If you spend any amount of time browsing the World Wide Web, chances are you have come across the word e-commerce.

E-commerce stands for electronic commerce and refers to all transactions completed electronically. This includes various online tools and activities, from Internet banking and e-wallets to online ticket sales and auctions.

However, when people talk about e-commerce, they usually refer to online shopping: buying and selling goods over the Internet. A good example of an e-commerce platform is Amazon , the largest online marketplace in the United States.

If you are interested in starting an e-commerce site to sell online, this article may be for you. We will explain all about ecommerce shops: how profitable they are, the main ecommerce business models, the different types of products and services to sell online, and the advantages of ecommerce businesses.

Without further ado, let’s begin.

Ecommerce trends: how profitable is ecommerce?
The ecommerce industry is growing all the time. Here are some noteworthy statistics on the growth of ecommerce businesses:

• In 2020, online sales accounted for more than 18 percent of all retail sales worldwide. It is expected to continue to grow and reach 21.8% in 2024.
• The pandemic has led to an overall growth of $183 billion in online spending, and the figure is expected to grow to $1 trillion in 2022.
• Experts predict that e-commerce will account for 95 percent of all purchases by 2040.

In short, the e-commerce industry has inevitably become an inseparable part of many people’s lives.

The 4 main models of an e-commerce business
There are many ways to classify ecommerce businesses. This article will group ecommerce websites into four online marketplace segments based on the participants involved in the transaction.

The following are the four main types of ecommerce by business model:

1. E-commerce Business to Consumer (B2C).
   The B2C model refers to businesses that sell products and services directly to end users.

They come in various forms, such as:

• Retail : when a business sells goods or services directly to consumers for their own use, rather than reselling them to third parties. Think of buying a phone from Apple , ordering a pair of Adidas shoes.
• Dropshipping : merchants do not have to maintain inventory themselves. The seller purchases an item from a third-party supplier, who ships the item directly to the buyer. a Ease of management and low capital are some of the reasons why many small businesses have adopted this model. Examples of dropshipping providers include Megagoods and Sunrise Wholesale .
• Crowdfunding : This model requires encouraging people to fund a new business or product in exchange for a reward. The reward can be a small gift, a monetary interest, or shares in the company. Some examples of crowdfunding platforms are GoFundMe and Kickstarter .

2. E-commerce Business to Business (B2B).
   In the B2B model, both participants are business entities. Typically, this transaction occurs when a business needs to source materials to create products.

Let’s take automobile manufacturing as an example. In this case, an automobile dealer buys from manufacturers. B2B transactions might include the purchase of tires, rubber hoses, and windshield wipers, materials to build cars that will be sold to customers.

As a result, B2B e-commerce transactions typically result in more recurring high volume sales and purchases.

Wholesale e-commerce falls into this category, where companies sell products in bulk and at low prices to online retailers instead of selling directly to end users.

Some examples of business-to-business companies include Berlin Packaging , Flexfire LEDs and Bulk Bookstore .

3. Consumer to Business (C2B) E-commerce.
   C2B businesses allow people to sell goods and services to businesses. This approach gives consumers the power to choose their own prices.

To clarify , affiliate programs and freelance sites are classified as C2B.

An affiliate program is a marketing system in which a company pays someone to promote its goods or services. Companies are willing to pay for promotion because the affiliate is usually a well-known person in the industry and a following of loyal users.

Companies typically offer affiliate marketers unique links that they place on their websites. Each time a reader clicks on the link and is directed to the company’s website or online store, the affiliate receives a commission.

In contrast, a freelancer sells their services to businesses. Freelancers can come from virtually any field, from web development to financial services.

Transaction flow can vary from one platform to another. Some may require companies to contact freelancers first, while others allow companies to hire freelancers immediately without prior correspondence.

As such, e-commerce websites such as Upwork , Hubstaff Talent and Fiverr belong to this model.

4. Consumer to Consumer (C2C) E-commerce.
   The C2C business model connects consumers online, enabling one individual to sell to another individual. Similar to other models, the C2C model can be used to sell both goods and services. Many people also use this method to sell handmade or second-hand products.

This process usually takes place in online markets that achieve a reduction in profit. Examples of B2C e-commerce websites that help customers sell to other consumers by registering an account include Etsy and Craigslist .

Some e-commerce platforms such as eBay also allow customers to sell products through online auctions instead of a simple purchase.

The merchant puts a product up for auction for a certain period and people can bid on it. At the end of the auction period, the buyer willing to pay the largest amount of money can buy the product.

In addition to e-commerce sites, C2C transactions can also take place through money transfer platforms such as PayPal or social media sites such as Instagram or Facebook .

Types of e-commerce businesses based on goods and services sold
The following are the types of business ideas and services that e-commerce stores can offer:

• Physical products. These are tangible items, such as clothes, beauty products, jewelry, food, cars, and computers.
• Digital products. Non-tangible products, such as mp3s, eBooks, online courses, and computer software.
• Services. When people offer their skills to do a specific type of work and are paid by project or time. Examples of people who offer online services include graphic designers, web developers, and translators.

Online businesses can offer these products and services through a one-time purchase or a subscription system.

A one-time online purchase means that the transaction occurs only once. The transaction is complete when a customer purchases a T-shirt and the item is delivered to him or her.

In contrast, a customer will pay for a product or service monthly or annually with a subscription system. The buyer can use a service or have products delivered regularly for the period for which he or she has paid.

Another example is a meal kit delivery service such as HelloFresh . This online business offers customers pre-portioned ingredients and corresponding step-by-step recipes every week. Customers can also adjust meals according to their diet type and choose the number of recipes per week.

What are the advantages of opening an e-commerce business?
There are many advantages to entering the growing e-commerce industry.

Here are some reasons why setting up an ecommerce site may be better than the traditional physical store business.

Ecommerce unlocks the global marketplace
Ecommerce overcomes geographic barriers. It allows merchants to increase revenue by selling to anyone, anywhere. Online shopping is also made even easier by the prevalence of mobile devices, which contribute to the growth of ecommerce.

Both global e-commerce and mobile commerce have grown steadily over the years. Global mobile commerce sales from retail are expected to exceed $132 billion by 2024, while global e-commerce sales are expected to reach $5.4 trillion by 2022 .

An online shop makes products easier to discover and purchase, enabling small businesses to sell trendy products on a scale impossible to achieve with a physical store.

In addition, an online store not only has wider market coverage, but also eliminates the need to open physical stores. With physical businesses, you have to create inventory, rent store space, and hire employees. With ecommerce businesses, on the other hand, you can start building an ecommerce store as soon as you know what to sell and are ready to go online.

Open 24/7/365
Having your business on the Internet means you are always ready to sell.

An online store increases sales opportunities for merchants. Unlike a physical store, your income has no opening hours. In addition, 87 percent of shoppers start looking for products online, so setting up an online shop will expose your business to a wider audience.

For shoppers, online shopping provides them with instant gratification. Regardless of the time of day, consumers can shop online via desktop or mobile device. With just a few clicks or touches, the product can be theirs.

This convenience is especially beneficial for those who cater to a global audience. You never know what time zone people are in, and being open 24/7 reduces your chances of losing customers.

To further maximize customer satisfaction, use chatbots in your online store to provide 24-hour customer support.

Low operational costs
In addition to eliminating the need to build or rent physical stores, starting an ecommerce store also reduces several operational costs.

When selling online, you can save on warehousing and product storage costs by choosing a dropshipping business model. Let the supplier fulfill orders for you.

Depending on the e-commerce platform you choose, setting up an online store can also be quite cost-effective.

Online advertising is also cheaper than traditional channels. Many online advertising platforms are available, such as Facebook , Google and Instagram .

In addition to paid advertising options, there are also free methods to market products. Examples include creating organic social media or blog posts and improving your site’s search engine optimization (SEO). Don’t forget to adjust your marketing strategy to meet your budget.

In addition, you can eliminate the cost of staffing by starting and running the business yourself. Even if you need staff, you won’t have to hire many employees, thanks to the advanced features available in various e-commerce solutions. We will discuss this further in the next section.

Easier management
E-commerce businesses can automate inventory management with the help of tools and services. They simplify and facilitate the operational tasks associated with running a business.

For example, you can add, track, and manage product inventory from a single page.

Shipping and delivery details are also taken care of with real-time calculation tools. Therefore, there is no need to create a manual table shipping rate. Ecommerce platforms also typically offer a variety of payment options, and customers can choose one they are familiar with.

Some ecommerce platforms even come with customizable, professionally designed default templates, so there is no need to hire a graphic designer. Choose the one you like best for your ecommerce site and adjust the elements to your liking.

With the right e-commerce platform, you can easily achieve efficiency and productivity, thus focusing more on growing your business. In addition, using the right platform means that your ecommerce store is more likely to deliver an exceptional user experience to customers who shop online.

Descriptive Information and Personalized Lead Targeting
With a physical store, you can only display a limited amount of information about each product.

This is not the case with an ecommerce store. You can add detailed descriptions about products or services and display as many product variants as you want. Entrepreneurs can even provide complete information about the history of their brands to build credibility and gain customers’ trust.

These small features might seem insignificant, but they can encourage online shoppers to buy. According to one study, informed customers feel more satisfied and confident in their purchase decision.

Having an e-commerce business also allows you to use lead targeting strategies, such as personalized email marketing or targeted advertising campaigns.

Because your online store can collect customer data, you have the ability to do personalized marketing depending on the customer’s information, whether it’s purchase history, gender, or age.

By understanding your target audience, you have a better chance of increasing conversion rates. Use customer data to offer different types of marketing content and personalized recommendations to different demographic groups.

Examples of successful e-commerce sites
To help inspire you and give you a better understanding of what an e-commerce site might look like, let’s take a look at some of the best e-commerce companies in the industry.

Amazon

One of the largest players in the industry, Amazon is an American technology company and online retailer. The fields it focuses on include ecommerce, digital streaming, cloud computing, and artificial intelligence.

Amazon.com has numerous subsidiaries that provide various products and services. Examples include Amazon Fresh, a grocery delivery service that operates in the United States, and Amazon web Services, a subsidiary that provides APIs and cloud computing platforms.

Walmart

Another American retail company, Walmart provides virtually any product or service imaginable. Examples of some of the trendy products it sells include gardening tools, office supplies, movies, and books. This company also provides services such as health care and automotive services.

One of the reasons for its success is its principle of offering low prices to its customers. Walmart achieves this through various methods such as minimizing operating costs, advanced barcode technology and supply chain management, and its direct cooperation with various manufacturers.

Alibaba

Also known as Alibaba Group, Alibaba is a Chinese online retailer and technology company that focuses on various market segments of e-commerce, search engines, and cloud computing services.

It has a variety of subsidiaries to drive its online efforts in different niche markets. For example, Alibaba.com is an online marketplace focused on B2B wholesale transactions, while AliExpress caters more to B2C transactions. There is also Taobao, an ecommerce platform available only in Chinese created to facilitate C2C ecommerce transactions.

Read also: Alibaba vs AliExpress: which is better for dropshipping in 2022?

eBay

This American ecommerce company focuses on B2C and C2C transactions. In addition to allowing immediate purchases, the unique quality of this online marketplace lies in its auction function, which allows users to bid for a specific period of time.

The e-commerce website allows people to buy and sell various types of products, including electronics, beauty products, industrial equipment, clothes, and sports equipment.

Read also: eCommerce security: how to protect your shop from cyber attacks

Conclusion
To recap, although the term ecommerce can refer to all types of e-commerce transactions along with related tools and activities, it mainly refers to online shopping. As an industry, it is expected that global ecommerce will continue to be a profitable source for earning online . Examples of successful online stores include Amazon , Walmart , Alibaba and eBay .

We addressed four ecommerce business models:

1.Business to consumer (B2C). Online retailers sell online directly to end users.
Business to business (B2B). Wholesalers sell products in bulk and at lower prices to ecommerce retailers.
2.Consumer to business (C2B). Individuals offer services and expertise to businesses.
3.Consumer to consumer (C2C). Individuals offer products and services to other individuals, either through one-time online purchases or through an online auction system.
4.Online stores can also sell both physical and digital products and services. Online buyers can purchase products and services through a one-time purchase or subscription system. In addition, we explained the advantages of starting an online store instead of a physical one:

• The ability to sell to international customers.
• A 24-hour business.
• Lower operating costs.
• Practical tools for easy store management.
• More detailed product descriptions and personalized marketing.

Whatever model you choose and whatever product or service you plan to sell, don’t forget to choose the right ecommerce platform for your needs. We hope this article has been helpful in helping you get started on your Internet commerce journey.

If you decide to open an ecommerce business and have your online shop built by professionals in the field contact us for information or request a totallymemnte free ecommerce quote.