This subject will be explored in greater depth in the future as there are many possible topics with lots of details that need to be discussed. This article is intended to provide a high level overview of the topic.
The first step in opening an ecommerce store is selecting a product. This can be a simple or complicated process. You may have a hobby that has products that you can sell. This works great as you already know about the product and you have probably shopped for the product before. This will help you understand the mentality of your customers and help you better communicate what is important to them. Having a hobby in which you would like to start selling products could also be a terrible idea. If you have the hobby, someone else probably does also. They may have had the same idea as you. This can drive up competition and increase supply, resulting in lower prices and smaller margins.
I suggest looking into these types of products, but keeping an open mind. Often times, the things people don’t want to sell are the best to sell. If no one wants to sell it and people need it, there is lower competition and therefore, higher prices and higher margins. I suggest looking into several different types of ecommerce products and possibly several different markets. Then select the best product. I also suggest keeping your scope small, meaning don’t try to sell everything. If you want to sell furniture, start with a submarket of furniture. Maybe start selling office chairs. Then expand to office desks, then file cabinets. Once you have established your name in the office furniture market, then you expand into more categories. It’s much easier to become an expert in a very small niche, then expand, than it is to start competing with amazon.
Where do you find your ideas? It could be anything. Maybe you are walking through the store and think “why does this store only have 2 types of widgets?” You may also be looking to purchase an item and are having a hard time finding a site that looks respectable. Often times smaller site offer great prices, but their website looks amateur and therefore untrustworthy. You may put off by this and are willing to spend a few extra bucks to find a reputable looking site. You can be that site!!!
Once you have figured out your product, then contact manufacturers. If they will not sell to you directly, they will typically provide the contact information for a distributor.
When you have your product and your supplier, it is time to set up your site. We will look into that subject in the next post.
The next series of posts will examine what it takes to open an ecommerce store. This can be a very complicated or very simple process. So follow with us and learn to open your ecommerce site.
A service is an act or activity. This often fulfills a need which the buyer can not do (for example, build a house) or which the seller can do for cheaper or in a more reasonable amount of time. Selling a service through an ecommerce site is very different from selling a physical good or virtual good. Selling a service requires action beyond clicking a few buttons or calling your distributor. This type of ecommerce product has many advantages and disadvantages.
There are a few advantages to selling a service. The first of which is you could automate your service. Paypal has done this brilliantly. They process a lot of transactions each year and they do it all automatically. This means they don’t need to do anything every time there is a transaction, leaving them the time to improve their service. Another great aspect of selling services is that if you offer a unique service which provides value to the customer that no other person or company can provide, you can charge a lot. This can result in massive revenue and profits.
Along with the advantages of selling a service, there are also the disadvantages. First is that you must actually provide the service. Depending on what you are selling, this can be a substantial undertaking. If you have sold your computer programming skills to create a program for a company, you must now follow through. This can result in a major time investment. If you underestimated how long it would take you to complete this task, you could end up spending lots of time for not a lot of money. One other risk associated with selling a service is that your competition may have automated the task that you are doing manually. This is extremely relevant when it comes to search engine optimization (making sure your site is like and ranked well by the search engines). Many search engine marketers are selling their services on sites like fiverr.com in which they submit your site to many other sites. If you were to do this manually, it may take several hours. However, a lot of the providers have created software in which they enter a few pieces of information and then click a button. You simply can’t compete with automation. Another big disadvantage of providing a service on the internet is that you are often competing with people from many different parts of the world, some with much lower standards of living. If you were to sell your services on a site like odesk.com, you might be competing with a person willing to work for $2-5 an hour. They might not create the most quality product, but for the cost, a lot of people are willing to take the risk.
Virtual goods are items that do not have a physical footprint. They are the types of ecommerce products that exist only with computers. This can include your favorite mp3, the book you downloaded on your kindle, and the PDF you downloaded. The keyword here is “download”. There is no need to ship anything. Often all that is required is a few clicks and you are on your way.
There are many advantages to selling virtual goods. Let’s start with the most obvious. There is no shipping and no inventory to maintain. You simply upload your product to your site and let one of the many ecommerce solutions handle the transaction. Many of the ecommerce shopping carts as well as several wordpress plugins allow for “digital products” to be sold. In general, the process works like this. The consumer decides to purchase your product. They make their payment through paypal or your merchant account. Once the payment is confirmed, the customer receives an email with a username and password to download the product. Once the download is completed, the username and password expire to prevent multiple people from downloading your product. When the download is complete, you receive an email with confirmation that the transaction is complete This type of ecommerce product allow you complete control. You don’t need to worry about whether UPS will lose your shipment. You don’t need to worry about inventory. You know that your product was delivered and that you have an infinite number of products to sell to future consumers. The last and greatest advantage of selling virtual goods is that if you create your product, you can keep your expenses next to nothing. Other than a few hours and a few bucks for a domain and hosting, you have no expenses. Each additional product doesn’t cost you anything extra. You don’t have to purchase another item to replenish your stock or pay your dropshipper each time you sell your product.
There are many advantages to selling virtual products, but there are also a few disadvantages. If you do decide to make your own product, you must go through the process of creating it. This can be very complicated. If you don’t have musical talent or software development skills, you must write (some people can be intimidated by this, but I assure you as you do more and more, it gets easier). You must do market research. You must decide upon a subject. Then you must write. If you choose to sell another person’s product, you lose some control. Affiliate programs have made a lot of people a lot of money (in general terms, an affiliate programs are where you sell another persons product for a portion of the profits), but the affiliate can change their program at any time. If the affiliate’s product loses quality, you will suffer. If it is software and there are bugs, you will suffer.
Physical good are just that, physical. They have mass and can be touched. They are the types of ecommerce products with which most people are familiar. Physical goods can range from watches to book to airplanes.
There are several advantages to selling physical goods over the internet. First of all, these are the type of products most people buy. This means they are comfortable buying these products. This should remove any hesitance when purchasing. If the product is manufactured by a know company, people know what to expect and they know that the product is of high quality. Another advantage of a physical good is that there is no need to produce, make or manufacture your product. An ecommerce store can sell a physical product which is purchased from a manufacturer or distributor. This eliminates the need to be creative, inventive, or have the skills to create something with your hands. “Dropshipping” is another advantage. Dropshipping is when an ecommerce site sells a product to the consumer. The site then contacts the manufacturer or distributor whom sends the product directly to the end consumer for a small fee. The store profits the difference between the consumer purchase price and manufacturer’s price. This avoids the need to carry inventory and allow a new ecommerce store to get started with very low costs. Many stores start out dropshipping but transition to carrying inventory at least on their most popular products.
In addition the the many advantages of selling physical goods over there internet, there are also many drawbacks. The first of which is that people can’t touch the product. This is particularly important when it comes to items where sizes are important such as clothing or shoes. This also doesn’t allow the consumer to get a sense of the quality of product. This may not be as important when selling a large name brand product, but this is extremely important when it comes to selling smaller or off brand products. This results in additional costs and time. If you choose to dropship everything, you have a different set of problems. Dropshipping forces an ecommerce site to lose control. The dropshipper controls the inventory and shipping. There is no guarantee that the dropshipper is maintaining the appropriate stock. If your dropshipper runs out of stock (this is a particular problem right before Christmas), you not only don’t make your sale, but you have to contact every customer and tell them you are unable to fulfil their orders. It’s not fun. Another disadvantage is shipping. If you use a dropshipper, you have no control over how fast your order is shipped. If you carry stock, you must pack every single order and ship them.
In our first article, we discussed the types of ecommerce as well as the types of products which are exchanged during and ecommerce transaction. As a reminder, the three products are as follows:
- Physical Goods – For example, shoes, clothing, snowboards, coffee, ipods, etc
- Virtual Goods – For example, music, movies, book, software, etc.
- Services – For example, banking, car rentals, plane tickets, etc.
Each type of product has its advantages and drawbacks. In the next series of posts, we will examine each one further.
Consumer to Consumer (C2C) is one of the types of ecommerce in which one consumer sells a good or service to another consumer. Have you ever bought or sold something from Ebay? If so, this one of the types of ecommerce is something with which you are familiar. This type of commerce has been greatly helped by the invention and progression of the internet. Before the internet was around and ecommerce was prevalent, garage sales or the newspaper classifieds were some of the consumer’s only options. With the development of sites like Ebay and Craigslist, one consumer selling to another consumer has never been so easy.
Ebay is an online auction site in which a consumer can auction off any unwanted goods. Maybe they received two of the same items as a gift and had no need for two. Perhaps they are looking to make a little extra cash by selling some old junk. Don’t be confused, most of the products on Ebay are of high quality and Ebay offers a great marketplace where people from all over the world can find just about anything they are looking for. Ebay is a great place for finding goods, but if you are looking for more than just goods, then Craigslist is where it’s at.
Craigslist is an ecommerce site which has local classified advertisements. Craigslist has listings for odd jobs, furniture, houses and everything in between. Craigslist does not facilitate any transactions, but they match up buyers and sellers. This means that before you buy, you can meet your buyer or seller in person (and in a public place) to determine their trustworthiness.
Consumer to consumer ecommerce is a type of ecommerce which has been greatly helped by the progression of the internet and the development of a few key sites. C2C ecommerce has provided many people the opportunity to clean out their garage and make a few bucks at the same time.
Business to Business (B2B) is a type of ecommerce in which one business sells its goods or services to another business or businesses. Due to businesses having more money than a consumer, the number of transactions as well as the volume per transactions of business to business sales is typically very high, much higher than that of business to consumer sales. This type of ecommerce could involve several different types of transactions.
One possible transaction could be selling of a physical product to another business for resale to the consumer. For example, selling 10,000 sleeping bags to a company, which will in turn sell them to the consumer at a mark up. This could be beneficial to both parties as the buying company can take advantage of another companies established name brand. These types of transactions have transformed over the years from exclusively buying in bulk at a discount to buying one product at a time through a dropshipper (dropshippers are manufacturers or distributers who send their product directly to the consumer with another business facilitating the transaction).
Another possible transaction could be selling a product to the business for the businesses use. For example, buying a computer from Dell for an employee to use to perform their job. Another example would be using Quickbooks to manage a business’s finances. Another example would be a shopping cart software providing their service to an ecommerce store. Shopping cart software companies not only provide the software, but often the web hosting as well.
The Business to Business (B2B) type of ecommerce transaction is the largest type of transaction that takes place on a daily basis. Many businesses serve other business in many different fashions with many different products or services. The result is a great type of ecommerce style to pursue.
Business to Consumer (B2C) is one of the types of ecommerce in which one business sells its goods or services to the consumer, or the general population.
In the typical physical goods business to consumer ecommerce transaction, a customer visits a business’s website and adds their product to their “shopping cart”. Consumer then check out using the secure software of the shopping cart and their payment is processed. Once the payment is processed, the business packages and then ships the product to the consumers. A few hours to a few days later, the package shows up on the consumers front door.
Virtual goods, or digital products, are sold in a very similar fashion to physical goods. A consumer visits a business’s ecommerce site or uses their ecommerce software (think iTunes) and adds the products to their shopping cart. The consumer makes their payment and then the virtual good is available for download. The download can be instantaneous or require logging into a website with a one time username and password. Once the product is downloaded, the transaction is complete. The whole process of purchasing a digital good can take only seconds.
Business to Consumer ecommerce stores can come in many different types. For example, amazon sells a wide variety of products and most resembles a large department store. A store like campmor sells only outdoor equipment. They most nearly resemble a brick and mortar store like Barnes and Noble, specializing in only one major category. Finally, a business to consumer ecommerce store can specialize in only one type of product, like ghilliesuitwarehouse, selling only ghillie suits and accessories. This type of store most nearly resembles a brick and mortar shoe store.
The Business to Consumer is one of the types of ecommerce with which most people are familiar. If you have ever ordered something online, you have most likely dealt with this type of ecommerce.
Ecommerce is any type of transaction involving goods or services in which the internet is used. There are several types of ecommerce and in general, there are 3 types of products which are exchanged in an ecommerce transaction. They are as follows:
Services – This could include banking, car rentals, plane tickets, etc
Physical Goods – This could include shoes, clothing, snowboards, coffee, ipods, etc
Virtual Goods – This could include music, movies, book, software, etc
Ecommerce has grown to become a worldwide force in recent years. Ebay is worth approximately $46 billion and Amazon is worth approximately $85 billion. To put that in perspective, Target is worth approximately $40 billion. Neither Ebay, nor Amazon have a physical store front.
In general, there are three types of ecommerce, each including the two major participants in any type of commerce, business and consumers. The three types of ecommerce are as follows:
Business to Business (B2B)
Business to Consumer (B2C)
Consumer to Consumer (C2C)
Business to Business (B2B)
In this type of ecommerce, businesses are both the seller and the buyer. The results can be massive transactions in which lots of money trades hands. One example of this would be Paypal. Paypal offers an ecommerce solution by processesing transactions for all types of ecommerce for a fee. Paypal charges a small percentage of each transaction they process. With very large and numerous transactions, Paypal can generate massive revenues.
Business to Consumer (B2C)
In this type of ecommerce, businesses sell to consumers. This most closely resembles the traditional brick and mortal stores. The business sells its goods or services to the general public. Amazon is a great example of this and is exclusively an ecommerce business. A consumer makes a purchase from amazon and several days later, the item shows up on the consumer’s door step.
Consumer to Consumer (C2C)
In this type, a consumer sells to another consumer. There are several great examples of this, including Craigslist and Ebay. Consumers look to another consumer who is trying to get rid of something for a few bucks. This would most nearly be related to a garage sale.