It's quite likely, because e-commerce is all the rage, now more than ever. However, like many, you may not know the exact meaning of the term, nor the differences between e-commerce and other related concepts.
The objective of this post is to give you a precise definition of e-commerce and to explain how it differs from other similar concepts. We will also review the different types of e-commerce, as well as the advantages of e-commerce over traditional commerce.
Are you ready to find out everything you need to know about e-commerce?
Let's get started!
Content of the article
Advantages and disadvantages of creating an e-commerce
Steps to create an e-commerce
3. Strategy
Did this make you want to launch your digital business?
Concept: what is e-commerce?
According to Wikipedia, e-commerce, or electronic commerce, is ...
"the pecuniary exchange of goods, services, and information through computer networks, especially the Internet. "
In other words, it is commerce that handles 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 the 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. E-business, on the other hand, refers to the whole process to be implemented in order to manage an online business.
Within e-business, we find for example:
- Inbound marketing
- Promotions
- Stock management
- SEO
- Email marketing
- etc.
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 e-commerce
The world of e-commerce is very vast 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 one based on the business model.
Let's go.
1. According to the business profile
Each business is directed 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 organizations. For example, a store selling building materials to 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 many examples in the fields of fashion, electronics, etc.
- C2B (Consumer-to-Business): portals where consumers offer a product or service that companies can purchase. These are the classic freelance job portals such as Elance, Odesk, Humaniance, Homework, etc.
- C2C (Consumer-to-Consumer): companies that facilitate the sale of products between consumers. The most obvious examples are eBay, Leboncoin, or any portal that sells second-hand items between individuals.
As we can see, e-commerce includes realities that go beyond a simple purchase in a store.
2. According to the business model
The online world is still a very immature sector. The technological changes are constant and the new online businesses respond to new needs.
We can differentiate the type of e-commerce according to the revenue generated or the way the exchange between the buyer and the seller takes place:
- Online store with its own products: this is the first thing we think of when we think of e-commerce. The same characteristics as a physical store, in an online version.
- Dropshipping: for the customer, it seems to be normal e-commerce. The difference is that it is a third party that sends the product, not the seller. To learn more about dropshipping, we advise you to read our complete guide dedicated to dropshipping.
- Affiliate e-commerce: affiliate businesses go even further than drop shipping. 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 store that pays him a commission once the sale is concluded. The affiliation with Amazon is the most frequent. If you are interested in these models, please read our articles on affiliate marketing or stockless sales.
- Membership: this type of e-commerce seeks that its customers make recurring purchases. The privileged 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) that contains certain products. One of our clients, 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 store that brings together several stores. It is a website on which different sellers offer their products. Amazon is an example of a marketplace par excellence: several companies put their products on sale on the platform in exchange for a commission paid to Amazon.
- Services: e-commerce does not necessarily sell products. Training, advice, coaching, and in general, any time exchanged for money. This is a good and viable option to start without taking risks.
Want to start an e-commerce business? How about learning more about the pros and cons of the e-commerce venture?
Is it easy? Is it worth it?
Read on.
Advantages and disadvantages of creating an e-commerce
Why have e-commerce businesses become so numerous on the Internet in such a short period of time?
First of all, because e-commerce represents important advantages compared to traditional commerce.
Let us see which ones.
Advantages
- More customers: neither a local store nor a company located in several cities can reach as many people as e-commerce. Being able to buy and sell from anywhere in the world greatly expands the target audience and gets more customers.
- No hours: unlike traditional stores, which are rarely open 24 hours a day, e-commerce has no hours. The website remains open and accessible to the public all day long and the customer can therefore make his purchases at any time.
- Lower costs: to be able to do without a physical establishment makes it possible to reduce the costs compared to the operation of traditional trade. And if the e-commerce works by putting in contact suppliers with buyers, there will not even be production costs (case of dropshipping, which we spoke to you about the above).
- More margin: the reduction of costs and the increase of the number of customers allow to reach a bigger margin than with traditional trade, even by lowering the prices. We sell more and we earn more money.
- Scalability: in e-commerce, you can sell to one or a thousand people at the same time. In a physical business, there is always a limit to the number of customers 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
Reading all these advantages, you might think that creating e-commerce is a panacea. However, you should be aware of the difficulties that e-commerce can represent.
Therefore, it is worth analyzing the challenges you will face when you start your online adventure.
Disadvantages / challenges
We prefer to talk about challenges rather than drawbacks so as not to distort reality.
Some disadvantages exist, of course (as with everything in life!). But without them, creating an online business would be too easy and lose its appeal
- Lack of trust: although gateways and payment methods have made huge strides and are now as secure as in physical stores, many people still don't fully trust online transactions. To help them trust more, it is possible to use an SSL (HTTPS) certificate that encrypts the transferred information, as well as other certificates that help guarantee the customer's security.
- Products and services that cannot be seen or touched: as customers, we like to feel that we are making a good purchase. We like to see the product and touch it to realize its quality and this cannot be done in e-commerce. How to overcome this disadvantage? With complete product sheets, including images, videos, and a very detailed description of the product.
- Internet connection required: it is obvious, but in order to sell and buy on the internet, a device connected to the internet is required. This does not concern the majority of online activities but can be a problem for some sectors where the target audience is older or less familiar with new technologies.
- Technical difficulties: dealing with unfamiliar issues is a daily occurrence for entrepreneurs, whether offline or online. In the case of e-commerce, the technological part requires a minimum of technological knowledge, which not everyone has. The best way to solve this difficulty is to delegate this part, although it obviously has a cost.
- Competition: the economic entry barrier to creating e-commerce is not as high as for a physical business. The competition is thus more important, and it is necessary to be more competent than the others.
- Time to get results: when a physical business opens its doors, the customers who pass by see it. Getting visibility for an online business is more difficult than it seems. Indeed, you can have a great product and be present on a great platform, but if you don't work to gain visibility, no one will notice you.
At Doofinder, we are convinced that the advantages far outweigh the disadvantages. Indeed, considerable improvements in product return policies and security systems are gradually overcoming these difficulties.
And now, how about a detailed look at how to create e-commerce?
Steps to create an e-commerce
Now that you know what e-commerce is and 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're not sure yet, there are several techniques to detect opportunities.
They all rely on an open mind and good observation skills. It's about seeing everyday situations with an entrepreneur's eye.
When you walk down the street, look out for physical businesses that could be transposed to the Internet, if they are not already.
Think about your needs, the needs of the people around you: what do they use on a daily basis? What do they complain about?
Go out in the street explicitly looking for ideas.
Look at what people are wearing, how they are behaving. Observe and write down every idea that comes to mind, without filtering them.
Keep thinking about how you can solve the problems of the people you meet. Your entrepreneurial spirit is like a muscle that you need to train: when you start going to the gym, you feel some soreness the first few days, but as you go, your body gets used to the exercises. It works the same way.
But the most important thing to remember is: don't sell products, solve problems.
2. Analyze the idea
The second step is to sort out the initial ideas until you have only one or a few left.
It will be this e-commerce idea that we will analyze.
- Value proposition: what is the value provided? What need does the idea satisfy?
- Market: is it a new product? Is it a product that already exists, but that offers new features?
- Competition: Who currently meets the need you have identified? Could you improve the product or service?
- Demand: Is the problem you are going to solve large enough to generate a large demand? Check how many Google searches exist for the topic. You can do this with Keyword Planner.
- Challenges: List any other challenges that come to mind (technical difficulties, competition, threats, etc.)
A great way to analyze an idea is with a basic business tool: the SWOT.
S = strengths, W = weaknesses, O = opportunities, T = threats
The SWOT analysis is a business strategy tool that allows you to analyze the strengths, weaknesses, opportunities, and threats of your idea from an internal and external perspective.
3. Strategy
Thousands of businesses are created every day, but most are created without a predetermined strategy.
And be convinced that knowing the direction to take and the means to get there will be the key to your success.
You can ask yourself questions like :
- How will our ideal client know us?
- Why will they prefer us to the competition?
- Will we be cheap?
- What defines our customers? What common characteristics do they share?
- What are the goals of our business? How will we grow?
This template provides a quick and simple summary of the keys to a business. Spending some time filling in these 9 boxes will help you identify what is important to your idea and how to make it work.
4. an Action plan
So far, you have defined general ideas and goals. In this fourth part, we will deal more concretely with specific actions.
Here are some ideas:
- Name: this is one of the puzzles at the beginning. Our advice is to follow basic rules: a short name, easy to pronounce, available in the .com domain and on the main social networks.
- Hosting: e-commerce needs to be hosted by a server.
- Corporate identity: here we are not only talking about the colors or the logo but about the values to be transmitted, the true essence of the brand. Feel free to read our post in which we explain how to create your brand image.
- Website: who will build the website? If you're not doing it yourself, you'll need someone to do it for you and advise you. Consider the different options available to you depending on your business model: PrestaShop, WordPress, Shopify, etc.
- Visibility: this is the last point, but it's actually the most important and overlooked part. Most entrepreneurs strive to have a good product and a beautiful website to sell it, but they forget to think about how the customers will arrive.
Finally, you should not neglect the legal issues. Will, you set up an LLC? Will you register as a freelancer?
Has this made you want to start your digital business?
We hope this article has been helpful to you.
You may have many doubts and questions. Don't worry, it's perfectly normal. Think and analyze your business idea carefully and, if you decide to launch, define a plan of action.
The rest will come with hard work and consistency, I promise!
0 Comments