It is essential that every company has an online presence nowadays. A person may not be stepping out of their house today, but they are definitely on their phone 24/7. Keep reading to understand all the keywords related to e-commerce, and different forms of e-commerce that you can apply to your company.
E-commerce (Electronic Commerce) is the buying and selling of goods and services through the Internet.
What is the difference between e-commerce and online marketplace?
An e-commerce only has one selling on the platform, where the site owner is generally the only seller who takes care of storage, processing payments, logistics, etc. Marketplace is an extension of e-commerce where the platform allows third-party sellers to sell on the platform.
Pros |
Cons |
---|---|
Specialization: Deep industry knowledge can lead to more effective matchmaking and value-added services for users. | Scale Challenges: Especially if the industry it serves is relatively small or has a limited number of businesses. |
Niche Targeting: Connecting with a targeted audience can lead to better sales and partnerships. | Limited User Base: Making it more challenging to find buyers or sellers, especially in smaller or highly specialized industries |
Higher Trust: Customers are dealing with businesses that are more likely to understand the specific needs and challenges of the industry. | Market Fragmentation: With multiple platforms catering to different niches within the same industry. This can make it more difficult for participants to decide where to focus their efforts |
Pros | Cons |
---|---|
Diverse Customer Base: Able to lead to a larger customer base, increasing the platform's potential for growth and revenue. | Complex Operations: Each category may require different strategies, suppliers, and logistics, making operations more challenging. |
Economies of Scale: Economies of scale can reduce operational costs and potentially offering lower prices to customers. | Seller and Product Quality: Maintaining quality control becomes essential to maintain trust among customers. |
Data Insights: Enabling better analytics and insights to enhance the user experience and make informed business decisions. |
Brand Dilution: Offering too many diverse products can dilute the marketplace's brand identity and messaging, making it less focused and cohesive. |
Brand Recognition: Making it easier to attract customers and sellers alike. | Customer Confusion: Overwhelming to navigate a platform with a large variety of offerings, which can lead to confusion and frustration. |
Whether you're an aspiring online entrepreneur or an established business owner looking to expand your online presence, understanding these e-commerce categories is crucial. Embracing the right e-commerce model for your specific goals and target audience can be the key to your online success.
Goods and services are sold directly from businesses to consumers, the end users, with no middlemen involved.
Examples: Amazon, Uber, Netflix, The New York Times Co. and eBay.
When a business manufacture, market, and sell its own product in its own facility and channel. They skip over wholesalers, distributors, and retailers, managing all by themselves.
In 2021, retail e-commerce sales totaled around 5.2 trillion U.S. dollars worldwide, and this figure is estimated to further increase by 56% over the next few years, reaching about 8.1 trillion dollars by 2026.
amazon.com is the largest e-commerce in the world. On average, people visit 9 pages on amazon.com per visit, and each visit lasts 7:08min.
In second place is ebay.com. People visit 7 pages on average per visit, and each visit lasts 6:50min.
In third place is amazon.co.jp. Amazon has been the largest online retailer since 2000 according to onepatch.
Amazon has a clear monopoly over online shopping in almost every country in the world, including the UK. This e-commerce giant is a horizontal e-commerce that sells different goods to different businesses in different industries. Therefore, they are able to leverage economies of scale to provide even more range of goods for their consumers and at better quality.
Source: similarweb
Temu is a Chinese e-commerce platform that went online in September 2022, and in just over six months, it has captured tens of millions of users. Yet, this stunning growth came at what cost? Temu rose in fame because of its lower-than-low prices of goods shipped directly from Chinese factories and warehouses. To sustain the prices, Wired estimated that Temu's orders to the U.S. lost an average of $30(around £25) per order.
Source: similarweb
As e-commerce continues to evolve, businesses need to embrace these trends to stay competitive and meet the evolving needs of tech-savvy consumers in 2024.