Understanding The Different Types of Ecommerce: What are your options?
The world of ecommerce is changing all the time. In just a few years, it has gone from being an expensive and risky venture to something that’s accessible for anyone with a computer and internet connection.
This article will help you understand the different types of ecommerce so you can choose one that suits your needs and helps you reach your goals.
How did ecommerce get started?
Ecommerce started to become popular in the mid-1990s, as internet use was booming. This coincided with the development of online payment systems like PayPal and Alipay that made it possible for consumers to buy things without leaving their home or office.
The first ecommerce website is believed to have been Pets.com, which launched in 1998.
The most popular ecommerce website these days is Amazon.com, which launched in 1994 and currently has over 310 million active customers worldwide.
Ecommerce websites are not just for selling products online anymore, either. Plenty of companies offer digital services as well like music streaming sites or software subscriptions that can be purchased with the click of a button on the web. Music subscription service, Pandora, is an example where customers could have access to millions of songs and create custom radio stations based on their preferences.
One example of a successful ecommerce businesses is Etsy, which was created in 2005 and specializes in handmade or vintage items from independent sellers.
Another popular ecommerce website is Wish.com, which offers customers a chance to purchase goods at prices they cannot find anywhere else on the web for such as electronics, clothes, beauty products and home decor.
Ecommerce websites are not all the same, which is why it’s important to decide on the type of ecommerce business you want.
Advantages of ecommerce
Ecommerce has become the fastest growing industry in the world, and it’s not hard to see why. Ecommerce sites offer customers a wide variety of goods at prices they cannot find anywhere else on the web for such as electronics, clothes, beauty products and home decor. Customers can also browse through different types of items before making their purchase decision, which is a huge benefit for those who are not sure what they want or need.
By running an ecommerce site, entrepreneurs have the opportunity to run their own business and make money off of it without needing any kind of overhead costs like retail stores require. This means that while you might be able to take half as many products on your website as you would be able to in a brick and mortar store, the fact that your site is online means there are no rent or utility bills.
The convenience of being online also helps people save time. They can find what they want quickly without having to drive to stores which might not have what they need or getting out their credit card for each purchase.
There are also more options available for ecommerce businesses that might not be achievable in a traditional retail store like having an online storefront, being able to take credit cards instead of cash or providing the option to use PayPal with your transactions.
For instance, if you’re selling makeup and want clients who may live outside the United States, they can use PayPal to pay for their purchase.
Disadvantages of ecommerce
A disadvantage of ecommerce is that companies are not able to physically interact with customers in the same way brick and mortar stores can, meaning customer service will be more difficult to provide. Companies need a robust social media presence as well as a strong online reputation so they don’t get outcompeted by other firms which tend to have more of a personal touch.
That isn’t the only disadvantage of ecommerce. There are many more cons associated with ecommerce.
- Online stores don’t have the same variety of merchandise that can be seen in a physical store, meaning it may not be as easy to find what you’re looking for online and shops without shopping assistants tend to take longer than they would if buying from a store staffed by sales associates.
- Many consumers will find it difficult to trust an online store because their perception of the quality and authenticity of goods can’t be seen.
- The lack of tactile experience, as well as the inability to see what they’re buying before purchasing it are also disadvantages for consumers who buy online.
How many types of ecommerce models are there?
There are many types of ecommerce business models. A few examples include:
- Dropshipping, where the business doesn’t keep any inventory and instead sells goods through a third party. The store owner purchases products from a manufacturer or distributor at wholesale prices then creates an online storefront for customers to purchase them. Once these orders are made, they’re passed on to the supplier, who sends out the goods and sends the order to customers.
- OpenCart, which is an open source ecommerce platform that’s easy for anyone to use with no need for coding skills or design experience. The software needs only be installed on a web server.
- Shopify Plus – this provides businesses with shopping cart systems designed specifically for larger stores and retailers who want to take their business to the next level.
- WooCommerce, which is one of today’s most popular ecommerce platforms for WordPress users. It has a variety of functions and plugins that can be utilized by both programmers and non-programmers alike. More than 22% of all online stores are built using this platform.
- Magento, which is a comprehensive solution for businesses who want to have full control over their ecommerce websites. The platform features plenty of prebuilt extensions and themes that allow users to customize the site’s design and functionality as they see fit.
- Shopify – this company provides an all in one package for smaller merchants looking for simplicity.
What are the ecommerce businesses by business model?
Ecommerce has many different types of business models. The most common type is the online store, which comes with a wide variety of options for merchant services and payment gateways to choose from. Other ecommerce businesses come in other forms including: expert platforms (like Upwork), marketplaces (such as eBay or Etsy) and networks that connect sellers to buyers (such as Amazon).
What are the types of ecommerce revenue models?
Ecommerce revenue models depend on the type of business. Some companies, such as Amazon Prime and Etsy charge a monthly subscription fee for access to their platform. Other types of ecommerce businesses rely solely on commissions from sales made through the site or marketplaces like eBay.
What are the 4 traditional types of ecommerce business models?
The four traditional types of ecommerce business models are:
- The Expert Platforms Model
This type of ecommerce business model is becoming popular because the barriers to entry for developing a website and marketing it are low. The company offers expert advice on topics such as finance, law, or technology in exchange for an ongoing revenue share with the freelance experts who contribute their knowledge to them.
- The Product Aggregator Model
This type of ecommerce business model is popular for online retailers who are looking to consolidate their offerings and increase customer convenience. The company will offer a single website where shoppers can purchase products from many different brands or stores at one time, rather than visiting multiple sites to find the same items.
- The Affiliate Model
This type of ecommerce business model is popular for online retailers who are looking to increase sales. The company will allow other merchants the opportunity to advertise their products through affiliate programs, usually in exchange for a commission on any purchases that result from them.
- The Amazon Marketplace Model
Amazon has become one of the world’s largest online retailers, and they have developed a business model that is different from most other ecommerce sites. The Amazon Marketplace Model allows third-party sellers to offer their products on the site in return for some of the profits generated by those sales.
How to choose an ecommerce business model
When you are deciding which ecommerce business model will work best for your new online venture, there are a number of factors that should be taken into account.
- Ease of use: How easy is it to set up and maintain the site?
- Cost: What does the company charge for its services? Are they worth their price tag?
- Competition: How much competition does your business model have? Will it be too difficult to carve out a niche in the market and get customers, or will you have an edge over other companies because of your unique approach?
- Future potential: What is the long term outlook for this particular ecommerce site. Is there room for growth?
- Time: How much time and effort does this ecommerce model require? Is it something you can do in your spare time or will it take over your life?
- Flexibility: Will the site be able to grow with your company as its needs change, or are there limitations that prevent changes from being made easily.
When choosing a model for your online store, you should also keep in mind customer experience and needs; what products or services will be offered; manufacture costs, inventory management and distribution channels; and payment methods accepted by customers.
Do your research before choosing an ecommerce model
Make sure you are well-informed before choosing an ecommerce model. As we have seen, ecommerce is a growing industry that many people are getting involved in for their own reasons and motivations. When choosing an ecommerce model it's important to consider the pros and cons of each one before committing.
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