What is e-commerce?
Short for electronic commerce, e-commerce, as the name suggests is a business model where individuals and companies buy and sell products, services, and even data online.
If you want a more in-depth understanding of this topic, check out the FAQ section below:
Question #1: What are the three types of e-commerce?
The three main types of e-commerce are business-to-business, business-to-consumer, and consumer-to-consumer. Let us take a look at each one in more detail.
First, business-to-business e-commerce, as you may have already guessed, involves businesses selling to and buying from other businesses. An example of this would be Shopify, which sells their tools and services to companies or individuals who want to run their own online stores.
Other examples include:
- Web development companies who sell their services to businesses who need a website
- Google and Facebook that both sell digital ad space and advertising tools to businesses
- Email marketing platforms that sell their services to companies who want to build and market to an email list
The second type of e-commerce is business-to-consumer—which is also pretty self-explanatory. It involves businesses selling directly to consumers. Examples include:
- Shopify store owners selling consumer products
- Subject matter experts selling digital courses
- Gadget stores selling consumer smart devices
The third and final type of e-commerce is consumer-to-consumer, which, as the name suggests, involves consumers selling directly to other consumers. A great example of this would be individuals selling their used gadgets to other people on eBay.
Question #2: What are its benefits?
The biggest benefits of e-commerce include:
- Reach
- Scalability
- Convenience
Let us take a closer look at each one:
First, e-commerce provides a significantly wider reach than traditional commerce. With it, you can sell to anyone anywhere in the world at any time, especially if you sell digital products—unlike if you run a physical store that can only sell to people who walk in during business hours.
The second major benefit of e-commerce is that it is extremely scalable, especially if you sell digital products. It does not matter if you have 10 or 10 million customers. As long as you have your products in stock, you can serve them all on autopilot. There is no need to rent extra storage space or hire more people to accommodate the increasing demand.
The third and final benefit of e-commerce is a convenience for both the sellers and the customers. For the sellers, since pretty much everything about e-commerce is fully automated, it makes selling so much less demanding. For the customers, on the other hand, e-commerce allows them to make their purchases at any time right at the comfort of their own homes.
Question #3: Is e-commerce right for my business?
E-commerce is right for your business if it satisfies two basic conditions:
- What you are selling can be offered online and delivered to your customers
- Your target customers have the ability to make online purchases
Let us go over each one:
The first condition is that what you are selling can actually be offered online and delivered to your customers. An example of something that cannot be sold online and actually delivered to customers is a gym. For customers to be able to avail of a gym’s services, they will need to actually go to its physical location.
Of course, this does not mean that a gym cannot sell personal training, courses, supplements, and gym gear online. But the core business, which is the gym itself, is not actually designed for e-commerce.
The second condition is that your target customers should actually be able to make online purchases. They need to have not only the technical know-how needed to shop online but also the ability to make payments online. This is why if your target customers are older individuals who may not be comfortable with modern technology or those who live in areas with no access to reliable and fast internet, then e-commerce may not be right for you.