E-commerce: What It Is and How It Works

E-commerce: What It Is and How It Works

Thanks to technology, the phenomenon of globalization defines the present state of society. Consequently, the needs of businesses have undergone a radical shift. Virtuality has taken over all spheres in recent years, and thus, the transition from the traditional model to the virtual model is imminent.

In this context, e-commerce emerges as a new way to market products or services through the web. While this model has already been adopted by many businesses, the market remains expansive, and any kind of enterprise can step into it. In fact, if a company wishes to remain relevant in the market, e-commerce is the path to take.

But how does e-commerce work today? The truth is, many questions revolve around this topic, and we will address them here. In this post, we will provide you with a detailed account of what e-commerce is, the advantages of this model, and why it holds such importance in the present. Take note!

E-commerce: Concept and Generalities

E-commerce is undoubtedly one of the most commonly heard terms nowadays, especially in the business environment. E-commerce refers to the process of marketing products or services over the internet.

This concept encompasses a series of different processes that enable the purchase and sale of various types of products or services. In other words, in order to achieve the goal of sales, a company must implement specific strategies to establish an online presence, identify its target audience, understand the dynamics of the market it operates in, and more.

The e-commerce business model harmoniously complements practices such as digital marketing, segmentation, email marketing, and other automation processes carried out with specific objectives. 

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Types of E-commerce

E-commerce is categorized based on two main aspects: the commercial profile or the business model. Let's delve into each of them.

E-commerce Based on Commercial Profile

This pertains to the type of customers a business targets. For instance:

  • B2B: Business-to-Business indicates that the users of the offered product or service are other companies or organizations.
  • B2C: Business-to-Consumer refers to companies that directly target end consumers with their products or services.
  • C2B: In this case, Consumer-to-Business focuses on consumers offering a product or service to a company, which then decides whether to accept it.
  • C2C: Consumer-to-Consumer is a model in which a company facilitates the sale process of products from one consumer to another.

E-commerce Based on Business 

To meet the current market's demands, various business solutions strive to enhance processes. Among them are:

Online Store with Proprietary Products: This mirrors taking your physical store into the virtual world.

  • Dropshipping: This business model involves the seller not maintaining stock of products. Instead, a third party handles product shipment based on orders.
  • Membership: This commerce type aims to achieve recurring purchases by users. A subscription is offered to acquire products or services.
  • Affiliate E-commerce: This involves referring customers or users to another store. The intermediary earns a commission.
  • Marketplace: A virtual space housing different stores; similar to a virtual shopping mall. Various vendors offer their products from any field (for instance, Amazon or Mercado Libre).
  • Services: Various types of services can also be offered through the internet, such as classes, consulting, advisory services, and more.

Advantages of Starting an E-commerce

Digital transformation has brought many conveniences to the world, and businesses are no exception. Below are the key benefits of creating an e-commerce platform and why you should start right away.

  • Full-time Commerce

Thanks to the accessibility offered by the internet, online sales can remain active 24/7, 365 days a year.

  • Enhanced Visibility

Through interconnectivity, a virtual business can reach the most remote locations that a physical store might not be able to explore. With the internet, you can expand your market as much as you wish.

  • Cost Reduction

Just the thought of not needing a physical establishment is a significant advantage. Additionally, depending on the type of business, other expenses such as production or transportation costs can be eliminated entirely.

  • Scalability

With the ability to sell online, you can reach multiple customers simultaneously. Your online store will always be available to anyone who wants to visit.

And although these are just a few of the benefits the internet offers for commerce, it's important to note that regardless of your business, you should always have a sound strategy to drive and maintain its proper functioning.

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