What is e-commerce? Types, how to create it? and examples

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What-is-an-e-commerce

If you do digital marketing, sooner or later you will have to manage an eCommerce or at least consider what it can contribute to your brand.

What-is-an-e-commerce

E-commerce has been on the rise for years and the 2020 crisis has further accelerated its penetration among consumers. We are going to see what exactly an eCommerce is, what types there are, the pros and cons of this strategy, how to create your online store step by step, and 5 examples of commerce strategies that work.

What is e-commerce?

E-commerce or electronic commerce is the practice of buying and selling products over the internet. It is also called “eCommerce” for each online store that is dedicated to this business.

The e-commerce sector has been one of the most disruptive in recent years because it has revolutionized traditional commerce by offering an unprecedented level of comfort and customization. For this reason, electronic commerce has become the basis of the business model for many brands.

Types of e-commerce

We can classify e-commerce based on the audience they are targeting or their business model.

Depending on the target audience

  • B2C (Business to Consumer) : ecommerce aimed directly at the final consumer. It is the most frequent type and within it we can find many examples, from online hardware stores to ecological fashion stores.
  • B2B (Business to Business) : ecommerce whose target audience is other companies, for example, office supply stores.
  • C2C (Consumer to Consumer) : this typology has flourished in recent years with the rise of online sales. These are consumers who sell directly to other consumers, usually second-hand products. The most popular example in our country is Wallapop.
  • In addition to these three types, which are the most common, we can also find alternatives such as C2B (Consumer To Business), G2C (Government to Consumer),  B4B (Business for Business)  or B2E (Business to Employer).

Depending on the business model

  • Own online store : the simplest model, it simply consists of a digital version of the physical stores of the brand, which sells its own products. It can be an exclusively online business, or it can have both ecommerce and physical stores.
  • Marketplace : a marketplace is a kind of “macro store” that includes various sellers. The best known example is  Amazon , where anyone can sell for a commission.
  • Dropshipping : For the customer, a dropshipping is no different from a standard online store. But instead of managing their own inventory, in this case the seller is limited to showing and promoting the products and a third party is in charge of making the shipments.
  • Affiliate : In digital marketing, the affiliate model consists of using third parties to promote products or services in exchange for a commission. The affiliate places links to refer the customer to the other store, where the sale is closed. For example, the affiliation with Amazon is quite frequent.
  • Subscription : instead of selling products or services individually, in this case what is sought is for consumers to contract a monthly membership and receive products at home on a regular basis. For example, this is the case of the famous “surprise boxes”, which today are implemented in many sectors.

Pros and cons of ecommerce as a business model

Ecommerce has been a revolution in the way of selling and can be adapted to all kinds of sectors. But before you launch your branded eCommerce, take a look at these pros and cons and think about how it would fit into your business.

Pros of e-commerce

  • Greater reach for your business : with an online store, you will automatically be accessible from all over the world (although you will always have to take into account which countries you can ship to and which ones you cannot). In contrast, physical stores always have a limited reach range by definition.
  • Lower costs : setting up an online store has a very low initial cost, especially compared to renting or buying a store. This means that the barriers to entry are much lower and that better margins can be achieved than with a traditional store.
  • Available 24/7 – The vast majority of brick-and-mortar stores are limited by opening and closing hours, and the longer they are open, the higher the staffing costs. On the other hand, e-commerce never closes their doors.
  • Growth potential : there are no limits to the number of people who can “enter” your ecommerce at the same time (as long as you have hired a good server, of course), which allows your business to grow.

Cons of e-commerce

  • Difficulties in accessing certain sectors : Although online shopping is becoming more and more popular, there are still sectors of the population that are not very familiar with it and do not feel comfortable buying online, for example, the elderly.
  • Impossible to see, touch or try products : For products where sensory qualities are very important or require testing, such as clothing, e-commerce introduces a barrier that is difficult to overcome. We can partially solve it by providing detailed descriptions, photos and videos of the products and having a good return policy.
  • Trust issues . Some users still do not trust electronic payment systems. Trust seals and SSL encryption can help us alleviate this problem.
  • Greater competition . As the barriers to access to electronic commerce are very low, there are many more brands that can open their own online store. Therefore, we will have to make a certain investment of time and resources to stand out and be visible.

How to create your own ecommerce step by step

1) Look for an idea with possibilities

Today, the eCommerce sector is very established, which means that there is competition in any type of product you can imagine. But don’t let this discourage you: e-commerce is still growing, so you can surely find your niche.

You just need a good idea.

You can consider running a new online business, or work with an established type of product but make your store stand out from the competition in some way.

Therefore, the first step is to write down all the ideas that come to mind for your online store. You can do some organized brainstorming, or just watch people’s behavior and see what comes to mind.

Then, you will have to make a filter to keep the most promising ideas and evaluate their  viability :

  • What user problem does this idea solve?
  • What other ways exist to solve this need? Why do I think mine might work better?
  • Is there a real demand around this problem? (To get an idea, you can check out tools like Google Trends to get an idea of ​​the search volume it generates.)
  • What challenges and difficulties may arise?

2) plan ahead

The first factor that will help you stand out from the competition is good planning. And is that although several online stores are launched every day, not all of them have designed a   solid business strategy before jumping into the pool.

Therefore, if you want your eCommerce to work, you have to spend some time thinking and writing down aspects such as:

  • What is the value proposition of your online store.
  • What target audience is it addressed to ( buyer person ).
  • How you are going to manage logistical aspects, such as stock or shipments.
  • What channels are you going to promote it on?
  • What are your operating costs and sources of income going to be?

Using this strategy as a basis, you will be able to develop a   more detailed action plan , specifying aspects such as:

  • The providers that they are going to use: at a minimum, you will have to contract a hosting, a provider and an ecommerce software, as well as decide which shipping company or companies to use.
  • The name of your online store: you can choose a descriptive name and domain or a brand name, but always try to make them easy to pronounce and remember.
  • The image of your brand: design aspects such as the logo or colors come in here, but also deeper questions about your mission, vision and values.
  • The promotion strategy: a physical store is instantly visible, but e-commerce requires an initial effort to position itself in search engines and be present in other channels. In short, you will need to promote your e-commerce with an online marketing strategy.

3) Be patient

An online store is a long-term bet. You will have to make yourself known little by little, promoting your store on different channels and generating traffic,  leads, and finally repeat purchases. Think in terms of annual planning and develop a solid growth strategy. You will see how the effort is worth it!

4) Measure, analyze and test

Actually, all online marketing should be based on constant trial and error. Think of your online store as a testing ground where you can experiment with different strategies. Which channel generates more conversions? What is the most effective landing page? Constantly measure the results of what you are doing and apply the results to your eCommerce to multiply your sales.

7 examples of eCommerce strategies that work

1) Birchbox: monthly subscription boxes

Today, monthly subscription eCommerce has reached all kinds of sectors, from craft beers to pet supplies. But Birchbox was the pioneer.

Birchbox ‘s business model consisted of sending its users samples of different beauty products in a monthly “gadget box” in exchange for a monthly fee. It was a very novel concept that managed to generate a lot of user-created content and word-of-mouth recommendations.

2) ModCloth: personalized vintage fashion

Despite the impossibility of trying on clothes online, the world of fashion is one of the worlds that has worked best in electronic commerce.

Within this niche,  ModCloth has taken a very customer-centric approach, involving them at every step of the process. The brand’s value proposition focuses on finding the right product and cut for each person, and thanks to this they have managed to develop their own online community.

3) Leesa: word of mouth to sell mattresses

Compared to other mattresses eCommerce,  Leesa stands out for its quality. They knew that their customers loved the products, so instead of spending on ads, they opted to encourage word of mouth recommendations through a  specialized marketing automation tool instead of spending on ads.

4) TOMS: a supportive e-commerce

The  TOMS proposal is very simple: “one by one”. That is, for each product they sell, the company donates a product or service to less favored communities.

For TOMS, corporate responsibility is not an add-on, but an integral part of its business. Thanks to this, they have managed to become a multi-million dollar company… and donate millions of shoes.

5) Everlane: radical transparency

Everlane is another example of how to stand out in a saturated sector like online clothing stores.

Faced with the rise of “fast fashion” and the cheap garments that are discarded each season, Everlane is committed to quality, knowing that they cannot compete on price. In exchange, they offer consumers radical transparency about their production processes, showing the true cost of each step. Thus, they have managed to position themselves as an ethical and quality brand for which customers are willing to pay more.

6) Warby Parker: a different kind of sunglasses store

To differentiate itself from the competition, the Warby Parker sunglasses eCommerce focuses on storytelling and creating a unique brand, which makes users generate and share their own content. In addition, they have paid great attention to user experience,  and customer service.

7) Dollar Shave Club

Dollar Shave Club is an example of a subscription model in a previously uncommon sector, such as shaving products.

Dollar Shave Club

But without a doubt, its strong point has been its promotion through  YouTube videos that are as surreal as they are sincere.

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