Have you ever wondered what exactly e-commerce is?
That’s quite likely because e-commerce is in fashion today more than ever. However, like many, perhaps you do not know the exact meaning of this term, or the differences between e-commerce and other related concepts.
The purpose of this post is to give you a precise definition of e-commerce and explain how it differs from other similar concepts. We will also review the different types of e-commerce, as well as the benefits of e-commerce over traditional commerce.
Concept: what is e-commerce?
According to Wikipedia, e-commerce, or e-commerce, is …
“The pecuniary exchange of goods, services and information via computer networks, including the Internet. “
In other words, it is a business that manages payments through electronic means.
Differences between e-commerce and e-business
E-commerce and e-business are two concepts that tend to be confused. In reality, they have nothing to do with each other.
E-commerce refers only to the transaction of goods and services between a buyer and a seller. The e-business, meanwhile, refers to the entire process to implement to manage an online business.
Inside the e-business, for example :
- Inbound marketing
- The promotions
- Stock management
- Email marketing
- As we can see, the concept of e-business is much broader than that of e-commerce. As a type of business model, e-commerce is part of e-business.
The different forms of electronic commerce
The world of e-commerce is very large and includes several distinct models. It is possible to make 2 classifications:
A global classification based on the business model (who sells and who buys)
Another based on the business model.
1. According to the business profile
Each business goes to a specific type of customer. This allows us to distinguish the following types of e-commerce:
B2B (Business-to-Business): Companies whose end customers are other companies or other organizations. For example, a construction equipment store that is aimed at architects or interior designers.
B2C (Business-to-Consumer): companies that sell products or services directly to end consumers. This is the most common form, and there are countless examples in the fields of fashion, electronics, etc.
C2B (Consumer-to-Business): portals on which consumers offer a product or service that businesses can acquire. These are classic freelance job portals like Elance, Odesk, Humaniance, Hopwork, etc.
C2C (Consumer-to-Consumer): companies that facilitate the sale of products between consumers. The most telling examples are eBay, Leboncoin or any portal selling second-hand articles between individuals.
These forms of e-commerce are the most common. There are also other types, such as the G-C (Goverment-to-Consumer), the C2G (Consumer-to-Goverment) or the B2E (Business-to-Employer).
As we can see, e-commerce brings together realities that go beyond a simple purchase in a shop.
2. According to the business model
The online world is a still undeveloped sector. Technological changes are constant and new online businesses are responding to new needs.
We can differentiate the type of e-commerce according to the income generated or the way in which the exchange takes place between the buyer and the seller:
Online store with its own products: it’s the first thing you think about when thinking about e-commerce. The same characteristics as a physical store, in an online version.
Dropshipping: for the customer, it seems to be a normal e-commerce. The difference is that a third party sends the product, not the seller.
E-commerce Affiliate: Affiliate businesses go even further than dropshipping. In this case, not only does the store not send the product, but the sale does not take place on its platform. The e-commerce redirects the customer to another shop that pays him a commission once the sale is concluded. Affiliation with Amazon is the most common. For example: Biodegradable.es. If you are interested in these models, do not hesitate to read our articles dedicated specifically to affiliate marketing or sale without stock.
Membership: This type of e-commerce seeks to have its customers make recurring purchases. The preferred way to obtain them is through a periodic subscription (weekly, monthly, quarterly, etc.). This type of membership is currently in vogue with the “surprise boxes”. This is a box sent every month (or at another frequency) and contains some products. One of our customers, NUOObox, offers for example boxes of natural and organic cosmetics. The advantage of this model is to ensure a recurring income each month.
Marketplace: A marketplace is a shop with several shops. This is a website on which different sellers offer their products. Amazon is the marketplace example par excellence: several companies put their products on sale on the platform in exchange for a commission paid to Amazon.
Servicices: an e-commerce does not necessarily sell products. Training, advice, coaching and, in general, any time traded for money. It is a good viable option to start without taking risks.
As we have seen previously, advances in this area are daily, and new types of e-commerce are constantly emerging.
Want to start e-commerce? How about knowing more about the pros and cons of the e-commerce adventure?…
Advantages and disadvantages of creating an e-commerce
Why have e-commerce become so numerous on the Internet in such a short time?
First, because e-commerce represents important advantages over traditional commerce.
Let’s see which ones.
More customers: Neither a local shop nor a company in several cities can reach as many people as an e-commerce. Being able to buy and sell from anywhere in the world greatly expands the target audience and allows for more customers.
No hours: unlike traditional shops, which are rarely open 24 hours a day, e-commerce does not have a timetable. The website remains open and accessible to the public all day and the customer can therefore shop at any time.
Lower costs: being able to do without a physical establishment can reduce costs compared to the operation of a traditional business. And if e-commerce works by connecting suppliers with buyers, there will not even be any production costs (the case of dropshipping, which we talked about above).
More margin: Cost reduction and increased customer reach a larger margin than traditional business, even lowering prices. We sell more and we earn more money.
Scalability: In an e-commerce, you can sell to one or a thousand people at the same time. In a physical enterprise, there is always a limit to the number of clients you can serve at a time; in e-commerce, the limit is your ability to attract visitors. And of course, that of your computer server. 😉
By reading all these benefits, you might think that creating an e-commerce is the panacea. However, we must be aware of the difficulties that can represent e-commerce.
Steps to create an e-commerce
Now that you know what e-commerce is and you know the advantages and disadvantages, let’s see where to start.
1. The idea
Do you already have an idea or are you starting from scratch? If you are not sure yet, there are several techniques to detect opportunities.
All are based on openness and a good sense of observation. It’s about seeing the situations of everyday life with the eye of the entrepreneur.
When walking on the street, pay attention to physical businesses that could be transposed on the Internet, if it is not already the case.
Think about your needs, those of people around you: what do they use on a daily basis? What are they complaining about?
Go out into the street explicitly in search of ideas.
Look at what people are coming across, how they behave. Observe and write down each idea that comes to your mind, without filtering them.
Always think about how you can solve the problems of the people you meet. Your entrepreneurial spirit is like a muscle you have to train: when you start going to the gym, you feel aches the first days, but gradually, the body gets used to the exercises. It works the same way.