A tour of Wikipedia tells us that E-commerce or online commerceor even electronic commerce is the monetary exchange of goods, services or information via computer networks, in particular the Internet. Put simply, this is a business whose offer is published online and the payment is digital.
Types of e-commerce
There are several e-commerce models that we can separate into two main categories:
On the commercial profile
Here we distinguish e-commerce according to the “who sells, who buys”. So we have the following models:
- B2B (Business to Business): this is a proposition of a service or goods from one company to another. The case for example of SMART FARM which is a farm which offers its products to other companies such as restaurants, hotels and others.
- B2C (Business to Consumer): here the offer is aimed directly at the end consumer, this is the case, for example, of companies that sell clothes online.
- C2B (Consumer to Business): in this case, the consumer makes an offer to companies. An example would be freelance employment platforms.
- C2C (Consumer to Consumer): Case of companies which simply facilitate the sale of products and services between consumers. This is the case with auction platforms (EBay, iCollec, etc.)
These are the best known and most common models, but there are others as well.
on the business model
We can differentiate the type of e-commerce based on the income generated or the way in which the exchange between buyer and seller takes place.
- An online store with its own products: The same characteristics as a physical store, in an online version.
- Dropshipping: To the customer, this seems to be normal e-commerce. The difference is that a third party sends the product, not the seller. To learn more about dropshipping, we send you on Wikipedia :).
- Affiliate e-commerce: Affiliate businesses go even further than dropshipping. In this case, not only does the store not send the product, but the sale does not take place on its platform. The e-commerce redirects the customer to another store which pays him a commission once the sale is concluded. Affiliation with Amazon is the most common. For example: Biodegradable.es. If you are interested in these models, do not hesitate to read our articles (in English) devoted specifically to affiliate marketing or even selling without stock.
- Membership: this type of e-commerce seeks its customers to make recurring purchases. The preferred way to obtain them is through a periodic subscription (weekly, monthly, quarterly, etc.). These types of memberships are currently in vogue with “surprise boxes”. This is a box that is sent out monthly (or other frequency) and contains certain products. One of our customers, NUOObox, offers, for example, boxes of natural and organic cosmetics. The advantage of this model is to ensure recurring income each month.
- Marketplace: a Marketplace is a store grouping together several stores. This is a website where different sellers offer their products. Amazon is the prime example of a Marketplace: several companies list their products for sale on the platform in exchange for a commission paid to Amazon.
- Services: an e-commerce does not necessarily sell products. Training, advice, coaching and, in general, any time exchanged for money. This is a good, viable option to start without taking any risks.
advantages and disadvantages
E-commerce is a young sector that is attracting more and more companies. However, it should be remembered that like any industry, it has its advantages, but also its disadvantages.
As advantages, we can cite:
- The large population, because we can always reach more customers
- The advantage of 24 hours a day, because a website does not have a closing time during the day
- Reduced costs, because e-commerce requires much less resources than traditional commerce.
- A good margin, because the increase in customers and the reduction in costs mean that, even by lowering costs, we earn better than a traditional business.
- Scalability, which means that you can sell to several customers at the same time, which is quite difficult in a physical store.
And as drawbacks, we can cite:
- Customer reluctance, which may be due to lack of trust in payment methods, lack of trust in products that cannot be seen or touched. This was I believe one of the major problems that JUMIA encountered in Cameroon, it happened that the customers were simply not satisfied with the products that they have on their eyes at the time of delivery.
- Internet connection essential. It may seem like a formality elsewhere, but in Africa it is not. Indeed, the connection index by population is still quite low, and this also slows down the expansion of this innovative business.
- Strong competition. Indeed, it doesn’t take much to launch an e-commerce business, so it is a highly competitive industry.
- The visibility, the strong competition means that today, to be visible, it takes a lot of constant effort.
Now that we’ve talked a bit about e-commerce, we can now talk about the minimum steps to start an e-commerce.
Steps to create an e-commerce
Now that you know what e-commerce is and the pros and cons, let’s see where to start.
Do you already have an idea or are you starting from scratch? If you are not yet sure, there are several techniques you can use to spot opportunities.
All are based on an open mind and a good sense of observation. It is about seeing everyday situations through the eye of the entrepreneur.
When walking down the street, watch out for physical businesses that could transpose to the Internet, if they haven’t already.
Think about your needs and those of the people around you: what do they use on a daily basis? What are they complaining about?
Go out on the streets explicitly in search of ideas.
Look at what people you meet are wearing, the way they behave. Observe and write down every idea that comes to your mind, without filtering it.
Keep thinking about how it would be possible to solve the problems of the people you meet. Your entrepreneurial spirit is like a muscle you need to train: when you start going to the gym you will feel aches and pains for the first few days, but as you go, your body gets used to the exercise. It works the same way.
But the most important thing is to put this idea in your head: don’t sell products, solve problems.
Analysis of the idea
The second step is to sort through the initial ideas until you have only one or a few left.
It will be this idea of e-commerce that we are going to analyze.
- Value proposition: what is the value provided? What need does the idea satisfy?
- Market: is this a new product? A product that already exists, but which offers new features?
- Competition: currently, who meets the need you have identified? Could you improve the product or service?
- Demand: Is the problem you are going to solve large enough to generate a great demand? Check how many Google searches exist for the topic. You can do this with Keyword Planner.
- Difficulties: list the other challenges that come to mind (technical difficulties, competition, threats, etc.)
A great way to analyze an idea is to do it with a basic entrepreneurship tool: the SWOT.
S = strengths, W = weaknesses, O = opportunities, T = threats
SWOT Analysis is a business strategy tool that allows you to analyze from an internal and external perspective the strengths, weaknesses, opportunities and threats of your idea.
According to INSEE, more than 500 companies are created in France every day, but the majority are without having defined a strategy beforehand.
And be convinced that knowing the direction to take and the means to get there will be the key to your success.
You can ask yourself questions like:
- How will our ideal client get to know us?
- Why are we going to be preferred to the competition?
- Are we going to be cheap?
- What Defines Our Customers? What common characteristics do they share?
- What are the objectives of our business? How are we going to grow up?
To define the e-commerce strategy, we will use the Business Model Canvas.
This model simply and quickly summarizes the keys to a business. Spending time filling in these 9 boxes will help you identify what is important to your idea and how to make it happen.
So far, you have defined general ideas and goals. In this fourth part, we will deal more concretely with specific actions.
Here are some ideas:
- Name: This is one of the puzzles at the start. Our advice is to follow basic rules: a short name, easy to pronounce, available in the .com domain and on the main social networks.
- Hosting: E-commerce needs to be hosted by a server. Don’t worry, we’ve written an article where we walk you through how to choose hosting for your ecommerce store.
- Corporate identity: here we are not just talking about the colors or the logo, but the values to be conveyed, the true essence of the brand. Don’t hesitate to read our post in which we explain how to create your brand image.
- Website: who will build the website? If you don’t do it yourself, you will need someone who can do it for you and can advise you. Consider the different options available to you depending on your business model: PrestaShop, WordPress, Shopify, etc.
- Visibility: this is the last point, but it is actually the most important and neglected part. The majority of entrepreneurs strive for a good product and a beautiful website to sell it, but they forget to think about how the customers will arrive.
Finally, you should not neglect the legal issues. Are you going to set up an LLC? Are you going to register as a self-employed person?
Did you want to launch your digital business?
We hope you found this article helpful.
You may have many doubts and questions. Don’t worry, this is completely normal. Think and analyze your business idea well and, if you decide to go for it, define an action plan.
The rest will come through hard work and consistency! 😉
You’re in luck, because right now SMART DESIGN is in the middle of a promotion to help newbies in e-commerce, so you can contact us.