E-commerce

Have you ever wondered what e-commerce is?

Meaning of e-commerce

Have you ever wondered what the e-commerce is? Surely you have heard many times the words e-commerce, electronic commerce or online shop but you might not completely understand the meaning of the term e-commerce. What is more, against the great variety of different definitions that come up around the world of e-commerce there may be key concepts that you have not assimilated yet.

We are going to show you what e-commerce is, the different types of e-commerce that exist, as well as a a series of terms related to e-commerce and, of course, the multiple advantages of e-commerce against the model called "traditional".

Starting from the beginning, ¿What is e-commerce?

E-commerce, ecommerce or electronic commerce is simply to employ the internet as a mean for trading of services, goods or products. That is to say, trading online using the internet as a mean of communication. This way, we can say that many sites for selling can be included in what we have called e-commerce. Are all the electronic commerces the same? Not at all. Let's analyse the different types of e-commerce existing today.

Which are the advantages of e-commerce?

The expansion of electronic commerce

Do you really know whay e-commerce have become so popular in the last years? What advantages do they provide against tradicional trading? As we said in the definition of e-commerce, the main characteristic of an electronic commerce is that uses the internet as mean for trading. Here is the key fo everything: Using the internet as a tool for buying and selling is the great advantage of e-commerce. This is going to let us:

• Have a sales site open the 365 days of the year and the 24 hours of the day.
• Costs cut, for you will not have to necessarily rent a brick and mortar site: the internet is our sales channel.
• Remember that the internet has no borders. We can expand our business internationally towards new markets.
• It lets us divide our customers into segments and be more effective in future marketing campaigns, providing specific information to the segment the products are meant to.

Now we understand not only what an e-commerce is but also we should not be surprised of its boom, for the advantages it provides against traditional model (e-commerce can perfectly be a complementary solution for traditional commerce to have an omnichannel strategy), next question is: Are all e-commerces the same? As you might be thinking, the answer is definitely "no". Let's analyse the different tipologyies of e-commerce we can find.

Types of e-commerce

You already know not only what an e-commerce is but also you understand its boom and expansion for the benefits it provides as an independent sales channel or complementing the traditional sales channel in a society that keeps on evolving towards digitalisation. The question we make now is: How can we classify the different existing e-commerces? Let's make this classification in two big groups, one focused on the different business models than can be implemented in an e-commerce and other based on the profile of the final customer the products and services are meant to (buyer) and the person or entity who sells those services on the internet (provider).

Based on the type of customer it is aimed for.

Every e-commerce has a target to sale its products or services. Just like it happens in traditional commerce neither the seller nor the customer must be always the same. By this typology we can classify, in broad strokes, shops on the following way:

• B2B also known as Business to Business or company to company: As we can work out, it is trading betwewn professionals, that is to say, companies or professionals who sell their products to other companies or professionals. One example is the online shop of a fashion brand which sells products to other fashion e-commerces. This kind of e-commerce has other main characteristics which are that different prices show depending on the professional who registers to make the purchase. Moreover, on this online shop, access is usually limited and, in case of being free, it only allows to buy when the user has logged in the system. Other classic functionalities on a B2B e-commerce use to be the quick purchase, customised payment methods, risk limit or the use of multi storage to manage stocks.
• B2C also known as Business to Consumer: In this case, the company or professional sells its products to final customers. A typical example is the fashion company that we have mentioned before which sells its products to final customers. It is the most "classical" example of e-commerce and the most common type we can find.
• C2B or Consumer to Business: Here, the final customer offers the product or service to companies.
• C2C or Consumer to Customer: In this case, the final customer offers products or services to other final customers. Second hand websites, so trendy nowadays, are a clear example of this C2C sites.

E-commerces depending on the business model the implement

In the first classification we have taken into account the kind of customers the e-commerce is aimed to. Apart from that, we can also classify the e-commerces depending on the business model they implement. The most important business models to include attending this characteristics are:

• Dropshipping: A very popular business model on the last years whose main characteristic is that the seller does not send directly the product to the final customer, but is done by a third party. The biggest advantage of this business model is that the seller does not need to have own storage, for the shipment is done by the provider. One disadvantage of this kind of online shops is logistics and stocks management. In case of having various providers, due to the fact of not having own storage, if the shipment has to be done by different providers we do not have total control over shipping costs, delivery dates and stock amounts.
• E-commerce with own products: It can be either the only sales channel or the complement for one or several brick and mortar shops. In this case, quite the opposite than on dropshipping, having own storage provides the advantage of having product stock totally controlled.
• Membership: These e-commerces work under affiliation and subscription. The customer registers and periodically (generally monthly) an automatic payment is charged so the products can be available. It is widely used in food and beverage e-commerces like wine or beauty products. The concept of partner gains strength in this kind of websites.
• Services: The most common example of this kind of e-commerces is course selling websites. They do not sell physical products, but training which might be face-to-face, remote or by videos that the final customer downloads.
• Marketplace: Yes, we have left marketplaces for the end. Shop of shops. An e-commerce where other shops can offer their products to final customers. Examples? Amazon and Alibaba.