What is eCommerce? The Basics of Selling Online

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Black business woman on a laptop with package

Key Takeaways:

  • There are a number of eCommerce business models to choose from. Go with the option you think will work for your situation.

  • Choose products and/or product categories based on your business goals.

  • Depending on the business model and type of product, you’ll also have to decide which selling avenue works for you.

 

Now is the time to enter the eCommerce industry. Not only has eCommerce continually increased, but COVID-19 put it into overdrive, forcing SMBs to take their business online. In 2020 alone, eCommerce sales reached $4.28 trillion worldwide

So what is eCommerce? Simply put, it’s the act of buying and selling online. But there’s a lot more to eCommerce than an online transaction. Amazon didn’t become the world’s number one source for online shopping in a day. It took years of perfecting the eCommerce process to get where Amazon stands today. 

If you’re reading this, it means you want a piece of this thriving industry. You’re looking to become an eCommerce entrepreneur and we’re here to help you do it. In this post, we’ll introduce you to the basics of selling online including the types of products to consider, what model fits you best, and some eCommerce tips that every beginner should know.

Ways to Sell Online: eCommerce Business Models

The process of selling online typically follows this journey: manufacturer to wholesaler to distributor to retailer, and eventually, the customer. At first glance, this seems like a lot, but there are several eCommerce business models to choose from that can simplify the process. Here are the most popular models to choose from:

Dropshipping

Dropshippers don’t actually come into contact with physical products. Instead, they act as a middleman, choosing a popular product from a dropship supplier’s catalog, listing it online, then sending an order confirmation back to the supplier for shipping. Dropshipping has a low startup cost so it’s perfect for people looking to start a side hustle. The difficult part about this model is promoting your product, so it’s useful to have a strong knowledge of marketing when choosing this business model.

How Dropshipping Works

Process of how dropshipping works

Wholesale

This model is similar to a traditional retailer, where owners purchase stock in bulk from a manufacturer at a discounted price and sell those items online. While this method does give you control of the physical product packaging, there is one downside: storage. Wholesalers must have enough storage to house the products they sell. Luckily, there are solutions to this, including third party logistic (3PL) companies to take the pressure off of you.

Arbitrage/ Resale/ Vintage

Have you ever gone thrift shopping before? The arbitrage business model uses this strategy, where merchants find discounted products from other retailers, and sell them at a higher price. Similar to dropshipping, some find this model useful as a side hustle. The biggest drawback most resellers face is how much time it takes searching for the right product.

Artisan/ Handmade

Some people turn their hobbies into profitable businesses. For artisans, this business model has proven to be a lucrative endeavor. It’s a great way for DIYers to make some extra cash. But running an eCommerce business does take time and attention, which makes it a challenge for handcrafters to juggle online selling and product building.

Private/ White Label

We’ve all seen identical products on supermarket shelves with different labeling. This is an example of white labeling. A business owner following this model purchases generic items from a manufacturer and sells it with their own personal branding materials. Similarly, private labeling occurs when only one merchant can sell a particular product exclusively.

 

Woman business owner looking at her mobile phone with a laptop

Main Product Categories to Sell Online

Choosing what to sell online may be the biggest decision an entrepreneur can make. Not everyone can sell Lamborghinis on the internet. That’s why it's important to choose something that fits your goal. Here are the three main eCommerce product categories you’ll see:

Physical Products

This is simply a tangible item that customers can interact with. It’s the most common of the three types of products. Are you reading this from a phone or laptop? Those are both considered physical products. 

Digital Goods

Similar to physical products although with one main difference, they’re not tangible. Instead, business owners send shoppers their purchase via download. Examples of this include online lessons, software, and music.

Services

The third category consists of actions given to shoppers including freelancers and consultants. A good example of this type of product is a marketing company providing email assistance to a business owner or a business offering bookkeeping services.

Where to Sell Your eCommerce Products

We mentioned before that eCommerce is the buying and selling of goods online, but where do customers find these products? Depending on the business model and type of product you choose, you’ll also have to decide which selling avenue works for you. Below, we list popular places to sell goods and services:

Social Commerce

Social media connects the entire world with unlimited content at the click of a button. It’s come to the point where not only is social media for interacting with other people, but with brands too. Companies all over are utilizing platforms like Instagram and Facebook to promote their business and even sell their products right from the social site. With new features introduced every month, it’s the future of eCommerce.

Online Marketplace

An online marketplace consists of large companies, like Amazon, eBay, or Walmart, showcasing thousands of online merchants and the products they wish to sell. For this particular approach, sellers sign up for their desired marketplace, showcase a product with a description and image, then wait for an order. It’s one of the easier routes, but some aspects will be out of your control.

Screenshots of Amazon, Ebay, and Walmart online stores

Personal Store/ Shopping Cart

Another option for online sellers is creating their own branded store. This route consists of ready-made eCommerce websites, like our DIY website builder, to create a personalized site that only focuses on the seller’s products. While online stores require more time and resources toward marketing, it also allows merchants complete control over their brand, unlike sellers on Amazon.

 

Will You Start Your Own eCommerce Business?

eCommerce is a growing industry, and it shows no signs of slowing down. Many entrepreneurs have found success in creating an online business. All it takes is a little hard work and determination. 

Not only are there multiple business models to choose from, but the possibilities are practically limitless. From wholesaling furniture in bulk to dropshipping knick-knacks, you’re bound to find something you’re passionate about. 

For more resources to help you create or improve your online store, check out our eCommerce blog.

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