What Is Ecommerce?
Electronic commerce, commonly referred to as ecommerce or e-commerce, is the buying and selling of goods over the internet. There are many different types of ecommerce, and many different ways to participate in ecommerce as both a consumer and a business. Many websites currently on the internet are examples of ecommerce businesses, using the advantages of the internet to optimize their services.
With all the advantages available through the internet, including help with all steps of the creation process and online platforms to host a business, starting a business is easier than ever through ecommerce. >.
How do ecommerce websites work?
Ecommerce websites profit by selling products, whether physical or digital, over the internet. For physical products ecommerce websites will then ship products to customers and for digital products (like computer software). Many businesses and products operate better through an ecommerce rather than traditional business model. This is especially true for businesses that sell digital products, as the products can be both sold and delivered through only the internet.
Many businesses have chosen to move to ecommerce models due to these advantages they offer. Some of the largest companies currently operating, for example Amazon, operate only through their ecommerce platforms. Many types of businesses are consistently trending towards ecommerce due to the many benefits it can offer. Because an ecommerce format may not be right for every business, it’s important to carefully consider your options before beginning to create an ecommerce business.
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There are 3 main types of ecommerce operating on the internet.
- Business to Business, which includes businesses purchasing from other businesses over the internet. This can include materials, parts, or anything a business needs to operate.
- Business to Consumer, in which consumers purchase products from online retailers. This is the type of ecommerce most people are likely familiar with, and includes buying products from retailers like Amazon or Shopify.
- Consumer to Consumer, sometimes known as the secondary market, where consumers exchange and sell goods to each other that were previously purchased from a business. This includes many products sold on websites like Ebay and Facebook Marketplace
Starting an Ecommerce Business
Starting an ecommerce business can be a complicated process for new business owners, so we will take each step one by one:
1) Decide What Your Business Will Sell: Before entering the ecommerce space, it is important to decide what type of business you will be starting. Are you going to be selling a product or a service? Will the product be digital or physical?
Although this process will likely be easier than setting up a physical store, many of the same initial problems apply, including aspects like company costs for startup, approaches to marketing and production, developing relationships with suppliers, etc. Even with all of the resources available to make these processes easier, starting an ecommerce business is still a significant venture for any entrepreneur.
2) Begin Branding and Building Your Company: Just as with in-person commerce, there’s much more to a business than just what you’re selling. Focusing on the branding and marketing strategy of your business earlier rather than later can have positive effects in the long run, so it’s important to think about this aspect of running a business as early as possible.
Another important part of starting an ecommerce business, just like any business, is to choose the structure on which your business will operate. There are many different potential structures, and choosing the right one for you and your business can be very complex. With an important decision like this, we recommend speaking to a lawyer or legal professional in order to ensure your business is built with the best structure possible for its unique needs.
3) Get an EIN and Business Licenses/Permits: There are many legal requirements to starting an ecommerce business, many of which can vary dramatically depending on the location in which it is operated. Many of these processes can be difficult to understand for a business owner without significant legal experience, so most business owners may benefit from the help of a legal professional during this stage of the creation of their ecommerce business. For that reason, our company offers many services to help with this process, including services that can help a business owner acquire an (EIN) and the necessary legal documents/licenses to better start and operate their business.
4) Creating a Website and Choosing an Ecommerce Platform: For ecommerce businesses, the website for your ecommerce business is representative of your products and your main way of interacting with customers. It’s very important to your business that your website looks and functions the best it can, as a subpar website can dissuade customers from purchasing your products.
It’s also important to choose a representative domain for your website, as this is how people will be viewing your website and purchasing your products. Having a URL that doesn’t make sense for the products you offer can confuse customers and make your company more forgettable.
Some examples of popular ecommerce platforms are Shopify, Squarespace, and WooCommerce, each of which have their own advantages, disadvantages, and price points. It is also possible to run your ecommerce business through another platform like Amazon, which removes many steps of the ecommerce process in that it provides a website and platform on which to market and sell your products.
5) Products and Marketing: This step is nearly identical to what is required when creating a physical business and storefront. You now have to source and develop your products to prepare them for sale on your ecommerce platform. You will also need to market your products to get the word out to your potential customers. Once this stage is complete, your ecommerce business can start operating and generating profits.
Establishing an ecommerce business may not be right for everyone, so it's important to think carefully about an ecommerce platform can best serve your individual needs.