data interchange (edi) were the only sources for users to initiate transactions and exchange business data online. When it comes to the history of eCommerce, it dates back to 1969, CompuServe, the first major eCommerce company founded by Jeffrey Wilkins and Dr. John R. goltz. this company was created using a dial-up connection. however, electronic commerce fully explored after 1991, when the internet was available for commercial use.
timeline of major e-commerce events
This is the timeline of major e-commerce events.
top ecommerce business statistics you want to know
The growth of the e-commerce business has skyrocketed in recent times, especially, the clothing and beauty segments are experiencing double-digit growth constantly. this trend is not destined to abate. As the following statistics show, the global e-commerce industry continues to prosper at a steady pace and is supported by several factors, including affordability, increasing consumer wealth, and improving infrastructure. Today, going global is not a strategy, but a necessity to be successful.
as we said, the e-commerce industry will accelerate at a fast pace in the coming years. here is the proof –
Global numbers aside, let’s see how regional growth is sprouting –
China has the world’s largest e-commerce market. With countries like China and India leading the way, Asia accounts for the largest share of the global eCommerce sector at around $831 billion, followed by North America and Europe at $552 billion and $346 billion respectively (Shopify). .
how important is electronic commerce?
As we move into the next decade, businesses will embrace new changes and prepare for the latest eCommerce trends occurring in the business landscape. As digitization reaches every nook and corner of the world, brands and marketers must be nimble and adaptable to succeed online.
recommended to read: 10 dtc trends for e-commerce growth
Today, e-commerce is dramatically transforming the traditional shopping experience. the line between physical and digital commerce is blurring. Today, customers, companies, and countries are connected for business, education, work, and entertainment. E-commerce has become part of everyday life. But why does this happen? And how has electronic commerce gained more prominence recently?
read more to find out.
some advantages of electronic commerce:
It turns out that running an e-commerce business is less expensive than traditional stores. Unlike brick and mortar, you don’t need to worry about maintaining your traditional stores. Necessities like electricity and other utility bills, store rent, equipment, and room decorations are eliminated in an eCommerce business. On the other hand, you need a website and database to run your eCommerce business that can be run well with little capital.
Print media and TV advertising are not very effective and are known to be expensive compared to online media. selling where your customers exist is the new trend. With online users growing every day, online advertising proved to be an effective way to sell and market your products and services. On top of that, the ROI of online advertising is definitely higher than traditional advertising. Plus, it’s easy to track your ad spend and align it with your PPC goals and budget.
Today, you or your company can exist in one country and sell your products to another country through an e-commerce website.
If you want your business to reach a broader set of audiences, going online is the right choice. Of course, selling online is no longer considered a business strategy, but rather a necessity for businesses. also, at some point, you want to expand your business. Opening a physical store needs to take into account various factors such as your store location, customer reach, inventory location, etc. on the other hand, an eCommerce website will cater to multiple market segments and increase your sales. this reduces significant costs. all you need to do is come up with a definite marketing plan to increase the reach of your product/service.
ecommerce business revenue models
according to income, we have:
- wholesale and storage
- drop shipping
- white label
- wholesale and storage
- drop shipping
- white label
- e-commerce subscription model
- b2b – business to business e-commerce
- b2c: business-to-customer e-commerce
- c2b: consumer-to-business e-commerce
- c2c: customer-to-customer e-commerce
- longer decision cycles: the wait time between the initial contact and the completion of the payment is longer.
- multiple decision makers: Unlike b2c, b2b implies a hierarchy of decision makers, usually more than two.
- offer customer-specific discounts: In b2b models, the product portfolio, pricing, and discounts are more complex than in b2c. this may vary for small scale b2b companies.
- selling internationally: The b2b e-commerce business model has the potential to reach international markets. Diverse cultural forms and multiple currencies and languages are expected from the b2b e-commerce model.
- there is a small set of customers compared to other e-commerce business models.
- Generating sales takes longer if you target other companies.
- Companies take longer than usual to make decisions, so generating profits takes time.
- Profit margins may be different for different customers. If any customer (business) asks for big discounts by buying in bulk, it can reduce your profit.
- Business integration, registration, branding and advertising costs are more significant than the other business models.
- The main disadvantage of a b2c eCommerce business is competition. it’s so vast on the web. you can find thousands of online stores that sell a similar product or offer a similar service to yours.
- As mentioned, b2c businesses struggle to thrive. Without a strong supply chain and operations, your business can hardly succeed in the market. high speed internet service, shipping and packaging are some of the areas that require your attention.
- The customer base of a b2c model is broad and segmented. it is difficult to identify your potential customer based on your product or service. Furthermore, customer experience and trust take time to build, which also requires constant attention.
- Usually people sell new or used products to other consumers online. they use a common platform like ebay and olx to sell their products.
- In c2c models, the c2c website will charge a small percentage of initiated online transactions as transaction fees.
- for buyers: buyers benefit significantly from c2c websites because they get goods and services at a lower price than the market price. They deal with different vendors based on their interests. therefore, you have multiple options to choose from depending on the offer price suggested by the sellers and their portfolios.
- for vendors: vendors can achieve high profitability due to the nature of this business. Direct sales to the customer will reduce the overhead incurred.
- for buyers: Since the market is diverse, the main disadvantage of the c2c eCommerce business model is quality control. As you deal with various vendors and multiple product segments, unless you come into contact with the product/service, you cannot differentiate the quality of the product. in this model, you can hardly claim a warranty or guarantee on the item, and refunds are also rare.
- for sellers: It is difficult to find a reliable c2c platform for both sellers and buyers. your online payments cannot be guaranteed. Few c2c ecommerce websites may demand high transaction fees which can reduce your profits.
- has an intermediary website like upwork that serves as a medium between individuals and companies.
- Online reviews are a valuable asset for building a reputation.
- As a seller, you do not need to pay for your daily business transactions or operations in this model.
- According to the specified budget, companies approach customers to provide their services.
- Open discussions between companies and consumers will greatly improve the outcome in a short period of time.
- it is difficult to establish your brand online. creating a constant buzz to succeed in online competition is daunting.
- profits made may potentially be less.
- have a solid foundation
- find a profitable product to sell
In the wholesale and warehouse model, you buy items in bulk and store them in your warehouse. In this model, companies/entrepreneurs sell products in large volumes. In general, b2b companies use this model. The basic advantage of this wholesale model is that you get products at a cheaper price when you buy them in bulk. plus, your profit margins are high in this case.
In the dropshipping model, you sell items that are manufactured, fulfilled, and shipped by other sellers or companies. In this case, you establish a business relationship between a wholesaler or retailer who has supplied articles that can sell products of his choice. you’ll put these products on your e-commerce business website and sell them online while your wholesaler or retailer handles order fulfillment.
in white label, you are not manufacturing the product you sell. but you get a licensed contractor who allows the product to be sold under their brand name. in this case, you are importing the products. you need to control the shipping and fulfillment process. you also need to track and maintain product quality, which can be difficult in this case. Although it is additional work, you enjoy the advantages of higher profit margins.
The e-commerce subscription model allows a company to provide services (usually) to the end user on a regular basis in exchange for regular payments or fees. this model is not new companies that operate in fashion, food and entertainment are adopting subscription models in their operations.
top 4 ecommerce business models in 2022
All types of eCommerce business models are thriving today. we are excited to learn how fast the e-commerce industry is progressing. but you need to know the basics to get more benefits.
Careful research of available business models and products will give you the necessary insights into the e-commerce industry. Before delving deeper, familiarize yourself with the popular eCommerce business models on the market and identify the right one that suits your business and products.
popular e-commerce business models
Which e-commerce business model best suits your needs?
let’s find out.
b2b e-commerce business model
In a b2b e-commerce model, your business sells products or services to another business. You will find software companies, vendors or manufacturers that sell products to resellers, office and school vendors that sell to schools and institutions to be included in this category.
characteristics of the b2b e-commerce business model
advantages of the b2b e-commerce business model
Stable environment: Compared to other e-commerce business strategies, b2b e-commerce models are more stable. A successful b2b business will grow steadily and embrace various market scenarios. in this way, b2b will be more successful and will be able to increase its presence and opportunities online.
better sales: the collaborative approach to customers will increase customer loyalty. These models work with an enhanced and robust supply chain that makes it easy to showcase the product portfolio and reveal upsell and cross-sell opportunities. this, in turn, will boost the overall sales of the product.
low cost: these online b2b models have organized structures. In most of these models, the work is automated, which translates into fewer functional and operational errors, which in turn reduces management costs.
data-centric process: thanks to industry 4.0, most companies today are adopting automation in their operations. processes are built on factual data and follow an integrated data-driven approach.
disadvantages of the b2b e-commerce business model
b2c e-commerce business model
b2c ecommerce business models sell to their end user, which is a customer. this is the most common business model in the e-commerce space. a b2c model can also include the sale of products and services. These models are traditional retail models where companies sell directly to individual customers.
let’s take a closer look at the risks and benefits of the b2c e-commerce business model.
advantages of the b2c e-commerce business model
Sell Internationally: The best part of this model is that you can sit at home and sell to your customers on the other side of the world. this opportunity will help companies scale faster.
Low overhead costs: B2C models are popular with brick-and-mortar stores. introducing electronic commerce in this model will reduce maintenance and management costs. maintaining an e-commerce business website is more profitable than maintaining a physical store.
Benefit of Analytical Tools – One of the benefits of running an eCommerce store is that it’s easy to track metrics. In the B2C eCommerce model, it’s easier to analyze your customer metrics. By using analytical tools like Google Analytics, you can track your customer metrics and analyze their buying behavior based on buying patterns, demographics, and product categories. This helps you come up with the best eCommerce business marketing strategy that suits your business.
Learn more about eCommerce analytics software here.
Read more: The Whole30® Program – The Whole30® Program
Unlike traditional marketing, online marketing is easy to manage and track results. Tracking important metrics like click-through rate, conversion rate, impressions, and clicks will give you insight into how your product is performing. As AI applications are introduced, companies are leaning more towards customer-centric environments. With these apps, you have a head start in creating more leads in the long run.
disadvantages/limitations of the b2c e-commerce business model
c2c e-commerce business model –
In the consumer-to-consumer e-commerce business model, consumers come into contact with each other when people sell goods or services to each other. These goods can be mobile phones, cars, bicycles and computers.
characteristics of the c2c e-commerce business model
advantages of the c2c e-commerce business model
disadvantages of c2c e-commerce business
While c2c e-commerce business simplifies the way we sell and buy products and services, the fraud risks involved are high. this cannot be ignored either.
c2b ecommerce business model
In this model, an e-commerce website will allow people to sell their products and services on your website where companies hire them.
upwork and fiverr are some examples of this model. help companies hire freelancers for their respective tasks.
characteristics of the c2b e-commerce business model
advantages of the c2b e-commerce business model
disadvantages of the c2b ecommerce business model
how to start an ecommerce business in 2022?
There is nothing more rewarding than starting a business from scratch and seeing it grow even more.
yes, that’s true.
Online business is accelerating at a fast pace. Online retail giants like Amazon, eBay, and Walmart are showing us that eCommerce business is the future. But many e-commerce companies are struggling to make their mark. Building a business requires a solid foundation, hard work, and discipline. it’s more than just choosing brands, website designs, and finding products to sell.
so, are you ready? Let’s take a look at the step-by-step process to start your eCommerce business in 2022. Our detailed guide will give you a comprehensive idea of how to research, launch, and grow a profitable eCommerce business from scratch.
Like I said before, you need to be thorough with a basic understanding of eCommerce. Familiarize yourself with available or trending eCommerce business models because no single business model will fit all businesses.
One of the biggest challenges in a business is identifying the right product to sell. coming up with product ideas can be daunting. Identifying a product or product line, or a niche, can be difficult without proper research. Sometimes you may feel that the products you want to sell already exist in the market. that’s the harsh reality. but don’t let that stop you from finding one.
If you want to know the best products to sell on Amazon, check out the link here.
The following checklist will help you identify the right products for your eCommerce business.
follow your passion –
why am I saying this? your passion can easily turn your business into a long-term success. When doing so, keep in mind your professional experience or knowledge, because your knowledge gives you an advantage when starting your online business. do a smart job.
research product ideas –
Find sources and websites that provide you with the best eCommerce business ideas or profitable product ideas. identify low-risk products for high profit margins. You must calculate all the costs involved in developing a product and calculate your profit. While you’re doing this, be sure to calculate the costs involved in promoting, holding (in inventory), and shipping the products.
lightweight items are easier to ship. Second, costly product damage leads to higher losses. so define your roi or profit margin before moving forward.
identify customer pain points –
Discovering customer pain points while creating a product is an effective way to enter your target market. Online reviews, product feedback, and related social media channels are all great sources for identifying your customers’ pain points.
Now that you’ve identified your customer’s concerns, it’s easy to find your product in 3 ways.
build a new solution for a new problem –
In this case, you are identifying the gap in the market and you need to make your customers aware of the existing problem.
For example, in the 1930s (1940s), De Beers, owner of De Beers Consolidated Mines Ltd., one of the world’s largest diamond mining companies, manipulated the supply of and demand for diamonds with the help from new york n.w. based ad agency Yesterday. Using idols from movies and magazines, the agency conveyed to the public that wearing diamonds to propose is an indestructible symbol of love. They started the trend towards diamonds, especially among women of all ages and income groups. This increased sales of beer diamonds in the United States from $23 million to $2.1 billion in 1939-79. (source-atlantic) this trend reached every corner of the world in the mid-1960s and continues to this day.
So the bottom line is that with this method you are addressing the gap, creating demand and offering your product as a solution. you are creating a whole new market. requires the most creative and innovative mindset.
For those who want easier options, there are two other ways to do it.
build a better solution to the existing problem –
Read more: What does it mean when your feet is itchy
customers always want better, faster and easier solutions to their problems. then you as a seller/entrepreneur have a chance to succeed.
but remember, if we focus on problems, we only get problems, so you must first identify a solution to create more innovative solutions. There are numerous examples in our daily lives.
for example, early internet users are more familiar with yahoo as a search engine. But why has Google been considered a successful search engine in recent years? because of its seamless customer experience. online users want satisfying results for their search terms. And the Google search algorithm does just that. It provides quality over quantity that was lagging behind on Yahoo. On the other hand, although Yahoo’s home page is liked by its users, Internet users prefer Google’s trusted results.
This type of approach requires less creativity, but should be able to create lasting results.
how to identify the problem in this case?
- discover customer opinions about the product
- identify the problem that your competitors address the least.
In this way, it is easier to generate ideas that can address the demands of your customers. read recent and critical customer reviews of your competitor’s products. By reading product reviews online, you get to know what your customers want.
create a new solution to an existing problem –
This approach is often time consuming and can also be expensive. once successful, it creates a competitive advantage over others making their own mark in the industry.
Now back to the problem, how do you find the right solution?
There are always better solutions on the market. Getting a head start with your product in the marketplace may seem difficult. in such cases, follow the steps below to identify the solution:
- buy the products of your main competitors in the market.
- use and experience them and identify the problem yourself.
- list the issues and envision a better product that addresses these issues.
- hire a product designer/engineer to design a new product.
- create a prototype. your first sample product.
- and test the product by pitching it to a set of target audience.
- gather their input and work on it.
stay up to date with industry trends
You have a niche and you are trying to identify the right product. Staying up to date with that specific trend of the ecommerce business market is important. Identifying a trend as soon as it enters your market helps you carve out a place in the market easily. This not only makes it easier for you to enter the market, but also reduces your ad spend when launching a new product.
but don’t give in to temptation and make decisions quickly. see the big picture and take advantage of trends that may eventually become a need/demand in the market.
how to find industry trends?
websites like trend hunter, kickstarter and google trends, other ecommerce business forums like reddit will help you find ecommerce business product ideas.
It goes without saying that when launching a new product online, advertising strategies where you should opt in and test your product before launching is a must.
validate your ideas –
Once you have a list of ideas for your eCommerce business, it’s time to validate them. validating potential ideas for your business takes time and a clear mind.
Some of the ways to weed out inappropriate ideas for your eCommerce business are:
- Ideas that create legal complications: For example, if you sell weight loss pills or plans that may have potential side effects, handling medical claims can be quite challenging. Unless you have a legal background or are comfortable with those aspects, it’s best to keep such ideas at bay.
- Explore ideas that are completely irrelevant to your interests: Having a passion or at least some kind of interest in the product idea will help you succeed in your eCommerce business faster and easier.
- Get permission to source and ship your products: High shipping costs in an e-commerce business will hurt your pockets. And, if you’re going for a private label business, make sure you have a defined manufacturer or supplier who can source your products. you can explore your branding and marketing if you choose a manufacturer or supplier to develop your products.
recommended guide: amazon manufacturer part number.
structure of electronic commerce
future of e-commerce: how e-commerce will change in 2022 and beyond
When we talk about the future of e-commerce, the first question we get is: will e-commerce continue to grow?
of course, without a doubt.
There is huge potential in emerging e-commerce markets such as India, China and Russia. These countries are expected to grow fastest in the e-commerce industry. this results in more stores and e-commerce companies adapting their products and services to these emerging markets.
Although physical stores have a larger share of retail sales, without a doubt, sales of e-commerce businesses are growing at a rapid rate in recent years.
on the other hand, e-commerce business thrives on automation. From marketing to inventory and warehouse management, the entire eCommerce supply chain benefits from automation. This trend is reducing the human force and other labor resources and improving the efficiency of the processes. setting up inventory alerts, reviewing notifications, and tracking fulfillment processes has become a norm in the e-commerce business.
As consumers get smarter, automation is also changing eCommerce marketing. companies are devising definite e-commerce marketing strategies to greatly optimize the customer’s shopping experience.
In today’s world, where customer personalization is the key to business success, automation meets growing customer demand in the eCommerce space.