Why Start an Online Store? Is this the best time ? As the whole world is forced to stay at home and everyone is thinking of doing an online business. But is opening an online store is viable in these difficult times?
According to an estimate consumers will make 95% of purchases online by 2040 (Nasdaq), so there’s never been a better time to start an eCommerce business.
Whether you’re an offline retailer or an investor with a bit of extra money to start a new enterprise, eCommerce is a great field to get into, especially today’s time. From mere fascination in the 80s and 90s, the online industry has grown enormously and is now a rampant part of our lifestyle. In fact, the industry grew so much over the years that it even opened enormous opportunity for everyone willing to start it.
Jeff Bezos, an American entrepreneur who founded Amazon in 1994, is worth more than 1 Trillion USD. Amazon started off as online store for books, but now, you can buy almost anything there from a shoe to a industrial & scientific supplies, and has made its owner one of the richest people in the world!
What is E-commerce?
In simple words eCommerce (or electronic commerce) is the buying and selling of goods (or services) over the internet. So eCommerce is essentially an online marketplaces that connect buyers and sellers. and where internet is used to process all electronic transactions.
On the August 11, 1994 around noon a man named Dan Kohn sold a CD of Sting’s “Ten Summoners’ Tales” to his friend Phil Brandenberger for $12.48 plus shipping through his website NetMarket, an American retail platform. This is the first example of a consumer purchasing a product online using encryption technology to pay online using credit card.
Types of E commerce Models
There are 5 main types of eCommerce that can describe the online transaction held between consumer and business
#1. B2B: Business To Business E-commerce
In B2B model, sales and transactions are made between 2 businesses such as a manufacturer and a wholesaler or retailer. This type of eCommerce does not require any customer involvement and its happens between 2 businesses only.
The B2B model has longer sales cycle, higher order value and more recurring purchases. Also the transaction of the B2B business model is much higher than other eCommerce model. B2B eCommerce often requires very high amount of capital to set up.
For example A business sells software-as-a-service for other businesses to use like accounting software, payroll software etc.
The few examples for this model include Alibaba, Amazon business, IBM, Boeing, ExxonMobil Corporation, and more.
#2. B2C: Business To Consumer E-commerce
The B2C or business to customer is the most common and biggest type of e-commerce. This model involves a retailer or business selling products or services directly to end customers i.e individual people.
This model works by digital marketers and online retailers and they sell their goods or services to individual internet users. It is one of the traditional and earliest forms of eCommerce and has grown massively in the last two decades as observed from retail giants like Amazon, Walmart etc.
It requires low startup capital when compared to other eCommerce models. For example, you can sell products online even without any inventory or delivery by using the benefits of drop shipping.
The few examples for this model include Amazon, WalMart, Staples, Target, and REI.
#3. C2B: Consumer To Business E-commerce
In C2B know as Customer to Business model, customers sells their products or services to business. For example a sole proprietor or freelancer serving for the business
Freelance artists, writers, designers, web developers, lawyers, chartered accountant are some good examples of C2B business model. Bloggers who sell advertising space on their websites can also be considered as C2B transaction.
The few examples for this model include Freelancer, UpWork, Google Adsense, Commission Junction, and Abode Stock.
#4. C2C: Consumer To Consumer E-commerce
Under the C2C eCommerce model, consumers sell products or services to consumers usually through a third-party website or an independent online platform that they created for this purpose.
The most common example of this model is an an online auction site like eBay, where a customer posts a product or services for sale and another customer bids to purchase the product or avail the service. However, the third party who is the medium between 2 customers like website generally charges a commission.
The main disadvantage in C2C eCommerce is that it’s not much scalable that’s why many successful C2C eCommerce businesses starts transition to the B2C model to support their growth.
The few examples for this model include eBay, Craigslist, OLX, Cars24 etc
#5. B2G: Business To Government E-commerce
B2G eCommerce model, also known as business to administration is one where a business sells its product or service to the government of either the area where its operations are based or elsewhere.
It has generally high-profit margin and also contract period is longer than most other eCommerce business models. B2G businesses can also have several tax benefits not available to other eCommerce merchants.
It could also confine a business to operate within a specific geographical location, thus removing the primary purpose of eCommerce transactions which is border less product and service delivery.
#6. C2G: Consumer-To-Government E-commerce
C2G eCommerce model, also known as Consumer to administration enables the consumers to post feedback or request information regarding public sector services directly to the local or global government.
Some example of this type of model is, electricity bill payment on government portal, payment of health insurance, payment of taxes, etc.
It makes public administration more flexible and efficient also there is enormous profit potential for third parties contracted to handle C2G transactions.
So now that you have understand the models of eCommerce business. Its now up-to you to decide which model you want to follow to start your eCommerce business. For the started B2C business model is most economical and appropriate.
Reasons to Start an Ecommerce Business
eCommerce is growing year after year, and it has become a major force in the global economy. The online market is expected to grow at the rate of 56% by 2020, where as traditional markets only expected to grow at the rate of 2% during the same time period.
This makes it very important for any business to think about starting online eCommerce business, as brick-and-mortar stores will no longer provide the bulk of the sales. If you are interested in starting your own eCommerce business, 2020 may be a great year to join the market.
Here are some reasons to start an eCommerce business now
1. e-commerce is expected to grow Worldwide
According to a report from the U.S. Census Bureau, in the third quarter of 2019 alone, U.S. eCommerce sales amounted to approximately $154.5 billion, accounting for 11.2% of all retail sales in the nation.
In choosing a business model, it’s always important to check the latest trends and always choose a model that is into growth markets. If you want to get into eCommerce, this is one of the best time as the opportunities are growing day by day.
2. To Get More Independence
The self-employed have more independence and more control over their vocational destiny than folks that work as an employee.
Certainly, someone might argue that employees can “turn off” their jobs, while entrepreneurs are “always on.” But a small business owner will have a lot more schedule flexibility and control of when and how work is done.
3. E-commerce Business is Easy to Start
Starting an eCommerce business doesn’t mean that you have to be a tech-savvy person. The platforms like PrestaShop and few others have made your work easy and simple. They tend to offer pre-made design templates, easy check outs, multiple payment gateways and free hosting to the people who are willing to start their eCommerce business for the beginners.
4. To Make Extra Income, or Become Financially Secure
Although no business is guaranteed to be a success, online eCommerce business can be an excellent source of income that gives better return on the investment.
An online store allows you to make extra income and become financially secure with less risk as you will need a smaller workforce with the reduced chances of shoplifting, rogue workers and damages to goods as compared to a physical shop.
5. Potential for Expansion
The potential for expansion of an online store is nearly limitless. Once you start to experience success, your products are hit and more and more people are buying it, you can hire an online advertisers to help you gain more exposure and reach out to new potential clients.
Also its very cheap to grow in online eCommerce store, you can hire new workers, open offices across globe, get shipping partners and sell your products worldwide. It is really up to you to how large you want your online store to be, even Amazon was started as an online book store and now its most valued company in the world.
6. It is easier to start a business than ever before
Due to the many available e-commerce solutions like Shopify, Big-Commerce, PrestaShop, Magento etc, it is now easier to start a business than at any time in the past. Thanks to available tools and eCommerce solutions, everybody can launch their own eCommerce store easily without knowing design or coding.
Using these tools you can easily create a professional, functional website that will help drive sales. These platforms put you in the comfortable position and you just need to focus on the marketing and sales for your online business rather than dealing with administrative and technological tasks.
These eCommerce platforms offer multiple design templates, easy checkouts, various secure and safe payment gateways and often free hosting as well. All you require is a right plan with dedication, hard work, and diligence to create, manage, and scale a successful online business.
7. Physical Stores are closing at record rates
With more and more brick and mortar stores closing down at a record pace, there is less competition from them, giving you the opportunity to truly flourish with web sales.
Because you can control your inventory and let your customers know when your products will be in stock, you won’t suffer from the same fate of retail stores who only have a finite number of resources. eCommerce provides a major advantage over traditional retail offline store, and it will only become more and more superior in coming years.
These were some of the reasons to get involved in the eCommerce trend, and right now is the best time to do it. It is a low cost, low risk endeavor that may end up being extremely rewarding and helping you make the money you always dreamed of.
If you are ready to start your online store then you can learn here How To Start An Online Store That Makes Money