What is E-Commerce? Definition, Types, and Business Models

D&V Philippines

10 May 202204:09

Summary

TLDRE-commerce presents vast opportunities for business owners, encompassing both direct online sales and marketplace listings. Key platforms include Shopify, Amazon, and Alibaba. The industry categorizes into B2C, B2B, service-based, and C2C models. Successful e-commerce hinges on selecting a fitting business model, such as dropshipping, subscriptions, wholesaling, or retailing, and involves understanding target audiences, legal registrations, and comprehensive business planning.

Takeaways

💡 E-commerce encompasses the buying and selling of products or services online.
🛒 To start selling online, you can either run your own e-commerce website or list your products on an online marketplace.
🏪 Having an e-commerce website is akin to owning a physical store where customers can exclusively browse your offerings.
🌐 Popular e-commerce website builders include Shopify, BigCommerce, and Weebly.
🛍 Listing on online marketplaces like Amazon, Alibaba, and eBay is similar to selling in malls or grocery stores, offering a variety of products from different sellers.
🔍 E-commerce can be categorized into four main types: B2C, B2B, service-based, and C2C, each with distinct selling dynamics.
📦 The dropshipping model allows you to accept customer orders without holding physical inventory, with a third party handling fulfillment.
📆 Subscription services offer products on a recurring basis, such as weekly, monthly, or yearly, fitting well with industries like food, fashion, and entertainment.
🔄 Wholesaling involves selling goods in bulk to retailers at discounted rates, while retailing focuses on selling smaller quantities to end consumers.
🏭 The white-labeling model involves a third-party manufacturer producing products that are then sold under your brand's name.
📈 To succeed in e-commerce, determine your business model, conduct product and niche research, decide on sales channels, understand your target audience, register your business, obtain necessary permits, and prepare a comprehensive business plan.

Q & A

What is e-commerce and how does it work?
-E-commerce refers to the selling and buying of products or services online. It works through various platforms such as e-commerce websites or online marketplaces where consumers can browse and purchase items.
What are the two main options for starting to sell products online?
-The two main options are running your own e-commerce website or listing your products on an online marketplace.
What is the difference between having an e-commerce website and selling on an online marketplace?
-An e-commerce website is like owning a physical store where shoppers can only browse your products. An online marketplace is like selling in a mall where shoppers can browse various products from different sellers.
What are some popular e-commerce website builders mentioned in the script?
-Some popular e-commerce website builders are Shopify, BigCommerce, and Weebly.
Name some popular online marketplaces where one can list their products.
-Popular online marketplaces include Amazon, Alibaba, and eBay.
What are the four main types of e-commerce mentioned in the script?
-The four main types of e-commerce are Business-to-Consumer (B2C), Business-to-Business (B2B), Freelancing, and Consumer-to-Consumer (C2C).
How does the business-to-consumer (B2C) e-commerce model work?
-B2C involves an online retail store selling directly to end consumers, which can be done on an e-commerce website or an online marketplace.
What is the business-to-business (B2B) e-commerce model and how is it typically conducted?
-B2B involves a company selling products or services directly to another company, usually through their own website.
Can you provide an example of the freelancing e-commerce model mentioned in the script?
-Freelancing e-commerce is exemplified by a freelancer offering writing services to business owners through platforms like Upwork or Fiverr.
What is the consumer-to-consumer (C2C) e-commerce model and where does it commonly occur?
-C2C involves a consumer selling new or pre-loved products to another consumer, commonly through websites like eBay or Etsy.
What are the different types of e-commerce business models that can help generate income?
-Types include dropshipping, subscription services, wholesaling, retailing, and white labeling where a third-party manufacturer produces the product for your brand.
What steps should be taken to prepare for starting an e-commerce business according to the script?
-Steps include determining your business model, conducting product and niche research, deciding where to sell, identifying your target audience, registering your business and brand name, applying for necessary licenses and permits, and preparing a business plan including financial and inventory management.

Outlines

00:00

🛒 E-commerce Overview and Business Models

E-commerce is defined as the online buying and selling of products or services, offering significant business opportunities for both existing and aspiring entrepreneurs. The script outlines two primary methods for selling online: operating an independent e-commerce website or listing products on an online marketplace. It compares the exclusivity of a personal e-commerce site to a physical store, where customers can only view the seller's products, with the marketplace model, which is akin to a mall where shoppers can compare products from various sellers. Popular e-commerce website builders mentioned include Shopify, BigCommerce, and Weebly, while Amazon, Alibaba, and eBay are highlighted as leading online marketplaces. The script further categorizes e-commerce into four types: B2C (business-to-consumer), B2B (business-to-business), service-based, and C2C (consumer-to-consumer). It also discusses various e-commerce business models such as dropshipping, subscription services, wholesaling, retailing, and white labeling, emphasizing the importance of choosing a model that aligns with the business's capabilities and profit goals. The paragraph concludes with practical steps for starting an e-commerce business, including determining the business model, conducting product and niche research, deciding on sales channels, identifying the target audience, registering the business, obtaining necessary licenses, and preparing a comprehensive business plan.

Mindmap

Keywords

💡E-commerce

E-commerce refers to the buying and selling of goods or services over the internet. This concept is central to the video as it introduces the main topic of the script, which focuses on the opportunities for businesses to sell online. Examples in the script include running your own e-commerce website or listing products on an online marketplace like Amazon or Alibaba.

💡Online marketplace

An online marketplace is a digital platform where multiple sellers can list their products, and shoppers can browse a wide range of items from different vendors. The script compares online marketplaces like Amazon, Alibaba, and eBay to malls, where customers have access to multiple options. It emphasizes the convenience and variety offered to consumers.

💡E-commerce website

An e-commerce website is a dedicated online platform owned and operated by a business where consumers can browse and purchase products directly. The script explains that owning such a website is akin to running a physical store, as visitors only see the products from one seller. Platforms like Shopify, BigCommerce, and Weebly are popular tools for building these websites.

💡Business models

Business models refer to the various methods by which an e-commerce business can generate revenue. The script outlines several business models, including dropshipping, subscriptions, wholesaling, and retailing. Each model has its unique process, like dropshipping, where a third party fulfills orders, or subscriptions, where customers receive products regularly.

💡Dropshipping

Dropshipping is a business model in which the seller does not keep inventory but instead passes customer orders to a third-party supplier who fulfills and delivers the product. This allows businesses to offer products without the cost of maintaining stock. The script highlights this model as a flexible option for e-commerce businesses.

💡Subscription service

A subscription service is a business model where customers regularly receive products or services over a set period, such as weekly or monthly. Examples include Netflix and Spotify, which use subscription models for entertainment services. The script suggests that this model works well in industries like fashion, food, health, and lifestyle.

💡Wholesaling

Wholesaling involves selling large quantities of products at a discounted price to retailers, who then sell them to end consumers at a profit. The script mentions this model as a way to earn through bulk sales, contrasting it with retailing, where goods are sold individually to consumers.

💡Retailing

Retailing is the direct sale of products in smaller quantities to end consumers. This model involves selling items at a marked-up price, which is derived from the discounted rates provided by wholesalers. The script explains how retailing is the opposite of wholesaling, as it focuses on individual sales rather than bulk transactions.

💡Niche research

Niche research refers to the process of identifying a specific, focused segment of the market where a business can target its products or services. The script advises e-commerce entrepreneurs to conduct niche research to determine the focus of their business and better understand their potential customers.

💡Target audience

Target audience refers to the specific group of consumers a business aims to reach with its marketing efforts. In the script, understanding the target audience is essential for delivering the right messages to the right people, ensuring that the products and services offered meet the needs and preferences of potential customers.

Highlights

E-commerce offers extensive business opportunities for both existing business owners and aspiring entrepreneurs.

E-commerce involves the online selling and buying of products or services.

There are two primary options for selling products online: running an e-commerce website or listing on an online marketplace.

An e-commerce website is akin to a physical store, offering a platform for customers to browse through your products exclusively.

Popular e-commerce website builders include Shopify, BigCommerce, and Weebly.

Listing products on an online marketplace is similar to selling in malls or grocery stores, offering a wide range of products from various sellers.

Prominent online marketplaces include Amazon, Alibaba, and eBay.

E-commerce encompasses four main types: Business to Consumer, Business to Business, Service to Business, and Consumer to Consumer.

Business to Consumer involves selling directly to end consumers, either through an e-commerce website or an online marketplace.

Business to Business involves companies selling products or services directly to another company, typically through their own website.

Service to Business involves freelancers offering services to business owners through platforms like Upwork or Fiverr.

Consumer to Consumer involves individuals selling new or pre-loved products to other consumers on platforms like eBay or Etsy.

The business model in e-commerce is crucial as it determines how income is generated from online sales.

Dropshipping is a model where customer orders are fulfilled and delivered by a third party without keeping products in stock.

Subscription services involve sending products to customers on a regular schedule based on their chosen plan.

Wholesaling involves selling goods in bulk to retailers at discounted rates, who then sell to end consumers.

Retailing involves selling goods in smaller quantities or by piece to end consumers, with a markup added to the wholesale price.

White labeling involves a third-party manufacturer producing products for your brand, which you then sell as your own.

Determining your business model is essential for managing your operations and maximizing profits.

Conducting product and niche research helps in identifying the focus of your e-commerce business.

Deciding where to sell—whether on an e-commerce website, through an online marketplace, or both—is a key strategic decision.

Understanding your target audience is crucial for effectively delivering your marketing messages.

Registering your e-commerce business and brand name is an important step in establishing a legal and recognizable entity.

Applying for necessary licenses and permits ensures that your business operates within legal boundaries.

Preparing a comprehensive business plan, including financial and inventory management aspects, is vital for the success of your e-commerce venture.