Home DEFINITIONS What Is Ecommerce And Types, Pros & Cons Of E-commerce Business Model?

What Is Ecommerce And Types, Pros & Cons Of E-commerce Business Model?

If you do digital marketing, sooner or later you will have to manage an ecommerce or at least consider what it can bring to your brand.

E-commerce has been on the rise for years, and the 2020 crisis has further accelerated its penetration among consumers. Let’s see what exactly is an ecommerce, what types are there, the pros and cons of this strategy, how to create your online store step by step and 5 examples of commerce strategies that work.

What Is E-commerce?

E-commerce is the practice of buying and selling products over the Internet. Each online store that is dedicated to this business is also called “ecommerce”.

The e-commerce sector has been one of the most disruptive in recent years because it has revolutionized traditional commerce by offering an unprecedented level of comfort and personalization. For this reason, electronic commerce has become the basis of the business model for many brands.

Types Of Ecommerce

We can classify electronic businesses according to the public they are targeting or their business model.

Depending On The Target Audience

  • B2C (Business to Consumer): e-commerce aimed directly at the final consumer. It is the most frequent type and within it, we can find many examples, from online hardware stores to organic fashion stores.
  • B2B (Business to Business): e-commerce whose target audience is other companies, for example, office supplies stores.
  • C2C (Consumer To Consumer): this typology has flourished in recent years with the rise of online sales. These are consumers who sell directly to other consumers, generally second-hand products. The most popular example in our country is Wallapop.
  • In addition to these three types, which are the most common, we can also find alternatives such as C2B (Consumer To Business), G2C (Government to Consumer), B4B (Business for Business) or B2E (Business to Employer).

Depending On The Business Model

  • Own online store: the simplest model, simply consists of a digital version of the brand’s physical stores, which sells its own products. It can be an exclusively online business or have both e-commerce and physical stores.
  • Marketplace: A marketplace is a kind of “macro-store” that includes various sellers. The best-known example is Amazon, in which anyone can sell for a commission.
  • Dropshipping: For the customer, a drop shipping does not differ from a standard online store. But instead of managing their own inventory, in this case, the seller simply shows and promotes the products and a third party is in charge of making the shipments.
  • Affiliate: in digital marketing, the affiliation model is to use third parties to promote products or services in exchange for a commission. The affiliate places links to refer the customer to the other store, where the sale is closed. For example, affiliation with Amazon is quite frequent.
  • Subscription: instead of selling products or services individually, in this case, what is sought is that consumers contract a monthly membership and receive products at home on a regular basis. For example, it is the case of the famous “surprise boxes”, which today are implanted in many sectors.

Pros And Cons Of Ecommerce As A Business Model

Ecommerce has been a revolution in the way of selling and can be adapted to all kinds of sectors. But before launching your branded ecommerce, take a look at these pros and cons and think about how it would fit into your business.

Pros Of E-commerce

  • Greater reach for your business: with an online store, you will be automatically accessible from all over the world (although you will always have to take into account which countries you can ship to and which you cannot). Instead, physical stores always have a limited scope range by definition.
  • Lower costs: setting up an online store has a very low initial cost, especially compared to renting or buying premises. This makes entry barriers much lower and better margins can be achieved than with a traditional store.
  • Available 24/7: The vast majority of physical stores are limited by opening and closing hours, and the longer they are open, the higher the personnel costs will be. In contrast, e-commerce never throws the blind.
  • Growth potential: there are no limits to the people who can “enter” your ecommerce at the same time (as long as you have hired a good server, of course), allowing your business to grow.

Cons Of E-commerce

  • Difficulties in accessing certain sectors: although online shopping is becoming increasingly popular, there are still sectors of the population that are not too familiar with it and are not comfortable shopping online, for example, the elderly.
  • Products cannot be seen, touched, or tested: In products where sensory qualities are very important or require testing, such as clothing, e-commerce introduces a difficult barrier to overcome. We can partially solve it by providing detailed descriptions, photos and videos of the products and having a good return policy.
  • Trust issues: Some users still do not trust electronic payment systems. Trusted seals and SSL encryption can help us alleviate this problem.
  • Greater competition: As the access barriers to electronic commerce are very low, there are many more brands that can open their own online store. Therefore, we will have to make a certain investment of time and resources to stand out and be visible.

Also Read: Step By Step Procedure To Create Your Own E-commerce Business

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