What is an eCommerce Business and How does it Work?

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What is an eCommerce Business and How does it Work?

India’s eCommerce orders volume increased by 36% in the last quarter of 2020, with the personal care, beauty and wellness (PCB&W) segment being the largest beneficiary. This growth we were talking about since last year, and now data speaks up for itself. 

A lot of people are excited to start an eCommerce business. If your goal is to make money – then the goal should be a scalable and profitable business that lasts. It is vital to have a long-term vision for building an asset that brings out the best value to the market.

If you’re reading this blog, then you will get an end-to-end process of getting started with the eCommerce business and make it do wonders. And below is what we will cover in this blog…

There is nothing more rewarding than starting your business and watching it grow. You hustle and build it up, and no one can take it from you. When you think of an eCommerce business, it is even more exciting, as you can begin with minimal capital.

So what exactly is an eCommerce business?

eCommerce, known as electronic or Internet commerce, refers to buying and selling goods through the Internet and building up an online store with assets like website, social commerce, and affiliate marketing. 

This kind of business has become a vital part of modern-day living. Being able to walk through the countless products without leaving behind the comforts of your home, which genuinely makes eCommerce a convenient way to shop in a modern way.

Types Of eCommerce Business?

What is an eCommerce Business and How does it Work?

Now that you’ve planned to start an eCommerce business, the odds are that you’ll fall into at least one of the four different categories. Each of the categories below has its benefits and challenges, so know what bucket your ideas fit in well and think about the opportunities the categories might have for you:

Business To Consumer (B2C) 

Any business sells products or services to an individual consumer, e.g., buying a pair of shoes from an online retailer.

Business To Business (B2B) 

When a business sells goods or services to another business, e.g., a manufacturer selling goods to a wholesaler

Consumer To Consumer (C2C)

Any consumer selling product or service to another consumer, e.g. selling an old mobile phone on OLX to another consumer

Consumer To Business (C2B) 

In this model, a consumer sells their product or services to any business or organization, e.g. An influencer offers exposure to their online audience in exchange for a fee.

Before we proceed to how the eCommerce business works, it’s time to think back to how you stopped years ago. Where did your groceries, clothes, gadgets? Doing business has transformed the way we shop today and refined to what more is possible.

As businesses unfold, there are other five value delivery methods for eCommerce innovation. Look below:

5 Value Delivery Methods For eCommerce Innovation

What is an eCommerce Business and How does it Work?

Consider if your business model is a car, then the value delivery method is the engine. Here’s a catch! How will you compete to create an eCommerce business which is worth sharing? To make it simpler, we’ve listed below a few of the popular approaches taken by the industry leaders:

D2C – Direct To Consumer

This usually is for manufacturers, who cut out the middleman, a new generation of consumer brands that have seen rapid growth.

White Label & Private Label:

You can apply your name and brand to a generic product purchased from a distributor in’ white label’. Whereas in the ‘private labelling’, a retailer hires a manufacturer to create a unique product for them to sell exclusively. By opting for ‘private labelling’, you can lean on your investments in design and production and look for an edge in marketing and other sectors.

Wholesaling

In this approach, a seller offers its product in bulk at a considerable discount. Wholesaling, though, is a traditionally b2b practice, but many retailers have offered it to budget-conscious consumers in a B2C context.

Dropshipping:

One of the fastest-growing methods of eCommerce business is dropshipping. These marketers sell items fulfilled by a third party supplier, like AliExpress. Dropshippers act as a middle person or mediator by connecting manufacturers and buyers.  

Subscription Service:

Back in the time, publishing companies used a subscription model to deliver books to their customers every month. With a rise in eCommerce, businesses are going beyond the monthly subscription clubs. Today, every industry or brand has opted for subscription services to bring better convenience and savings to their customers.

After choosing the business model, the next step is to learn how the eCommerce business works

How the eCommerce business works

What is an eCommerce Business and How does it Work?

As we know, deciding on a product or service to sell is vital but what falls after that is what we’ve covered below:

A proper mechanism to accept orders:

  • Once a customer has browsed your online store and decided on what they would like to buy, then comes a process that accepts the order. It starts with software that runs the shopping cart. 
  • In addition to processing the order and updating the database, a shopping cart also looks after various tasks: 
  1. Computation of taxes
  2. To process the discounts and coupons.
  3. Adding the saved billing and delivery address of the customer
  4. Upselling
  5. To ensure the acceptance of terms and services and other conditions in case of a sale.
  6. Generating codes, invoice number, order number, tracking details etc 
  7. Giving various delivery options to the customers
  8. Redirecting customers to payment gateway

In case of ebooks or downloadable content, then redirect the customers to the download page.

A Proper Payment Mechanism:

In most cases, eCommerce transactions involve transaction money.

This process is conducted through software called a payment gateway. The payment gateway provides various payment options that accept identification details, such as credit card numbers, and authenticates customers using a password, CVV code, and other authentication factors.

Exshiptional Delivery:

We genuinely agree when people say that effective logistics is the key to any successful eCommerce business. So, it is vital to choose the right logistics partner that can help you deliver the goods to take care of products in the warehouse, which will help you save time and additional cost.

Better Customer Service To Up Your Business:

Every customer needs to be given the best service, from pre-sales to post-sales. Before the purchase, your customer might have queries related to the product not mentioned on the website. And after the purchase, a customer might have queries related to usage, enhancement, or repair. The whole process of customer service will decide if the customer will retain or look for another seller. Here you need to watch every step to grow your business and make it do wonders.

Reverse Logistics Needs To Be Looked After:

In today’s time, there is no product that is error-free. As a result, some products might be damaged, may have stopped functioning, or the wrong product must have been delivered. Such errors might result in a reverse logistics process. Reverse logistics means when the customer sends the product back to the seller, and this usually happens when a customer raises a return on the website or due to reasons.

Now that you’ve understood every detail about the eCommerce business, you might want to leave the blog here and go back to starting to work on the business idea, but we say, wait! Because it is essential to know the pros and cons before hurrying to start an eCommerce business:

Pros and Cons to start an eCommerce business:

What is an eCommerce Business and How does it Work?

Speed and Flexibility:

 One of the most significant advantages is that eCommerce businesses can be operated entirely from home or on any given schedule.

By using the tools available by online hosts and other eCommerce resources, setting up a store can be seamless and a quick process. 

Minimal Startup Costs:

Before the eCommerce business became popular, starting an offline business required huge budgets. But with the rise of eCommerce, business owners can set up the whole online store within minimal budgets. Even for wholesaling and drop-shipping companies, access to a large inventory of products is highly affordable.

24/7 Operation:

There is no 9-5 job for the Internet, and so online stores are always open. As a result, eCommerce owners can make profits even when they’re on vacation.

Competition:

One of the challenges of starting an eCommerce business is the competition. There are a million sites that the seller has to compete with for similar items. It can be a challenge to gain the share of the market from the existing business.

Time Consuming To Develop Brand Trust:

Consumers are sceptical of businesses that they haven’t made purchases with or not referred to. People are most likely to stick with businesses they know, which may be a task for startups to shift their focus from an existing brand to theirs. 

Technical Problems:

Even if there are various tools to set up an eCommerce business with shopping carts and payment gateway, websites might often stop working for various reasons that may impact sales.

Conclusion:

Starting your business online is a great way to begin. And we’re extremely sure about it. Also, the number of businesses growing online is increasing every year. The competition is fierce, but will it be more difficult? We don’t know what the future looks like, but our tasks remain the same.

If you implement this guide to begin your online business, then you will be heading to success. What is your business idea? How are you planning your goals to make it grow massive?

Comment your thoughts below!