By definition, eCommerce is noted as the processing of buying and selling both products and services online. Normally, it involves multiple parties in addition to the exchange of currency and data to process transactions. Furthermore, it represents the greater industry of electronic business, which involves everything needed to run a company exclusively online.

eCommerce has allowed businesses to establish a wider presence in the overall market and gain access to the widest array of customers possible through the provision of cheaper and highly efficient channels of distribution for services and products.

For example, Target (TGT) managed to completely supplement its presence of widespread brick-and-mortar stores with an online front that allows consumers to purchase everything from coffeemakers, clothes, toothpaste, video games, etc., right from the comfort of their own home.

Different Markets

This type of finance operates in every segment of the market. All four include:

  • Business to business (B2B) – involves the direct sale of services and goods between multiple businesses.
  • Business to consumer (B2C) – involves multiple types of sales between a business and its targeted customers.
  • Consumer to consumer – allows people to sell directly to each other through a popular third-party like PayPal or eBay.
  • Consumer to business – allows people to sell directly to businesses such as an artist licensing their work for use by a company.

Unfortunately, despite the more seamless experience that eCommerce offers, the provision of goods and services is not as easy as it might seem. More often than not, it requires a substantial amount of research about what a business is going to be selling in addition to the market, competition, business costs, and audience.

Upon determining the aforementioned variables, you must first come up with a proper name and subsequently establish a legal entity like a company. Next, the website that will provide eCommerce functionality must have a dedicated payment gateway.

Imagine a small business owner who runs a store that sells dresses. They must not only create a website, but they must also promote clothing and other related products by allowing customers to make payments through services like PayPal or directly via their credit card.

Pros and Cons

Consumers are offered several key advantages when purchasing products or services online:

  • Convenience: There are no business hours for an eCommerce business, as the automated process of sale and fulfillment can occur 24 hours a day, 7 days a week.
  • Increased selection and availability: A growing number of stores are now able to offer a greater selection of products than what is possible to carry in brick-and-mortar. Many stores now solely exist online to offer consumers exclusive items that aren’t available anywhere else.

However, there are certain drawbacks when using eCommerce for business. Several of these include:

  • Limited customer service: When shopping online with a computer, you cannot ask employees to demonstrate the physical features of a product in person. Despite the fact that many websites allow chatting online with a dedicated staff member, this is still not a common practice.
  • No instant gratification: Certain online marketplaces like Amazon allow same-day shipping, but this almost never occurs elsewhere. When a customer buys a product online, they must wait for it to be shipped to the office or their home. This lacks gratification upfront due to the need to pay at first and not receive the desired inventory until days later.

What is Dropshipping?

By far, the most popular implementation of eCommerce today includes what is known as dropshipping. Typically, this involves a business owner listing products for sale on their website that they currently do not own, have available units, or have a dedicated production center for. Instead, the process of manufacturing and fulfillment is handled at the time of sale to the customer.

A third-party supplier will handle both the manufacturing and distribution of the product to the customer at the behest of the business owner, who will pay a fee. However, this fee is always less than what is paid by the customer in order to guarantee profit.

Conclusion

The bottom line is that eCommerce represents just one part of running a successful business online. Although the latter involves the full process, eCommerce specializes in the sale of services and goods via the Internet. Companies like Amazon, eBay, and Alibaba have revolutionized retail, forcing traditional brick-and-mortar stores to change the way they conduct business with customers.

If you are considering launching your own eCommerce store, ensure that you do proper research before beginning. Furthermore, ensure that you begin with a narrow, small focus to guarantee that there is sufficient room for growth.

Get a name, settle on a business structure, and acquire the necessary documentation like a federal employment identification number (FEIN), licenses, and permits as applicable. Prior to selling, decide on the right platform for your website. Lastly, always keep it simple.