So what’s an e-commerce website?
How does it work?
In order to open an e-commerce shop, entrepreneurs must determine what to sell. There are many e-commerce business ideas, but finding one that actually works is the first main challenge.
From there, you have to figure out your target audience. Once you have a target market, it’s time to build an e-commerce website. There are many working parts to make an e-commerce website successful.
E-commerce websites are tricky to make, but with the right e-commerce platform, merchants can seamlessly manage their digital storefront.
There are several key players in e-commerce, but they usually fall under these three categories.
- Merchants: Also referred to as sellers, e-commerce shops, or e-commerce stores.
- Buyers: Also referred to as customers, consumers, and shoppers.
- Software: Also referred to as platforms.
Types of e-commerce
B2B e-commerce is when a business sells a good or service to another business. These businesses often sell in bulk from a warehouse or have a digital service. The largest B2B wholesaler is Alibaba, which sells things like auto parts to automotive repair shops.
B2C e-commerce is when a business sells a good or service to a consumer. This business model is what most people think of when they think of e-commerce. It occurs when merchants sell goods or services, like jewelry or clothing, to consumers.
C2C e-commerce is when a consumer sells a good or service to another consumer. Most commonly, people use this business model to resell what they bought from a B2C business. Marketplaces like eBay are used for the selling of goods from consumer to consumer.
C2B e-commerce is when a consumer sells a good or service to a business. Most of the time it involves selling a service to a business, such as graphic design services. This type of e-commerce is growing as people value the flexibility of being a freelancer.
Now let’s learn how to actually make an e-commerce company. There are three major types of e-commerce platforms that you can use to sell online:
- Online marketplaces (eBay, Amazon, Etsy, etc.)
- Comparison shopping engines (Shoppping.com, Find.com, etc.)
- Software that you can use to build your cart or online store
The ideal would be to find the right mix between all three options, since you may find potential customers on any of them. It is preferable, however, to focus on one or a few platforms after you try them all and determine which option is best for you.
That being said, it helps to follow industry trends and adapt to your market. When your customers switch from one platform to another, you want to make sure that you follow them, not the other way around.
As you can imagine, the multi-billion dollar e-commerce market is a great opportunity for software vendors that specialize in software for online sales. The e-commerce software market was valued at $3.8 billion in 2016 and is expected to reach $4.7 billion by 2021.
This type of software usually provides all or most of the features you may need for e-commerce. Yet, there are significant differences between platforms, and they’re not always easy to identify.
Here’s how to compare e-commerce platforms so you can differentiate them:
- Understand what’s included “out of the box” and what is delivered through integrations or partnerships. It’s also important to know if the solution is offered as a suite made of multiple products, or if it’s one single solution.
- Pricing isn’t always straightforward because there are different models that vendors use to charge you. For instance, vendors sometimes charge a percentage of the transaction for payments instead of a flat fee.
- Sets of features and options are sold as plans, and each plan is usually priced differently. Therefore, it’s critical to understand what you get when you choose a plan and how you can move to other plans.
Security solutions provided by the vendor should also be an early consideration when selecting a cloud provider. These tools can help improve user governance and help to better control data in transfer. Users should also be well aware of who has privileged access to their business-critical applications.
E-commerce merchant types
Since e-commerce is such a broad term, it encompasses a variety of solutions. To better understand the many opportunities within e-commerce, it’s important to learn about the different types of merchant websites and what they sell.
Selling anything downloadable is a perfect opportunity for an e-commerce business. From software companies to video-game sellers, there’s no need for a physical store when the product can be directly delivered to the place from which you’re buying.
Selling only digital products drives down costs because there’s no overhead of a brick-and-mortar and there’s no cost of shipping and handling.
Any e-commerce website that sells the skills of someone online is service-based. A good example of this is a freelancer.
Freelancing is sold online and then completed online without having to ever meet in-person. There are websites completely dedicated to freelancers and connecting them with people who need their service.
This type of e-commerce website is born from a physical retail store. Places like Walmart and Target are good examples of companies that started in the brick-and-mortar space and expanded to online sales to reach a broader audience and increase sales.
Dropshipping is a unique type of e-commerce website where merchants sell products online, but they don’t have the inventory. Instead, they find a supplier to fulfill the order. The cost of these products is usually higher because the supplier holds the inventory in a warehouse or other space and then fulfills the orders with shipping and logistics.
How to start an e-commerce business
Starting an e-commerce business is quite intimidating, but if you break the process into smaller tasks, then it’s easier to set goals. The way to start an e-commerce business varies depending on the business model and items being sold.
The first step is to do an immense amount of research about e-commerce and the products you may want to sell. Brainstorm a name and a brand identity so that everything created can fall under the brand look and feel. If you don’t know what to sell quite yet, then start there.
Keep in mind, an e-commerce website must include the following:
- Clear branding
- Easy-to-use check out
- Shopping cart
- Payment options
- Detailed product pages
- Similar product options
- Customer reviews
- Social buttons
- FAQ page/support
- About us page
What to sell?
Finding a product to sell on an e-commerce business is the most important part of research. It’s challenging to figure out what will be most profitable, or well-liked. Get inspired through seeing what’s working for industry leaders, then evaluate the product or service through researching its SEO potential.
Good SEO (search engine optimization) is what makes websites show up on the first page (if you’re lucky, the first result) of search engines, like Google.
Then, make sure that the market isn’t too crowded. If there are already established category leaders, then consider differentiating the product or finding a new product to sell.
Here are some things to consider when determining what to sell using e-commerce:
- Common pain points
- Niche interests
- Your talents/skills
After evaluating these factors, choosing a product will be easier. But that’s not all, now it’s time to figure out the logistics behind manufacturing and buying the product or service.
Where to get products?
Sourcing the stock for an e-commerce site is important to master. If you buy too much inventory, then profits will sink, and on the other hand, if there’s not enough inventory, the customer experience will suffer.
The most common ways to source products are:
This method is used when a product doesn’t already exist. It’s expensive to do, but allows for control of the product.
In order to manufacture original goods, you have to invest money upfront for the set-up of an assembly line or whatever is necessary for product production. Since it’s a new product, there will be more trial and error before launching the e-commerce site.
This method is the manual production of a product. For example, people who sell on Etsy mostly make their products themselves. Making products is time-consuming, but low-cost and low-risk.
This method allows merchants to buy products in bulk for a lower price per unit. The wholesaler stores and manufactures the inventory, which makes the prices drop and decreases the risk.
This method allows merchants to partner with manufacturers who own the production facility and fulfill orders for merchants. Most people getting started with e-commerce start by using dropshipping.
When figuring out which sourcing method to choose, it all depends on the amount of money an e-commerce store has to work with and the type of product or service that’s being sold.
If all of the best companies are sourcing their materials from the same manufacturer, then it’s not a good idea to do the same because it will be much harder to stand out. The safest way to make sure no one copies a product is by having the e-commerce company manufacture the product by itself, however, this method is the priciest and riskiest when scaled at a fast-pace.
How to grow your e-commerce business
The most daunting part of starting an e-commerce shop is actually making that first sale, but the work doesn’t end there. Merchants need to continually promote and perfect their brand so that their e-commerce keeps growing.
Optimize your website
Except when content goes viral (which is rare), or is featured on a TV show watched by millions of people, buyers won’t just come begging to buy. It’s a must to find them and convince them to buy; and therefore, it’s essential to know where they spend their time online and where they are more likely to buy.
The traffic on the website can be beneficial to generate online sales. There are just a few things to consider when turning website visitors into buyers:
Find a mix of organic traffic through e-commerce SEO and paid search. The best way to identify what works is to track the costs of each type of traffic and compare it with the results. Remember that organic traffic isn’t free— you still need to pay people and buy tools to manage your website.
Make sure your e-commerce store is easy to find and use. It helps encourage website visitors to visit the store and to make it available from any page on the website.
Also, you should make it easy for users to complete their transaction and have strong shopping cart abandonment strategies.
Take advantage of email
No, email isn’t dead; it’s doing quite well, actually. In the U.S. alone, the number of email users is expected to reach 255 million by the end of 2020.
When trying to reach new prospects by email, you can benefit from using different types of solutions, such as email tracking software, email marketing software, and email verification software.
Create a social media presence
Social media may seem easy when you use it just for fun, but it can be quite complicated for sales. Several major social media platforms are used globally, but some are very popular outside of the United States.
For instance, Xing is an alternative to LinkedIn that is used by almost 15 million people in German-speaking countries. LinkedIn only has 6 million users in the same region.
If you want to target B2B customers through social selling in a certain region or country, make sure your business leverages the correct social media tools and e-commerce features.
Besides the geographical location of social media users, discover other demographic details such as age, level of education, and so on. Some data sources can provide valuable information on who uses social media. Statista is a good example, as well as the Pew Research Center for U.S. data.
Generate product reviews
It’s not a secret that customer reviews are crucial to sales for e-commerce shops, but some companies don’t use this free user-generated content to the best of their ability.
People innately trust recommendations and reviews from people just like them more than advertisements and brand marketing. By using reviews in campaigns, the ad changes from the brand talking about their product to people just like them talking about the product. That shift really matters.
If the e-commerce shop has an average of 4.6 stars, tell the world about it. Reviews are difficult to generate and if a store is having success there, it’s imperative to tell others about what people are saying.
Another opportunity with user-generated reviews is using negative reviews to further explain things about a product. Sometimes people simply misunderstand the intended use of a product and highlighting a user-error will help others who were probably wondering the same thing— or even better, show potential shoppers that there really is nothing wrong with the product.
There are many working parts that help the marketing of an e-commerce shop be effective. E-commerce marketing brings brand awareness to potential shoppers.
Marketers make sure the brand has a cohesive look and feel that is well-liked by consumers. Once the brand is known, marketers work to increase reach and tell the world why that business is the right solution for certain needs.
From loyalty programs to encouraging customer reviews, there are infinite ways to get started with marketing an e-commerce business. Learn why email, social media, and product reviews are the three most common approaches for e-commerce marketers.
Source: Learning Hub