Launching your own business can be both thrilling as well as daunting experience. To transform your business idea into a viable business, you will have to strategize and multitask as well as decide on numerous factors such as what type of model will it have.
Where will your products and services be put up for sale and which company/professional to hire to design your e-commerce website. There are numerous companies and agencies offering e-commerce development services in India.
The internet offers a plethora of options that can facilitate the sale of your products and services to your target consumers and enhance your business.
While most entrepreneurs look for easily accessible consumers and rely on Amazon for boosting their sales, others try to build and expand their own brands.
This article analyses various factors that are necessary to build a small e-commerce business and also weighs down the various pros and cons of selling on Amazon and setting up your own E-Commerce Store.
Major Types of E-Commerce Businesses
1. Business to Business (B2B)
Business to business or B2B model of business involves transactions between businesses, which generally involves a wholesaler and a retailer, or a wholesaler and a manufacturer.
This business model involves a business that is conducted between companies, rather than between a company and individual consumers.
This model is quite common in a typical supply chain of any business, as the companies purchase components and products such as raw materials for use in their manufacturing process. And finally, the finish profits are sold to the consumer via business to a consumer transaction.
Business to Business transactions require a lot of planning for it to be successful. The key to building a business to business relationship is to establish strong business client relationships.
Business-to-business relationships must be paid the most attention to, typically through professional interactions prior to sales, for successful transactions to take place.
The advantage of having a Business- to Business model is that the orders are usually in large bulks, and once the business relationship is established the orders are repeated frequently if the quality of the products is maintained.
When it comes to Business to Business E-commerce, internet opens up many opportunities and provides a dynamic environment in which businesses are able out about products and services that will help in laying the groundwork for future business-to-business transactions.
The websites allow the other companies to know and learn about the business products and services and enter into a contract.
Online product and supply exchange websites permit the business to search the products required by them easily and to procure these products through e-procurement interfaces.
2. Business-to-Consumer (B2C)
Business to consumer (B2C) business model refers to the system of selling products and services directly to the customers. It is basically targeted towards individuals who are end-users of those products and services.
Business-to-consumer (B2C) is one of the most popular and widely known sales models. This business model was first utilised in the year 1979, when Michael Aldrich used television as a primary medium to sell the products to the consumers.
Traditionally this model referred to as the shopping malls, infomercials, eat-out restaurants etc. But with the growing influence of the internet, a whole new B2C business channel in the e-commerce or selling of goods and services on the internet emerged.
New businesses arose, making the internet as their selling ground that promised to sell directly to the consumer, thus cutting out the middleman/retailer and lowering prices.
The business to consumer (B2C) model requires maintaining good relations with their customers to ensure they return.
The key factor to ensure sales is to have a good marketing strategy which would involve campaigning in order to elicit an emotional response from their customers.
There are typically five types of B2C models in the digital world that most companies use to target consumers.
- Direct sellers: This is the most prevalent model of B2C e-commerce in which the manufactures or small businesses sell their products directly to the consumers.
- Online intermediaries: These are the type of interceder websites which don’t actually own products or services that put buyers and sellers together. Sites like Expedia, Trivago, and Etsy fall into this category.
- Advertising based: These websites utilise free content to get visitors to come to a website and these visitors then come across digital advertisements of the e-commerce businesses who sell products and services. For example, the Huffington Post, a high-traffic site that mixes in advertising with its native content is one example.
- Community-based: These websites like Facebook helps to connect the people and form communities based on their interests and then help marketers and advertisers promote their products directly to consumers.
- Free-Based: These websites charge consumers for their content. They also offer free but limited content and charge for the rest of it. A widely known example is Netflix.
3. Consumer-to-Consumer (C2C)
In consumer to Consumer (C2C) trade model consumers trade among themselves typically on an online platform.
There are two methods for implementation of this model, first is an auction and other is a classified advertisement.
Consumer to Consumer (C2C) model is based on the market environment where one customer purchases goods from another customer utilising a third-party business or platform to facilitate the transaction.
This a relatively new type of model that has emerged with e-commerce technology. Margins are higher in this mode of e-commerce business than traditional pricing methods for sellers because there are minimal costs due to the absence of retailers or wholesalers.
The advantage of this business model is that consumers are able to find items that are difficult to locate elsewhere.
C2C websites and similar platforms make money from fees that are charged to sellers for listing their items for sale, adding on promotional features, and facilitating credit card transactions.
This type of business model is growing steadily on the e-commerce platform for its cost-effectiveness. The only problem faced by them is the lack of quality control or payment guarantees.
Etsy, ebay, Ole etc are some successful example of this type of business model.
4. Consumer-to-Business (C2B)
Consumer-to-business model, popularly known as the C2B model, is a type of business model, which emphasizes on a network where the end user or a consumer makes a product or service that an organization uses to complete a business process or gain competitive advantage.
This praiseworthy e-commerce business model can be traced back to the growth of popular consumer-generated media and content across different consumer segments, such as websites, blogs, music, videos and social networking sites.
The Consumer-to-business model, also exists in another form, known as the electronic commerce business model wherein the consumer can offer products and services to companies, and the companies in return, pay the consumers.
This form of e-commerce business model is a perfect example of the contrast that can be drawn to the traditional business model, where the companies used to offer goods and services to consumers, i.e. business to consumers model or the B2C model.
Most of the time the consumers are freelancers which provide their services to the clients. The C2B model can be witnessed in its full glory in the day and age of social media, in the form of social media and large online retailers.
An excellent example for such type of e-commerce business model would be reverse auction websites, affiliate marketing, freelance marketplaces etc.
Pros & Cons of Selling on Amazon
Amazon is one of the most celebrated international online stores, used by millions of consumers to meet their daily product needs. But selling on Amazon comes with its own set of pros and cons.
- Huge potential for sales: The most obvious benefit of selling on Amazon is the humongous pre-established consumer base it has. With this consumer base, your products are more likely to reach out to the consumers.
- The amazon’s product cataloging system ensures that your inventory ends up in the most appropriate location for an Amazon user to find your product.
- All you have to do is to list your products in line with Amazon’s guidelines, after that the sales and revenue are sure to increase while using Amazon.
- International reach: Amazon gives you platform to expand your e-commerce business beyond the geographical boundaries and reach out to the international consumers who are eager to buy your products.
- The extraordinary back end support: The back-end support of Amazon's infrastructure is commendable as it provides the sellers with every facility that is required for business inventory tracking, credit card processing, and sales tax collection.
- Furthermore, it also provides the option of “Fulfilment by Amazon” in which Amazon handles all storage, packing, and shipping including international exportation, returns, and customer service.
- Lack of Control: When you sell your products on Amazon you'll have to abide by its rules. The Amazon can cut you off for the reasons that are beyond your control.
- Furthermore, Amazon focuses more on showcasing products rather than the sellers. Having a Brand presence is impossible when you are selling on Amazon.
- You cannot create a special promotion offer and Amazon can decide on the price you have to sell your products, making it difficult for you to control your own e-commerce business.
- Competition: Amazon along with the huge consumer base also have a lot of sellers with similar business as yours, this makes the environment of the website very competitive. It becomes difficult in such circumstances to stand out and show your product’s worth.
- No Market Presence: When you are selling on Amazon, Amazon gets all the credit and it becomes difficult to build your own brand.
- Furthermore, it does not provide you with access to your consumer list and by not having access to the previous consumers, you miss out on further revenue opportunities.
Pros & Cons of Setting Up an E-Commerce Store
- Control: Since it will be your own website you can have control over everything. You have control over the content of your website, where and which product is to be showcased, the design of your website, the packaging etc.
- You can introduce your own promotional offers and on the basis of the reviews you get, you can design your products. Your own online retail gives you autonomy and flexibility.
- Have your Own Customer Base: When you open your own website, you can have your own customer base, on the basis of which you can decide on how your products are doing and what needs to be improved.
- You will be able to create special promotional offers for selected consumers, can alter consumers about upcoming sales and also update them about useful contents and build their trust.
- B2B business Sales: In case you are dealing with a business that requires a lot of consumer’s trust, Amazon becomes futile.
- In setting up your own website you can have a good consumer base of bulk buyers (as raw materials for their business) as they usually rely on consistent quality which the Amazon does not provide.
- Less Reach: Marketplaces like Amazon helps you to reach out to consumers beyond your local boundaries and helps your business to reach even international consumers.
- By focusing on your own website you cut down on the huge consumer base you could have targeted.
- Credibility: Establishing your consumer base is not easy. People are more aware of Amazon and trust its products.
- If your business is in its nascent stage and is not well known, then the consumers will doubt its credibility and might not purchase your products rather they will go to the retailers they trust.
- Support: Since you have full control over your website, if anything goes wrong you'll have a lack of support. it would depend upon your website developer whether they provide tech-support or not if they don’t then you might get stuck into technical issues.
Technologies Used for E-Commerce Application Development
OpenCart is one of the best and most popular open source e-commerce platforms preferred by PHP developers.
It is so greatly admired due to its user-friendly attractive interface and easy to use built-in e-Commerce store characteristics.
It allows small and medium businesses to open and sell their products and services right away without minimum investment.
The best feature that OpenCart offers is it’s ready to use shopping cart solutions for the retailers where you just simply need to download it, install, choose a shopping template, add the products you want to sell and then your retail website is ready for accepting and starting your business.
Furthermore, it comes with copious web development and eCommerce extensions like order management, an option to coalesce with numerous payment gateways and also provides a lifetime free support and software updates.
Some of the most attractive features of OpenCart is that it is highly flexible and is very easy and low-cost maintenance. It also generates a sale report which helps in building a business strategy.
It offers a wide range of add-ons, plug-ins, modules and templates and also provides product review and rating options for truly transparent service.
Shopify is the most known paid E-Commerce Application Developer. It provides ready to use and a flexible solution that allows you to build your business without much hassle.
All you have to do is sign up and then you can design and build your own online store. It has a fast-paced setup which allows you to sell your products as fast as possible.
It also provides you with a platform with an array of inbuilt features which allows you to expand your site features.
Most of these features are free but some require a monthly subscription. It solves most of your technical issues and functionalities that allow you to run your online store smoothly.
Shopify being completely PCI DSS compliant provides the best security for credit and debit card transactions at par with the industry standard. Furthermore, the free SSL certificate encrypts all of the sensitive business data.
The application’s e-Commerce allows design is also mobile friendly allowing the users to easily browse and make purchases through mobile.
Adding to this it also offers round the clock customer support service which helps to make your business more profound.
Woo-commerce is one of the significant supporters of the fastest growing global e-commerce business segment.
It was launched in 2011 and since then its popularity has increased day by day. Though there are plenty of tools available in the market, woo-commerce is preferred as it is open source and free.
This is perfect for those businesses that run on a tight budget but need a quality website.
The best thing about Woo-commerce is that it allows flexibility in handling your website, as you can have an infinite product list which can be listed in various categories.
Along with it, woo-commerce offer various templates which you can further customize depending upon your business requirements.
It offers various dimensions to your website like having blogs etc to make your website more attractive.
It is regularly updated which helps in removing all bugs and issues. On top of this, it provides an excellent shopping cart which is secured and sturdy.
Apart from this, it is also mobile friendly which helps in facilitating the business
Magneto has emerged as the most popular e-commerce solutions, especially for the bigger businesses which can afford to invest in specialised Magento e-commerce development skills.
The reason behind Magento's popularity is basically its strong and expanding framework. It provides the best catalogue management feature among all tools. With it, you can upload thousands of items in bulk for sale.
It has advanced capabilities which provide comparisons, wish lists, search results list, and related products blocks. It also allows consumers to subscribe for in-stock alerts & price change alerts and also whether there is a special promotion going on.
Some of the other features of magenta are that it allows multiple pricing options to the users, it enables the user to create a multilingual website which allows you to expand to various geographical regions.
It is also SEO friendly which makes it stand out from all other tools. The only con is that it has a complicated structure and requires special Magento e-commerce development skills.
5. PHP Custom Ecommerce Portal
PHP is a server-side scripting language that works on the system of content management. Its features enable users to have complete control over their website features and characteristics.
It enables users to make exciting and customised applications. PHP language can also be embedded in HTML. It also works swiftly with Oracles and MySQL open source databases.
A custom made ecommerce portal allows users to build and update their website regularly. It is known for its flexible and functional frameworks like CodeIgnitor, Laravel, Yii, etc.
Which are utilised by developers globally for developing their e-commerce solutions. There are many companies in India offering e-commerce web applications development using laravel.
So before making a decision on whether to sell on amazon, or to set up your own e-commerce store, you must know all these pros and cons. hope this helps to make a better decision.