You’re convinced that launching an online shop is a good business idea. Users are buying online more and more and there are plenty of sectors that have yet to be exploited.
So far, so good.
The problem is…
What type of e-commerce should you open? Are there some e-commerce models that that work better than others?
If this is exactly the point at which you find yourself, then this is the post you need to read.
Today we’ll be explaining different types of e-commerce (and there are loads) and which one best fits your business idea.
Let’s figure out that dream shop!
What exactly is e-commerce or an online shop?
We’re going to go back to the definition that we used in this post where we went through everything you need to take into account before you open up a business.
E-commerce is a system for the buying and selling of goods and services using the Internet as the main means of exchange.
Having said that, you may think that any website on which you can buy something is an online shop.
Indeed, that’s true. Many people think that an online shop goes beyond the traditional idea of selling physical products via the Internet.
And that is why there are so many different models of electronic commerce.
It’s not the same if you:
- Sell to individuals
- Sell to other companies
- Sell through Facebook
- Have your own app
- Offer products or services
It very well may be at the beginning, but you’ll see how it isn’t so tricky in the end.
What types of e-commerce are there? Options and alternatives
There are lots of online business models, but which one is the best for you?
This section will take on exactly that question – we’re going to go through all of them and take a look at the pros and cons of each one.
Watch out, you may be a business owner by the end of this post! ;)
1. E-commerce according to the goal
In this first classification, we’re going to check the type of sale that is carried out online. There are two main groups:
A. Private or collective sales
These refer to groups of users whose organization helps them to get volume discounts. The idea is that the more demand there is, the cheaper the price will be.
This is the idea behind Privalia.
They offer daily sales on high-quality brands with huge discounts just for their members (about 28 million around the world).
Direct heirs of the traditional auction rooms, they are a type of online business that is becoming more famous online.
In addition to eBay, which is the main example, you can check Catawiki, an international online auction site that auctions off odd and unique products on a weekly basis.
2. E-commerce according to the object being sold
Now we’re talking about what is sold – and there are many options (with even more variants of each one):
A. Physical products
That is to say, objects that you can touch.
Es decir, de esos que puedes coger con las manos.
Within this option, there’s a very interesting alternative: dropshipping.
Dropshipping consists of selling products from a different supplier. While you are in charge of the commercial side of the business, the supplier is in charge of the stock management and shipping.
Are you interested in this type of business? Click here to read this post about how find suppliers.
B. Digital products
A digital product is a file. They can be:
- Song or sound
- Plugins or other digital tools (not SaaS)
- And many, many more
The main advantage of these products is that once you have made one, you have them all. Manufacturing and distribution expenses are low compared to those of physical products.
In this case, we go a step further since we don’t sell a product, but rather a job. Some possibilities are:
- Training courses
- Professional services
- And more!
If your idea is to open this type of business, you may be interested in affiliate marketing, which includes offering third-party services for a commission on each sale. Or quite the opposite, paying a commission to those who recruit new affiliates.
3. E-commerce according to the platform used
This classification focuses on the channel through which the final purchase is made. There are several different sales vehicles:
This is the example that we all think of when we talk about online commerce – a shop on a website.
There are two types:
- Only online sales
- Companies that have created an online channel to complement their offline business (such as Inditex with its Zara or Bershka shops)
But, as you are going to see now, there are more options.
B. Social E-commerce
This one’s easy to define with just its name. ;)
It refers to electronic shops based on social networks such as Facebook, Twitter, or YouTube.
They usually have more than one sales channel, although some entrepreneurs try selling their products on Facebook first before creating a “normal” website.
C. Mobile e-commerce
There is something that should be crystal clear in your mind:
If you are going to start an online shop, it MUST be adapted to all types of screens. Being responsive is no longer an option – it’s an obligation.
More and more people complete their purchases from their phones and this trend is on the rise.
There’s also the option to buy through apps.
4. E-commerce according to how the shop is built
Choosing a CMS is one of the most difficult choices to be made. Depending on your project, one option may be more appealing than another.
A. Open Source
Open source software allows you to create your shop quite easily (although there are different levels).
- WooCommerce (for WordPress): the easiest one, but also the one that offers the fewest options. It’s the one for you if you sell just a few products.
- PrestaShop: with this CMS, you can create a much more powerful online store, but it’s more difficult to use. If you have quite a lot of products, you should start with PrestaShop.
- Magento: the most complex option. It’s very powerful, but you need to know a bit about coding (and it requires more money).
If you’re thinking about creating your website with WordPress, here you have a step-by-step guide about creating your e-commerce on WordPress.
B. Software as a Service (SaaS)
It’s a type of business in the cloud.
That is to say, instead of installing your store on an open source platform, you can choosean SaaS supplier. In other words, software that allows you to run your shop without installing anything… the supplier will do it for you!
If you want to try this out, have a look at Shopify.
If you have doubts about which CMS you should choose, here you have a post that will help you decide.
5. E-commerce according to the target client
If there’s something essential to making sales, it’s having customers. ;)
Each business has a target client (if you don’t know who yours is, start by defining your buyer persona – here we tell you how to do so).
Depending on the audience that you are targeting, your business may be:
A. B2B (Business-to-Business)
These are companies whose final clients are other companies or organizations.
For example, an online clothes shop that supplies another e-commerce that sells customized clothing items.
B. B2C (Business-to-Consumer)
These are companies that sell to individual clients as the final consumers of the product or service.
Once again, this is the most common type and here you have a huge catalog of examples. ;)
C. C2B (Consumer-to-Business)
These are usually platforms where individual clients offer their products or services so that companies can buy or hire them.
D. C2C (Consumer-to-Consumer)
These platforms facilitate the selling process between two end clients, like the infamous eBay or any other secondhand goods website.
Another successful case in this category is BlaBlaCar.
Do you know which type of business you have (or will have?
You probably have a thousand ideas floating around in your head without any being clear.
Don’t worry – that’s normal.
That’s why the first thing you should do is verify the state of the market in the sector you’re thinking about launching in. After that, you can carry out a study of the companies that are already in it.
- What do and don’t they sell?
- Which sales channels do they use?
- Which are their prices like?
- Shipping methods?
- And any other questions you can think of!
This is what will help you to better understand your business and the possible obstacles you could face along the way.
It will surely be of help to you. ;)