Are you thinking of starting a business where you sell your products online? If so, you will join the millions of entrepreneurs who have carved out a place for themselves in the world of e-commerce.
At the heart of this term, electronic commerce refers to the purchase and sale of goods and/or services through electronic channels such as the Internet. Electronic commerce was first introduced in the 1960s through electronic data interchange (EDI) over value-added networks (VAN). The media developed with the increased availability of Internet access and the advent of popular online vendors in the 1990s and early 2000s. Amazon began shipping books to the garage from Jeff Bezos in 1995. eBay, which allows consumers to sell to each other online, introduced online auctions in 1995 and exploded with the 1997 frenzy of Beanie Babies.
Like any digital technology or consumer-based purchasing market, electronic commerce has evolved over the years. As mobile devices have become more and more popular, mobile commerce has become its own market. With the rise of sites like Facebook and Pinterest, social media has become an important driver of e-commerce. In 2014, Facebook was responsible for 85% of social media sales on the Shopify e-commerce platform.
Market developments represent a huge opportunity for companies to improve their relevance and expand their market in the online world. Researchers predict that e-commerce will account for 17% of retail sales in the United States by 2022, according to Digital Commerce 360. These figures will continue to increase as mobile and Internet usage increases in the United States and in developing markets around the world.
As in traditional commerce, there are four main categories of electronic commerce: B2B, B2C, C2B and C2C.
B2B (business to business) – These are businesses that do business with each other. For example, manufacturers sell to distributors and wholesalers sell to retailers.
B2C (business to consumer) – B2C consists of companies that sell to the public through shopping cart software, without the need for any human interaction. This is what most people think of when they hear e-commerce. Amazon is an example.
C2B (from consumer to business) – In C2B e-commerce, consumers post a project with an established budget online, and companies bid on the project. The consumer reviews the quotes and chooses the company. Elance is an example.
C2C (consumer to consumer) – This is done through classified ads, forums or online markets where individuals can buy and sell their goods. Examples of this are Craigslist, eBay and Etsy.
Get started in e-commerce
If you are selling physical goods, you will need to consider how you will ship them. PayPal and other processors have worked with shipping merchants to provide one-stop postage processing. You will also need to research the laws of your state to determine if you must obtain a sales license online or if you must collect sales tax from your state or municipality.
Dropshipping is a way to outsource your inventory and shipping. Drop-delivery services store and ship the products you sell as a merchant, multiple times for wholesale prices. These companies act on your behalf, using your brand and packaging. The best of these services have integrations with Amazon, Shopify and other e-commerce platforms.
As your business grows, you may want to consider more advanced ways to process payments, such as using a merchant account and a service. The services that integrate better with your bank often offer reduced transaction costs compared to processors such as PayPal.
As in any new business, the first step to success in the e-commerce is to set goals. Do you intend to increase the income of your current customers? Gaining new customers? Increase the average value of orders? Sell through new channels? Lower prices? Once you have established your goals, it is time to establish a plan.
A SWOT analysis can help you assess the strengths, weaknesses, opportunities and threats of your current business environment. What does the market look like? Where does your business excel and where does it hesitate? Review your entire business, not just segments. Evaluate external opportunities, as it is often the first place to invest time and money. Be honest with yourself when analyzing weaknesses and threats, otherwise, the analysis will be of no use to you.
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