Types of online business
When we think of an ecommerce site, the first thing that comes to our mind is some regular online store where it’s possible to purchase items with online transactions. However, in recent years, the ecommerce industry has grown massively, generating countless online stores and solutions. Knowing the types of e commerce business models is crucial in order to determine which could be a right fit for your enterprise.
When a business sells online to another business, we call it a B2B. These e commerce sites target companies that place large business transactions. They usually offer personal customer experience and wide customization. One of the biggest B2B ecommerce businesses is Amazon, enabling thousands of companies to do business online through their platform. Another example of this type of online business could be companies that sell merchandise for other companies, ex. brick and mortar stores.
It is one of the business models where companies are selling their goods and services online to single customers. It could be an ecommerce website of a physical store, or a completely online business model. There are multiple B2C models to choose from, accordingly to your business strategy:
Dropshipping business model
What if you didn’t have to worry about managing inventory or risk unsold items? This tactic of selling products is called dropshipping. These businesses sell products but don’t manufacture or even physically have them. A third-party company handles storage and necessary logistics to your company’s warehouse. The advantage of it is that you don’t need so much investment upfront, and the logistics is relatively easier than the other business models. The only activities to focus on are the online sales and marketing efforts. That makes it easier for young entrepreneurs with small businesses to start out their journey with ecommerce sales. However, you should carefully check your suppliers to ensure that the quality of offered products is met, and they are trustworthy.
Direct to consumer
This happens when ecommerce stores manufacture and sell products through their own website. These models allow big margins, control the quality and give exceptional customer experience. They are often physical stores that own ecommerce platforms, as shopping online has generated huge numbers in recent years and is an important part of the retail industry. Owning an ecommerce store with inventory can generate much cost and development, therefore it’s much more complicated to set up.
These are huge online marketplaces that have the features of B2B ecommerce sites such as customizable orders, large selection or high volumes, but are open to single customers. Some examples are well known commerce businesses like Alibaba or Swish. The benefits that come with this type of online sales are associated with operational efficiency, coming from large order sizes. All of that makes it perfect for cost-leadership strategies.
An old concept given new life. It’s an online marketplace where users are selling products they no longer need. The biggest platforms include eBay, Vinted and Etsy. Some base on regular online transactions and some allow online auctions as well. These sites are perfect to look out for unusual items and vintage clothes. There are usually associated small commissions with selling products, but the general access is free of charge.
Ecommerce businesses you should know
Let’s talk about some of the most successful ecommerce companies that are great examples to follow in terms of selling not only goods and services, but also digital products.
It is one of the largest e commerce retailers out there and undeniably one of the most recognizable brands in the electronic commerce world. This online platform offers a large variety of products from books, electronics and even household items. 28 years of experience, global reach and exposure gives them a solid position on the market. The company offers Fulfillment by Amazon, which is a service that allows smaller businesses to manage all their logistics and customer service. Sounds like a good place to start the e commerce journey!
Shopify is an ecommerce company that gathers businesses of all sizes: from freshly established startups, to well known enterprises. It is a company that enables others to create their own online stores and set up everything. Its interface is intuitive and accessible for those with minimal tech experience. You start off with choosing a template and then customize it according to your brand identity. Shopify also helps with the management of the inventory and all processes associated with ecommerce transactions. What is interesting, is that you can seamlessly integrate it with third-party applications and tools to elevate your online retail.
OLX is a popular online classifieds platform that slightly differs from traditional ecommerce models. It focuses on the local aspect of retail sales. Communities from specific geographic areas can connect together and sell online goods and services. Most of the features are free of charge as well. Customers are looking for items online and are able to negotiate prices or arrange transactions through a direct chat. OLX acts as a middleman, and it’s great in this role! They even provide some online banking features for e commerce transactions, making it even easier for its users.
Advantages of having an online store
Now that we’ve explored types of online retailers and some of the best e commerce companies, let’s talk about the benefits of having a business selling online:
Scalability: Ecommerce transactions allow brick and mortar stores to build their online presence and expand the customer base without geographical limitations.
Availability: Electronic commerce allows a business to operate 24/7, enhancing customer experience and satisfaction, which ultimately leads to increased revenue.
Cost optimization: Compared to traditional brick and mortar stores, e commerce stores often have lower operational costs. No need for rental space, large inventory or workforce.
Customer Insights: Ecommerce platform offers multiple analytics and tools that provide businesses with valuable data on customer behavior, preferences or purchasing patterns. This information could be used for marketing efforts and improve customer satisfaction.
So, is eCommerce business for you?
Online marketplaces have revolutionized services online and the way we do online shopping, also through mobile devices. Understanding the different types of online business models is crucial for crafting one’s online strategy. Making the right choice can elevate your business and generate great outreach. What does your audience want? Do they usually go to physical stores, or maybe already do shopping online? What are your resources and abilities so far? These are the questions you would want to answer, before starting your journey with mobile commerce. Good luck!