E-Commerce Websites - Business & Revenue Models, Website Elements & Functions
E-commerce websites are online portals that facilitate online transactions of goods and services via the transfer of information and funds over the internet. These sites allow the buying and selling of tangible goods, digital products or services online using computers, tablets, smartphones, and other smart devices.
Much like a traditional physical retail store, e-commerce websites allow consumers and businesses to buy and sell to one another on a designated platform. The main difference between e-commerce and physical commerce is that e-commerce transactions occur entirely over the internet rather than at a brick-and-mortar location, although some businesses choose to operate both.
E-Commerce Business Models
There are several types of e-commerce business models based on the transactional type, and the involvement of the participating parties :-
Business-to-Consumer (B2C) - Electronic exchanges of goods and services between businesses and consumers. The goods or services are generally for personal use, such as groceries, clothing, electronics, streaming services, etc.
Business-to-Business (B2B) - Electronic exchanges of goods and services between businesses, such as a manufacturer and wholesaler, or a wholesaler and a retailer. Business to business e-commerce is not consumer-facing, and usually involves products such as raw materials, software, or products that are combined. Manufacturers also sell directly to retailers via B2B e-commerce.
Example of a Business-To-Business (B2B) E-commerce Site and link to live site.
Business-to-Administration (B2A) - Electronic exchanges of products and services between organisations and public administrations. These types of e-commerce businesses sell online tools to government agencies. Usually, the recipient will use the program to manage their services, such as processing citizens’ requests or maintaining official records.
Example of a Business-To-Administration (B2A) E-commerce Site and link to live site.
Consumer-to-Consumer (C2C) - Electronic exchanges of goods and services between buyers, normally through a third party. C2C sales take place on platforms such as Etsy, eBay, Fivver, etc.
Example of a Consumer-To-Consumer (C2C) E-commerce Site and link to live site.
Consumer-to-Business (C2B) - Electronic exchanges of goods and services where people offer items or services to businesses. C2B encompasses influencers offering brand endorsements, photographers, consultants, freelance writers, etc.
Example of a Consumer-To-Business (C2B) E-commerce Site and link to live site.
Consumer-to-Administration (C2A) - Electronic exchanges between individuals and the government. These transactions are typically payments for public administration costs, such as health services, social security, taxes, or payments to nationalised industries.
Example of a Consumer-To-Administration (C2A) E-commerce Site and link to live site.
Direct-to-Consumer (D2C) - Direct-to-consumer e-commerce is the newest model, and trends within this category are continually changing. D2C means that a brand is selling directly to their end-customer without going through a retailer, distributor, or wholesaler. Subscriptions are a popular D2C item, and social selling via platforms like Instagram, Pinterest, TikTok, Facebook, SnapChat, etc. are popular for direct-to-consumer sales.
Example of a Direct-To-Consumer (D2C) E-commerce Site and link to live site.
E-Commerce Revenue Models
Everyone, from independent freelancers to small businesses, to the largest of corporations, can benefit from the ability to sell their goods and services online at scale.
The following are some examples of types of e-commerce revenue models :-
Retail - The sale of products directly to a consumer without an intermediary.
Dropshipping - The sale of products that are manufactured and shipped to consumers via a third party.
Digital products - Downloadable items such as templates, courses, ebooks, software, or media that must be purchased for use. Whether it is the purchase of software, tools, cloud-based products or digital assets, these represent a large percentage of e-commerce transactions.
Wholesale - Products sold in bulk; wholesale products are usually sold to a retailer, who then sells the products to consumers.
Services - These are skills such as coaching, writing, influencer marketing, etc., that are purchased and paid for online.
Subscription - A popular direct-to-consumer model; subscription services are the recurring purchases of products or services on a regular basis.
Private label - A private label product is typically sourced from a manufacturer and then sold under the retailer’s brand for exclusive sale. Retailers can then make changes to the product — such as colour or size — to develop their own unique brand identity and fit their specific niche. Private label products are usually less expensive than national brands, and if marketed correctly, they have the potential to generate large profits.
White label - A white label product is a product that is created by a manufacturer for sale by many retailers. Each retailer is allowed to resell the generic white label product under its own name and branding. With white label manufacturing the retailer is able to charge a premium on the product by attaching their existing brand because of their position in the marketplace.
Crowdfunding - Crowdfunding allows sellers to raise startup capital in order to bring their product to the market. Once enough consumers have purchased the item, it is then created and shipped.
E-Commerce Platforms & Websites Explained, Including Their Major Elements & Functions
There are a host of different platforms/websites dedicated specifically to e-commerce to help businesses build an online presence.
An e-commerce platform is a software product specifically designed to sell products and services online. It is an end-to-end software solution that allows online retailers to manage their business. This type of service encompasses e-commerce website builders, accounting and inventory management systems, as well as customer service infrastructure.
An e-commerce website is usually a complete product add-on within a general website builder. The add-on is in the form of an integrated e-commerce platform, usually as a themed template. It too can have highly advanced functions similar to those of an e-commerce platform, but on a smaller scale,
The main difference between the two is that a dedicated e-commerce platform offers a higher level of scalability and flexibility with more advanced functionality in analytics and reporting, more powerful marketing tools, and more payment gateways. However, it can be much more expensive to build and operate than an e-commerce website. E-commerce platforms are suited for larger enterprises, whereas e-commerce websites are favoured by smaller entities.
Fundamentally, an e-commerce site is the backbone of an online retailer. It is a platform in which businesses launch, host, and manage their online stores. The site provides features that allow merchants to build a branded online storefront to locate and sell their products and services.
From a seller's perspective an e-commerce site, when compared to offline selling, offers the following benefits :-
Low start-up and running costs.
Increased customer reach.
Improved customer service and flexibility.
Online and selling 24/365, no opening time restrictions.
Less time-intensive to operate.
Business is online, it is not location dependent.
Higher margins, increased profits, improved cashflow.
There is a huge variety of e-commerce software packages from which to choose. Which e-commerce software is best for a business depends entirely on its specific requirements. However, it must be stressed that an e-commerce site is a business model, not just a piece of technology.
An e-commerce platform/website has four core functions :-
Providing core tools and services
Setting rules and standards
Though different platforms/websites offer different features, listed below are many of the varied elements and functions of the most advanced e-commerce sites. This link provides a summary of all of the elements that can comprise an e-commerce site; more detail on the elements and their functions are listed below.
E-Commerce Sites - Elements & Functions
1. Take Payments Easily
Taking payments seamlessly by direct debit or credit card from major banks, PayPal or direct payment transfer to a bank account.
2. Product Reviews
Customer engagement is improved by allowing them to give feedback on their purchases.
3. Product Comparison
Allowing customers the ability to compare products as they shop.
4. Multi-Lingual Ecommerce
Displaying the site and product information in different languages enabling overseas customers to more easily understand the site's offerings.
Managing sales via automated synchronisation with online accounting software such as Xero, Fresh Books, Quick Books and others.
Having customers pay on a subscription basis, useful when selling courses or licenced material.
7. Sell Unlimited Products
Selling as many products as possible, unlimited scaling regarding the number of products or pages.
8. Customer History
Observing how customers browse through the online store, while also keeping a full purchase history log, and calculating the total customer lifetime value.
9. Zapier Integration
Software designed to integrate with more than 230 third-party online web services including Zen Desk, Sales Force, Gmail, and more.
10. Advanced Search
Giving customers the ability to search by name, category or price, plus more.
11. Social Media Login
Enabling social login for seamless checkout and new account creation, saving customers the time and effort of entering their details into the site.
12. Shipping Options
Shipping by the weight, volume, type or product, making shipping prices destination dependent.
13. Name Your Price
Allowing customers to define the product price. Also useful for accepting user-set donations.
14. Website Analytics
Tracking monthly sales volumes, best selling items, stock levels, and more, within the site's integrated dashboard.
15. Payment Plans
Allowing customers to pay an item off in instalments, comparable to hire purchase.
16. Event Booking Tool
Running events and have people join and pay online. Limit the number of people, show a location map, details and photos. Allow site users to view by list, week or month.
17. Discount Codes & Coupons
Offering coupons to effectively track marketing efforts. Choosing from amount off, free shipping, or percentage discount.
18. Email Marketing
Having customers instantly subscribe to newsletters and offers for future sales promotions. Synchronising with Mail Chimp, AWeber, Mail Poet and all other major email marketing programs.
19. Watermark Protection
Protecting ebooks and other PDF downloads from theft. Optionally enable password and/or copy protection, preventing and identifying unauthorised sharing of PDF downloads. Protecting against theft of product images and photos.
20. Stock/Inventory Management
Tracking stock levels and automatically updating product numbers and seamlessly showing when items have sold out.
21. Point Of Sale
Selling online, and in a physical retail store, through the site's point of sale interface or integrating with Vend.
22. Invoices & Packing Slips
Quickly and easily print standardised invoices and packing slips with the details already included.
23. Currency Conversion
Allowing customers to see what the product prices are in their currency by dynamically grabbing the latest exchange rates, and substituting displayed prices on the fly.
24. Customer Support
Managing the customer helpline centrally with Help Scout.
25. Image Zoom & Product Slider
Giving customers the ability to zoom in on product images and obtain more detail. Product slides can also be added allowing customers to quickly flick through images.
26. Pop-Up Terms & Conditions
Having the T&C page open in a pop-up window during the checkout process, thus keeping users in the checkout funnel.
Generating unique barcodes for every order placed on the website. These barcodes can be used on etickets, ereservations, packing slips, or anything else that would benefit from having a scannable barcode attached to it.
28. Dynamic Pricing
Providing bulk discounts on volume purchases and role-based pricing.
29. Sell Vouchers
Selling redeemable printable vouchers from the online store, useful for selling other peoples' events or services.
30. Tax Calculations
Adding or removing certain taxes on items depending on their geographic delivery location. Including or excluding tax on products.
31. Offering Customers Calendar Booking Tool
Selling services online, allowing customers to book days, dates, and times, with immediate payment.
E-commerce has grown exponentially over the past decade and continues to grow every year. For many small businesses, moving or expanding operations online is not just about gaining a competitive edge, it is a means of survival. This was accelerated by the pandemic.
However, an e-commerce site should not be viewed as something that is simply 'needed' in order to survive. Instead, it should be viewed as a vast opportunity for a business to reach a level of growth and success that would not have been possible before the advent of the internet.
Overall, the advantages of e-commerce are substantial for all of the stakeholders involved. The consumers benefit from better quality products at lower prices, as well as reduced service costs and other associated factors. The sellers benefit from increased sales volumes and a better customer experience. Online stores provide convenience to buyers while allowing sellers to expand into different niches that they may not have been able to reach before.